Someone shared a framework recently which was lowercase P pivot or uppercase P pivot, and both are useful tools to have in your toolbox. Because I feel like when we built Next and the early version of Vercel, we did like a small P pivot on focus and trimming down bad ideas and leaning into certain use cases and certain infrastructure. But it can also be useful to just like, hey, like this thing that I went down this path, the assumptions were completely wrong. Start over. You basically have to get comfortable with pivoting. It's a thing you're doing very often. I also, I'll emphasize, you really have to think, try hard to think ahead while staying very focused on like the most imminent thing, because a startup that's venture-backed is a story. It's like the Apple 2 to the Macintosh to the… There's always something ahead, and sometimes you can pull it forward.
So we'll do questions. Try not to pitch your company. It's boring. Like make your question something that'll be interesting for everyone and we can all learn about it. All right, we'll just pass it around.
Where hold it like quite close to your mouth. All right. I want to follow up on that. You know, like we're in this gold rush era where a lot of people are trying to, like, where people are kind of incentivized to stab each other in the back or throw some people under the bus. And on Twitter there's like some YC startup copy another YC startup or whatever it is. So I want to ask about like how do you guys construct your own ethical framework, you know, after being here in Silicon Valley for over a decade now.
That's a great one because there's just so much garbage on X coming from startups. Maybe it's always been the case, but I see what you're seeing, very low quality launches, people stealing shit left and right. I've always believed in this idea of play long-term games with long-term people. I do think it pays off to just conduct yourself with great integrity, and you might not get the highest number of likes, but you got something out into the world that's high quality to you and adds value to the world. And so I'll take that. This goes back to the importance of feedback. It's actually really useful to for example tweet or launch something and nobody gives a shit, because you're getting useful information. You know what sucks is you created shit and then you paid a bunch of bots to retweet your shit, and now you're just lying to yourself. You're lying to other people. You might be SBF in 5 years. You might be wearing orange jumpsuit.
So I might just rather do the high integrity thing for as long as possible. Think long term, and I really really appreciate getting signal. I don't want people to be yes-men, or like, oh cool I have a lot of followers so therefore I have to get a lot of success, that kind of thing. I really just want to get true signal from the world.
Yeah, and I think also you want to build it into your company and actually be explicit about it. I think in your values or framework or your mission statement. We used to have a value at Presto which was we want to feel proud of our work, and I think that's a big standard. You know, we don't want to take shortcuts. We want to feel proud, and I think it's true personally too. You want to feel proud of yourself, and you want to feel like you earned it and you earned whatever success you got. So when you see other people taking all sorts of shortcuts, I mean, that's on them, and it is a short-term thing as GMO was saying. I think they're not going to feel proud of themselves the next day and it will come back to bite them. So just focusing on that as a north star.
I will say one thing that always annoys me about the world is sometimes assholes and unethical people do win. I would love to say they never win, but they do win. But at the end of the day, you have to just be true to yourself. I would hope that you put something good out there and you get good outcomes from it. And you know, there will be assholes, and I don't think you should lower yourself just because other people are behaving like that. All right, next question.
I think you guys talked about that you get a lot of signal from your customers and that's how you built a lot of business, like I think you mentioned about TripAdvisor and a couple of others as well. I'm just thinking, have you also gotten a lot of advice from investors as well, and a lot of them would have given you a lot of signals and now you know that what you want to talk to an investor about and you can get a better revenue multiple. How do you try to balance those scenarios because now you guys have become billion dollar companies? You know exactly what to say and you can get a better revenue multiple, so not optimizing for that rather than optimizing for what customers are saying. So I think it's a balance, I think you talked about short-term pain and long-term optimism. So just want to understand how do you guys play on that kind of scenario?
I guess it depends what they're saying. I think investors can sometimes point you towards like, hey, is my idea fundable? Am I is the market big enough? There's definitely some signal to be taken there. I think it's very rare for them to give you startup ideas, like go build this other thing. So you should learn from it, but I don't know if it's like revenue multiple maximization as an equation to aim for. I think it's probably more like okay, what does it take for this idea to be fundable? And if you talk to 20 investors you'll get some sense of it, assuming you really care about getting investment, you eventually need it to potentially be fundable. But I don't know if I'd drive actual startup ideas from it.
