Invest Like the Best with Patrick O'Shaughnessy
· Gokul Rajaram, Patrick O'Shaughnessy
[00:00:00] S1: Great example. Reducer. I like that. [00:00:00] S0: I wonder how that applies also to communication. Maybe this is a fun opportunity to ask you about the format that you've alighted on that a leader can send to his team on a weekly basis, I think. It seems like this idea of reducing and simplifying can be applied in so many ways by great leaders. Talk about it in terms of communication from leadership to a team.
· Gokul Rajaram
[00:00:00] S1: One of the things that people, especially founders of startups, don't realize is – initially most startups start with two or three people and then they go to people who are all sitting in a room together. Everyone can hear what you're saying, but as soon as a company goes into, I think I call it two rooms, where they're not in the same room together, then you have to communicate. You have to let people know what's going on. And there are a few artifacts that companies need to start putting into place. One is the notion of an all hands. It seems cliched and unnecessary, but even with a 15%-20% company, just getting together once a week and basically just sharing what people have built and been working on in a way. And then having the leader address everyone or one of the leaders address everyone is a great way to get people together. The second thing is a weekly CEO email. And I think this is a very powerful way for the CEO to get across to the team what is on their mind. The best way I think is, that I've done myself – is during the course of the week, you start jotting down things that you think you want to communicate. And then you'd spend Sunday taking all of those things and adding it to two or three things that matter, that you want to get across. Most businesses, I think, can be communicated along three dimensions, product, business, and team. What's happening on the product? How is it becoming more remarkable or serving the customers better? What's happening to the business side? How are we doing better as a business? And then what's happening on the team front? Who have we added, subtracted? What changes have we made? And most importantly, don't be afraid of repetition. Because repeating it once, twice, thrice, four times. That's when actually it seeps into their bones.
· Patrick O'Shaughnessy, Gokul Rajaram
[00:00:00] S0: What is the literal format that you do in your email? What is the structure that you do personally? [00:00:00] S1: I've used in the past, and what I recommend, and what people I've seen now – I've seen at least 15 CEOs adopt it, and to good effect. It’s three sections. One is called top of mind. So this is product, business, and team. Doesn't need to be all three. What's keeping you up at night? I think this is the thing that literally everyone is hanging on to. I mean, because I remember seeing it from Jack, from Mark, from Sheryl. Seeing it put in paper or put in an email is just so powerful. That's one. The second thing is performance update. I think everyone wants to truly understand how's the company doing? How's the company doing on the dimensions? This is where, especially being a startup, I think most people are one dimension removed from how the company is doing. They all want to know that they're doing well. I think this is the way. And the third is miscellaneous. There's things like recognizing specific people. It's quotes from customers. It's maybe an offsite announcement. But the most important section where you should spend 60% or 70% of your time on, is top of mind.
· Gokul Rajaram, Patrick O'Shaughnessy
[00:00:00] S1: I've used in the past, and what I recommend, and what people I've seen now – I've seen at least 15 CEOs adopt it, and to good effect. It’s three sections. One is called top of mind. So this is product, business, and team. Doesn't need to be all three. What's keeping you up at night? I think this is the thing that literally everyone is hanging on to. I mean, because I remember seeing it from Jack, from Mark, from Sheryl. Seeing it put in paper or put in an email is just so powerful. That's one. The second thing is performance update. I think everyone wants to truly understand how's the company doing? How's the company doing on the dimensions? This is where, especially being a startup, I think most people are one dimension removed from how the company is doing. They all want to know that they're doing well. I think this is the way. And the third is miscellaneous. There's things like recognizing specific people. It's quotes from customers. It's maybe an offsite announcement. But the most important section where you should spend 60% or 70% of your time on, is top of mind. [00:00:00] S0: How transparent should one be in that? As a leader of a business, I can tell you what’s top of mind, but a lot of it either might be sensitive, or I would worry about scaring people or worrying people about something that I'm thinking about or worrying about. What keeps me up at night might create stress in the business. Where should one draw the line in terms of how candid they are?
· Patrick O'Shaughnessy, Gokul Rajaram
[00:00:00] S0: How transparent should one be in that? As a leader of a business, I can tell you what’s top of mind, but a lot of it either might be sensitive, or I would worry about scaring people or worrying people about something that I'm thinking about or worrying about. What keeps me up at night might create stress in the business. Where should one draw the line in terms of how candid they are? [00:00:00] S1: I personally think more candid is better than less. Why? Because if you're more candid, you can actually ask people to suggest ideas. If you have good talent at the company, if you actually ask them, "What do you think I should do? What do you think we should do in this situation?" I think people will rise up to the occasion. Especially when the company is small, we want people to have more input and if there's a one-way road decision that we're going to make, where making it takes us one way or the other, I think it'd be great to get feedback from more people. [00:00:00] S0: I want to talk about ads and everything you've learned about building an incredible ads product. You've built the two most important ad systems in the world.
· Gokul Rajaram
[00:00:00] S1: I always say as a company, you either die or you live long enough to become an ads company. And so we are seeing now with OpenAI, it's happening. Now, how do you build an ads business? There are three fundamental ways to succeed in the ads business. Three, and only three. One, you need to own a very coveted group of users and you need to have a surface on which those users interact. Google Search is a great example. It's a surface on which a very coveted set of users interact with. Obviously, they express high intent, so Google is one of the most profitable ad businesses. Facebook, very similar. It took us a while to figure out what was coveted about these users. Turns out what was coveted was the identity. We knew who these users were and we could match them to customer and other data. And so you could precisely target these people with messages you wanted, and you could find people similar to them. ChatGPT, their combination of intent and identity data is unparalleled. I mean, Google had intent data, but not identity. Facebook identity, but not intent. These things have been both together. It's the dream of any advertising person. And these are complex, multi-phase searches. That's the other beautiful thing. You search, but each of the queries is kind of like a search. And then you search again and you're just building up searches. At Google, you typically search and then you lose the person because they go off and click and you don't hear. These are natural language queries ripe for amazing, amazing targeting. So that's one example. That's one way of making money, where you have to own a first-party product. You have to be the first party. Second, you have to drive outcomes. That's another way of making money where you don't own any inventory, but you can drive outcomes to advertisers. The best example of this is a company called AppLovin. AppLovin is a $100 plus billion company. They drive one outcome really well. Mobile app installs. And no one believed that people would need that many mobile app installs. Turns out everyone wants to get mobile app installs. It was initially only restricted to gaming, but now they sell to every mobile app that wants more app installs. So AppLovin has built a massive infrastructure.