How BetterUp raised over $500 million after early challenges | Ep 1

0:00 foreign welcome to the pre-seed show it's a show where I talk to successful Founders to better understand what it was like when they were first getting started because very often for first-time Founders the tough part is getting to traction today we'll talk to Alexi robichaw he's the co-founder and CEO of better up we invested in betterop's earliest round about seven years ago and since that time the company has raised hundreds of millions of dollars in venture capital from amazing

0:31 investors like like threshold iconic Lightspeed and freestyle now while Alexia has built better up into the success that it is today it wasn't always like that when they first got started he had to confront some pretty tough questions how do I look for a co-founder how long do I keep working on the idea are there better ideas that I should be looking for how do I raise money how do I recruit all of those things that first-time Founders go through these

0:55 are pre-everything questions so without further Ado let's get into it Alexi welcome to the show thanks for having me I'm excited to be here my my first question I guess is when did you know you wanted to be a Founder you've you've done amazing things in your career and you you but even before better up how did you know that you wanted to start something yeah I mean I I think I was always starting something even as a as a kid starting little

1:29 businesses here and there I don't think I ever had the concept of like oh that can be a job I think I still was like oh he's doing this and it's like I don't know why I didn't need I would didn't even know the concept of Entrepreneurship and so although I was doing entrepreneurial things starting businesses helping to start non-profits with some friends it you know I still kind of just thought I needed a real job so it really wasn't until

1:54 I had left Disney and was doing some Consulting with some of the executives we had started a Consulting shop and we ended up Consulting for a couple VC back startups and then I was like oh wow like there's this whole world I I had I had been a coder in high school and taught myself to program and I was just like I had no idea this place Silicon Valley existed where people who like technology like myself like to build things like myself can start companies

2:19 that are focused on that and so and then it was like oh yeah is I guess I have kind of been doing that I just you know always thought that was like a side gig and I don't think I ever took it even that serious myself it's like you could do this one day I don't know why it just never transpired so that was probably I you know that was like early 20s probably for me when it was just kind of hit it's like oh you can do this and I I knew I didn't know

2:44 how to do it so I found my way to a startup in Silicon Valley and part of that was hey I really want to learn from a founder and understand what it's like so that you know I could do this one day right so your path was learning from other successful Founders I guess you're talking about social cast right yeah that that and that's where you went tell us a little bit about how that time at Social cast and then eventually VMware influenced your interest in coaching and

3:14 mentorship I I recall that you were fairly young you were a fairly young executive at VMware interfacing with the CEO and the cxos and that must have been that must have been a lot to take yeah it was pretty stressful I was definitely underskilled to the job it was you know a wild ride and that absolutely I got a lot of exposure I got a lot of access to our large customers to their c-suite our own c-suite which was awesome but I think I was like 25 26 at the time and

3:46 pretty overwhelmed now I had already had some exposure to coaching and mentorship because in my free time Eddie my now co-founder better up we were coaching and mentoring high school students after school but again this is a non-profit setting that I helped to start it was just kind of like passion work for us really important work for us but then when I was at Social Castle we went through the acquisition by VMware when I was this very young executive it was this kind

4:12 of mirroring of wow like I'm now feeling like the pressure I'm feeling the trials and tribulations and I'm looking at myself supporting these students with people young professionals like Eddie and they have a way richer support structure than I have and I'm a young executive I have more economic means as a result of that but I'm actually doing worse subjectively in terms of my well-being in terms of maybe having a sense of purpose and fulfillment and I'm super stressed out

4:41 and so it was this kind of like Perfect Storm of this thing that had been my passion to help others this thing that had been my passion I thought around building high growth startups which I did enjoy in this moment I realized hey I need to find a way to connect these two for my own well-being if so I can continue to just be dialed in focused and calibrated that's right that's a that's a gem of a like an Insight which is like you had a personal passion you started

5:10 you started this organization when you were when you were young as as a personal passion side project a hobby or something that you felt personally excited about and then you kind of connected that dot to your professional experience and you found in the professional that that would be a great application in the professional setting also right was that the unlock in your mind about the idea that was the unlock I think the unlock was and essentially wow I need this and it

5:41 didn't exist right and so I I was in a world of hurt and I took some time off and I was spending a lot more time with the students so I was getting more intimately involved in how we're organ orchestrating their care what are the different subjects reading more different types of leadership social emotional learning things like that which were really fascinating to me for me the non-profit had always been an area where I was able to give back to others but

6:07 also just kind of geek Out and because it was like you know not my job it was like a playscape for me and that like I could get really creative and when I was then not working I was able to really do that but I was starting to self-interface and be like wow I could benefit from this and that started me looking for help into the heart of your question I couldn't find it I went to

6:29 therapists and it wasn't quite a fit I went to coaches it wasn't quite a fist for host reasons and so I think the unlock was well what do you need what if you just kind of made that for yourself and as I did that and started showing it to a couple people I you know I had been building product for a while then so I was like I have an inkling that others made like this people like Eddie other young professionals and so when we started better up we actually thought

6:53 it was just for Millennials we were Millennials we thought that would be the only people who used it and we're like that's a massive Market should be good enough for kind of the future of the world that'll be great and it was actually you know we can get to this it was actually customers who are like why are you saying Millennials like everyone would use this but it really started from this place of I honestly was just building it for myself I kind of wanted part of therapy and I

7:14 kind of wanted part of Executive coaching and I and I couldn't find that in the world right all right we'll come back to the eye a little bit more about the ideation process and customers but before that you mentioned Eddie Eddie is your co-founder a lot of Founders were just starting off they usually start off alone and then they look for co-founders or they bat around ideas and many people struggle to find the perfect co-founder what advice do you how did you find or how did you I guess you you met Eddie a while ago

7:43 that's and was he a natural choice for you to start something how did that come about yeah so I've done this I you know I've done this I I think the right way with Eddie and previously I've done this the wrong way in some other you know it's things that didn't work out and for me Eddie was natural in that we were already doing the work together in another context and and that's not always the case that you're going to be so fortunate to have that but we

8:11 were and you know archetypically we weren't the right skill set to be co-founders because we both have more of a business background I was more product in business he was more being Consulting private Equity operations so typically you'd say oh you need like a Lexi's role in a proverbial CTO type person and I've done that before and it's not enough just having that complimentary skill set is not enough I think what really makes a very strong founding

