Guillermo Rauch at Founders in Arms Live: Simplicity, Focus, and the Bet That Built Vercel

Being a founder can be so lonely because it's not like you have a whole team of coaches that are helping you not burn out. So a lot of it is what I think Ben Horowitz says, like managing your own psychology. Because in reality, whether you burn out or not, you could totally go off the rails and just burn out, but also you can be your own coach in the sense of like, all right, it's time for me to unplug. It's time for me to go for a run. It's time for me to invest more in my social life. And I know that it was difficult for me to figure all that out because I was by myself coming from another country. So I appreciate the concern over those kind of things, but also part of what one needs to master.

I met a lot of customers today. So thank you for putting this group together.

I hope so. We should definitely do.

Yeah, the way we talk about it is that we have a web stack, which is all of the tools and infrastructure that you need to build for the web, and then you have an agent stack, which is all the tools and infrastructure you need to build agents. What I've learned over the past year is that you kind of always need both. So people really like that Vercel is becoming the everything cloud. You can come in because you're building a site, or you can come in because you're building an agent. You can come in because this is your first time ever building software, which is what we're seeing with v0, with the Vercel plugin for Claude Code and Codex. A lot of people, some of the people might be in this audience, had never even thought about creating software before and now they can create and deploy on Vercel. So what we've seen over the past I would say probably six months is this massive new onslaught of users who are new to software engineering. So the platform has become the place where you have an idea and you bring it to reality online.

Yeah, interestingly it's the second company that is a serious company. I think for many of us in this room we're serial entrepreneurs, right? So we've been having companies since... I probably had my first company was like 10, selling CDs in my school during recess.

Kind of. The teachers didn't love it. But this is the nature of being an entrepreneur. Like sometimes you rub people the wrong way. But essentially this is my second startup. So I came to Silicon Valley. I was initially working for another startup and one of the things that I noticed is I love building stuff. I don't love working for a boss, so I want to work for myself again. And I also noticed that in Silicon Valley, it's really easy to start things. In many ways, I think in this day and age, it's extremely easy to start things, but the journey has also gotten really difficult and competitive. So, I started a startup, then I sold it to the company behind WordPress. So it was my first exit after quite a few years of iterating, pivoting, trying different things. And then when I was at WordPress, I realized that the world is going to change because of different big waves. One big wave was the cloud. At WordPress, we had our own data centers. And I thought, man, I don't think the next billion companies are going to have their own data centers.

This is 2013.

Yeah. So I started Vercel in 2015, end of 2015, 2016, and I had spent two years at WordPress. And by the way, WordPress had to create their own data centers. They were scaling really quickly and they needed to keep up with their scale. And so what the cloud brought to the world was this idea of elastic computing, that you could have a quick idea. An anecdote that I like to share is in this room you might find the next multi-billion dollar success that everyone's going to be talking about in 10 years. For me, it was the case when I went to my first co-working space and I met the Instagram guys that were my office mates and they had built on AWS. And what I noticed is that as they kept growing, obviously AWS was able to keep up with their growth. So they became quickly one of S3's biggest customers because people kept uploading photos and then they would put them into S3. So that was one of the big things, is that the cloud has this ability to scale with you. And I noticed, I bet on that wave. I didn't know exactly what I was going to do frankly when I left WordPress but I knew okay that's going to be a very important wave. Another one was front end. So when I was at WordPress we'd been really successful with the PHP stack but it was all this monolithic thing. You had to put all of your eggs in one basket in the same runtime in the same codebase with the same sort of limitations. And I noticed that the world was going more towards more interactive rich client experiences, so React was happening as well. And so when I left I didn't know exactly what I was going to do but I had a bunch of intuitions. I knew that there was going to be a potential for something like Ruby on Rails but for this new generation. I also knew that the cloud was really powerful but it was insanely hard. So I think noticing these asymmetries about the world is really important for entrepreneurs.

What I would do is because I was always obsessed with starting something new or coming up with new ideas. I would go out to dinner with people and I would try ideas on them. I remember I was with a couple of friends in Finland and I was like, 'What do you think about this framework idea?' And I go back and that might have been the first time that I articulated verbally what would become Next.js, right?

Thinking out loud and seeking feedback. I think I've been always pretty outspoken about what I want to build, which is sometimes hard to do as an entrepreneur because you think everyone's going to steal your ideas. Like I've been there, done that. But it's really helpful to notice how people react to your ideas or to the things that you're selling them on a Zoom call or whatever.

I think everything is feedback. Even when they notice that, and by the way, I've gotten better at this over the years, but even noticing someone is not following your train of thought.

I kind of upset an engineering manager at Vercel today because I was like, 'Hey, on Friday we're going to have this customer. They're going to come to us and they're going to tell us everything that's broken. And by the way, a lot of what's broken is relating to your area of work.' So it's like setting up expectations. It's like don't feel bad. This is how we're going to improve. But I try to get all of the negative stuff out of someone if I can because one lesson that I learned is that people sometimes might not volunteer all of the bad things about their product experience. Sometimes they might even be a little oblivious about what's painful about their day-to-day. They might tell you like, 'Oh yeah, I love everything about ChatGPT,' but then you start digging in and like, oh yeah, you just got a bad answer and like, oh, that didn't work. Oh, and that was really slow. And so you start identifying opportunities commensurate to your ability to dig.

