Invest Like the Best with Patrick O'Shaughnessy
· Jesse Zhang, Patrick O'Shaughnessy
[00:00:00] S1: Exactly. [00:00:00] S0: Yeah, that's really interesting. How do you mark milestones in the business? How do you motivate the team? What have you learned about how to rally around a given thing? I know you're super aggressive when you have a customer that you want to get that. It's not just an old school sales process. It's an all hands on deck, send engineers, do whatever it takes. What have you learned about motivating milestones, rallying the team, organizing around common goals?
· Jesse Zhang, Patrick O'Shaughnessy
[00:00:00] S1: Yeah. For us, I mean, one thing we do always is we always have a flagpole that's within sight that can just kind of rally everyone around it. Having things to rally around are quite helpful. I was kind of thinking about this the other day. I think another type of rallying is around competition, right? I think when people feel they're in a battle and there's clear enemies, then it makes sense again. You don't want to get to the point where there's active animosity, but just a healthy level of competition. It ties the team together because there's something to focus on. Same thing with milestones. If you give everyone a clear milestone and this can be pretty insignificant. Last year for our revenue milestone, we told everyone we'd get them super nice jackets and we got Decagon Arc'teryx jackets and everyone was super excited about that. And if you just think about the cost, yeah, the cost of the jacket and just how much people get paid, it's trivial, but it just creates this, hey, we're working towards these jackets. It brings the teams together because now it just feels everyone's working together towards this common goal. That's been a big part of our culture is just finding what is the next milestone. [00:00:00] S0: Anything that we haven't covered about either the business or this exciting AI applications world that you feel especially passionate about? I feel we've done a good job of covering.
· Jesse Zhang
[00:00:00] S1: It's been a great conversation. I think what has become almost a meme or hyped up a lot in AI startups right now are a couple things. One, obviously everyone's in person. It's 996 or whatever. I don't actually think 996 is that healthy. It happens in China and everyone's super hardcore. But one of the reasons is that no one has jobs over there, so it's very easy for employers to have leverage. I think here you generally want to maintain a good balance because if you're working super high intensity, you need time to relax a little bit. But that is one element. The other element is the forward-deployed engineers. So everyone's talking about forward-deployed engineers. And yeah, I just think it's kind of funny because my co-founder came from Palantir, so they actually have forward-deployed engineers. What a forward-deployed engineer at Palantir means is you're working on a $10-25 million deal, and so you're actually just almost full-time working with either one or a small number of customers and building very specifically for that. And I think people are a little bit conflating that with what startups do, which is startups are just very hands-on and do things that don't scale. But for you to actually have a FDE model, you need to have massive clients, and most people do not have massive clients. So I'm actually kind of interested to see how that plays out because I do think there's like an over-indexing on this forward-deployed engineering model right now where yeah, I have a forward-deployed engineer and the deal sizes are like $50k. And that's something we think about a lot as well. We are very hands-on with our customers, but I think you have to think about things holistically. You have to think about okay, well how do we scale quickly? We don't have $50k clients. But for every $50k client you have someone that's fully staffed to them, that's impossible to scale. So you need to find that line in the middle. And I think the full forward-deployed model only works with the Palantir approach.
· Patrick O'Shaughnessy, Jesse Zhang
[00:00:00] S0: Presumably on this side, you do care a lot about your margins? Margins you're much more open about if it's just LLM cost or something like this, but if it's fully baked people costs, that's going to be a problem? [00:00:00] S1: Yeah, it's not even a problem necessarily from the pure dollar margins. It's just prevents you from scaling. No one can hire good people that fast. It's just hard to hire good people. So if your business is fully constrained on good people, then that's also not a good thing. [00:00:00] S0: What do you think the minimum customer size in revenue is to justify a forward-deployed engineer model? [00:00:00] S1: Oh, probably a million. Yeah, yeah, yeah. [00:00:00] S0: Fascinating. Well, I think you know my traditional closing question for everybody: What is the kindest thing that anyone's ever done for you?
· Jesse Zhang
[00:00:00] S1: As I mentioned, our mutual friend Scott gave me a heads-up here, so I did put a lot of thought into it. So when I was little, call it ages 5 to 13, elementary, middle school, pretty lazy kid in general—most kids are. There's very few people that are just intrinsically self-motivated. I wanted to just play games all the time or just hang out with friends or play sports. And yeah, my parents had a very interesting way of raising us, me and my sister. What they did was basically when we were really little, it was an extreme level of discipline. When I was little I played a lot of piano, essentially three, four hours a day, and then for competitions, they would just pull me out of school and just go hard at it. And then I guess, fortunately for me, my parents decided, okay, math was probably a better way to go, and I was just quite talented at math when I was little. Even for that, it was just full force. You're just committing everything. We did not have TV in the house, we didn't have video games, we didn't really take vacation. Growing up, you're kind of in this mindset of you're sacrificing most things to focus on one thing. When you're a kid, actually, you have no frame of reference, so it doesn't feel hard necessarily because your parents are kind of setting up the criteria for you. And in hindsight, I had a very happy childhood. But I think that level of discipline and also just competitiveness is very hard to gain that after your childhood is over, because when you're in your childhood, your brain's still forming, so that kind of forms your personality. So one, I'm very grateful for that. And I think that's also why when I talk about my generation—there were a lot of immigrant parents from my generation that came over for grad school and they're all around my age. And I think that's our crop of folks just are doing very well, partly because of that, partly because of the upbringing. And then what my parents did, I think which is the more unique side, is that a lot of times what happens, especially it's the stereotypical Asian parent, is that that just continues and you just have overbearing parents. I would say even though my parents were very intense about things, they never had any semblance of overbearingness.
· Jesse Zhang, Patrick O'Shaughnessy
They wouldn't prevent us from doing things we wanted to do, force us to say, "Hey, you should pick this or whatever," and so on. What happened was towards the end of middle school into high school, I think we had already kind of established these personalities. Basically, my parents just pounded a sort of lazy, wanted-to-play-around kid into someone that was just very, very driven. Then to their credit, they just completely laid off. They don't have any opinions on what we do for careers, what we should do. They're very supportive. So I think that's very kind, because you cannot replace—you can't even pay for that. You basically just need parents that are willing to spend a ton of time crafting this childhood for you to develop this. And I think a lot of things I have in life right now are from that. So that's probably the kindest thing. And my sister as well. Even growing up, I think there was a lot of pressure on me and in some way, for parents that immigrate who are also ambitious folks, it's very hard for them to succeed themselves in a new environment, in a new country, so they put a lot of expectations on their children. Yeah, my sister was also—she was just always trying to sacrifice things for me when I was trying to achieve things. And so, yeah, try to spend as much time with my parents as possible. [00:00:00] S0: What was the climax of your math career?