8:39 relationship and what made Eddie and I's relationship successful has been you have to actually have just deep admiration and respect for what the other person brings to the table and of course you need to have some complementarianess in our business Tech is really important but so is operations because there's a coach network at its heart and so it was pretty clear for me early on that actually Eddie brought the Ops chops he brought a lot of the analytical

9:04 rigor the thinking the systems building that would build this business but at a lower level we had already de-risked the relationship and I think that was a huge benefit here we were working together again in a non-profit setting but we realized that we were just kind of natural yin and yang and complementary we had a lot of energy and action working together and a lot of deep fondness and our admiration for one another and it's it's not unlike a partnership or a marriage

9:31 it starts with trust and respect and I think trying to Fast Track that is risky in my opinion and you want to make sure you can let that really marinate and sometimes you just got to get in there and figure out and see if it's going to work but I I caution from based at least in my own experience of just finding the archetypical I'm an ex I need a y i I think you can get yourself in a world of hurt versus saying like who do I really think is better than me in

9:58 many regards and when they say something I'm gonna stop in my tracks and listen to them and I'm going to really incorporate their feedback and vice versa right so those are the classic advice that many Founders often hear is that if you're a technical person a go find a designer and then maybe a salesperson and that's the team of three and then just just do it because that's what the market is looking for I think you're you're suggesting like be more organic and authentic

10:23 and your co-founder of course they should have complementary skills but it is a marriage you you should know them pretty well and trust them deeply because ultimately you're you're deciding to share a lot of equity with them right they're they're expanding the pie with you and you must have a lot of friends and Trust for folks who don't have the benefit you've had of having worked with Eddie for a while for the past what have you seen other people do that might have worked

10:49 I guess part of it is having some kind of a working history some kind of a working relation like a trial period or something like that yeah yeah and you know when when Eddie and I started so you know I I think there's a couple of things tactically practically you can do and when Eddie and I started he was at Haas doing his MBA it wasn't clear I was very clear hey gotta be full time to be a co-founder I'm full-time I quit my job like whoever's gonna be co-founders got

11:16 to be full-time and he wasn't he wasn't initially certain he could commit to that he had a full ride at Haas and that was a big deal to walk away from and so the original the original thing was we were just hacking on this together and you know if I if I was able to go fundraise we were actually also looking for a third co-founder like a CTO co-founder and the idea was me and that person may get started and then when Eddie graduates in two semesters he'll jump on board

11:45 and actually Eddie built the conviction where he was like hey I'd like to lean in now and quit my NBA and go full time but there was that period where we were able to in a really de-rest and and kind of just you know playful way work together with no commitment we're very clear so I think whatever the situation is Clarity is your friend here you know you want to be clear on what the parameters of the relationship are we were very clear where it's like hey we're just going

12:10 to see if there's something here versus nope you want to lean in and be a co-founder for me I was very clear with him on what were the requirements for any co-founder there was no ambiguity it's like you gotta be full-time you know and he understood that and so that gave him Clarity that like until I'm ready to do I'm not the other thing I'd say whether you know the person or you don't know the person even knowing Eddie we had to do is I think there's a whole values architecture

12:34 you can skip over which is like it gets into very basic things why are you building a company and there's a lot of valid reasons as you know to build a company like this is capitalism you could be building a company to get rich that's a very valid reason to build a company if that's the reason you're building the company make sure your other co-founders are building the company for the same reason are you building a company to create an iconic company that outlives

12:57 you that's what Eddie and I both wanted to do okay great like are you aligned to that are you going to take this company public or are you going to sell to the first person who offers you a couple hundred million dollars all valid great answers all contribute to economic GDP growth have done right but where I think you can go wrong is by not having those conversations early on and for two reasons one if you can't have those conversations early on you should be probably worried about the

13:24 person's ability to imagine Prospect like if they can't really sit down and kind of like play out the decades then they're probably not operating or thinking at the level you are as a potential co-founder two you've got to make sure there's the alignment right like you know this as an early stage investor most startups fail because of founder Dynamics right and so do you have the long-term AIMS in view Eddie and I have never 10 years in now had a conversation about selling

13:52 this company except for the first conversation we ever had that we were never going to sell the company that's been the only conversation and you can just like shut that part of your brain off and you know the offers come the Motions from corporate dads and we're just like we're not selling the company the only way we'd ever sell this company is to like Stave off a bankruptcy and like help employees you know not go bankrupt but that's a fail state for us it's always been clear

14:15 this is about okay whatever the answer is for you spend the time to get the alignment and don't be scared to ask the questions I think a lot of times we go into these relationships we kind of don't want to know the answers because we just want it to work out and that's where I made the mistake before and it's like no you really want to know the answer trust me right you want to have the

14:33 tough conversation now it's not going to be tough by the way and if it's really tough and awkward that may be feedback for you and the relationship anyways but do that early and and get very clear on what success looks like for all of you how long you're going to be doing this what fires you up how do you like to what's winning whatever that is is make sure every co-founder is aligned around that that's right well alignment trust even if you so that's what's really what's really interesting

15:00 what you just said is that even if you know the person you might not have talked about this amount of in this amount of depth with them about what it would be like why would you take it yeah who's your best friend like do you sit around and say hey if we one day hypothetically we're starting a company like what would be your walk away price you know like you should ask your coven like if someone offers a billion dollars would you sell like that a lot of people would say heck yes I

15:22 would and that's a valid answer for Eddie and I the answer was like no I mean unless we were failing we wouldn't sell no no way that's amazing what do you think it what do you think it was about the process or working with you when Eddie was finally able to give off his full ride that it's a big decision on his part to commit give up on his on his sort of Education the full ride

15:48 all of that stuff not wait two semesters but jump in now what was it what what was it do you think at the time that that game it's even worse because by the time he did he only had one semester left so you know then I was just being I was just being no I mean he respected I I was just holding the line I'm saying hey I get it we can like talk again in a semester but

16:08 if you know if we were gonna go now and I'm going I'm going now like I'm trying to put the founding team together we got the Prototype like I want to try to go fundraise you know I think it was belief and conviction and what we were building and you know I think there's two layers to that I I think Eddie and I's if I can speak for him are psychology upon reflection and maybe this is good or bad time will tell you probably already know the answer