Yeah. Like I try to be really annoyed about everything at Mercury. Like I think you can get used to things and then you just take things for granted. But if you're just very annoyed about the world, it's actually a useful way of learning and improving.

There's a yin and yang. I think I'm a huge spiritual believer in that, that I have to give you enough of what's bad and also I have to celebrate the wins and I have to bring out the joy of our accomplishments but not so much that we just live in this permanent idealized state of oh everything is perfect. So I think it's also how you give the feedback. I think if you make it very much about like, hey, I don't like this. Maybe if we did it like this, and you make it more about we're creating something together. I don't think people mind that. I think if it's purely critical without proposing a solution or if it's about someone like, hey, why did you do a shitty job of this again? Like no one likes that. One thing that I adopted as a mental model that changed my perception of everything is Jony Ive has this thing about opinions versus ideas. So opinion, by the way, and I preface this by saying all feedback is a gift for me. I have enough thick skin that you can tell me an opinion. I still kind of value it. But there's a superior form of feedback which is an idea. So the example here would be if there's something you don't like about an app, you can say ah this app sucks, screenshot, or you can say this app sucks because so and so and here's my idea on how to improve it. So I think the final form of feedback and the most dynamic and productive workplace would be one that is a free exchange of ideas that are high quality ideas and the more concrete the better.

And I sometimes correct people when they tell me, 'Oh, that's an awesome thing you guys invented.' It's like, 'No, that was invented by HashiCorp, who was a customer for Vercel in the early days, or that was invented by TripAdvisor.' I actually memorized some of the big wins that we've had that are attributable to customers.

Yeah. One of the ways that we try to suss it out as early as possible is by actually building. So can you ship it as an experiment? Can you ship it as a v0? Can you actually show me your idea in action? Obviously, as long as the cost is not too dramatic, by actually giving it shape, people realize pretty quickly that their idea is bad. There's also ideas that we all convince ourselves are good ideas. And we have to face the real world. And so I try to always use the voice of the customer or data to actually contrast the hypothesis with what actually happened. And I really try to use data, you know, I'm not the crazy data science guy, but I try to constantly orient myself around data. So I have all of these really cool Slack workflows where now an agent will give me every week a download of metrics and an analysis of the metrics. And so those are ways in which you can be reoriented. And by the way, sometimes it's not that it's a bad idea, is that there's this other much greater idea that you should be feeding your attention. And so this is actually where data can be really helpful. Obviously, I'm speaking about a company now that has multiple product lines and we're at a certain scale right now. You're probably in the trenches of your zero to one idea and there's different techniques for that.

Yeah, if I were to name the chapters of the company from your question, I would say chapter one was finding focus. That was the whole arc of the first few years of the company. It wasn't finding ideas. I think right off the bat I had some pretty good ideas. So Next.js is obviously a pretty good idea. Maybe I had too many ideas. I was starting to build a lot of other open source projects at the same time. Like some might know, we built a terminal called Hyper and we built a microservice framework and a bunch of other things. So finding focus and narrowing focus, first identifying that from all the portfolio of open source things that we're working on, Next.js was like, 'Holy shit, that one is getting adopted by enterprises and individuals alike. That was going to have a lot of traction.' But the other one is on the infrastructure side, narrowing our focus to do this particular kind of deployment really really well and focusing more on the CDN and the capabilities of distributing these workloads globally. So that required a focus because my prerogative, my intuition was I'm going to build infrastructure for everything. Even this is so crazy because I was watching these two movies of wow Next.js keeps taking off and everybody in the world is using it and it's like the infrastructure can do Next.js but it can also do kind of everything. So it wasn't focused. So it was a process of trimming the forest and finding the thing that would stick.

Okay. So in retrospect, the things that have always worked the best and I teach the company still is the things that were solving our own pain points and had been proven before they kind of got out into the market. So Next.js we built for ourselves. So when I left WordPress, I realized I'm going to use React for everything. And yet React was kind of a pain to even just build one page, one website. You had to almost take a PhD. And so I built it for myself. And then I started noticing that a lot of other people were running into that same problem. It wasn't immediately obvious to me that my problem was relatable. I almost discovered this gem. And by talking to other people and paying attention realize okay like this thing someone was asking me earlier how do you get into a market that's seemingly crowded with a lot of competitors and actually I try not to think about competitors because I would have never shipped anything if I was motivated by competitors. Like think about how many ways there were to create a website. There were actually probably like 20 React frameworks before we nailed the one that had this minimalism and zero configuration and server-side rendering and all of these things. So I think focusing on that pain point but then noticing that that pain point was so relatable and was going to give rise to a gigantic market opportunity. So that's the other thing I always give advice to people is you really have to play in enormous markets. I think the intuition that entrepreneurs sometimes have is that well if I get like 5% of this market, 10% of this market, doesn't matter what the market size is. But what I think we really benefited from is that we entered the, you know again from a wedge, Next.js became a wedge into what has now become the entirety of the cloud for us and so we can keep dreaming about.

Some people said, many people said.