Billion dollar failures, and billion dollar success | Tom Conrad (Quibi, Pandora, Pets.com, Zero)

Transcription for the video titled "Billion dollar failures, and billion dollar success | Tom Conrad (Quibi, Pandora, Pets.com, Zero)".

1970-01-01T02:45:21.000Z

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Introduction

Tom’s background (00:00)

There's this belief that everybody needs to be a founder. I think in some ways our industry would be much better off if there were fewer founders. I think there's an entire category of smart, creative, hardworking, talented, borderline visionary people who can raise that $2 million seed and go off and build some stupid company that's never going to go anywhere. That would be so much better off finding a team that needs their skill set and working on a problem that has a mathematical formula that's going to win on any metric, whatever metric you care about. You want like the acclaim of your peers, you want financial reward, you want outside impact on culture, whatever, whatever the thing is, it gets you out of bed every morning, you can achieve that in collaboration with others. You don't have to be the person that raises the seed round. Today, my guest is Tom Conrad. Tom was an engineer at Apple, CTO of Pandora, which he helped take from zero to 80 million users. He's also VP of product at Snap, where he's the right-hand man to Evan Spiegel for two years. He's been on the board of Sonos for over seven years. He's also part of two infamous product failures, Quibi, where he was chief product officer, which raised over $2 billion and died less than a year after launch. He was also a senior engineering leader at Pets.com, which famously went from nothing to a public company to completely out of business in 19 months. Today, Tom is the CEO of Zero Longevity Science, which is on a mission to extend the lifespan and the health span of the human race. In our conversation, we dig into what Tom's learned from these famous product failures, also what he's learned from the many product successes. Tom also shares what he's learned about how to pick where to go work and what to avoid, how important understanding the math formula of the business model is, also lessons on burnout and health and leadership, and contrarian corner. With that, I bring you Tom Conrad after a short word from our sponsors. This episode is brought to you by Coda. You've heard me talk about how Coda is the doc that brings it all together and how it can help your team run smoother and be more efficient. I know this firsthand because Coda does that for me. I use Coda every day to wrangle my newsletter content calendar, my interview notes for podcasts, and to coordinate my sponsors. More recently, I actually wrote a whole post on how Coda's product team operates and within that post, they shared a dozen templates that they use internally to run their product team, including managing the roadmap, their OKR process, getting internal feedback, and essentially their whole product development process is done within Coda. If your team's work is spread out across different documents and spreadsheets and a stack of workflow tools, that's why you need Coda. Coda puts data in one centralized location, regardless of format, eliminating roadblocks that can slow your team down. Coda allows your team to operate on the same information and collaborate in one place. Take advantage of this special limited time offer just for startups. Sign up today at coda.io/lenny and get a thousand dollar startup credit on your first statement. That's c-o-d-a dot i-o/lenny to sign up and get a startup credit of one thousand dollars. coda.io/lenny. You fell in love with building products for a reason, but sometimes the day-to-day reality is a little different than you imagined. Instead of dreaming up big ideas, talking to customers, and crafting a strategy, you're drowning in spreadsheets and roadmap updates, and you're spending your days basically putting out fires. A better way is possible. Introducing Jira Product Discovery, the new prioritization and roadmapping tool built for product teams by Atlassian. With Jira Product Discovery, you can gather all your product ideas and insights in one place and prioritize confidently, finally replacing those endless spreadsheets. Create and share custom product roadmaps with any stakeholder in seconds. And it's all built on Jira, where your engineering team is already working, so true collaboration is finally possible. Great products are built by great teams, not just engineers. Sales, support, leadership, even Greg from finance. Anyone that you want can contribute ideas, feedback, and insights in Jira Product Discovery for free. No catch. And it's only $10 a month for you. Say goodbye to your spreadsheets and the never-ending alignment efforts. The old way of doing product management is over. Rediscover what's possible with Jira Product Discovery. Try it for free at Atlassian.com/lenny. That's Atlassian.com/lenny. Tom, thank you so much for being here.


Experiences, Lessons And Carrier Path

Landing a gig at Apple (04:40)

Welcome to the podcast. Thank you. It's so fun to get to be a part of this. I thought it'd be fun to start with a story about your time at Apple and you building this now very ubiquitous feature of dragging and dropping something into a folder, which is how you tweet about or talk about it at a talk. And the fact that it's still around. Can you just share that story and maybe a lesson from that experience that you've taken away? Sure. So let's see, I was 15 years old when the Macintosh came out. I remember really clearly my entire teenage years. Like all I wanted to do was to move from Columbus, Ohio to Cupertino and work for Apple. And my heroes were that team of people that had written their signatures on the inside of the Macintosh. When you cracked open the first Macintosh case, you would find the signatures of the 20 people or so who worked on the Mac. And that was my only ambition, truly. And I mean, this was a period where no one wanted to work for Apple. I mean, that wasn't a thing. And it seems like maybe a little obvious today, but it wasn't an obvious ambition at all back then. So anyway, I went to college. That's all I wanted to do. Studied computer engineering at the University of Michigan. And as we talk about my career, it's just over and over and over. I'm going to say an incredibly lucky thing happened. And the first incredibly lucky thing that happened for me in my career probably was that the University of Michigan happened to be a place that Apple recruited from. I didn't know that when I chose the school, but it made it reasonably easy to connect to a hiring manager at Apple. And I wrote an actual letter and put it in an actual envelope and put it in the mail and got an internship and drove out in my dad's Pontiac from the Midwest to California, spent a summer interning. And my last day of the internship, I was thinking about really what I wanted to do when I came back, hopefully came back to Apple after I graduated. I had worked on a product that became like shipped. It was called the Quick Draw GX. It was an earlier kind of second-generation rendering system for the Mac. I'd been that team's intern for the summer. But what I really wanted to do was I wanted to work on the Finder. Like this is the only thing in the whole world I really wanted to do. And so I went and found Ron Lichty, who is the manager of the Finder team, and said, I graduate in 10 months. I'd love to be a part of your team. And I think he was kind of like, why are you coming and talking to me now? You're literally going back to Michigan tomorrow. So I go back to Michigan. In May, the phone rings. And Ron says, the college recruiting department just told me that I have a college hiring rec. And if I don't use it by tomorrow, I lose it. So he's like, I can't even interview you. You can't meet the team. But you're basically a freebie for me. So do you want this job? So just an insanely lucky moment, got this job. So yeah, I get to Apple in the summer of 1992.


Pioneering the blinking folder design on iOS (07:41)

And I have a laundry list of things that I would like to do to make the Finder more usable. And I remember sitting in Ron's office and saying, you know, you know, at the grocery store when like you're carrying bags of groceries out, like the door is automatically open for you. I think like the Finder should do the same thing when you're dragging an icon around and you want to put it in a folder, you should be able to kind of hover maybe over the folder icons and drill down into the file system to get to where you're going. And then when you drop the file, all of the folders that opened up between you and your source and your destination would close for you. Ron thought that was a fine idea. And so that was the way Apple worked in those days. I just went off and started coding that up. And I got to the point late one night, two in the morning, I'm at Apple, no one else was there, where I needed some kind of animation to indicate that the folder was about to open. And I'm certainly not an animator, and I certainly wasn't going to do anything thoughtful in the middle of the night. So I just wrote some code that blinked the folder, like selected, unselected, selected, unselected five times. And I thought, oh, I need one of the really talented visual designers to do something much more interesting long story short Apple finally shipped that feature like four years later sat in the first-grade repository ever while we did other things and when it shipped four years later it blinked five times. Roll the clock forward six or seven years, Mac OS X comes out, entirely new finder rewritten from scratch, no spring-loaded folders anywhere to be seen. People complained about it. It got reimplemented. So all of the code, brand new, folder blinks five times when you hover over it. Roll the clock forward another decade, iOS comes along and they added folders. And when you drag an icon around, it blinks a few times. I'm not sure the point of this story is other than maybe it's something about, I think we all do this as designers and product people. We take these shortcuts that we think that we'll go back later and clean up. And sometimes, I mean, it's literally been 30 years, that little design detail lingers three implementations later. And now it's just a part of the way that these Apple products work, pretty bizarre. As you were talking, I'm on a Mac right now recording this, and I just did it just to make sure it's still there. And it is indeed still there. I think it blinks three times and then just opens up for you. There you go. If only engineers got royalties on features they build that continue to live on in a product. Okay. I'll tell you like just one other little thing to center you in time about what the Finder was like in 1992. We didn't get royalties, but our names were in the about box. Like you would go to about the Finder and like the seven of us, there were seven engineers at Apple that worked on the finder, like our name, which our names would scroll by, you know, the finder copyright 1992, yada, yada, yada, one name after another totally different era. It feels like you got kind of what you wanted with the name scribbled on the motherboard. For sure. I've gotten a lot of the things I wanted as a kid.