16:34 was it was never about us like we were convinced this tsunami was coming like we just saw it like it was clear as day I mean this was 2013 by the way so it was not clear like the only thing kind of out there was mindfulness but we were just like is this all going to be about mental health in the next 10 years everything in our culture like from celebrities how they talk about this to you know

16:57 to what employers invest in to Performance and part of that was we had geeked out so much on the science it was clear from the science this is just how the world actually works and we have this whole like blind spot as a culture and pretending it doesn't work the way it really works but I think it was that belief fundamentally we shared a point of view and a world view that this was inevitably gonna happen and that created a sense of urgency because then it

17:23 was like right you know our earliest fears were not that we weren't going to succeed we were pretty confident there was a chance we were never going to succeed that was like we we were like the statistics we probably won't succeed we're being honest we believe we're going to succeed but like the critical part of ourselves is always like this is a crap you know it was that someone else would succeed right our fear was that like someone's gonna do this

17:47 we believe so much this was an inevitability it was like someone's gonna do it we can see it it was so clear to us the fear was always that someone else would beat us to the punch and we'd be sitting there when we're 70 and be like we missed the moment and so that I think was a huge compelling thing for Eddie is this belief we lived in this reality of this is an inevitability we've convinced ourselves this is our new it's not even something we have to convince ourselves

18:12 anymore we live here we live in the future and then it was almost like this paranoia for lack of a better term that like if if we don't do it we're going to miss them all right now I mean honestly if you ask me now I could have started the company four years later right like that Trend in society took way longer to unfold than we thought I think we were directionally right but we were way way

18:31 ahead of it right and in not a good way that's not like a passive pat on the back we were like too early in some bad ways but I think it was that and then I think it was the relationship like we really liked working together so it was just like I remember Eddie saying like I can sit here at Haas and like study how to build a company I'm taking classes on product management or I can come

18:52 work with you and learn from a product man like he's like at some point it just hit me I'm like I'm doing an MBA to potentially do this and here's my moment and I just needed I just need to jump I just need to jump jump at it that's great that's great and and talking about the about ideas that might be a little early but the space is right what were What were what was that process like

19:18 when because many many Founders usually Silicon Valley is right on calling the trend but timing is is off sometimes it's early or late usually and getting it right timing is so hard what was it like for you all in the early days as you were like investigating the space did you have did you know like right out of VMware social cast exactly what you wanted to build or did you want to experiment in a in a certain zip code with various different ideas yeah so I would

19:50 say I had by the I had been experimenting zip code similar ideas for a couple months before I started working with anyone and so I was just kind of doing that on my own and that included everything from looking you know more around therapy to you know just like a lot of these approximate places Eddie and I by the time we were working together we had really narrowed it down to like two components of what are still in better up today and it was really a question

20:20 of like where do we get started we knew coaching would be a big part of it and particularly using coaches who had a clinical background who were working on some of these topics of well-being and Leadership we knew that would be part and then we knew the micro learning would be a part of it as well not traditional e-learning or courseware but the more micro bite-sized learning and so we were always wrestling with these two things which way do you start you know the the business

20:46 people in US said okay we should start with like a freemium micro learning platform offering and then we'll upsell you into the coaching and we actually built that it was it was like Beyond terrible and pathetic it was Duolingo for life skills that was like the one line sentence and our first module was like conflict negotiation and it was like so boring I mean you're like drag and drop it just didn't work for a host of reasons and we used like our 40 30k and friends

21:11 and family funding to build that and we were showing that to people testing it and we're like oh and at some point you can like unlock a coach and everyone was like well well that's way better than this like that seems exciting and so like we wasted probably almost a year of our life on like building the business model figuring all about CAC out on this like freemium thing to upsell the coach and we thought it would be like this prosumer offering

21:34 and it turned out that you know what was interesting and frustrating in retrospect is our original idea was to start with the coach but we like convinced ourselves out of it with a bunch of excel models because we're like oh the economics are terrible oh there's like a human in the loop say oh your gross margin will be low oh no one will invest in this oh true by the way no one didn't want to invest in it for many years so we weren't wrong there but where we were wrong is

21:56 we let a bunch of what I call business metaphysics convince us away from the core truth which is you have to make something people want and in our space that means you're changing people's lives and we should have started with what was most life-changing and we eventually ended up there but and by the way both pieces were in the final product that we went to Market with and both we always do but that was kind of more it was not even zip codes it was like within the ZIP code

22:23 which side of the block do you start on was where we probably spent a year trying to figure out the right product offering and it ended up that it started with coaching reinforced by micro learning which is now a very ubiquitous model that you have a coach who gives you homework who then follows up I mean like there's therapy apps like everyone uses this model now but that was really the first time that you had like synchronous coaching with messaging

22:46 with take-home stuff in that kind of video enabled format and it seems really obvious now great that's usually the success of a mental model though it seems stupid simple and obvious maybe someone else would have got it faster but for Eddie and I that was like a year of kind of wrestling testing wrangling to figure that out and as you were going through that process as you were as you were going from the the the original idea to making something work

23:12 and then back to the original idea how did you come to that conclusion was it was it like it's you said something which is like some when you when you pitch the customer they basically said why don't you just give me the coach was it that was was it that you were kept hearing from your Target customers and how do you even pick who to talk to at the time yeah so you know we were doing focus groups we were doing tasks we were doing you know

23:40 buying ads driving to our landing page doing the onboarding assessment you know like we're you're kind of interpolating all these data it was actually desperation that I think provided the clarity we essentially ran out of money our engineer had to go work for Amazon because they're going to keep paying him our iOS engineer we had used our 40K and friends and family money Ryan our now CTO was Moonlighting for Equity he had a full-time job he couldn't afford to pay him

24:11 and we were pretty much just like well we blew that one we have literally nothing to show for this we've spent about two years of our life doing this we've tried to raise seed rounds Angel no success Beyond friends and family and there was this nagging at us this like you know we never kind of did the original idea which was like start with the coach and have a relationship

