Invest Like the Best with Patrick O'Shaughnessy
00:18:00 · Christina Cacioppo
[00:18:00] S1: Just getting people to use it. Which sounds obvious, but definitely use it yourself. Build for your company personally does not matter. Understand where the models are, where they're good, where they're bad, what harness means. Do that at least every two weeks because it just changes so quickly. You have to have a visceral understanding of what works and what doesn't. So that when somebody comes and they say, we're gonna fire all of our SDRs because I built one agent. And you can kind of be like, did you know? Where is that true and where that false? So there's like a bee in the muck. You want to get as many other people in that as possible. Broadly generalized, it's very black and white. Some people just go do that and some people don't. If you'd asked me a year ago, you'd been like, oh, well, there's some intrinsic motivation and the people who aren't separate problems go deal with them. I think I'm slightly more empathetic now in that we have seen very strong people not go dive in and you have to nudge them more about try to figure out what's blocking them and something can be blocking them and you can get people into the muck. Even if they don't dive in initially. So if you're a small company starting out on Vanta, great. We've got this set of controls for you. You adopt them. You may be mess with them on the edges, but you're like off to the races. If you're a larger company, you clearly run a security and compliance program. And you come to Vanta because you want that visualized. You want the automation and you want the monitoring. You want the real time dashboards. You don't want the like Jira ticket thing. Fine. Well, the hard part is you've got to get all that existing stuff. The controls, the risks, the data, the policies, the procedures, all that stuff in Novanta. Classically, the way you would do that SaaS company is you're like, oh, we're going make an onboarding wizard. It has four steps on a progress bar and we will like give you confetti. You're going to do that whole thing. We were setting out to build better onboarding this year. And the first couple product reviews, the team kept bringing onboarding wizards. Kept being like, stop with the onboarding. Like, no, go use an LLM. Stop. But they kept bringing onboarding wizards. And this was like a motivated team, talented people, they cared. And kept bringing onboarding wizards.
00:20:06 · Christina Cacioppo
We finally got the experience now. They shipped and it's working. It's basically Claude. Big canvas. Drag all your messy files in. Drag in all your screenshots. We will like make sense of it. Ask you questions and then you are set up and off to the races. And it works really well. Why were these smart motivated people bringing onboarding wizards? So you go out like finally. And the thing was they were like, well, we don't know if we can get the like drag your files thing to work. It might not work. And we know the onboarding wizard will work because we've built those before. We basically don't think we're allowed to fail on this project. Oh, that's the thing. Great. We're just going to bet that the LLM flow is going to work and we'll make it work and we'll hill climb all we need to, but burn the boats and just make this thing work. And then they were like, oh, okay, great. Do you want a next product review tomorrow? But it was this like funny thing where you're like, I would not have guessed that was their blocker. And you saw that and they were like going.
00:21:03 · Patrick O'Shaughnessy, Christina Cacioppo
[00:21:03] S0: You mentioned the talent worth thing before. There's this big trend, low margin, high growth thing where from an investor's perspective, the funny example you gave of a lab or a tractor, everyone wants something that can be that thing. Tell me about how you're going to be a $100,000,000,000 business or a trillion dollar business. Somehow now every business needs to be that big. What's that like to face down where you may not be building a business that should be a $100,000,000,000 business? There's like a 100 of those in the world. There's not that many. [00:21:29] S1: Yeah. And it's not to say Vanta won't be. It's funny. For me, it's like, oh, should I adjust the pitch and be like, well, inevitably, the baseline here is Vanta's 50,000,000,000. The real question you should be considering, if you join, can you take us on a journey to like 250,000,000,000? Should I just start saying that? Probably not. But the answer is not. Definitely not. Totally. Because you're like, well, is the pitch that people who work at Vanta are getting from other companies. The market now is saying that so much. You do seem unambitious. [00:22:00] S0: So what do you do?