Advice on choosing where to work (11:04)

So kind of along the same lines, I want to talk a bit about having gotten a lot of the things I wanted as a kid. So kind of along the same lines, I want to talk a bit about picking where to go to work. Clearly, you had a sense you wanted to work at Apple. Over your career, you've landed at a lot of really successful places. You've also landed at a lot of very famous failures that we're going to talk about. What advice would you give people for helping them pick where to go to work based on your experience? When I was a kid, my ambition to work at Apple was entirely about the product. And so probably that version of me would say, find a product that you're passionate about and go spend your time and energy on that thing. Pretty quickly, you learn that an awful lot of your development and day-to-day satisfaction really comes from the people that you get to collaborate with. Can you learn from them? Do you like them? Do they challenge you in the right ways? Do they give you latitude in the right ways? It's so much about not just what, but who. And so for a very long time, my advice would have been entirely in the category of like, find something that you love with people that you think are amazing and the rest will kind of take care of itself. And interestingly, like I have been lucky enough to have some things that were successful, you know, on the metrics that get talked about the most: big audiences, big financial return, etc., etc. And I've also worked on some things that were like, you know, really notable disasters. When I look back on my career and think about the things that I've done, my professional satisfaction is not well correlated with those sort of external metrics and very, very coordinated with, you know, did I love the thing we were building and do I love the people I was working with? Following the thread of the people, I think one of the hardest things is really knowing what the people are like until you join.


The importance of trusting your gut when it comes to people (12:43)

As a chief product officer or VP of product, you spend a lot of time with the team. Most people don't. They have an interview and then they're like, "All right, I gotta make a decision." Do you have any advice for how to help people get a sense of if the people are the kind of people they want to work with? I think people are really good at this. I mean, every single time I've taken a job where it turned out that I was working with people who had a different set of values or working styles than I had, I knew. And you tell yourself that, at least in my case, I tell myself a story about why the thing I suspect, you know, might be the case, you know, isn't the case. But, you do this in your personal life all the time, right? You meet people out at dinner. So you get seated next to them at some industry event or something. And sometimes you come home and say to your partner, "Oh, my gosh, the person next to me was just the worst." And then sometimes you're like, "I think I made like a permanent lifelong connection with this total stranger who just happened to sit next to me." Like, you know. It's like a very simple piece of advice that I think people don't fully appreciate is just like, trust your instinct, trust your gut. Just pay attention to what comes up when you're around people at a certain company. Okay.


Lessons from failed ventures (14:05)

So you brought up this phrase of notable disasters, and I want to talk about that. You worked at two of the most famous notable disasters of product companies, pets.com and Quibi. I think it's really rare someone sees the inside of so much hype and then such a fall at a company. And so I just want to spend some time in these two areas. And maybe the way to set it up is just what's a lesson you took away from each of these two experiences that you've taken with you to future work and maybe advice you share with people. Probably the biggest lesson. It's not really about the specifics of the business. The biggest lesson really is these things make you better. They, in some instances, actually, I think in both instances, they became the specifics of the business, the biggest lesson really is these things make you better. In some instances, actually, I think in both instances, they became kind of dominoes that opened doors for me in my own ambition and my own sort of professional life that maybe just wouldn't have opened at all if I hadn't gone to those companies and learned those things and had those experiences. And frankly, even in the case of Pets.com, like even the high-profile nature of it, I could have worked at, I could have worked at, you know, one of a thousand e-commerce websites in 1999. And when I went on to some subsequent job interview or something and talked about my experience, were like, I would never have heard of the thing that you worked on, but everybody certainly heard about pets.com. It's a pretty funny example too, of how some struggles are timeless, you know, that was 2023, 24 years ago now. And while as a leadership team, we made, I'm sure all kinds of mistakes. One of the things that happened was that there were three kind of overfunded pet e-commerce sites. And we all raised in excess of $50 million, which is a tremendous amount of money now, it was a tremendous amount of money then. And we all thought it was a zero-sum game and that we, as one player started to spend on promotion or to spend irrationally on national broadcast television advertising, we all did. And it became this kind of unwinnable arms race. So there was like a, there is like a, I think a fundamental lesson about the, like the, you know, having an excess of, of investment can be its own albatross or, or, or lead you to make decisions that maybe would be unwise. And then of course, it's just like, you know, timing is really important. You know, Chewy is an online pet store worth $9 billion today. They were a private company and bought by PetSmart and then spun back out. But when they were bought by PetSmart, they were acquired for $3 billion. You know, the biggest e-commerce acquisition of all time. And while I think it's probably unfair to compare Chewy, who executed exceptionally well over a decade, grew their business brick by brick, and turned it into something really remarkable to Pets.com, which was in a very, very different moment in time and tried to go to market in a really different way. The critique that is often leveled at Pets.com, or at least at the time, was like, this is just a stupid business. They're shipping dog food around. You could never make that work. And that's just wrong. You absolutely can make it work. Probably can't make it work when 80% of the country on the Internet is still on dial-up. It's really, really early.


Why and how Pets.com shut down (17:32)

I saw a stat that I think you shared somewhere that you took Pets.com from nothing to a public company, to completely out of business in 19 months. Yeah, I think that's about right. The other thing that's forgotten in the tale is that we actually didn't go bankrupt. We shut the company down and returned the remaining balance to the investors, which no public company had ever done before. And the leadership team just reached the conclusion that given the way market conditions had evolved, there was just no way we were going to be able to get more capital into the company. And it was a company that required additional investment to get to profitability. And so it was better to sort of wind down early, take the money that we had in the bank and get it back to investors than to just spend every last penny on what, you know, was sort of a fruitless attempt to salvage it. Did not know that. Let's talk about Quibi.


How Tom’s experience at Quibi renewed his passion for building (18:30)

