Invest Like the Best with Patrick O'Shaughnessy
· Jesse Zhang, Patrick O'Shaughnessy
[00:00:00] S1: Emotional? I think I'm a bit older now, so it's not really that emotional. I started a company before this that was, I would say, way tougher than the current one. I think just mentally makes you feel a lot more calm and appreciative of when things are going well and timing matters a lot. I think when I first started, I graduated a year early to try to start it. And I would say we had a very fortunate outcome, but the whole journey was very bumpy. [00:00:00] S0: What was it? What did it do?
· Jesse Zhang
[00:00:00] S1: So the company was called Loki. We basically built high performance video capture software for video games. So when people are playing games, you can really easily capture video clips and edit them and share them. The whole goal of the product is just get as many users as possible. And again, I think we exited at a very fortunate time. It was 2021. But throughout the journey at the beginning I didn't really know what we were building. And then trying a bunch of things and you're a new grad, you don't really have good intuition on what idea is good or not. So you just work really hard for three months and then you realize that obviously had no market. So that's tough. Then about a year and a half in, I had two of my good friends from school were my co-founders. They both got burnt out and then decided to leave. So it was just me after that trying to figure out what to do. And so that's, I think when you. I think that's way tougher than anything we're doing right now. It's the way you put it, an emotional thing. You don't really know if there is any future or not. There's a lot of pressure because you don't want the first thing you work on to be a failure, essentially. So I think that was much tougher from a psychological point of view. Nowadays, I think it's tough just a sheer amount of stuff to do. We're not getting much sleep. But in the grand scheme of things, you got to be really grateful, even be in this position to have enough work to do, to have enough interesting problems to have a team that you're really excited to work with every day.
· Patrick O'Shaughnessy, Jesse Zhang
[00:00:00] S0: How much do you think you're sleeping? [00:00:00] S1: I mean, it really varies. This week in New York, it's probably four to five hours a day. And it's not good because I'm not someone whose brain functions that well on less than eight hours. [00:00:00] S0: So if you think about the difference between the first and the second company, obviously now you have a company that's working extremely well. It's growing really, really fast. What did you do at the beginning of Decagon that was informed by your prior experience to make this one go better?
· Jesse Zhang
[00:00:00] S1: I think this is broadly true of starting companies. I think the first stage is by far the hardest because you're kind of just finding direction. And finding direction is very difficult because by definition it's not something where you can just have a goal and you're just grinding towards it and you can get there. Your goal could be, yeah, finding a direction, but it's more exploratory. So I think what we actually are quite good at now, and Ashwin, my co-founder, who's amazing, he also has similar background, he started a company before that got acquired. I think when you start a company the first time, you often share the same experiences, which is finding directions very difficult. So I think this time we were a lot more thoughtful about it. And again, it goes back to what your strengths are. I think we view our strengths as, hey, we're very good at problem solving. We're very just rational about things. We're just good at execution. And so if that's the case, then I think we just try to systematize the ideation process and it just comes down to, okay, whatever you work on, it has to be something that people will really invest in. And how do you tell if that's the case? You can just go really deep asking them. And I think people are usually a little bit, almost embarrassed or not comfortable going super deep in these questions. When you talk to a potential customer, they actually don't mind answering questions such as, okay, if we built this for you, exactly how much would you pay for it? Would your boss need to approve it or your boss's boss who needs to approve it? How would entire organization think about ROI? How would you present ROI to the leadership to protect yourselves and also make you look good? And I think if you really go deep there, it's almost you're basically asking classic sales qualification questions when in founder form. And because you're a founder, it's just feels a lot less salesy for you to go deeper. That process is what gives you a lot more signal. When we first started, we fortunately were able to get in front of a lot of large companies, mostly digital native ones. And we just asked these questions and we kept digging in. We had a bunch of different ideas at the time. We're not tied to any idea and it's just kind of open exploration.
· Jesse Zhang, Patrick O'Shaughnessy
We were looking at things ranging from data analysis to security to pre-sales to ops stuff. And that process was very helpful. It just shows you that there's a lot more signal to gain than just talking to customers, which is the general advice, or building something that customers want. Building something that people want. Yes, that is true, but it's very hard to just know that, yeah, they'll just tell you what they want, but then it turns out that that's not useful. [00:00:00] S0: What was the literal process? Would you go to a single person and ask them about multiple of your ideas at once? Or would you target it more one idea to one person? [00:00:00] S1: You have to target it based on what that person owns. If that person's very senior, you can ask about multiple. So if you talk to a COO, for example, you can talk about a bunch of different use cases. That gives you some signal too. And then if you're talking to more of a VP of a certain area, you're probably focusing on one use case. [00:00:00] S0: So maybe go in detail through one of these conversations so that others maybe could benefit from what you've learned. So what is the order of the questions? How would you structure those conversations to get the most information possible?
· Patrick O'Shaughnessy, Jesse Zhang
[00:00:00] S0: So maybe go in detail through one of these conversations so that others maybe could benefit from what you've learned. So what is the order of the questions? How would you structure those conversations to get the most information possible? [00:00:00] S1: So yeah, let's say we get into the call and you start by just doing very high level discovery. Hey, what are the sorts of projects that are ongoing right now? How do you spend your time? What is kind of stressful for you right now? Et cetera. And then you can kind of get a sense for the types of use cases. And then very quickly you can just form hypotheses literally on the fly of, okay, what would a product be? That makes sense here. And so then you're kind of explaining, okay, yeah, so what if something an AI agent could do XYZ, would that be helpful? And most likely they will say yes. Because there's this thing that happens where if someone's on a call with you, they almost feel they owe you like— [00:00:00] S0: A positive that you can—