I think that being delusional is necessary to be a founder. You really have to believe I'm going to be part of the 01% that's actually going to build a unicorn.
What advice are people being told about success that you think is outdated?
I think that college is no longer needed. That being said, I believe that your network is your net worth and there's no better place to go than college to expand your network.
So, you're saying go to college, but don't go there for the degree.
How do you think the best ideas are found? Ideas are cheap and execution is everything.
Hey everyone, welcome back to OnPurpose. Today I'm sitting down with Lucy Guo, entrepreneur, investor, co-founder of Scale AI, and one of the youngest self-made female billionaires in the world. Today we dive into the new rules of success, why speed has been a greatest advantage, and how AI is reshaping opportunity. Please welcome to OnPurpose, Lucy Guo. Lucy, I am so happy to be with you here because not only do we know each other a little bit offline, we've been to some pretty crazy places together. So, I saw you last year on Luminara on the yacht trip, which was amazing.
And then I saw you at my house where we did a fundraiser event. Then I saw you at the Dior party. It feels like our lives. And now we're seeing each other in camp next week.
Yeah, exactly. It's awesome.
Thank you for having me. Oh, no. I'm so excited for my audience to learn from you. I think that right now we're living at such an exciting time where so many young people are driven. They're ambitious. They want to do incredible things. You've already lived that. You've done it. You're going on to do more. I know you've shared some ideas with me. So, I can't wait to get inside your brain today. This is going to be fun.
Yeah. I wanted to ask you the first question I have for you is what advice are people being told about success today that you think is outdated? I still think that college is extremely outdated. I think that we're taught to go study and then get a traditional job. But especially in the world of AI, I think that college is no longer needed. That being said, I believe that your network is your net worth. And there's no better place to go than college to expand your network because college is really the first time and only time in your life where you're going to be thrown into a world where everyone wants to make friends. No one knows each other, right? So, everyone's open to this like emotional connection. I always tell people like I actually think one to two years of college is extremely useful because that is where you're going to build your network and you're going to build the deepest network because their most talented friends are always going to get these like multi-million dollar job offer straight out of college. But if you're able to have that emotional connection like everything is sales from retaining your employees to selling them to get you them to join your company and college is the best place where you can really build that emotional connection because everyone is open to it afterwards. Like you may go work at a company, you may join different like interest groups etc. But it's just not at the same density as colleges.
So you're saying go to college, but don't go there for the degree.
Right. Go there for the networking, the groups of people, the emotional connections, practicing things.
And I think college is a really great place, especially in classes, to learn a lot and learn how to think, but you should apply those skills to practical skill sets or you should apply the skills that you learn into practical use cases. So I would learn how to think in these classes and then I would start using AI tools, right? and really accelerate what you can do and be that like 10x executor earlier on in life.
Where did you go to college again?
I went to Carnegie Melon.
Did you go to college with anyone that you're still friends with? What are your peers doing now? Like what else have they done?
Straight out of college, I had actually hired the smartest people that I met. So like you know my TA, my computer science, it's not a sorority but within the CS program because they were just top of their class, right? So that was a perfect example of, hey, this is emotional sales and this is emotional retention. When I had dropped out, I had actually met a lot of people within the college network, not my specific university, but within the United States through hackathons. So, I'm still friends with them and these are people that I've actually invested in too after hiring them. They went on to go build their own companies. So I think that's just a perfect example of how they were ready to open up and be friends with me. And by maintaining those connections, I was able to hire them as my employees, retain them, and then support them when they went to go build their own companies.
Wow. That's so fascinating that you were able to not only maintain those relationships, but they become mutually beneficial for everyone.
And it's a really unique way to look at college actually because I think right now you have the anti-college agenda and then you have people saying you have to go to college because of the old reason. So it's an interesting one. I also wanted to ask you what's a habit that you think ambitious people think is going to make them successful but actually is slowing them down or holding them back.