What went wrong there? Do you think there was a path to Quibi having worked out? Any big lessons that you took away from that experience that you bring with you? The kind of miraculous thing about Quibi for me was it relit my enthusiasm for the industry for doing this work. I had left in, I think it was December of 2018. And I thought that maybe I was just done making software. I had done it for a really long time. I'd done it for like 25 years or something. And I had changed a lot. The industry had changed a lot. And I thought maybe I just didn't have the same passion for it that I had a decade before. It also seemed like maybe it'd be fun to have another chapter of my life that was just completely different. And I had a whole list of things that I thought I might want to do. I mean, they were really, they're kind of ridiculous. It's like, maybe I want to be a pastry chef. Maybe I want to be a landscape photographer. Maybe I want to, you know, learn to make bad music to put up on SoundCloud or something. And really the only thing they had in common were they were all things that I knew nothing about. People would be like, "Oh, you think you might want to be a pastry chef? Do you like to bake?" And I'd be like, "No, I don't know anything about baking." "Oh, you think you might want landscape photography? Do you take photos?" "No, I don't take photos." But I was kind of committed to the bit, actually to the point where when TechCrunch interviewed me about my departure from Snapchat, I was like, "You know, I'm out. I'm going to do something else entirely." That story is very much out there. But a few months after my last day at Snap, I got a call from Meg Whitman and Jeffrey Katzenberg who were starting up, it was called New TV at the time. And, you know, the pitch was, we're going to try to take the best of mobile and Silicon Valley and consumer tech and sort of weld it to the best of sort of Hollywood style content production to build something like completely bespoke and purpose-made for consumption on the phone. They were looking for both technology leadership and product leadership and wanted to know if I was interested in one or both. And I took the meeting, even though I wasn't really taking these kinds of calls from anybody. It just seemed like who's going to pass up the opportunity to have lunch with the two of them. So I listened to the pitch and politely declined and told them that I was going to be like a pastry chef or something. And we kept doing that every couple of months for like seven months. We'd go to lunch. They would give me an update on the progress they were making, and I would decline the invitation to get involved somehow. And then late in that year, I went to lunch one more time, and Meg explained that they brought on someone to lead technology, and they brought another person to lead product. And both of them, for really truly for reasons that are completely disconnected from Quibi itself, both of them had left after about six weeks. And Meg's like, "We've raised all this money and we've told the world that we're shipping this product in about a year. We got an awful lot to do. And I really could use some help. And I would consider it a personal favor if you would come and spend just a couple days a week helping." She's like, "I'll continue to look for someone who actually wants the job. But it would really be great if you could help me get this off the ground." And my wife is a freelance writer, marketing strategist, and loves her life as a freelance contributor. And she's like, "You should do this. Why not? It's two days a week. It's just a few months. What's the worst thing that could happen? Maybe you'll like it." And I'm like, "No, no, here's the thing that will happen. I won't do it two days a week. It will immediately be three days, then four days, then five days, then six days. Like I just know myself." And she's like, "No, she's like, you know, just on Wednesday night at six o'clock, close your Quibi laptop and be like, all they're paying me for is for Tuesday and Wednesday. And then open it back up on Tuesday morning. Like that's all you've got to do." Well, you know, she's right about most things, and she's wrong about this. I fell deeply into it right away. And it was just so fun to get to build a team from scratch and to design and build a product from scratch and to take advantage of all of the sort of modern software architecture stuff that had come into being over the course of the 15 years since we had started Pandora. And I'm embarrassed about some of what happened with Quibi for sure, but I'm super grateful for the experience because I just really fell in love with the industry again and was reminded of just how rewarding it can be to build something and to try to put it out there, even if you stumble pretty mightily along the way. Is there something that you took away from that experience that taught you what to try to avoid, what to try to pull towards? I think I sort of misunderstood or misjudged companies sometimes by thinking about them really focused on the product execution. You know, kind of if you find an interesting problem that people, you know, people care about and you solve that problem in a really beautiful, elegant, delightful way that's 10 times better than anything else that they can get in that same space, they'll tell their friends and all the rest of it will take care of itself. And so that was always my ambition. Find a thing that I cared about building, do a great job building it in a really delightful way, go really deep on listening to people and their feedback and iterate your way to success and sort of breaking through that membrane that we all strive to get across the, you know, kind of really great word of mouth. But I think the thing I've come to better appreciate is that companies are also kind of like they're kind of a math problem that describes how you take, you know, investment and pour them into the equation and out the other side comes returns on some time horizon. And yes, there are variables in that equation that are influenced by the product that you build and all of the little details and decisions that you make about making that product great. But if the equation is fundamentally broken or a big swing in and of itself, no amount of like iteration and execution can get you out of the failed outputs of the broken equation. And I think, you know, Quibi made a bet that you could build an entirely bespoke content library that was sufficiently scaled to get people to subscribe and retain for a couple billion dollars. I mean, it was a huge amount of money. But, you know, we made 70 shows in 18 months, which is like more content than all of the major broadcast networks combined made in a single year. So it was a pretty major accomplishment. And we made a bet that we would augment those sort of episodic and serialized or Hollywood style shows with a bunch of daily content that we produce at the level of like network television, nightly news and so forth. That would be an alternative to some of the sort of daily content that you might otherwise get on YouTube. And that was going to be about a third of the content spend. One like super interesting thing that no one talks about is that all of that content was designed to be made like day of or day before it aired. So there was no back catalog of it. And it was all designed to be shot in these professional studios that we built out. And it was really expensive. Like I said, it was like a third of the investment we were gonna make in content, maybe half, almost half the investment we were gonna make in content. And we launched two weeks into COVID, and we couldn't make any of that content except literally in the garages of the hosts' homes. And so we had this thing that was supposed to seem like really set apart from YouTube that literally now was being made exactly like YouTube content, which is sort of like self-produced at home with very little support infrastructure of Hollywood. Now, you can argue, I mean, I think the content on YouTube is really, really exceptional in this category. And maybe we were never going to do better than that. But I think what was really fundamentally broken with Quibi was that the actual foundational equation of can you make enough premium content that's totally bespoke and made for the service and takes advantage of the unique nature of the phone. Is that enough content to get people to sign up and retain? And can you do that for a couple billion dollars? And I think the answer is no, the library has to be much, much bigger. And you have to have like any company, you have to have sufficient time and energy to iterate on the content format itself because we were really, our roadmap really wanted to innovate on the content format itself. And so I think part of what happened is pretty quickly it became clear that the math was just wrong. It wasn't going to take 2 billion. It was going to take 6 or 8 or 10 billion. And the risk reward profile of betting 10 billion on the format was just more than anyone can stomach. Wow, I really like this metaphor and this mental model of the math formula of the entire business and thinking of it that way. I knew COVID changed the way people consumed content and that hurt Quibi because I think it was meant to be on the go, like sitting at home where you could watch anything you want, but also the fact that the content couldn't be made as well as you were hoping to make. Yeah, for sure. Yeah.


Takeaways from Quibi and why it ultimately failed (28:48)

As a CPO, one of the biggest challenges is pushing back, trying to convince the founders of their mistakes, convincing them to do what they want and just powering through it and dealing with it sometimes. I guess, is there anything you think you could have done looking back or is the math formula set up for failure from the beginning? And it's probably just not going to work out almost no matter what you did? One of the bets was that we weren't going to just use the apparatus of Hollywood to make the content. In part, we were going to use the apparatus of Hollywood to market the content. So, you know, Jeffrey had recruited this incredible Rolodex of the world's, literally the world's most famous celebrities to make shows for Quibi. We kind of had like everyone either made something for launch or was going to make something. And like part of what they were going to do is turn up in culture and talk about their shows. I mean, we've heard a lot in the last six months about how hard it is to market movies because the stars can't go out and talk about the movies during the strike. There was this theory that you could apply the marketing technique of Hollywood to get 20 to 30 million people into the theater on opening weekend for Quibi. And that was always like a very audacious take, I thought. Like, you know, Uber has all the money in the world to experiment with paid user acquisition, and they're not consistently a top 10 most downloaded app in the app store. But the theory of Quibi, like the math of Quibi, did require us to land in the top 10 from day one and stay there forever. Like the model would have worked if we could do that. And to the Hollywood marketing apparatus, the numbers that it takes to get there felt kind of small. You know, if you can get 20 million people in to see Shrek on opening night, new IP, surely you can get them to take their phone out of their pocket and download this thing and start a free trial. Now, those of us who have spent our life in Silicon Valley making software and really, really tried to get people to show up and download new IP in large numbers, know just how hard that is. So maybe if I critique my own contribution to the math equation, maybe I should have beat the drum a little harder about just how unlikely it was that we were going to land the kind of distribution in month one that the model sort of required. If I had to go back and do it again, I think I would spend maybe more time investing in illuminating that aspect of the digital universe. That is such a good takeaway of just showing the leaders, here's the data, here's the assumptions that we're all betting on, and do you believe this can happen?


Failing is okay (31:42)

And they probably would have said, "Yes, this will happen. I'm so confident." What made it hard was it wasn't structurally impossible. If you had to be bigger than any app that had ever been made, then you could probably make the case it's impossible. Like, if you had to be bigger than any app that had ever been made, then you could probably make the case it's impossible. But since you only sort of had to land in the top 10, like you couldn't quite say it was impossible. You could just say it was highly improbable. And maybe one of my mistakes was, I guess, I imagined that we would launch. And when the likely thing happened that we, you know, got millions of people to download the app, which we did, and then that would be when we inevitably struggled to, you know, retain those users in at, you know, at high percentages. I mean, we retained it sort of what I think of as like a good industry starting point, but we weren't setting any records on retention. I just imagine that what would happen next is like the thing that happens in all young companies. You would iterate, you would like grind on the funnel until a year later, two years later, six months later, whatever it is, you figure the formula out to get people in and get them to stay and get them to retain. And what I didn't appreciate was just how quickly you go back to the foundational math and then the math really says you just can't. You can't spend two years iterating your way on, you know, optimizing the funnels like you would in a startup that had a different cost structure, like in a world where you have to spend, you know, a billion dollars a year making content, you just can't afford to not be a hit. I think it's also important to just remind us it's okay for these things to happen. Like people take a bet. As you said, we're going to try this thing. Here's our bet. Here's our experiment. We're betting on this sort of format in this business. We're going to raise money from investors that know they might lose all their money. And it sometimes doesn't work out. It's part of the game. It's certainly painful to take money from investors even if they know what they're doing and to not get them a return. I feel a real responsibility to investors to do better than we did at Quibi. But yeah, I mean, there is a risk-reward thing that goes along with these investments and part of the reason I get, you know, all the riches on the upside is that they're gonna bet on some Quibis along the way too. So as you were talking, you said that it was called New TV and that sparked a memory and I searched my email and I actually got an email from a recruiter in 2018. We just kicked off a very special executive opportunity, the CPO at New TV, New Venture in Los Angeles with Jeffrey Katzenberg and Meg Whitman, raising a billion dollars working with top talent. Are you interested in exploring this opportunity? Lennie, Lennie, Lny, you, your story could have been so much different. You could this could have been Thomas podcasts. Let me tell me about what happened. It could be I would say I would take that trade. I don't know, there's pros and cons. I even sent this whole PDF, a TV in your pocket, new TV. Amazing. All right, I'm gonna read through this and see see what they pitched back in the day. Okay, let's move on to things that worked out really well. Let's call them notable successes.