24:41 and then that person give you some stuff you know to be fair the original didn't have the homework even embedded week I mashed the two together it was just like start with the coach and then you may have module I can't remember it never got built but like so it was kind of this haunting we had and then it was like okay like we got one Silver Bullet we got a couple Cycles from Ryan still Moonlighting like we can't do it in a mobile app anymore so it was this combination of like

25:06 we're desperate we have no money what can we actually afford to do cheaply we have this unresolved like Specter of we never really had the guts I never had the creative courage to go with the original idea because everything rationally told me it was going to fail but now I have like a year of data that kind of is like hinting that that may be the one thing these little comments and focus groups where people's eyes were gravitating when they saw

25:33 all those screens and the mock-ups the idea that we heard about it's the relationships that drive Behavior change from people when we talk to these self-help groups so we're like okay you know we're gonna do we're gonna do it we're gonna spend like five thousand dollars on credit cards that we couldn't afford we would PayPal each other off zero interest cap one cards and fake stores so we're gonna do that to get enough Facebook ads we can't even go to mobile apps so we're just gonna

25:56 use Google Hangouts so we're like let's do it let's do the coach we're gonna do Google Hangouts Asana for the homework Eddie and I are the matching algorithm we text people between sessions we got our friends who were like NBA students a couple friends who were therapists and that was it we built it and we had like one silver bowler we're like this thing like if this doesn't work I don't know what we're gonna do we never really play that out because we've never really had a

26:20 conversation about quitting but we were kind of at our wits in and it worked phenomenally well people loved it wow people were like this is awesome I love my coach I'm meeting every week I'm doing my homework in a song and it was so much user friction it's like the product version of me was like holy moly if they'll get through that like we had a pretty cool mobile app that had removed all and no one still wanted to use it here's something that like if you wanted to design the worst user

26:45 experience possible we had achieved it technically speaking click Equity was like broken you know you're switching between applications think about that you got to go from Asana to hang it's like just terrible by every design standard yet people are sticking with it we were like oh okay like if they'll stick with this imagine if we actually just made this work together in one app that was easy to use like we're probably actually onto something which was really exciting and

27:09 really frustrating because then we were like we should have just gone with our gut we just wasted a year of our lives and we didn't really waste it we learned a ton but lesson learned right right creative courage is the word you use create having the creative courage to do what you truly want to believe it's it's quite remarkable that better up the company it is today many times in unicorn had those moments early on when you couldn't pay your your developers and your and

27:34 you're desperately trying to figure out something that would gain traction and when you found that when you when when this sort of chicken wired experience eventually delivered do you feel something do you feel like this is it this is the one this this it's gonna take off it's this this is it this is the right idea and now I know exactly what product to sort of package it into I don't know that I mean I I maybe we're just bad at this I like I never had that Clarity maybe I

28:06 was supposed to but I was just like I think we were more just like okay cool like that worked it felt cathartic because it was a little bit of like yeah we should have gone with our gut that feels good but you're also like it burns a little because you're like I'm a real fool I think we had the excitement and the energy like yes this General formation works but our brains were going on the million things we could do better so I don't think we ever were like oh

28:33 this is it it was like okay yes this is the now this is the pathway this is a in terms of a mental model but like we're already cranking on can we tweak to it then we tricked this so I don't think we ever had the like the I don't know that there was ever like an aha moment if that makes sense where it was like oh this it was more just like okay that was like a Quantum Leap and that's

28:56 awesome how do we continue to punctuate from here and keep going and when you look in in the rep in the rear view mirror then it's like oh yeah that was a big unlock and an aha moment but part of this is like the blame the brain blocks trauma so like I don't remember most of this people ask me employees ask me all the time I can't remember the first like five years or better because they

29:15 were so painful and so miserable like I pretty much just blocked them all out you know so it didn't feel good I it felt better than probably the sucky year before it but honestly like those were tough rough times and it was it was wrong because I don't think there was a lot of elation you know right right it wasn't like you you like you just spent a year trying to get to something and and and it it and it's now it at least you had an outlet at least some more sort

29:45 of creative juices could flow through this channel yeah I think that felt bad yeah I think it felt that it was like pain relief we were it was it was tough man like we were racking up debt like I think by the time we raised our C round we were 75k in debt on credit cards like we were Cashing Out 401ks Eddie was doing Postmates like it sucked you know and like so I think probably the more

30:09 lived experience was catharsis of like oh some of that burden's been lifted there is a glimmer of hope this feels good but we were like days away from just having to like do we got to tell Ryan there's nothing here so it was probably more like a weight was moved off our chest than like a Eureka moment even though it was a Eureka moment I don't think that's not what I remember feeling I remember feeling like we dodged another bullet we live another day if that makes sense right

30:34 right right yeah because it was like too much to expect that this is the breakout in the in that moment did you just say that Eddie did Postmates deliveries while he was working yeah like we were young yeah we were young professionals he had a full ride to Haas I mean and then he left right and that had his living expense like that we still had rent to pay we I lived in San Francisco he was

30:58 living in like Berkeley Hills in a house with a bunch of his MBA students so it was it was tough economically I mean we were all in we were trying to do Project work for friends which I just kind of like feed ourselves and then we needed a little money here to run our ad experiments build little things here and there it was I mean necessity is the mother of invention but yeah it was it was challenging but you guys didn't give up you were so obsessed with this idea you didn't

31:27 give up what because because I think you said something before which is like you could you could tell that this is real some someone is going to build it so why not you you just needed a cracker of an idea and you found it I guess with this with the with the final final Play Wade would you many Founders grow through this experience they remain committed to the idea but eventually it doesn't work out most of the time it doesn't work out and they have to move on to

31:55 something else what if you could tell the court back like what advice would you give to folks about who what what makes sense to continue versus what makes sense to sort of pivot or move away or to try something else like what is that what would it have taken for you guys to make that call yeah it's funny I like never thought about this until we were maybe after our series a or right before maybe on the eve of our seed round I was talking to a buddy who had been like an

32:29 informal Mentor throughout the process and he was like you know Lexi when you started coming to me with your idea there were like five or six other entrepreneurs I was advising or investing in and all of them have quit he's like you and Eddie are the only people still at it you know I don't know if you meant that in a good way or bad way I think you've been in a good way but maybe you should like you should quit I don't think he meant that but I was like maybe maybe we