So this is actually probably an interesting one. I think that ambitious people have this mindset like I want to learn from the smartest people because that makes sense, right? So they gather all the mentors that they have possible and then they enter paralysis when it comes to decision-making. They ask all the mentors around them instead of listening to their own gut. And if I had done that, Scale actually would have never started because I had decision paralysis when I was deciding whether to leave Snapchat versus go build a company. I gathered all my mentors. I asked them, 'Do you think I should stay at Snap or go do my own thing?' And every single one of them, and I mean every single one of them told me to stay at Snap because Snap was in its hypergrowth stage and it was about to go public. People thought I was absolutely insane given that I was on this extremely special team with only 10 people. I think I would have entered decision paralysis if I were to have listened to my mentors. So I ended up just listening to my gut and optimizing for learning instead because I did feel like my learning had become stagnant at the company. But I think that extremely smart people constantly want to learn from others so they find the smartest people and they ask almost too many questions. It's better to make an imperfect decision but move forward because you can change your path than to enter decision paralysis.
I feel like any good decision I made in my life has often been opposed to some of the smartest people in my life because you feel it internally.
Exactly. And I think investments are very similar, right? Because you have to go against the grain to make a good investment. Like Airbnb I think is a great example and Uber is a great example. Like no one thought it would work but the investors that thought it would work, they went against the grain. And I think that's when the best decisions are made.
Did you have to give up equity? Did you give up stock, shares? Like were you giving up a ton of money too to go and do your own thing?
So I was giving up a lot of money. I wouldn't call it life-changing money for me per se, but I think it was life-changing money for other people, especially because Snap's vesting schedule at that point was like 10, 20, 30, 40, which is a very unique vesting schedule. So that meant that I was leaving the majority of my equity on the table.
Wow. So you would have had to really feel a sense of inner confidence that you had an idea. This goes back to you are like the average of the people you hang around with.
And because I was in a Thiel fellowship network and all my peers were founders that had either raised tens of millions of dollars or had built billion-dollar companies, I really did believe that I could be one of those people. I think that being delusional was necessary to be a founder because if you're building a venture scalable business, you really have to believe like I'm going to make it. I'm going to be part of the 01% that's actually going to build a unicorn. I do think that there are other businesses like lifestyle businesses that are much easier to become successful because you're not shooting for the stars, right? Like if you're making less than 100 million a year for venture, that's not great. But if you're doing 10 million a year as an individual, that can support you for the rest of your life. If you were 22, you had no money, no followers, and you felt like you had no connections, what would you do in the next 30 days to change the trajectory of your life?
If I were 22, I would actually go live on campus at different colleges because I feel like I would be young enough to do so, where I could pass off as a college student. That's actually how I was able to gain a network outside of just Carnegie Mellon. I lived on Mento Avenue at USC and kind of just hung out at USC as a student. I was in San Francisco and I was hanging out at Stanford as a student per se. When you blend into the college community, you will just start getting invited to things whether it's fraternity parties or hackathons. I would also definitely continue to go to hackathons because hackathons are great. It attracts a certain type of student that wants to do something over the weekend that doesn't involve partying, right? Like they are side questing to build and learn. And when you go to these hackathons, generally all the surrounding colleges go as well. So like MHacks attracted pretty much all the East Coast colleges. So did Penn Hack, so did HackMIT. So you're not only meeting people from that college, but all the smartest students from different universities.
So wait, you weren't pretending to go to other colleges. You were just hanging out at other colleges.
And so then you got the benefit of building your network in those colleges too.
Did you do that because it was fun or did you do that because you knew it would pay off in the long run? Like what was your mindset as a 22? I guess when you were at college you were younger than that. What was your mindset as a college student?
Specifically when I had dropped out and this app completely failed before the Thiel fellowship. I was going to build DoorDash. Actually, I built DoorDash at a hackathon and then, in between the hackathon and when I decided to go build a company, DoorDash got built. So, I was like, great, I need a twist on it, right? So, the twist was, okay, let's have people cook food for other students and deliver it versus restaurants. This has many, many issues starting from food safety. It's completely illegal, whatever. But I launched at Carnegie Mellon and it did well and I was like great, I need to expand to other colleges. So that was a mindset in going to live in other colleges and like really get in the community so I can convince other college students at these universities to cook food for their fellow students. College is a really great place to do it because it's so high density. You can just make a batch of cookies for example and run around campus and deliver it to hundreds of students and people were making like $100 an hour. It was great.
Yeah.
Very illegal. Don't do it. Don't build it anymore. How did you feel when you created your version of DoorDash at a hackathon and then you see the real idea happen?