Tom’s career at Apple (35:04)

Other products you worked on that worked out great? So I'll list a few of them, and maybe what might be helpful is just, we'll just go through each one and share what you took away from that experience, lesson you learned from working on those products. And the ones that come to mind for me are Snap, Pandora, and Apple, if we want to go there. Also, you built - I don't know exactly what you did there, but you worked on "You Don't Know Jack," this game that I loved. I think if you're an elder millennial, you're just going to like, "Oh my God, I love that game." I just - I don't even remember it exactly, but I just remember the visceral feeling of playing that game, and it was so much fun. So that's cool. I didn't know that you worked on that. And then there's also Sonos, which are on the board. So whatever order you think might be most interesting, just going through those and what did you learn from that experience? I worked at Apple in the interval where Steve was gone, John Skelly, that kind of period. So System 7, System 8, Power Macintosh, like that whole era. And we were doing a lot. We shipped a bunch of great hardware. We transitioned the company from Motorola 68,000 CPUs to the PowerPC architecture. But particularly in that transition, we really struggled to ship consumer software features. I mentioned that I wrote three-load folders and some other consumer features in my first six months at Apple, and they shipped four years later, actually after I'd left the company. I was a little surprised they were still in the software repository even, candidly. But I'll tell you that one of the things, culturally, about Apple in that moment was at least I felt like a person was really rewarded if they could make a kind of broad contribution across functions. You know, a talented software engineer, but also a thoughtful product designer, and maybe also had interesting input on product marketing. That you could build a really great reputation inside the company by playing all of those positions a little bit day to day. And so when I left Apple after four years, I look back on my time. I didn't have as much software as I had hoped. And I felt a little bit like a professional gadfly. I was six miles wide and a centimeter deep. And I went to work for this company called Berkeley Systems. In addition to You Don't Know Jack, they made the Flying Toaster screensaver, if you remember. "Oh my god. You remember the 90s? How could you forget that?" And when I met them, they were kicking off this game development for this, this trivia game. And we're looking for someone to lead the technical team. And so I joined as technical director for the You Don't Know Jack franchise, managed a team of engineers, and it was a completely different culture than what I was used to at Apple. It was certainly the case that I was welcome to weigh in on the game design or the marketing or some other aspect of the deliverables, but my job was to build the software on time, you know, with high quality, period. And like, if I did those things, I'd be rewarded. And if I didn't, like, I would not be successful. And no amount of insightful feedback on the gameplay or the packaging or whatever else I might want to do was going to benefit me and my career at all. And it was such a blessing to be forced to go deep on something because I spent a lot of time developing chops as an engineering manager, but I also wrote a ton of software. And that's really honestly when I became a software engineer. My college education was insufficient to get me there, and the amount of software I wrote at Apple was insufficient to get me there. But I came out of my Berkeley Systems You Don't Know Jack experience feeling like I could really hold my own technically in a way that just wouldn't have happened.


Lessons from You Don’t Know Jack (39:11)

And so I do think that there's something to be said for a culture where there are swim lanes and people are encouraged to be really, really exceptional in their lane. So I feel really lucky that I stumbled into the United Jack when I did. It was also the first thing that I worked on that had awareness for a couple of years. I mean, it's crazy. They're still making sequels. It has been nearly 30 years. There are versions of You Don't Know Jack that are in all of the stores, the PlayStation store, and the Xbox store in the iOS store. You can play new versions of You Don't Know Jack to this day. It's crazy. I did not know that. I see the website now, and it's a little different, but basically the same. So I'd say my lesson from You Don't Know Jack was definitely that it really does pay to get good at something and not just be a generalist. Then, I mean, you know, Pandora, it was the next thing that happened after You Don't Know Jack, with pets.com.


Lessons from building Pandora (40:24)

And then after pets.com, there was a nuclear winter in the industry. I worked in enterprise software for a while. After the nuclear winter, I had this idea that I was going to build a destination for music discovery on the web. I've been doing enterprise software and the consumer internet was almost non-existent for those years, early aughts. But around 2004, things started to thaw a little bit. You started to hear the first signs of the companies that came to call Web 2.0, like Flickr would have been one of the early examples. One of the enterprise software things I did was a personalization recommendation engine that used a vector space. It's like a lot of the things that we're talking about now in AI, albeit 20 years ago. So I knew something about recommendation systems in the enterprise space. I was super passionate about music. I'm not a musician, but I was that kid in college who would corner you and be like, "Oh, if you like this band, I got to play this for you." And you know, stereo until you would beg to leave. I had this idea that maybe I can use the internet to do that at scale. That was one person, but with hundreds of thousands of people or millions of people maybe. Introduce them to music that they would love, but otherwise would miss out on. And I promised that I was going to tell stories about luck in my career. There's been a gazillion of them, but one really dramatic incident of that is I was sort of biding my time to exit this enterprise software company. I was VP of engineering, a whole team reported to me. I felt a lot of responsibility to exit in a responsible way, but I was really excited about this digital music company that I was going to start. I wasn't telling anyone at all because I didn't want it to get back to the team. So I flew down to Los Angeles to go out to Coachella in 2000 in the spring of 2004. And completely randomly, like physically bumped into a guy that I had gone to high school with on the polo field and hadn't seen him in a decade. The thing that we had in common in high school was we loved music. So I told them the story of like I'm going to start this company to do personalized digital music on the internet and he said, "There's this woman I work with who just left our company to move to Oakland to work for this little company called Savage Beast that are also doing something in music recommendation. Do you want to talk to them?" And I said, "Sure, why not?" So I got introduced to Tim Westergren, who was the founder of Savage Beast. Savage Beast was like seven or eight full-time employees at that point. They made a music recommendation engine that they licensed to other companies to put in consumer products. Savage Beast's customers were Best Buy, who put it in kiosks, and AOL, who used it on the AOL music website. They were looking for a VP of engineering. I got the offer, thought about it a little bit. I declined because it was kind of this B2B to see thing. I really wanted to do something and get to where I'm at in the idea about the app. Like a month later, they called again and said, "You know, we keep talking to people and we really think that you're the person." Interestingly, one of the main reasons they thought that I was the person is they were really impressed by the fact that I had run engineering at pets.com. It's just one of those things where these things do pay dividends even when they're a disaster. Honestly, in like, in like what I would really say was almost like a lapse in judgment, I said yes, even though it wasn't the product that I wanted to build. I won't bore you with all of the details. Like 90 days later, after some typical early-stage founder drama stuff, the founding head of technology and product had resigned, completely unrelated to my arrival. The company had a new CEO, Joe Kennedy. Joe had this idea for what he called a one-click personal radio. Joe is a product marketer and just the best CEO in the whole world. We spent 10 years together building Pandora and he sort of gave me the keys and just said, "As long as it fits the brief one-click personal radio, it's all yours." I got to build the team and the culture in collaboration with him and Tim, the founder over the course of the next 10 years. And you know, it's just every, every, every good thing. So, I mean, there's just a million billion lessons from Pandora, everything I am as a product leader and an engineering leader comes from things that happen at Pandora. But maybe the thing that I think of first is I think we met our early audience in an incredibly genuine way. For example, when we launched, the support at Pandora.com was an alias for all at Pandora.com. So if you sent a customer service request to Pandora, every single person in the company received it. Because we had no, we made a decision to have no customer support team in the first year, the expectation was that whoever sees the request first should respond to it. So you would write to us and you would get the founder or you get me, or you'd get the engineer who wrote the feature, you get the CEO and there were no macros to respond to commonly asked question, there was no read the FAQ, and there were no rules about what you could and couldn't say. If the person's like, "I think this feature is stupid and broken," we would encourage people to say like, "You're right. And I'm really struggling to get our stupid head of product to agree with me. I'm going to CC Tom and maybe we can convince him that this was a bad decision." We did all of that because we thought one of our superpowers as a young company was that we could just engage with our audience as real human beings, not like as a shiny brand that was trying to be something that we could just never be. This period is where the iPod and iTunes are at the peak of their powers. So, there was no way we could sort of out-Apple, Apple on the brand front. And so we were just ourselves. And I think it really, really was a catalyst for the word of mouth that developed around Pandora. We never spent any money on paid user acquisition, literally no dollars the entire time I was there, because people love the product and they told their friends about it. And that's how it grew. I saw a stat that you grew Pandora from zero to 80 million users from 10 employees to 3000 employees from zero. Basically, it's a multi-billion dollar company. We did those things, not bad. My product stewardship, in some ways set the scene for Spotify to walk through the digital streaming door and show us the exit. So Pandora is, again, such a privilege to be able to have worked on something that touched and continues to touch tens of millions of people's lives every month. It's bittersweet from the standpoint that I think we had an opportunity that in some ways we misplayed. My mom is still a huge fan of Pandora. She uses it every day for whatever. It's still going. The numbers are still tens of millions of people in the US listen every month. So it's a thing. But yeah, it's a little sad that it didn't have quite the staying power that some of these other things that have come along since have. Just on that topic, do you think there's something that you could have done, someone could have done?


