A Product Market Fit Show | Startup Podcast for Founders
00:29:48 · Astro Teller
[00:29:48] S0: Yeah, but if you have a crazy idea about nuclear fusion. Okay, first, let's see if we can kill it on the whiteboard. If we can't kill it on the whiteboard, I guarantee you the next thing we're doing is not building something the size of a house to start doing plasma shots. We're going to build a simulator or find someone who has a simulator and see if we can kill it using the simulator. If it survives that process, maybe we have to build something the size of a house, but maybe we can even find someone in a university who can do a little bit of the de-risking with us even if it's only bits and pieces. And then when we get to the place, which we did. We closed this down about a year and a half ago. We had a fusion project. We ran it. We did build something the size of a house. We did almost a thousand plasma shots. We convinced ourself it was not going to change the world, and we closed the project down. But it was money well spent because we had removed all the cheaper ways to try that first. Speaking of which, we have a Moonshot podcast. If your audience wants to hear more about some of these stories. Really hear what it was like building Waymo or building Wing. Building this Fusion project. We now have two seasons out. If people just search for Moonshot Factory Moonshot podcast, it'll come up and I think people really enjoy this sort of deep dives. It's not just what it was like for us, but it's exploring with the entrepreneurs that have gone through X. What it felt like for them and what other people can learn about taking their own shots.
00:31:26 · Pablo Srugo
[00:31:26] S2: So we've talked through a few steps, how we come up with the ideas, how you start killing them off as quickly as possible by finding the main risk. What's the next step after that?
00:31:34 · Astro Teller
[00:31:34] S0: I mean, this sounds a little bit extreme but there is no step after that. You just keep doing that. If you do that for six years and you've burned down a lot of the risk. If we're actually at the place where we're like, well, there's a sizable chance this actually could be a Waymo someday. Then it graduates from X and, often this is sort of on the order of ten to fifty people who leave to set up this new business. No one makes anyone leave X. If you want to stay and you have to find a new job, a new thing to do at X, that's cool. If you're excited about the teleporter and it looks like it's really working and you're going to get a non-trivial amount of shares in the teleporter company. You better believe in it because you're about to start getting paid in illiquid stock now instead of paid like a Googler. Then it's an independent business and you guys are off to the races. But until then we structure everything in terms of, what are we learning here? In fact, the baby board meetings that we have for the more mature projects are called quarterly learning reviews. Just to remind everybody, don't show me your progress. Progress is like a smoke screen. That's the rowing frantically in the ocean thing. What we want to know is, what have you really learned? Because if you have spent five or six years at X and you graduate with like Series A, maybe even seed stage Product Market Fit. We are totally fine with that, because you will have tried six or seven times to figure out what the right best connection point to the world is. We don't want a Product Market Fit. We want this sort of moonshot market fit, which is much more holistic. Often we're trying to change a system out in the world. So finding some little thing that people will buy, which in some sense is a product market fit. Actually doesn't have a very good chance of changing the system. If our real goal is to fix the system, then we have to figure out a much more complex set of things.
00:33:37 · Pablo Srugo
[00:33:37] S2: Tell me more about, I want to go deeper on killing ideas and it gets harder, and harder. I assume as you progress through them, maybe whether it's through examples or maybe you have a process for making these decision points. I'm curious exactly how that works, because I think, again, that's another huge piece of learning for most founders who are very blinders on. This thing must work at all costs and I've just seen it so many times where, honestly, five years later. Seven years down the line, and you might actually have a few million in revenue but it's a bit of a zombie company. And in hindsight, 2020, it just feels like, you know what, you might've been able to see this five years ago. So I'm curious what kind of process you have for figuring that out.
00:34:17 · Astro Teller
[00:34:17] S0: Yeah, I'm going to describe it, but just first to be fair to entrepreneurs. There's a bit of a mentality in the venture world with entrepreneurs. I want you as an investor to burn your boats at the shore. So that you and your men fight like crazy to take Troy or whatever city you're trying to capture. Because I know if you burn your boats at the shore, you will just fight harder and that's true. The question is, did you pick the right city to burn your boats in front of? But once you've burned your boats, asking that question is just kind of scary because there isn't really a way back. You can give the remaining money back to the investors. But I just want to recognize to entrepreneurs who are listening to this, before we talk about how to kill your project. A lot of it is about the incentive structures. If they're not put into a situation where it's in their best interest to give money back to the investors and call it a day. It just kind of won't and that doesn't make them stupid. It's like the system has not helped them feel it. Now what you just pointed out is really important, which is, it's their life that's ticking away. So that actually by itself should be worth it to do, but often it's not. So for us we will do a set of things, but here's one that we do all the time. We insist on it, it's called kill criteria. So if your project has moved past the investigation stage, now a few of you are going to be full time on this thing. We're tracking the costs. It's probably not public yet. There might only be three or four of you full time on the project, but given all the resources around X you can borrow. You're probably acting like maybe a ten person company at this point. Right at that moment where you start to do this full time, write down your kill criteria. This is like an honesty message from you to your future self. At some point, call it a year in the future, the following things should be true. This is what I, current Astro, think are the monkeys. We have to be able to do at least A, B, and C at least this well for each of them. In order for us to be taking this project seriously and of course, at that moment, I'm going to be feeling so cocky and everything's going to be great. So I'm going to set A and B and C. I'll try to sandbag a little bit, but entrepreneurs are never realistic enough.
00:36:37 · Pablo Srugo, Astro Teller
[00:36:37] S2: What's an example of some of those A, B, C? That's a revenue milestone, I assume. So what might that be? [00:36:43] S0: If you want to make a magic box that pulls clean water from the air. Let's say, just using sunlight, which we did. By the way, and talked about on the podcast. Then let's agree, after a year of this, you're still going to have a super rough prototype. So you will not have scaled, but you need to be able to tell a fairly exciting and specific story about how we're going to get down to a penny a liter. Because at 10 cents a liter, it's glamping, it's kind of cool, but it won't really change the world. At a penny a liter, you will change the lives of more than a billion people on planet Earth, super exciting. Can we agree that within a year you need to be able to tell that story about what the techno economic slope is like? And you have the next year to go figure all of that out. [00:37:32] S2: Not even do it, by the way, just have a very clear, sharp story about it.