Honestly, I think the ideas are cheap and execution is everything. So, for me, it's like, okay, cool, whatever, right? Like Uber wasn't the first, but they executed extremely well. So, I didn't feel any resentment. I was just like, okay, cool. Like, this is a great app I can use. Like, let me think of something else.
Yeah. I think that's what's so fascinating about high achievers like you where a lot of people think that the idea is the value and when you see someone do it you're like oh I could have done it I could have done that and it's like well no not really because actually what it showed you is you've had a good idea someone went and did it already but that means you could find another good idea
Exactly. There's literally billions of people on this earth. People have ideas all the time. People execute all the time. You can easily hire a developer in India, get it done cheap. Now you can use AI and use Lovable, Replit, etc. and develop your idea. But execution is everything.
Where do you think young people waste most of their time when they're building their career?
I think young people are wasting most of their time working at these larger companies because they have golden handcuffs. Because when you're smart, you're literally getting paid millions of dollars per year, right? Which is extremely hard to let go of when you want to leave. They add in stock, they add in cash, they add in bonuses. I know some of the most talented people that I think could have built unicorn companies that ended up just staying at Snapchat for 10 years because they just kept on getting equity packages, which I understand from a different perspective because it is life-changing money over the course of 10 years, like you're making eight figures. I don't want to say their soul because the work is still interesting, but they're trading off extremely life-changing money, generational wealth, and working on something that they want to do, that one project, passion, idea that they have in exchange for cash.
But do you think everyone could be an entrepreneur?
I think everyone can be a certain type of entrepreneur. It just depends on how much of an entrepreneur do you want to be? Like are you trying to build a $5,000 a month business? Like yeah, anyone can do that. My friend literally prompted a chat to create a business with a $50 budget and it actually created a business that makes I think a few thousand a month.
Yeah. Yeah. The research I found a domain name and designed a really crappy logo. I think that anyone can be an entrepreneur but what kind of opportunity, what level are you trying to shoot for in the sky?
I guess the people that you're saying like they could have quit their job and I guess and golden handcuffs of course there's different levels of it. So, even where I grew up, I remember I was trying to leave my consulting job, which felt like golden handcuffs at the time. I was making like £45,000 a year, and that felt like golden handcuffs at the time because I was like, that at least pays my bills and pays for my rent. I don't know what I'd do without it. When someone's in that position, how should they consider the next move? Like, do you just quit and go all in? Do you come up with an idea first? like how do you think about the phases and trajectory of building something when you have golden handcuffs?
What I had personally done was I was working on side projects and after I received investor interest, that's when I said I'm going to quit and go build. I think that when people hedge too much as an investor, I don't think they're serious where they want the money inside their bank before they actually quit their job. So I would say work on weekends or like after work work on side projects like get some traction because that traction will turn into investor money but you don't really want to tell investors like I haven't really quit my job yet because it will make them feel or you can say that but you should make it known that whether or not you get the money you will quit your job or at least just say that. I don't know because I think you don't want them to think that you're not serious. I think people always get caught between that kind of catch 22 of do you quit first and then you find what you want to do or do you find what you want to do and then build it.
It is a sacrifice to derisk but de-risking does make sense. So if you're able to work on your side projects over the weekend after work etc. Like yeah you won't be spending as much time with your friends but you're also derisking your life essentially. And I do think that like once you have an MVP with traction which you don't need to quit your full-time job to get like you will be able to fund raise. How do you think the best ideas are found?
I think the best ideas are found when you're solving a problem for yourself because there's so many people in the world that if you're building for yourself, other people are going to have that problem and then whether or how large of a company it can be. It's just a function of how many people also have your problem and how much are they willing to pay. But you'll know exactly what to build and then you'll be able to use the product yourself and be able to figure out which features to build, what needs to innovate, etc. So I think the best companies that I've invested in and the best companies that I have built have all been problems that I've solved for myself.
And that's where people should start.
I think today everyone's now thinking how do you build the next billion dollar company
And that's almost like the most trillion dollar company. It might just be like a small problem that you're solving for yourself but you decide to expand on the idea afterwards.
I've heard you say Lucy that your biggest advantage is your speed. And I wanted to ask you what's a decision that people waste six months on in business that they should figure out in six minutes.