Current Role And Work-Life Balance

Looking back at Pandora and what could have been done differently (48:24)

Do you think there was an opportunity to become Spotify? Or was the business model and the math formula set up in such a way that it was nearly impossible? One of the things that was tough for Pandora was that when we started it, digital music was like a category that no investor wanted to touch. You know, it was lawsuits, there was no money to be made, there were relationships with the labels that were completely impossible to nurture, and there had been no big outcomes. Like the biggest exit in digital music when we got going was, I think Yahoo had bought Music Match for like $400 million. And so that was seen as like kind of the ceiling on the opportunity. And along the way, we found investors who believed in our vision and invested ultimately hundreds of millions of dollars in the company over its pre-public years. But there was never like an investor enthusiasm for the company in the category that was anything like the investor enthusiasm that a company like Spotify enjoyed just six or seven years later. Snap enjoyed for its pre-public tenure. And I think part of it was different for Spotify is that the comps were not music matched at $400 million. They were Pandora at 8 billion, but even above that, they were Netflix at 100 billion. And so investors just had this new sort of optimism about what you could do in subscription and in streaming, and Spotify really played that to their advantage in a way that we couldn't because we had gone public and the public market investors were still trying to, you know, figure us out. So we didn't have access to capital. It's very hard for us to take the same kind of risks that Spotify took. But then I think we just completely misjudged one really important thing, which is that we were really inspired by disrupting terrestrial radio. Terrestrial radio is like the predominant form of music consumption in the country. You know, people spend, I can't remember the exact stats, but it's like, you know, by minutes consumed, it's only like 10 times more music minutes a month on radio in the aughts and early tens than on owned music. And the advertising-supported sort of radio market was a $30 billion category and recorded music was $8 billion. And so we had this idea that we're going to reinvent radio and Spotify and RDO and Apple Music and like the 14 others is Rhapsody, which is Spotify before Spotify. They were all going to chase this smaller owned recorded music opportunity and that we could be left relatively alone over here going after the less sexy but actually bigger market. And I think we just got it wrong. Inevitably all of your music in any format was going to be delivered, you know, as a stream from the cloud and that the record labels in particular are going to, they were going to set the terms on what the structure was and the structure that they preferred was the Spotify structure. And we operated under a different licensing regime that they hated. That was a statutory license that we got from the government. And it was exceptionally risky for us to come out from under the statutory license and do direct deals with the labels. But it was a requirement to play in the world that they imagined as the future. And we should have imagined as the future too. And eventually the company got around to it, but it was just, it was too late. It's interesting that so much of this was rooted in that original vision that you shared of Pandora, of the radio, smart radio in your pocket. One-click personal radio that, like you just stayed on that track, even though there was this other track. But I think it's important to point out, you said it was like seven years later. And I feel like there's this interesting trend with the companies you've worked at pets.com and Pandora that it's too early. You just come too early at these ideas. And I feel like that tells me Quibi might still happen. There's a Quibi coming seven years from now. You know, it's really, really funny about that just today. It's really, really funny about that. Just today, there's a headline about a Hollywood-produced show that's launching on Instagram reels and TikTok that was shot vertical. And the headline is literally something like, is TikTok the new TV? And it's pretty funny that literally that's what Jeffrey and Meg called it when they were incubating the idea. I mean, I think it's pretty clear that purpose-built video for mobile looks a lot like TikTok. And I don't want to take anything away from all of the innovation in that space that they and the other players are driving that Quibi didn't capture in its initial product definition. But I mean, you know, obviously we stare at our phones consuming video of all kinds, you know, all day, every day. So there's definitely something there. The PDF that I mentioned that I got from the recruiter, the first page again says you have a TV in your pocket. So it's exactly what they're pitching. That's amazing. All right. I think what I've learned, I need to bet all my money on the Snoop Wibby clone because the timing might be right. This episode is brought to you by Help Bar by Chameleon, the free in-app universal search solution built for SaaS. Your help content lives outside your app and is scattered in many places, forcing users to waste time hunting for answers. Help Bar solves this. It delivers answers directly inside your app and eliminates context switching. 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How Tom became VP of Product at Snapchat (55:17)

Let's talk about Snap briefly, and then I want to have a couple more questions. At Pandora, I was the head of product and head of engineering. And our CEO was brilliant, but he was a product marketer. I mean, Joe was all things. He was an engineer by education and a great marketer and a great finance person and such a utility player at a very high level across every discipline. But he was also really good at letting his team do their jobs. He really let me run product and engineering. So, not only did I have tremendous latitude to make good and bad decisions about product, I also got a seat at the table to help lead the company. So rewarding, so gratifying, best professional experience that one could have. So, I leap into work after a decade. I take like a year and try to figure out what I'm going to do next. After about a year, I got introduced to Evan. And it's kind of a funny story. A mutual friend sent this introduction over. And then immediately responded and said, why don't you come down to Los Angeles and have a coffee with me. So I fly down. It's not clear if it's a job interview or what it is really. I was just lightly exploring things that were out there and was a big fan of what he was doing with Snapchat. So I spent like 45 minutes with him. And then I spent 45 minutes with the head of engineering and another 45 minutes with the head of legal. And then they tossed me into a conference room with a dozen product designers, all in their mid to late 20s, many of which have gone to school at Stanford with Evan, I would come to learn, all really impressive, super talented people. But it was just 10 of us sitting around a conference table. And it wasn't really clear that they knew why they were talking to me. But we had an hour-long free-ranging conversation. I left. And I thought it was a totally fascinating morning, but I wasn't sure what had happened really with these interviews. It all seemed very ad hoc. Is there a job opening? It was a little odd. I went to lunch on Abbott Kinney and got a text from Evan's admin saying, can you come back to the office? Have you gotten on your plane yet? I was like, I don't know, I was just ordering lunch. I'll just come back right away. So I go back. Now it's like one o'clock in the afternoon. This entire thing started at nine o'clock in the morning. I sit down in the conference room. Evan comes in with a manila envelope and says, we loved you, we'd like for you to be our VP of product and handed me a written offer. Like all the terms, the stock compensation, the whole thing. I'm gobsmacked. I'm flattered. This is really playing to my ego. I can't believe that this company that feels like maybe the most interesting thing that's happening in consumer tech, that their notoriously brilliant and mercurial founder has taken enough of a shine to me that he wants to give at least some of the keys to the product kingdom over after such a short courtship. I leave and when some of that buzz wears off, I start to wonder if there's some red flag in flux or maybe. So I tell Evan, listen, I'd like to come back and meet more of the leadership team, have more time with you, go a little deeper on what this means. And so we extend our courtship by another week or so. I, super impressed by the rest of the leadership team and the product thinkers and desires and things that I was going to get to work with on a daily basis. So I take the job full knowing that it's going to be wildly different than Pandora where I had all of this latitude to do whatever I might want to do. And in the context of Snapchat at best, I was going to be Evan's kind of right-hand person that principally executed his vision. And that's certainly what it was. Evan and I ended up having a really great collaboration, but it was certainly most days I was executing on his vision, both at a high level and very much in the details. Evan's truly brilliant. I mean, he's also actually a really nice guy. I think in some ways he gets a bad rap for he has very high standards, but he's a very kind person in my experiences with him. But it was a super exhausting job and not as soul-satisfying as I wanted it to be. After a couple of years, like I said, I thought maybe I just wanted to make croissants or something. But one really, really big, important lesson that I learned at Snap is about risk-taking. And when you have the financial support and the foundational relationship with your investors that Evan has, it really allowed him to take these really big swings. Acquire technology that he thought was game-changing, build features speculatively that maybe would be pruned in any other product roadmap planning process because the odds of them having an outsized impact were modest, and it just allowed him time after time to make bets that paid off and we forget about the ones that don't work when there are so many home runs, you know, in those years. And we didn't have environmentally. We weren't set up for that at Pandora. But I think in some ways, I wasn't temperamentally inclined to those kinds of big swings. And I think I take bigger risks and encourage bigger swings now because of things I learned from Evan and Snap. That is an awesome story. It resonates a lot with what Brian shared about how he thinks about product now, which is kind of telling people what to build versus very bottom-up. Tell us ideas you have that impact the way you run.