32:52 should quit but I'll answer the question in two parts because for Eddie and I we never we just had decided early on we weren't gonna quit and we had been really inspired by some buddies who were officers in the Navy Seals we have done focus groups with these seals to understand their psychology and you know long story short what we took away from them is quitting is a decision it was really fascinating mindset for all of them quitting as a decision you choose to quit

33:19 Buds and it's like well what's your other option it's like oh you just die in the water but that's the other options like okay but we we left that with a mantra of Eddie and I we're like we're gonna be the Cockroaches of Silicon Valley that's where we called ourselves we're gonna Outlast everyone We're not gonna quit and we've still never to this day out of conversation about quitting so on the personal bar of the question I don't know well the answer is because we never we

33:42 just never opened that part of our mind it's truly never been something so even when that idea it wasn't like we were gonna quit we may have to tell Ryan we can't he probably should quit and go focus on his family we were still committed to it like and we just it's like we were brain dead in that component and in retrospect it was a blessing because we we never wasted psychic energy on should we quit right it was always on that didn't work we're cockroaches what did we figure

34:07 out next how can we squirm through a smaller crack okay we'll figure it out on what I would advise Founders I think one thing that's powerful is to separate your what makes great Founders if I could you know wager a guess is it's a combination of a unique opinionated point of view on the world and then a way to operationalize that and creates value for people but the two are different and so you know we were pretty fixed and confident in our world view that that was gonna happen

34:37 where we were agile and iterative and experiment commenting is in how do you operationalize that world view right and we still have a ton of ideas in how we can operation we think what we're doing today is a fraction of the world view and what I would advise Founders is to get clear on disambiguating those two because I think often it's easy to throw the baby out with the bath water and sometimes it's just that your hypothesis on operationalizing your world view is wrong but

35:04 your world view is actually right and you don't want to give up on your world of YouTuber and I've seen Founders do that I don't want any names but I've seen people who have the right world view who had an initial idea that was wrong who gave up on it and I've seen someone else come in with a slightly different idea and win the world view right and you don't you don't want to do that if

35:24 you really believe in your world view and that actually gives you a sense of purpose because it's not about you it's about what's going to happen it's about how you can benefit humanity and so my my humble coaching although we didn't really I think cognitively this would probably be happening but we weren't aware of it at the time is be able to separate the two and it's okay if your hypothesis is wrong that happens in science but you have to almost have a faith-like

35:48 belief in your worldview when should you walk away either when you're tired of being wrong with your hypothesis like you don't have the money you don't have the energy sure those are all fair decisions or you don't believe in your world view anymore right like if you fundamentally don't believe in the world view and you've like I've invalidated the world view then it's probably time to walk away from that Venture Eddie and I never got there we were always every

36:11 failure made us more confident in the world view even though our hypothesis was wrong in that experiment it convinced us that the world view was more correct and I don't know if it should have convinced us we could have just been crazy but it did subjectively convince us so we only picked up steam in terms of our depth of belief even though we were like just failing more objectively and being worse as Founders we were like every time we failed we're like we're

36:34 even more convinced we're right on the world view right and that's what kept us going right I guess because your journey was deep deep conviction on the world view and then a lot of experimentation on operationalizing the hypothesis about how to get it done that's right how to how to get it out I remember remember when we first when we first met you you you were you had you positioned the product and sold the product really well which didn't exist at the time which is Imagine

37:03 coaching but over video and over like a Snapchat like like interface where you're you're having a conversation and there's a there's an interface where they are asking you questions and you're answering and there's a poll that's a video as the template or the I don't forget how you describe it but but I could imagine that that is what yes of course that made sense right but but it probably took you some time and crafting to sell that idea even though the product wasn't quite there yet

37:34 yeah it took us time crafting to sell the idea I mean the funny thing is we've now built that nine years later right like the reality is the market didn't want all that like the market and users just wanted video chat with like messaging after we had looked at your right we were doing the overlay we were doing like we have that now I don't want to steal our Thunder it'll be it's really cool it's amazing it tests well but like that's the market wasn't ready for it

38:00 they were like just the idea of being able to live chat with the coach and message after that was like more than people could absorb and so absolutely that that's a case where we're still building things now where we're like man we we had these ideas like a decade ago and they're just now seeing the light today not because we couldn't deliver on them but because it's like it just wasn't the right time for whatever reason so the actual solution that won the day

38:24 was a more toned down version of what we have pitched you and at the time we authentically thought that's what would do it we had built that tone down version we thought oh we're gonna upgrade it and as we went to do that realized that's not what's creating value for our users it's actually at that moment in the market a waste of time we should just focus on the quality of the coaches the quality of the interaction the video chat quality kind of these Basics you know

38:47 and sometimes it happens in Innovation it's not like this newfangled stuff that wins the day it's just kind of reliability and easy use that's right yeah it's it's so it's not the the the the the sizzle is is great but users sometimes don't they just want it to work they just want a problem solved and that's right and they don't they don't care about it the sizzle is great if it works but that's not what they're after they just want it to work and sometimes Founders

39:16 confuse that right sometimes Founders do get confused they get sucked into building the sizzle but for getting the the basics the simple stuff that but you know simple stuff doesn't sound exciting but it works right totally it works and I think just like there's product Market fit if you're a Founder who's doing a venture-backed startup there is like there is investor product fit and the two are not the same and you kind of have to triangulate both we had terrible investor product fit we had really good

39:48 product Market fit right like the market loved our product problem is no investor could believe the market would love the product and so some of that Sizzle was probably in retrospect us over indexing and incorporating too much feedback from investors because that's what they thought people wanted when actually what people wanted was kind of straightforward in retrospect and you need to navigate both but like if you have to pick you should always eventually investor Market fit will

40:16 investor product fit will follow product Market fit because the data is irrefutable and that's that was our journey like we always raised our Lounge late as you will recall we were always like an AAR threshold almost to the next round we raised the C that series A Levels raise the series a almost it's you know but that was because no one could believe that like the product Market fit would actually work and so there was like irrefutable data I mean you were an early believer

40:40 but most investors it was like they had to see a ton of data because they're like this isn't going to work and I think that's the right choice and a lot of businesses investors are more tuned to the space if it's a tech product you know at its core infrastructure they may be Engineers so they get it quicker so those are more aligned in our journey those were pretty separate and so one of the hardest jobs we had to do I had to do a CEO was navigate like where is this feedback