So I think the thing that people waste the most time on is actually just product development and design. Because when you go to a large company and you see how long it takes to design small features, it could be months to years. Because they want the UX to be perfect. But a common misconception is that the UX needs to be perfect for a product to be adopted. I actually highly disagree. People will go through bad UX. People will deal with bugs if they want the product badly enough. Like for example, let's say there's the new iPhone, right? And you're checking it out and it just keeps on bugging and it's like, 'Okay, cool.' The payment didn't go through, the payment didn't go through. You're going to keep clicking that payment button a hundred times until it goes through. You're dealing with the bad bugs because you want the product badly enough. So I believe the best thing to do is just release 90%. You can design 90% good UX in 1 to 2 days and then just have the engineers build it, ship it, and then see if it's adopted. If it's adopted, then iterate on it until it's a good product. There are very few products that need perfect UX for it to get adopted. Most products, if people want it, they will buy it. People feel like they need to build the full product in order to sell it, but my philosophy has always been create landing pages. If you're building a B2B SaaS product, make a landing page and start doing calls. See if you can get LOI signed. If it's a low enough price point, see if people enter their credit cards to save a spot on the page. If you're building a DTC product, I say sell it and then see how much you actually need to produce. And if you're late on orders, just give the customer another free t-shirt or something to make them feel happy and not be upset that the order was late. That way, you're actually testing demand for the product before wasting so much money and time developing just for it to flop.
So many people I see when they're launching something, they're spending all the time on the logo and the font and the color and all these types of things. And actually, you're saying, 'Well, put it out there and see if people even sign up and even care about it. And if they do, then you've got all the time and money now to actually go and build the real thing.' What's our addiction to perfectionism? Like, why do we do that?
I almost think it's an excuse. I think that people believe that something needs to be perfect in order for it to work. And when it's not perfect, they blame it on the fact that it's not perfect. And I see this with tech founders all the time, too, where it's like, okay, cool. Like, we just need to AB test our way into it being perfect for the product to work. But sometimes the sum of all parts doesn't equal whole, right? Like, you can AB test to have higher signup rates, then higher engagement, etc. But at the end of the day, there's only so much that can fix. Like you probably need an entirely new feature which is not really AB testable. Yeah, I think that it really is just an excuse.
What's the difference between a good risk and a bad risk?
I mean, I think it's all a function of what are the consequences, right? I generally believe that a lot of products could not have been created without taking risks. So, for example, like I think Uber obviously didn't really listen to anyone and they became so big that now it just exists. I was actually talking to Stripe founders and I don't remember what rule they broke but even Stripe apparently broke some rules and then they just became too big to fail and like they just had to make it work. So yeah, it's a function of just consequences.
But how do you evaluate that when you don't know? Because I guess we all start thinking, 'Oh god, if I do this, then the opportunity cost is this or this is the risk level.'
I generally evaluate just based on two criteria: is this going to be lifechanging for me, and am I optimizing for learning? Because if I'm not optimizing for learning, I'm just not going to do it because I think that the knowledge I gained doing the next thing, even if I lost a few million at Snap for example, I was going to learn enough being a founder that I can take those skill sets and either go get a new job that pays me better and I'll be more successful in my role, or build another company. And the life-changing money thing was also kind of that where I was like, okay, this doesn't necessarily change my life, so it's not worth my time.
There's something that we can all use in pretty much any decision.
Always optimize for learning.
That's such a big one because it's almost like we want to optimize for success, but you're saying optimize for learning and that will lead to success.
Exactly. Yeah. Like everyone always complains, 'Oh, it's such a big risk to quit college or it's such a big risk to quit this job to build a company.' But it's not like you are losing your knowledge and skill sets, right? If anything, you come out the other side and you have more skill sets. Like, yeah, you might have given up, let's call it, a $10 million a year job, but guess what? You'll probably get a $20 million a year job. And I also think that people underestimate how much people want talent, which obviously we saw with Meta paying nine figures for AI employees. I think that even if your company fails, if you hire talented people and you yourself are talented, there will be someone that will buy your company for more than your investors invested at a valuation because they know you want to make your investors whole and they know that you want money and for the talent they'll overpay. I keep thinking about my life and it was much smaller than that like I said the amount I was making but making a pivot companies were so good at making you feel like no but you built a network here you should stay here like there's such a culture of making you feel like you're going to fail if you move on and I think people believe that people buy into that how do we break out of buying into the fact that we actually think if we lose a $100,000 a year job then we're going to end up with a $70,000 a year job. We don't think we're going to be able to triple it or quadruple it.