Tom’s philosophy on being involved as CEO (01:01:31)

We're going to talk a bit about you as a CEO now, but I guess do you have a place you try to be as a CEO as here's what we're building? As a product-oriented CEO, how much should you lean into the details versus set direction and create an environment where great people can do great work? I suspect there's not one answer that applies to every company stage. When I was at Apple, one of the reasons that we struggled to ship things is that Apple did a great job of assembling incredibly smart and talented people. Just like everyone around me at that early stage in my career was so inspiring. But one of the side effects of that is we would get in a room and we would talk ourselves out of every good solution because it wasn't perfect. I used to joke that Apple was like the only place in the world where a vote of a thousand to one was a tie because that one person would be so thoughtful in their critique that the other thousand people would be like, "Hmm that's right, that's right," and even though there's been this huge consensus of what the right answer was, we got to talk ourselves out of making decisions. That one wasn't Steve Jobs necessarily. It could be somebody else. He wasn't there. Hmm. Wow. So, I think, I think what broke Apple out of that mode was Steve came back and they didn't vote anymore. Right. You know, Steve was just making the call. And so I have some sympathy for Brian and Evan who have these big, you know, thousands of people working for them. And as they delegate, they grow frustrated that there's not progress at the pace that they're looking for and that there's indecision and the people on the teams report that there's just like churn and no progress and there's victims and politics and all the rest. And that as the CEO, as a brilliant product-oriented CEO, they are uniquely situated to come in and cut through all of that garbage and, you know, get the trains running on time again. Having said all of that, I also think that it can be a mistake to be that kind of leader in a smaller org because part of the opportunity of the small org is to assemble a group of people that are incredibly talented, that believe in your mission and who you can easily influence with a much lighter touch and set them up to build a culture and an organization that can execute. And so I see my job as CEO is to try to surf that edge of like, I'm really in the details. So I deeply understand the business and the product decisions that we're making and the processes that we're using to run the business, but not overplay my hand with respect to dictating outcomes. The one thing you'll always have as a CEO is no matter how much you tell the team that when I swing by their virtual desk and say, "You know, I've been thinking about this little detail. It's not important right now, but like, what do you think?", you know, it's like nine out of 10 times that person is going to go and start working on that thing. And so you do have to be just really careful about the way you engage in some of those details, I think. There's a really good episode I had with Lane Shackleton from Coda, and he shared this framework called flash tags that they use at Coda. And I think it comes from HubSpot. You tell people, here's what this opinion is. Is it an FYI? Is it a suggestion? Is it a do this? There's like four of them. And one's like, "I will die on this hill. You need to do this." I try to do a lot of that. I wish I could say that in my experience that pays off. I do it an awful lot of time. Even if I say very clearly, just one person's opinion, focus on one, you know, don't change your priorities to go work on this, like it has more of an outsized impact on people's behavior than I intended. Easier said than done. Coming back to your journey, we've talked through the story up until getting to Quibi, but two years ago, you went in a whole new direction and you are now the CEO of a company called Xero.


Tom’s current role as CEO of Zero, and what he’s learned along the way (01:05:51)

What is it like to move from just being a product leader, an energy leader at a company, to being the CEO for the first time? Why did you use Xero for that role? And what have you learned as CEO that you wish you knew as a product leader or energy leader at a company that listeners might find useful? It's been a really, really incredible couple of years. In the aftermath of Quibi, I spent a lot of time, as we all do, soul-searching about what I learned and what I might want to do next. And as I thought about it, I realized that I really wanted to move on to something where I could have a direct impact on the culture and values of the company that I was involved in. I really got that opportunity at Pandora in a big way. And I had spent five years at Snapchat and Quibi working for Evan, Meg, and Jeffrey, who are all incredible business leaders, but have their own very specific style and approach. And that leaves a mark on the culture that's unique to the founder. And then, as we've discussed, I'm always really interested in building things that are near and dear to me. I was particularly thinking about what I can do that could have a really positive impact on the world in my next chapter. I've been involved in an awful lot of media stuff through the years, video games, and streaming services, and so forth. And it seemed like maybe there was something that had a little bit more weight to it that I could spend my time on. So, you know, my first thought was I would start something, so I had a company idea I was quietly workshopping for some months independently from all of that. It's eight months into the pandemic, and my own personal health was at an all-time low. I was 50 or 60 pounds overweight. My cholesterol was in the red zone. I mean, I was out of breath climbing stairs, which is something that I had never encountered in my life before. I'm a bit of a yo-yo dieter, and I'm always critical of looking in the mirror, but I was never really worried about my health and longevity, and suddenly I was. So, my solution to that was to go really deep on metabolic health, like just thousands of hours of podcasts and videos and glucose monitoring patches and aura rings and digital fitness gear. Just to try to understand the things that impact health and longevity. And, as much as I would like to report that what I learned is that there's some magic pill that you can take, maybe some oscillable rapamycin or something. The truth is, to live a longer and healthier life, you really have to attack what I would call metabolic disease, which manifests in overweight and obesity, prediabetes, and diabetes, and high cholesterol, and all of these things that impact your long-term health. And so, I found Xero in this path and was using it to help in my own sort of health journey. Mike Mazur founded the company four and a half years ago. He and I were talking in this interval about my own experience, the product, I was just kind of giving him product feedback and so forth. And he was telling me a little bit about his own entrepreneurial journey. And somewhere in the conversation, Mike said, you know, my intention is to step up into the executive chair role and to find a CEO for the company. So again, like in my story, just over and over and over this incredibly fortuitous thing happened. You know, I just sort of knew immediately that it sort of ticked all the boxes. Here's a chance to lead something that already had some momentum to impact the culture and values in a really direct way and was really close to my own personal journey. So we've got a great little company of 27 people, we've got more than a million users on the platform every month, over 100,000 of them pay us, with tens of millions of dollars of revenue through the years and double-digit growth even coming out of the pandemic when lots of health and fitness companies saw retreats. And most importantly, it actually works. 75% of the people who use the platform lose weight. People lose on average 5 to 10% of their body weight in the first 60 days. And because of the success that people have, we grow completely organically. We have no paid user acquisition at all. It's really a word-of-mouth business. But that's not to say that it's not challenging; all startups are challenging. And what we've really focused on for the last couple of years is we've been really focused on unit economics, really trying to understand how much value we can derive and deliver for every person who downloads and installs the app.


How Zero builds product (01:10:37)

How do we convert them through all of the funnels efficiently and get them engaged with the product and get them to retain and sort of drive that up in a really systematic way? And I'm... you look at my whole career, I'm definitely a person who started off thinking software development was mostly incorrect. You know, you find, you know, brilliant visionaries who have a deep understanding of human behavior, and they craft solutions for problems that other people don't see, and they make them delightful, and they get all the little details right. And, you know, when you found product-market fit for the art, then you sort of optimize them through a really sort of quantitative sort of take. And so I... I'm definitely a person that sees both sides of that sort of left brain and right brain, you know, equation that's... that's important in software. But here's the... here's the thing that's really... my eyes have really opened to in the last two years. While companies are definitely the software that they make and the products that they deliver and that there is an art and science to that, as I described, there is also, if you step back, there is an equation that describes the business. It talks about like how you turn investment into returns. And I suppose I had come up with finance and been a business major, that maybe that's the way that I would have conceived of companies to begin with. So maybe it's a little embarrassing that I had to be 53 years old before the scales fell through my eyes. And I was like, oh, companies are equations. The scales fell from my eyes and I was like, oh, like companies are equations. And so, you know, when we first started talking about lifetime value and customer acquisition costs and getting those two things balanced and just the sort of thinking about the unit economics of the business, my natural instinct was to go immediately to sort of the leaf nodes of the equation. Like, oh, what percentage of people do we convert from install to registered and from registered to trial? And these very sort of way down at the bottom of all the funnels and to ask the product teams, let's try to optimize these. And in the process, though, of trying to understand where we could take the business as we optimize those various dimensions and trying to understand too which of the dimensions had the most leverage, I started building these ever more sophisticated models that describe the whole business. I mean, in startups, you get to wear a lot of hats and definitely a hat that I'm wearing that I didn't anticipate at all. I am the full-time FP&A guy for Xero. And so I built this sort of spreadsheet that aggregates data from all of our business intelligence tools and raw data from our subscription transactions and looks at all of our historical results and all of our expenses and spend, and then can use that to predict future scenarios by sort of manipulating all of these variables. And it's just not at all the way I ever thought about products before. And I know that you've got lots of listeners who are like, this guy's an idiot. This is a fundamental way to contemplate, you know, product work. But if there's anybody out there like me who sort of thought of it as arc first and then sort of optimization in the details, it is really, really powerful to spend the time to create the model that describes the whole thing. So you can identify like, what are the high leverage points to focus on? So we've been doing a lot of that at the company in the last two years, and it's really starting to deliver incredible results. You know, like everything in life, you just, I mean, you sign up for things so you can learn, and that's the big one for me in the last year. I really love that takeaway of, as a CEO coming back to share, here's what you should be thinking about, that the CEO is probably thinking about as a product leader you may not be, of trying to actually spend the time to think about the business model and understand it deeply because your founders are thinking about all the time. And so if you're not, you're missing out on like, here's a way to influence them. Here's a way to. It's so funny too, because it's a thing. I suddenly understand something that mystified me through my entire career, which was I go to board meetings and you know, the investors would ask these probing questions, but they were really never about the product and what the product did and what the product roadmap was and like what the features were and what this, you know, it was all, it all seemed to operate at this level that sort of was almost completely independent of the details of like the what is the solution you put into the world which is a product you know oriented thinker was just completely baffling to me and and i like i now realize that they they were they were tilling the soil that i'm talking about they were telling like what it it doesn't really matter what the screens are what the features are and like, you, you know, that means really matters. But like, if there's another higher order way to look at a company, which is really about the optimization of this equation. And I think particularly if you sit on 25 boards, it's probably a much more efficient way to evaluate how your companies are doing where to spend your time and how to help by by thinking about them abstracted up to that layer. So I will never stop thinking about software development as being in our form, and I will never stop enjoying the days when I get to sort of lean in on the details, but it's been pretty eye-opening. The other thing that stands out here, one is, I think this is especially true for consumer subscription apps, which I've done some research on and basically they never work. There's Duolingo, there's Xero, which I didn't know how much scale you guys reached. My math here real quick. So you have a million users, 100,000 paying users. You charge like 10 bucks a month. I know there's a discount for an annual plan, but basically you're making somewhere a million dollars a month. Which you don't have to confirm or deny it, but that's the math they just did. And that's crazy. So congrats. That's a rare, successful consumer subscription app. It like never happens. And like I said, every startup is hard, and I never stopped being surprised at the new hard things that pop up every day, but we're on a really great run. We've had a tremendous year and I'm just so, so proud of the team we've assembled. They're incredible to the last. Part of the reason you're so successful is exactly what you said. There's a huge focus on LTV, CAC, the math formula, because for these sorts of businesses, that's the crux of it is can you acquire people for less money than you need to spend? One thing that's really fortunate for Xero is Mike Mazur, who founded the company, and I have both been sort of around the block long enough and enough times that we remember 2008, we remember 2000. And so in these moments, like kind of in the pandemic, there were companies in our category that were raising hundreds of billions of dollars with the intention of sort of throwing it at paid user acquisition. And we made a conscious decision to optimize the value of the organic traffic that we were getting and to drive our growth through LTV expansion rather than top of funnel expansion, which was candidly not in fashion in 2021, 2022. It turns out it's much more in fashion these days as companies are called upon to be much, much more capital efficient than they were during the pandemic era. And so, you know, I guess I feel somewhat fortunate that my, you know, my natural inclination as an entrepreneur is more in sync with the expectations of the market than it was for a while. Okay, so you've probably had the longest career arc of anyone I've had on this podcast.


