Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy, Jesse Zhang
[00:00:00] S0: What's the craziest thing that an investor has done to try to invest in the business? [00:00:00] S1: I don't think there's anything super crazy. The main thing that we do, and I would actually encourage more founders to do this, is that during the stage where people want to invest but they haven't yet, that's when they're most willing to be helpful. And so it's actually a great way for you to use that to proxy how helpful they'll be afterwards. Because if they're not that helpful in that stage where they really, really want to invest and they're willing to do anything, they're for sure not going to be helpful afterwards. I mean, they'll still be friendly and hopefully they'll not be detrimental. But that's your opportunity to really test folks and see how helpful someone will be. And we obviously know a lot of investors very well. I think no one has an issue with that. They know that they're going back to competition. They're also in a competitive sport. They know that they need to earn basically the ability to invest in the best companies. And so I think from their perspective, they're happy to work for it. So if you just give them opportunity to, they will.
· Patrick O'Shaughnessy
[00:00:00] S0: I'm going to ask about this from both founder and investor perspective. What advice would you give investors during that window? When there's a fundraising that's happening, you know, there's sort of an open process or a window or whatever, or what have you seen the best of them do? Well, not just, I'm sure, helping you, here's 10 customers you can talk to. I'm sure that's great. But also on the underwriting side, them making sure they understand your business extremely well. I'm expecting as a short period of time, what have the very best done in that window?
· Jesse Zhang
[00:00:00] S1: Number one, I think the best investors get this dynamic. We've definitely talked to a lot of high-profile investors where they're just not willing to help much until they're invested. Totally, they're right. It's hey, we have a lot of our current investments. We don't want to use our social capital or whatever to help with an new investor or a new investment. But I think from a founder's perspective, if that's the case, then it's hard to tell if you'll actually be useful or not. There's no difference between you saying that and then someone who can't really help and just saying that. I think the best ones just are able to give a lot of signal to the founder that hey, I'm really willing to help, I have the ability to help and we have a very strong network or we're very good at certain elements of go-to-market and we're just able to show that in the—let's say it doesn't have to be that long a period of time, a couple months before the round actually happens. That's one thing. I think the other thing is that if you just think about anyone you bring into the org, this could be employees or investors or advisors or anything. What we really index a lot on is just cognitive ability, raw intellectual throughput. And you can almost feel that out in an investor in the same way you would feel it out in an employee just by spending time with them and just actually seeing if they're thinking about things from first principles of your company. For example, right. A lot of AI companies are growing much faster than traditional SaaS companies right now. Because that's the case, a lot of things are different. You generally don't want investors that are just so many reps. You got to do things XYZ way. You want people that are just intellectually curious and will think about things along with you and can help problem solve.
· Patrick O'Shaughnessy, Jesse Zhang
[00:00:00] S0: What about on just the pure underwriting side? So an investor comes in, they're really smart. Let's take that for granted. They just want to understand your business. The good, the bad, the ugly. As fast as possible. What have you seen the best do in that side of the investment process? Including things like how fast they move or how deliberate they move or anything like that. [00:00:00] S1: I think the best ones, I would say they all mean one, they get a very deep understanding of our customers. It's actually funny, our customers have made probably so much money on expert calls because so many investors are hitting them up and I think the best ones can before they even talk to you. They've probably already done quite a bit of research and have a pretty full view on your customers. Unfortunately, I think what we've seen is that there is a lot of noise there because a lot of people just lie on customer calls. And we have people who had said that they've used us and we literally never heard of them. But generally if you do enough research and you're good at it, then you can underwrite the business that way because that gives you the most signal. And the other one is people that index on culture because I think culture is quite important and a lot of good investors know how important that is. And so if they feel you are becoming a place where good talent is congregating, then folks will index on that more.
· Jesse Zhang, Patrick O'Shaughnessy
[00:00:00] S1: I think the best ones, I would say they all mean one, they get a very deep understanding of our customers. It's actually funny, our customers have made probably so much money on expert calls because so many investors are hitting them up and I think the best ones can before they even talk to you. They've probably already done quite a bit of research and have a pretty full view on your customers. Unfortunately, I think what we've seen is that there is a lot of noise there because a lot of people just lie on customer calls. And we have people who had said that they've used us and we literally never heard of them. But generally if you do enough research and you're good at it, then you can underwrite the business that way because that gives you the most signal. And the other one is people that index on culture because I think culture is quite important and a lot of good investors know how important that is. And so if they feel you are becoming a place where good talent is congregating, then folks will index on that more. [00:00:00] S0: Let's talk about that. Let's talk about recruiting and culture. Starting with culture. How would you describe it? We talked about the quote on your wall is the first question. So that's part of it, of course. Extremely competitive, extreme bias to action, get things done. What are the other key components of your culture? When you're sitting with a new recruit, what do you tell them about what kind of place it is?
· Jesse Zhang
[00:00:00] S1: I would say there's definitely a level of intensity that's important. And yeah, you definitely want to tell people that upfront because you want them to self-select into this culture. So everyone that has joined Decagon, I would say they want to work hard, they want to be around other people that are really smart and are them and they're motivated by. They view this as maybe the prime of their career where, hey, I'm going to work hard. But we know that because of that, I'm going to build lifelong relationships with other amazing people. I'm going to have good financial outcomes, I'm going to be able to leapfrog steps in my career because the growth is just happening so quickly. So you're attracting people that. I think that alone creates a pretty strong foundation for the culture because you have people that are there to work. We have a lot of people that live right next to the office. And part of that is because we've selected for people that being in the office with other people. Right. We're in the office a lot. Those are the foundations. And then I think what you have to be careful on top of that is we really want our office to be a place where people enjoy coming to work every day because we spend a lot of time in there. It's like you want people to be happy, to be there where they feel like everyone there is supporting them between the organizations. You want people to feel like they're pretty aligned and folks are working towards the same goal. And that's an ongoing problem. I don't think we've solved culture. It's something we just put a lot of thought into and we want to make sure that people feel like they will be very fulfilled by staying here for a long time.