00:22:00 · Patrick O'Shaughnessy, Christina Cacioppo
[00:22:00] S0: So what do you do? [00:22:02] S1: There's a Vanta principle, value of a principle of do what it says on the tin. Do Do what you say you're going to do. And look, you can put ambitious things on a tin. It's not that. Don't over promise and under deliver. What we do is give some of that. Here's what we do as a company. Good, bad, indifferent. Here's the context. Now, let me talk to you about the business metrics. And we'll generally just show candidates like show everybody everything. It's fine. They're good. We don't really want them to leak. But if they leak, it's not the worst. Walk them through that and what we're doing and how that grows over time. Try to root it in all of the facts and all of the data. And so in some ways, it's counter the vibes with data and trustworthy vibes versus YOLO vibes. [00:22:44] S0: So what is it like in those talent wars? If the most talented people are being told this thing's gonna go to a trillion, basically every other company that's trying to hire them. [00:22:53] S1: Well, the better one is... Well, we're 6,000,000,000 today, but Sequoia is gonna do a $10,000,000,000 check-in a month and then somebody's gonna write it up to 25 next year, but we can get you 6 today. That's a good one. That one's tough. [00:23:06] S0: So you're faced with that. Like, what do you do? Do you not want those people? Maybe it's a filter.
00:23:06 · Patrick O'Shaughnessy, Christina Cacioppo
[00:23:06] S0: So you're faced with that. Like, what do you do? Do you not want those people? Maybe it's a filter. [00:23:11] S1: Sometimes. I think if you go to the person and be like, what are you optimizing for? Why did you entertain this? But not in a pokey way. Just what's annoying you at Vanta? One of these in specific. Very strong leader. Still at Vanta. It was basically this person felt like they couldn't make decisions that would put Vanta on a similar trajectory. And that would be their preference. They're like, oh, but this new place is promising me full decision making authority on this trajectory. Totally fair feedback. What do you need to feel like you can make these decisions? Like, just go make these decisions. Go. There's a money part and a FOMO part for sure. We've definitely gone up on comp and comp bands are kind of a joke. Now, the comp band is whatever data you have is wrong. It is what is being offered to these people. How much [00:23:58] S0: more do you pay the top person at Vanta than you did like as a multiple versus like... [00:24:02] S1: Oh, I think we should have way more comp dispersion than we do. [00:24:04] S0: So that's interesting. But if I go five years back and that person made X dollars, what multiple of X does the person make now? [00:24:12] S1: Total comp. It's probably like a factor of 10. Wow. I think it actually should be higher. My comp philosophy is you never pay the top people. Enough. Enough. You should always try and you will never hit it. And there's a bunch of people you pay much more than their contribution.
00:24:12 · Christina Cacioppo, Patrick O'Shaughnessy
[00:24:12] S1: Total comp. It's probably like a factor of 10. Wow. I think it actually should be higher. My comp philosophy is you never pay the top people. Enough. Enough. You should always try and you will never hit it. And there's a bunch of people you pay much more than their contribution. [00:24:28] S0: Say a bit more about what those top people are doing that's so valuable, typically. [00:24:32] S1: High agency. Get shit done. That sounds so milk toast and that's worth millions of dollars. But like, yes, actually it is. The high context person who understands the company and the customers and the domain, making generally reasonable decisions and sometimes bad ones and then iterating on their bad ones and just moving is so valuable. [00:24:54] S0: Do you think it'll be 10x again in five more years? Or is that starting to get too crazy? Is the rate at which the most valuable people are getting more valuable, staying the same, accelerating? [00:25:04] S1: Accelerating. The counterforce is at what point will investors get more concerned about dilution and stock based comp, which they weren't throughout the twenty tens, late twenty tens. We had more of a like stock based comp conversation as an industry in like 2022, 2023. Now we're definitely not talking about it. That's the counter side. Without that push on like dilution, I think people just get paid more and more. That's probably probably should. [00:25:30] S0: How much do you care about your valuation and multiple and the engineering of those things?