Advice on work-life balance (01:18:33)

You've worked at all of these different companies in a lot of different phases. You're still at it. And I'm curious what you've learned about how to maintain your mental health and avoid burnout essentially through this journey. You mentioned you take some time off. Is there anything else you found, or is that a trick of just how to not burn out? Do you know this Japanese concept called ikigai? Yeah, but share it. Share it for folks that may not be familiar. So the idea is it's a Venn diagram, and there are four spheres. There's one sphere that's labeled what you love. There's a sphere labeled what you're good at. There's a sphere labeled what the world needs, and there's a sphere called what you can be paid for. And where they all intersect is this Japanese idea of ikigai. It's like the intersection of what you're good at, what you love, what the world needs, and what you can be paid for. If you find that, it's ikigai. And interestingly, your listeners should go and find this because there are interesting ways to label the other intersections, the intersections where all four don't come together. And what's really interesting is that the ones that are three, but not four, I think because they are, they're the ones that are like, close, but not quite to this really satisfying thing. And so it's like, when you find those, it's really easy to choose a job or to choose a path where you have three, but not four, which is a really great recipe for feeling like there's something just out of your reach that's really important. Anyway, it's a great framework to think about your life and your career. So to start, I'm incredibly lucky that it's all Ikigai for me. What I'm good at, what I love, what the world needs, what I can pay for. Like they've just always overlapped. And a big part of it is just like, what I love is this world. Like I, I love software. I love building software. I love writing software. I love using software. Like people are like, you know, what are your hobbies? And I'm like, I don't think I have any hobbies. And I think about like, well, what kinds of things do I do on the weekend for fun? And it's like, you know, I'm like teaching myself After Effects or something, which I will immediately forget. But like, you know, it's just sort of fun to go really deep on some piece of interesting software. So I'm very lucky. And so that I think has been super sustaining for me. You know, like one of the reasons I've been able to do it as long as I have without really burnout is that just like, it's what I do. And in some ways it's why I come back to it. Like it's easy to say I'm gonna become a pastry chef, but left to my own devices. Like I use software, I make software. It's my hobby, it's my passion, it's all the things. But a couple of thoughts about how one engages with their work. One thing is I'm really not like a hashtag hustling kind of leader. There was a woman that I worked with on the Finder just out of college that left a really big mark on me. My own style of work then, I think I mentioned that my memory of flashing, blinking the folder animation was like a 2 AM kind of thing. I mean, I was 23 years old, I woke up at 11 o'clock in the morning, I, you know, went to the office, I screwed around and played, you know, video games in the Apple Arcade and went to a couple of meetings and had lunch and stood at the whiteboard and pontificated about some nonsense. And then about four o'clock every day, I would start writing software, and I would write software until two or three in the morning. And then I would go out to dinner with the people from the team in the middle of it and whatever. And so it, it kind of looked like I spent 14 hours a day, six or seven days a week at Apple and it was, I was really, I was celebrated for this with lots of nights where I was like, we're clear through the night, and my boss would come in the next morning and be like, are you still here? And I'm like, I'm still here. Look at this cool thing I did. And I got a lot of attention for that. And then there was this woman on the team who showed up every single morning at 8.30, sat at her desk, wrote a ton of great software and every night packed her stuff up and left. And she contributed more than I ever did. And I don't think she got the same kind of recognition that I got because of the way she did the work. And when we were building the team and culture at Pindar, I thought about her a lot and really made a point of saying that I just wasn't interested in performative contribution, that it's the work that matters. And what I want to celebrate is if you can show up and do it and go home and have other things in your life, because I think that's a recipe for being able to do it on a sustained basis rather than kind of burning yourself out. I think there's some nuance in this. I think 22-year-old me was always going to want to work through the night. And so I think creating space that that's okay too is important. And I think maybe in some ways at Pandora, like it was almost like that wasn't okay. It was like, you should be taking more breaks. Why are you doing, going this hard? But I do try to create environments where people have like a, like a reasonable balance between their regular life and their technology life or room for that if they choose it. And I do think that that has helped through the years has helped me keep at it, but I still work a lot of nights and weekends because I love it. It's my, you know, it's what I do. Here's the other thing. I got very, very lucky with the Pandora experience. Um, and got this sort of, you know, outsized, probably inappropriate financial reward for being a part of it and gave me options that I never imagined that I would have. And so I, after 10 years, I left and I didn't know what I would do, but I thought maybe, I mean, I really need, I did really need a break. It was a really hard job. And that was definitely a moment where I needed some time to recover. But I think if you had asked me on that first day, I would say like, I don't know why these people find success and then start another company right away. Like why? Like, you know, so many things you can do in the world. Why would you start another company? It's so hard. And I was particularly in love with the idea that I would like I had access to experience, like I didn't really care about things and went on a fancy watch or whatever a car, but I wanted to see the world. And so I thought like, I'm gonna just go and live in London for three months, come back to San Francisco for a month and go live in Mexico City for three months. And like, I'm gonna just have this like life where I'm soaking up experiences. And after doing that for six months, the thing that I came to realize is that what I care about way more than experiences is relationships. And like, if you're the if you're the person who is constantly on a plane going, seeking out some new experience, like it's really hard to form and maintain intimate, satisfying relationships. So I went back to San Francisco. I'm like, I can't be all over the world if I'm going to like be engaged with friends and like-minded people. And you know what people do on Monday morning? They go to work. And so like, if you want to be engaged with humanity, like where they are on Monday morning is like at work. And so more than I had the itch to build things, which I do very much have, I had the itch to collaborate, to like be in the game with other people. So that was what took me to Snapchat, took me out of like chasing experiences and took me back to building again. And then as we've already described, like, you know, I had a point at that. Well, I care about like this, this collaboration, but maybe I don't know. Maybe it doesn't need to be software that I'm that I'm creating in the world and could be like gave me a chance to sort of fall back in love with that, that process again. And here we are more software. plus being on a board of a hardware company. What you, what you just shared reminds me of Mark Manson's book, the subtle art of not giving a fuck where his, and have you read this book? I have not. Okay. It's like a sold like a bazillion copies. And it's like the core of it is that we get joy out of solving problems, and we think we'll be happy when we have freedom to do nothing, but it turns out freedom is only helpful to help us discover the problems we just want to keep solving yeah totally i think that's exactly right yeah it sounds like that's the experience you went on last question i'm trying to this new segment I'm going to call contrarian corner. And the question is, is there something that you have a contrarian opinion about something that you believe that most other people don't?