For me, I've gotten amazing advice from investors. The problem is selecting which. I can look back and I can wow, in that conversation with that guy he was absolutely right, and then I can also look back on some of the very early VC conversations, oh my god that guy was totally wrong. What I try to do is try to understand where is their idea coming from. For example, something that good investors can do is they can almost be like not your sales rep, but they can be your user research person that is out there in the world in the places where you're not spending time, hearing things about your company or trying to pitch it and recommend it, and they can give you the feedback of like, oh yeah, I tried to introduce this company to your thing and they said, oh, that's a terrible idea, I'm doing X. So I've gotten feedback like that. It was really good. I remember an investor came to me like, okay so I tried to pitch this company on your thing and they just didn't feel like it was differentiated from what they were doing. I remember thinking that conversation had a lot of impact on me because I was like, yes, the technology at that time was a little too generic. So it's not that that conversation immediately turned me into action and changed the future of the company, but I do remember conversations like that that were like, and sometimes hard conversations were like you're getting some bad news or someone that's giving you money is also not super excited, but if you're willing to listen, you can get something valuable out of it. There's also bad investors that get so impatient and they need to see things tomorrow because they feel like their money is not going to go anywhere or they get jealous of other investors. So it's a mixed bag for sure.
Yeah. I think just the one other point on that. There's a couple things that I've learned from investors, most of which was not relevant to our business. But I would say one thing I did learn from investors is how to sell to investors. You know, like GMO spoke about earlier, you can read their body language and what they're reacting to, what they're reacting positively to and what they're reacting negatively to. So over pitching to a number of investors you actually end up getting pretty good by the 50th or 100th pitch. That's why you always should structure your least favorite investors up front. It's hard to do that, but you do get better just by reading their body language. Sometimes they don't tell you in words, so you have to read body language because they're programmed to only tell you happy things. Very few will actually give you really good feedback. And then the other thing, as Gos mentioned, is industry knowledge, what's happening in industry, which company's doing this. You have to be really careful about that though, a lot of investors will have the wrong impression about things. They'll say, oh this company failed, they did the same thing you did and they failed two years ago, and they won't have any context as to why they failed. They'll make up something.
Thanks guys. How do you think about the pivoting stuff, like your decision framework for pivoting from one idea to another? Did you guys pivot on the way to become this successful?
I've done a lot of pivots in my time, so maybe I can speak about this. I think I'll give you an example of a pivot from Presto. We made this tablet for restaurant tables so guests could order and pay from their seats. That business was doing really well in 2019, we tripled in 2019 and we thought this is going to conquer the world. And then of course in 2020 what happens is a lot of the restaurants get shut down. So the whole product's existence is totally for naught at that point. But I think it's a forced pivot, and a lot of pivots are like that because your current business isn't growing as fast. And I think to GMO's earlier point where he was doing multiple ideas at the same time, that's always something you should have at the back of your mind. You should always be thinking about different ways you can approach a problem. Even if you have a little bit of doubt about your current path, I think also CEOs even at some scale need to be planning for growth three years ahead. So you can't only be planning for this year's growth or next year's growth, you need to be planning for three years ahead. So in that case, we just pulled out an idea that we were already planning for three years ahead growth, which turned out to be voice AI and computer vision. We started working on that in 2018 because we were like, oh by 2022, that will be our next growth engine. So we just pulled that forward. I think in a case where you have some revenue and you're thinking, you know you're already planning to be a multi-product company, you can do that. Now there are startups which are very early stage where their initial idea has no traction at all and they have to pivot. I think it's not that different. You just need to have five different ways of approaching the problem. You have plan A, plan B, plan C, plan D. If plan A doesn't look like it's promising, don't spend too long on it. Just keep moving forward.
Someone shared a framework recently which was lowercase pivot or uppercase P pivot, and both are useful tools to have in your toolbox. Because I feel like when we built Next and the early version of Vercel we did like a small P pivot on focus and trimming down bad ideas and leaning into certain use cases and certain infrastructure. But it can also be useful to just like, hey, like this thing that I went down this path, the assumptions were completely wrong, start over. And I think sometimes this happened with new product lines, some things that you might not even have seen because we also now have the privilege of being able to roll out products to smaller audiences and then kill them in the cradle. It's dark, but you basically have to get comfortable with pivoting. It's a thing you're doing very often. I also, I'll emphasize, you really have to think try hard to think ahead while staying very focused on like the most imminent thing, because a startup that's venture-backed is a story. It's like the Apple 2 to the Macintosh to the… There's always something ahead and sometimes you can pull it forward. And one last point, Lyft has one of the best pivots of all time. In that case, the original idea was carpooling software, started off selling to consumers, that didn't quite work, so then started selling to universities. Move from B2C to B2B. That business raised a little bit of funding but it wasn't growing like gangbusters. But then a competitor emerged that kind of figured something out, which was Uber. Uber kind of figured out this black car hailing, and they looked at them and they're like, hey, this is something that we can actually streamline off. And then Lyft's big innovation was peer-to-peer ride hailing, so it was a spin on what was already working. In that case, it was a competitor that inspired the idea. So in some cases, the inspiration can come from anywhere.