41:05 from an investor actually helpful or where is it actually distracting us from the market right right and that's another common trap that first-time Founders fall into is taking talking to a lot of investors as part of the fundraising and taking their feedback to heart and and not necessarily the customer's feedback or or or because the founder is not the investor is not as connected to the customer as the founder is right that's right probably another and

41:30 sometimes it's hard to Grapple with because you know customers telling you one thing the investor wants to see something else and so what do you do because you need their money but you can't get the money if they don't believe so it's like a it's like a difficult position to be and I guess the right thing to do is ultimately listen to the customer build what they want and eventually everyone else will follow that's what you are talking about but irrefutability of the

41:50 ultimate traction data right yeah what what was when you when you were first started selling to customers did you have a type of customer in mind some people think about you know you start if you start with large customers Enterprise customers Cycles are so long it's so hard how where you might start with smaller company startups who might give you a try first or individuals even might be even easier how do you think early on about getting when now that you had

42:20 like a rough product idea now you know it's the Asana plus Hangouts and then and then you and and and and any other machine learning algorithm if you will who did you take it out to which types of customers did you talk to yeah so first we actually went prosumer we were like adamant Ryan at that point we had raised some Angel Money Ryan joined as her CTO he joined on famously two conditions one we would never sell to companies and two he would never have to manage people

42:50 so those both ended up being wrong but Ryan and I have been at VMware together we were at Social cast together that's how we had met and and so we were pretty paranoid that like selling to companies would kill the trust in our in our product and companies would want inappropriate levels of data and but it was actually the user that brought us to companies like as we were coaching these prosumers they're all doing it for their professional life they're doing it

43:13 at work they're hiding in their car at lunch you know it's just kind of like my now wife was an HR business partner at a large tech company and was like you know I think HR would buy this and I'm like oh they're going to ruin it so that was kind of in the back of my head and so we were either really bad at customer acquisition in like a prosumer model but it was again it was

43:33 a moment of desperation we were just like we got this great thing we're really bad at Distributing it I think to be fair to us we were both bad at consumer acquisition but also the market just wasn't there but we saw this like holding context of the inner Enterprise and so we didn't know it was the honest answer so classic Eddie and I didn't know a lot of things he probably knew more than me so we just tried it all we're like let's go to Enterprise mid market and SMB and we

43:58 did a smathering of each and we said let's try to get 10 paid pilots and prove that people really want this and we had some startups small ones we had some mid-market and we had large Fortune 100 companies actually which surprised us and as we went through that what we realized is we're really good at the large Enterprise stuff like Ryan and I knew that well have been in a VMware we could get through penetration tests we could like get through it in a differential way and by

44:26 the way it's kind of the same amount of work it's a little more in procurement but like setup's the same oh and interestingly they tend to have more sophisticated buyers who understand the value you profit more and so that was the big thing for us the people are the same everywhere like we just want to help people so great people are people in any of those segments but it was interesting where and again we were kind of like are we crazy like traditional advice is go SMB mid Market Bottoms

44:52 Up disruption we're like I mean kind of all the data's telling us we should just go to Fortune 100 companies out of the gate if they're going to pay for this and that's what we did and that's kind of now we do all the segments we move down Market but that's kind of as you know been the The Uncanny story of batter up is by the time we were in the group and in Market we were selling to Fortune

45:10 500 companies and we've essentially just stayed there and then we've added new market segments yeah what was the hard part about cracking your first Enterprise customer what was the because well many Founders what they worry about is that it's just gonna take a year or two so we'll we'll put it on a slow burn while we bring on some other customers yeah and I think you can do both we did both I mean we we went out to try to get 10 Pirates at

45:42 the same time and some of these SMB mid-markets launched before the Enterprise isn't even signed right so that's like for real a real consideration and I mean look the hardest part is early on it's it's the selling but I take a contrarian view on that I actually think there's a an understated advantage in selling to large Enterprise which is large Enterprise will buy on product promise meaning that they will buy on the idea and they're happy to pay for a shop to build them something

46:14 custom so you can do it with integrity and we certainly did here's what we here's what the product's gonna have by the time you launch you know and it's actually cheaper I would say in some ways to learn because you're moving around decks you're moving pixels instead of actually building all the real products versus smaller business is going to be like well can I just kick the tires today and if you don't have it ready to go that's really hard to do and so we actually I think in

46:39 retrospect use the latency in the sales process strategically to time our r d process so during the sales process we got alignment on the features that Enterprise would want then we knew it was going to take six months to go through procurement and that gave us six months of development time to go deliver on that and so we were able to style but honestly it's like legal and procurement like and I think this is where as a Founder like one of the first things we did was get Perkins Cooley on

47:04 as our Law Firm like so if you're gonna do it you you you you can't kind of like do it in a halfway we had advisors who were early General counsels at Facebook Google Angel Investors like we attracted we pulled this talent in and they were helping us craft three page msas instead of 30 page msas no company would use it they'd make us use theirs in the early years but they were helping us understanding what red lines you could give on what didn't matter and that can be daunting

47:31 if you're a proverbial like you know Tech founder you probably maybe never had to do that especially if you come from consumer and so I do think if you're gonna go large Enterprise you can't go in a half-baked way you have to whether it's you whether it's your lawyer you have to be as a Founder like I was a lawyer like that was my day job I was just redlining msa's contracts what can we give on a DPA what kind Ryan was doing infosec right and like right you have to be committed to

47:59 do that and it paid off in Spades but you gotta you gotta be willing to do it that's right that's the work you you mentioned something about an un like a maybe it's a it's an Insight that you have that maybe other folks don't have but I think it's I just want to pick on that a little bit product promise Enterprises will buy on product promise what did you what did you mean by that yeah what I mean is like Enterprises know they have long sales cycles and deployment cycles and

48:25 so you again you don't want to misrepresent your capabilities but you can go to an Enterprise buyer and say hey here's what we're building here's the road map they can buy on roadmap all the time here's where we think these features will come out is that interesting to you yeah that is okay great like we need to start buying now so you can get it in six months right and and you'd be very transparent we were like you're hoping to fund the development of the roadmap you want but