Contrarian Corner: Founding

Contrarian corner: why not everyone needs to be a founder (01:27:22)

There's a segment in our industry that believes this very intensely, which is like, there's this belief that everybody needs to be a founder. I think in some ways our industry would be much better off if there were fewer founders. I think in some ways the [missing word] an entire category of smart, creative, hardworking, talented, you know, borderline visionary people who can raise that $2 million seed and go off and build some stupid company that's never going to go anywhere would be so much better off finding a team that needs their skill set and working on a problem that has, you know, that doesn't [missing word] the mathematical formula that's going to win, that has the market opportunity, that's like the right size, that has the 10x thinking that can really... And I'm a little biased here because while I am a CEO for the first time now, I've never been a founder. And I've been lucky enough to find a bunch of young teams that could benefit from my skills and enthusiasms and sometimes to some success and sometimes to some embarrassment, but always really, really interesting. Yeah. If you're out there and you think that the only possible way you can be successful in this industry on any metric, whatever metric you care about, you want the acclaim of your peers, you want financial reward, you want any of the things that people aspire to, your outside impact on culture, whatever the thing is that gets you out of bed every morning, you can achieve that in collaboration with others. You don't have to be the person that raises the seed round. I 100% agree with that. I'm always telling people don't start a company, it's super painful. Very rarely works out. It's like, so hard. I don't know what's harder being a product manager being a founder, probably being a founder. They're both very hard. Yeah, it is quite hard to [repeated phrase] be perfectly clear, like, there's something really special about founders. At both Pandora and now at Xero, the actual founders have from time to time said, well, you're like a founder, and I'm like, I'm nothing like a founder. You took all the risk. When I showed up, there was a team and there was momentum and there was money in the bank. I appreciate your desire to say complimentary things, but you're like a founder. It's not one that I'll take. With that, we've reached our very exciting lightning round.


Quickfire Questions

Lightning round (01:30:08)

Are you ready? I am ready. What are two or three books that you've recommended most to other people? I really love Elad Gill's High Growth Handbook. It's organized into chapters about foundational company building, building a leadership team, building a board. And in addition to the thoughtful synthesis on that topic from a lot, there's also he has a like an interview of someone that he does relevant to that section on each of the chapters. Really, really great read and super actionable if you're a leader in a young company. I mean, in a completely different end of the spectrum, I love big, complicated science fiction. And I mean, there's like a lot of garbage science fiction out there to be sure, but when you find something special, it's the best. So probably through the years in that category, there's a book called Hyperion by Dan Simmons. That's, it's just like a total classic. Everybody should read it. I read that. I read, I think I read the first couple in the first one. Yeah. Yeah. There is a sequel that's exceptional as well. And it's probably worth warning your readers that Hyperion is quite long and has an absolute cliffhanger. I think they're making a show out of it, which is going to be wild. I don't know how they do a show around that book. I thought you were going to say this other book a fire upon the deep. Have you heard of this book? Oh, that's so good, too. That's also very complicated, but incredible. It's the Yeah, I had completely forgotten about that. That's a that's a very special book. There's a couple in that series, too. Yeah, I think I only read the first one. Also, three body problem is the only other one that I always think about. It's come up a couple times on this podcast. Let's move on to the next question. Do you like the new Damon Lindelof show that's on Peacock called Mrs. Davis? So Lindelof, of course, from Lost and the new Watchmen on HBO. Mrs. Davis is about an AI that you wear in your ear, like the her AI, and a nun that is hell-bent on the AI's destruction. And it reads like an early Coen brothers movie. It's super darkly funny and really, really thoughtful. And unlike too much streaming, I think it's seven episodes and it is a perfectly encapsulated story that has a beginning, a middle, and an end and doesn't need to ever have another episode. It's amazing. It's worth, it's worth the, you know, get yourself a Peacock subscription for at least a month to, to, to watch Mrs. Davis. Favorite interview question you'd like to ask candidates that you're interviewing. There are two things about interviews. The first is I always encourage people when they're thinking about their interview questions to take any question that they're tempted to pull from their own current experience with the goal of trying to like, how would this person solve this thing that I'm working through right now? other person to like speculate and oftentimes like about your own business, I think you know really well that they don't actually know anything about. It creates this imbalance between the interviewer and the interviewee that feels like out of sync with how I think about the kind of collaborative nature of a great interview. So I tell people like that almost every interview question should start with, tell me about a time in your career when to just to give them permission to like, or to set their expectations that I'm asking them to tell me about something they've actually done that is relevant to the topic that I'm, I'm probing. So that's a, that's a, just a structural thing that I try to do. And then I, usually towards the end of the interview, I ask almost everybody, imagine that you have like a really great day at work. Tell me about what, like, what was it that you did on that day? Because I'm trying to figure out is kind of like, left to their own devices. What do they go to naturally naturally because it rewards them? Because I think it's really important to find the highest best use of everyone you hire. And sometimes you can get a little bit to the bottom of like, what's the highest best use if you understand the things where there's a natural reward mechanism, because it's like, well, I had this great day, I'm gonna do more of that tomorrow. What was the thing? And it's just pretty illuminating. Is there a favorite product you recently discovered that you really love? day, I'm gonna do more of that tomorrow. What was the thing? And it's just pretty illuminating. Is there a favorite product you recently discovered that you really love? I have bought every pair of headphones on the planet, in part because Apple's headphones do not stay in my ears. They just like, I've sneezed one across the room, I've lost one down a drainpipe. I they just they don't stay there. Never none of them though the wired ones, the not wired ones, the in your ones that they're just I and and it's left me feeling honestly, like I am some kind of anatomical freak like I look at other people wearing them. I like what is going on with their ear that it's just staying there. Perfect. It seems inconceivable to me. Nonetheless, I you know, I have a pair of AirPods pros that I want to love and like kind of put up with the fact that i'm going to drop them lose them sneeze them across the room but recently i came across this product uh from a company called ear tune that are these kind of their replacement tips and they just have like the littlest bit of like compression foam on them so they still they don't make the AirPods so big that they won't fit in the recharging case or anything and they work miraculously they stay in my ear and apple has this feature called like size fit or something go in settings, find your AirPods, scroll all the way down in the settings, and you can run this test where they play some audio and they tell you how good the seal is. And that revealed that my right ear is weirder than my left ear. So I actually have to use different tips in either sizes. Suddenly this sounds like a vaguely disgusting conversation to be having. Anyway, I'm just really thrilled about my ability to wear Apple's AirPods after all these years. I think what we're learning is you are a mutant. Your ears are different. Cool. We'll link to that product in the show notes. Okay. Do you have a favorite life motto that you often come back to or share with friends, either in work or in life that you find useful? I mean, you can't be like a product person without having an eye roll a Charles Eames quote, it's at the center of your existence. And for me, the Charles Eames quote is the details are not the details, they make the design. And I just, I just really absolutely believe that that, that the devil is in the details when you're a product designer and be uninterested in nuance at your peril. Final question. You worked with the creator of the GIF format. How does he pronounce GIF or GIF? Yeah, so before all of this, I worked at a company called CompuServe when I was in high school. CompuServe? I used CompuServe. I didn't know that. That's amazing. There was a guy on the team named Steve Wilhite, who invented graphics interchange format, GIF. And he was a straight out of Central Casting 1960s neckbeard programmer type. And the first I had ever encountered. And very prickly. And it's crazy, but at the time, but at the time Steve would take all comers in the fight that it was pronounced Jeff now he's obviously wrong it's obviously pronounced if it's crazy to me now 35 years later this is still a topic that pops up on the internet every once in a while it's somehow like zealig. I like I cross paths with the you know, the guy who created graphics interchange format and and I know his opinion on the topic even though it's an unpopular one. Got it. So he likes GIF, but you agree it's GIF. It's definitely GIF. It's obviously GIF. Okay, great. We're on the same page. We've decided. Let it be known. Let it be known. Let it be known. Tom, we've talked about successes. We've talked about failures, mental health, general health, all kinds of awesome stories. Two final questions. Where can folks find you online if they want to reach out and maybe ask some other questions that I didn't ask? And how can listeners be useful to you? I'm at tconrad on all the socials from Twitter to threads to Instagram. My DMs are open everywhere. And I really, I would absolutely be delighted to hear from any of your listeners on any topic that they choose. And you know, what can you do for me? Well, I would love for folks to download Xero and give it a try and send me some feedback about what we're doing right and what we're doing wrong. And we'd love to have our little product be part of your life. Awesome. Tom, thank you so much for being here. Thank you. Bye, everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.


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