Yeah. I mean, I think that is just again your network is your net worth and you are the average of the people that you hang around with. So, I was really lucky to hang out with founders that have done it before. So, I knew like how it actually went. I was lucky enough to hang out with investors who, you know, they would give exploding term sheets, but they would also tell me, 'Oh, exploding term sheets aren't a thing.' Like, if the founder came back, we would just give them the term sheet again. People's fear is overcoming their logic. Yeah. Because logically it's like why would I not be able to get this job back? Like if I was valuable to the company, they're going to want me again. And let's say for whatever reason the role is filled. I mean companies find roles for people all the time. When they think the person is Swiss Army knife and smart and will be able to help the company, they'll make a role for that person, right? But also there's so many companies out there that will hire you based off of the fact that you did a great job at company A. Company B is going to want you and company B will fight for you and understand that now you have more knowledge and more skill sets so they'll pay you more. This is really people's fear overriding their logic.
Everyone says find your passion. What's your take?
I think you should do what you're best at to have the highest impact on your passion. So, for example, like I really like nonprofits and supporting charities, but at one point in time, I thought like I'm going to start my own nonprofit and charity and foundation. And you know, that might still happen, but I also realized like at this age, in this state of my life, I'm really good at making money. So, my time is probably best spent making money and in donating to causes that I care about and being run by people that actually know how to run an organization or a foundation. I don't know how to run a charity. And like I had actually looked into this where I was like, I'm going to start a foundation. I'm going to do X, Y, and Z. And I realized how much work it is, right? And like how it's like quite literally another full-time job. Like maybe when I'm older, I'll learn all those skill sets and I'll decide like my time is best spent doing that as my passion. But I think optimize for fun. Fun doesn't necessarily need to be your passion, but like optimize for how you can make an impact in whatever you're passionate about.
But that feels hard, right? Because people are like, for example, when I was growing up, I was passionate about soccer. What do I do with that? Because I can't be a soccer player because I'm not good enough. So then what do I do?
But you can make enough money to buy a soccer team and you can have a soccer game and have so much fun.
Right. So you're saying that it doesn't have to be your career, but you may go build a career doing something else, but then use the fruits of that labor to then be closer to your passion.
Because like if you're able to experience your passion, that's what's going to make you happy, right? Like it doesn't have to be your full-time job. Well, I guess now music is my careerish or my side quest, but I just used everything that I had succeeded in and like, you know, the money I had created to go experience music and like live events and that made me extremely happy. I use like what I've been able to create that helps support causes I care about which has made me extremely happy. I don't think that needs to be your full-time career and like for most people it's not going to be their full-time career because like in certain fields like even no matter how talented you are, some of it is just luck, right? like I'll never really understand the music industry or the acting industry because I have so many talented friends in it and it just for whatever reason they're not making it and I really do think it's because there's other factors like network, luck, etc. in that.
Yeah. Yeah. But I like what you're saying that people often say pursue your passion or make it your work. But actually what you're saying is just go work, do the thing and then connect to your passion. And that feels much more realistic for most people.
I think for the majority of people, there are very few people who can do what they love and it makes money. But actually being free to the idea that you can do something that you don't hate, but you do something, and that something gets you to be able to be closer to all of these things that you love, which I think is a much more genuine authentic path for most people. People can aspire to live that way.
Exactly. And like you said, now you're closer to music charities. What were you passionate about? Like if you could have done something like for me, I could I would have been a soccer player if I could have like if I was good enough. What would you have done if you could have?
Well, it's changed over the years. So when I was younger, I wanted to be a singer, but I realized I'm basically tone deaf and I can't sing for my life.
So that was out the window. I remember choosing colleges and thinking it would be cool to be an FBI agent and fight the bad guys. But that was unrealistic because I'm a tiny woman. Then I got passionate about music and learned I could DJ. You don't need to sing or play instruments to DJ. It's been a very cool thing.