48:50 you can get aligned on that road map is that yes if you could build that I would be really excited to deploy that or Pilot that or test that great I want to hear that if it's like well build it and come back and let me know that's a nice way of saying you didn't Intrigue them I I used to tell the teams if you have to build it to sell it you're doing something wrong as an Enterprise

49:09 PM like you should never sell something you can't build but like from from from a like a causative model standpoint they should be so compelled to want what you're promising but they're really they're willing to buy today and I promise that that comes in and that's how big companies sell large they sell their roadmap with integrity and honesty but you can do the same thing as an early stage founder you can sell your roadmap you can say here's where the product

49:35 is today here's what we're adding over the next couple months is that exciting and if they're not like like yeah in fact I'd like to do a paid pilot that's how exciting it is that's actually feedback for you don't build it go figure out something else where someone is leaning in it's not going to get more exciting when they see it right that's the difference between a consumer and an Enterprise Enterprises typically are value they're rational buyers consumers are emotional

49:58 buyers at some level they're they're evaluating on features feeds capability functionality very rarely is it like you told me you were going to do X and that sounded really lame and boring and I would never buy that and then you showed me Ax and oh my gosh no right usually you told me that it piqued my interest wow that's really hard to do if you could do that that would make my life as a company really easy now I'm gonna stress test can you do it and when it doesn't

50:25 feel like that as an Enterprise founder you gotta really ask do you have product promise fit because you're never going to get product Market fit if the promise of the product isn't even exciting to people that's right so so even before product Market fit this product will promise fit which is what you're looking for and you don't have to build anything it's cheap it's product marketing it's it's product management and product marketing it requires zero lines of code and when we would

50:52 first go demo better up and again we did this with Integrity we had a one screen mobile app that we would demo and I would have to like then go to slides change the talk track and like because we just that's all we had and we then showed the rest of the app in like slide where but not in the actual app and we were very clear like this is going to go live this is going to be there by the

51:14 time we launch your pilot and in one case we had to delay a pilot and just like hey it's not ready yet they were totally cool with it again this is the advantage of Enterprise they don't sweat a week delay they're like used to doing 18 24 month software rollouts and you don't want to use that in a bad way so you become sitting on your laurels or you delay stuff that's bad business but you can use it and like you can stack those vintages of selling product development info

51:39 section we layer those vintages so we weren't wasting any weeks but we also were able to you know parallelize things faster than just having to wait for every deal to play out completely that's fascinating this input is this is so cool I can't wait for people to hear this I want to I want to sort of touch on another topic fundraising you've done a terrific job of fundraising over 500 million dollars raised from some of the best best VCS in

52:05 the business how do you what advice do you have for folks who are fundraising like what has worked for you that you that you think might work for others the best advice I ever got in fundraising was from Paul Graham and I wish I had listened to it earlier the best advice on fundraising is build a good business it's really that simple like there are some Founders who are I've never thought of myself as a found I still don't I think I'm bad at

52:34 fundraising I mean when you say that stat I'm like okay maybe not as bad as I think I am in my head but we were I was so bad at it in the early years I think that's still where like so like I'm still anchored to that but the reason I was bad at it was probably one because I wasn't good at it but also because we had nothing to show so it's like what are you investing in really the best way

52:54 to fundraise is build a good business like when you have data when you have results they become irrefutable and I think you know my biggest regret there's a lot of regrets one of my biggest regrets in building better obvious in the early years I spent too much time trying to fundraise off really just an idea instead of spending more time setting up Hangouts and Asana sites and actually making progress on the idea and I thought I needed more people to do that I thought I genuinely needed

53:21 the capital it didn't come from a place like I want to say I raised around it wasn't at all that but when I actually thought from first principles and we were desperate and we actually we didn't need any of that we didn't really need money at all we probably could have saved a year of our life me not doing I think it was like 70 something pitches we got no's on in the first 18 months of investors so it's like that's a lot of time we're trading the deck I'm trying not to

53:46 have a breakdown every time we get rejected you know stay strong stay confident so my advice on fundraising is it's really easy when you have something that customers want it's really hard when you have to convince people customers will want this sometimes you have to in the early but even in the early my advice would be how do you de-risk it can you do a small batch pilot like we did can you go buy ads and sort of conversion the more you can get to traction data fundraising

54:11 becomes easier if you find yourself spending more time on your decks than you do on your products probably time to do a little check-in on where you're spending your time as as a Founder and you probably see this all the time you'll probably be more likely to invest in a Founder who can't even fundraise they can't communicate in a coaching pitch but they've built something really cool than someone who comes in is really polished beautiful deck silver tongue but you're

54:35 like you've literally built nothing like right you built a pro forma I mean you tell me but we were kind of between those but we should have been more on the we can't communicate anything but we have something to show we were spending too much time dying to communicate our point of view in this big Grand Vision and not enough time on how how are we going to make traction to it right right so good it's a good advice we're going to move into our sort of final two final Tuesday

55:02 set of questions this one is is rapid fire so it's about firsts what was the first big mistake that you that you can share oh man so many well I think the first big they were kind of coexistent it was what I just shared about probably over fundraising early but I think the first big one was not going with our gut on the product it was coach first I think the first big mistake was burdening that with a future business and Engineering we call that premature

55:32 optimization right like we caused more Downstream Problems by trying to solve a future problem but it wasn't actually a problem and it got us off track instead of just honoring our intuition honoring what we wanted for ourselves we didn't want to use our Duolingo app we just thought other people would want to use it that was the first big mistake we should have just done what got us excited to work together in the first place which was I'd really want a coach like this and

55:55 we should build this for other people and that I think was the first big mistake we recovered from it but it cost us yeah yeah and as you think back to more recently after 10 plus years and and better up is everywhere and not just in the US but overseas too what what is what brings you the greatest happiness or greatest sense of achievement let's say in the past year or so of of of of better up something that gives you conviction about how big this could be

56:23 it's it's the we call them members our users it's the members I mean Eddie got an email from a coach who forwarded him a note from a member the other day he read it in all hands I mean we're like we were crying it's just so I mean these they like we we we literally change people's lives every day that's not Hyperbole and we hear about it unsolicitly helping people coach them through chemo on cancer helping people through some of the

56:50 darkest moments in life death of a loved one some of the brightest moments in life I found out a story recently in the last year there was an EA at one of the world's largest companies who had access to bedrock and she she aspired to become a PM this was like a laughable goal she didn't go to an Ivy League she's not an engineer she said lowly low lias are amazing she's a lowly EA in that culture she worked with her coach and in under a year became a

57:16 PM like the first time an EA had ever gone to a PM that's like life-changing difference in her future her own sense of of self-accomplishment her economic outcomes I mean she's probably making four or five times as much as she was given how this company pays so it's those stories and that's something that Eddie and I were clear on early on from our non-profit work we used to call it the moral salvage value of better up we said hey even if we fail the moral salvage

57:42 value here is so sweet that we will be happy with ourselves if we only impact 100 people the way we did with these first 25 users we can like Pat ourselves in the back and say like that was worth our time where some businesses especially Venture back there's they're binary zero some propositions like they either work when you hit a billion users and it changes the world or they never get there and they don't and that's how VCS are set up we we didn't love that as a Founder

58:08 we wanted to contribute to something that even if we don't succeed as a business we'll feel we have given back to humanity and so that moral salvage value you know will better up be a successful commercial it seems more likely than not that you know at this point but I can already tell you we have literally changed the lives of hundreds of thousands of people for the better and that's something we will go in the grave knowing and that's really really powerful and it started with

58:36 25 very early 25 and now thousands of thousands of people that that's quite that's quite amazing I I gotta ask like what makes you what makes you good at this what makes you good at running a company pursuing a vision and and you have a lot like a lot of employees now many many customer lots of responsibility very different from what it was when you first started 10 10 years ago what makes you what what do you think makes you good at this

59:05 well I I don't know if I agree with the proposition we'll see time will tell if I'm good at this I mean I think it's our own medicine man like I remember early on someone giving us feedback they meant it in a really helpful way it was terrible feedback and that's happens all the time and we had too many advisors and they're like you know it kind of makes you look like you can't run your own company because you need so many advisors I remember thinking

59:31 well I can't run my own company that's why I need so many of that like I mean duh like if I knew it all myself I wouldn't need help from people that's kind of the whole point of our business I just I naively thought investors would look at that and be like that's a sign of strength that you know you need all this help and that you can enlist some of these great luminaries they took it as a sign of founder weakness that like hey so I think if we're good at it it's simply that it's

59:56 like I have an amazing board of directors I have an amazing network of advisors people like you who are some are investors some are not investors I am daily talking to multiple of them like that is not an exaggeration and that has always been the same it used to be mainly out of sheer desperation because we had no idea what to do some days but I think that has allowed me at least personally I'll just speak for myself

60:21 to continue to stay out scale and grow with the business because I'm able to talk to people who have been at the next Horizon in the next Friday here and it's it's coaching it's mentorship it like it makes you elastic it makes you be able to scale and like in ways that are otherwise impossible and that's what we've now tried to bring in the product with our extended Network you don't just have one coach you have access to coaches across 11 different verticals and in a way

60:46 it's just mimicking and mirroring my experience in Eddie's experience which we've been fortunate that for any legal I.T anything there's some one of the best people in the world this is the beautiful part of Silicon Valley is able to lean in and quickly educate us on where we need to get smart and so if anything I would say it's it's just that porousness of being open to that help and pulling it in and I think I just maybe naively thought that you know that was strength and I you

61:15 know I got I got a little lesson and some people view that as weakness whatever like right don't really care at this point it's working for us that's great advice and then in the final for the final question is is again looking back sort of 10 years when Alexi was for Alexi and Eddie were just getting started if you could give advice to those two founders with with the benefit of hindsight what would you tell them today not just the early days not just you know sure

61:42 you know like like speed up like focus on your gut but having seen 10 years what would you tell them well in the exact moment I'd say hey dumb dumbs stop fundraising go build your product so we already talked about that but that would be my immediate advice I think more longitudinally I mean it's a it's a cliche but it's true and it's specifically true it's extra cliche because of our business it would be it it's about the people

62:12 this stuff is all about scaling which means it's all about the leaders it's about your direct reports your lieutenants and I think feedback I'd give myself is be more intentional with making sure you have the right leadership team at every stage and be be very clear with yourself if that team is pulling you or if you're pulling them even emotionally what does that feel like and in the early days you have to pull but as you have the means and the

62:45 financing to bring on seasoned operators you need to really ask yourself am I still pulling these people forward and there's always going to be a little that you're the founder you're probably the Visionary or am I learning from them am I getting the best idea in the room is coming from them and I think you know we always liked our leaders we liked our teams and we probably held on to folks longer than they were really pushing the business forward from coming from a

63:12 good place but that in retrospect slowed us down and I think the emotional litmus test of that is this kind of this feeling of like are they pulling me in a way or am I pulling them and lots of years of probably less productive time than it could have been had I been clear on that earlier that's great that's great Alexa you've been you've been so kind with your time and I I'm just so excited to have some of the things that you've said broken down into

63:42 nuggets because this is so valuable so many new new sort of insights I think especially for people who are just getting started so I want to I want to sort of properly thank you for taking the time to chat with us and in in closing I want to thank everyone who's been viewing this and let you know that that we've had the Good Fortune of backing companies like better up and Alexian and several other Founders we're a pre-seed stage fund we've been around about

64:06 seven years or four Capital please please follow us send us your send us your pitches earlier the better we've had a good fortune obviously of investing in better up and then and then companies such as web have gone on to raise about two billion dollars after a four and and nothing is too early please do follow me on Twitter my first name anamitra on Twitter and our our website is a4.vc and we want to put more of these episodes together and thank

64:33 you once again to Alexi for for taking the time to share your perspective with all the founders who are just getting started 10 10 years where you were back in the day thank you so much well thank you and you guys have been an incredible partner for all the founders out there on a Mitra and Grove are the real deal early on you want Founders to understand markets and products and it's really rare to have a fund that's as focused on that and your vision as A4

65:01 and they've you know they're a small check at this point on our cap table but they have been one of the most outsized value-add investors we've had in our industry so it matters so much early who your investors are the wrong investors can do as much damage as they can do help and you can't go wrong with these guys so I would encourage you to just lean in and learn from them and build with them and have a ton of fun together thank you sir thank you so much with that farewell