Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy
[00:00:00] S0: I'd love to ask you about a few of your kind of general views of company building and the future. One of them that you and I have talked about before is this view that a lot of the best company builders will be very technical in this era. Say more about that.
· Karim Atiyeh
[00:00:00] S1: So I think we're at a interesting junction right now. And the best analogy that I can give is the Ford one where, if you had asked people before cars what they wanted, they would have said faster horses. We're probably at the juncture right now where you ask customers what they want from your products and they'll say, oh, I want an additional widget here, an additional button there. They don't realize that the car to their faster horse is possible. We as a company should be obsessing over what do customers really want? Well, they want to get from point A to point B, and what is the best way to get them there. It's, well, it's to build a car for them. And you ask questions, who even realizes that that car is something that is possible? And what it might look like is, well, the people who came up with the technology for how an engine functions and what it's capable of doing and what is possible. And these tend to be more technical people in general. I think the technical folks are more likely to see the possibilities in terms of product than non-technical folks. So as a result, particularly right now, technical folks can be very impactful in other disciplines because they see the possibilities better than other experts might. And the other side of it is the gap between not having subject matter expertise in a domain in say in marketing or healthcare or education, and having it is the smallest it's ever been. The only thing stopping you from getting that knowledge is your ability to learn and to ask the right questions of an LLM that can help you become an expert a lot quicker than you would otherwise be. I joke now that I'm a better doctor than I've ever been, but I'm not a doctor. I'm a better lawyer than I've ever been, but I'm not a lawyer. And in practice that means that when I'm having a conversation with my doctor, I'm a lot more knowledgeable and I know to ask the right questions. When I'm having a conversation with a lawyer, they're a lot more efficient and I'm asking the right questions. And as a result, I think engineers that know what is possible can help us build the future of our product much better for our customers. Even though they have not done procurement before, they have not done AP before, they have not done accounting before, et cetera.
· Patrick O'Shaughnessy, Karim Atiyeh
[00:00:00] S0: You've extended that even to marketing. Can you maybe tell this story? So rewind time. I don't know, a year and a half or two years ago or something, you and I are talking about this and you decided to go take over marketing as the CTO and you've had this experience since which I find really interesting of what it's like to bring an engineer and an engineering team to a problem without domain expertise. In the same way you're just describing what did you do? And walk us through that. Because it feels like that playbook might be usable by others in different parts of their business. [00:00:00] S1: Yeah, of course. The funny thing about that is I think that was a time where all the lagging indicators were going extremely well. A lot of people were asking me at the time, what do you think has broken? I mean, things seem to be going quite well. There's no need for a change there. And I was looking at the early leading indicators and starting to see things like, well, we've made our conversion really good in a lot of segments. We are converting at more than 50%. That meant that if a customer had a conversation with a salesperson, there was a 50 plus percent chance that there will be a customer within 30 to 60 days. Which is incredible. [00:00:00] S0: Yeah.
· Patrick O'Shaughnessy, Karim Atiyeh
[00:00:00] S0: Yeah. [00:00:00] S1: And you're like, okay, conversion is getting really good. We've gotten better at monetization, but conversion can't get better than 100%. There's some kind of upward limit. There's some kind of upward limit to monetization as well. Some percentage of the value that we're driving. Okay, there is no upward limit or the upward limit to how big our TAM is is a lot further because we're still to this day sub 2% of corporate card alone. And it just felt like we were starting to slow down maybe a little bit in our ability to generate leads. And while these two other things in terms of conversion and monetization were going really, really well, there's an upward limit to them. And if we didn't figure out how to re-accelerate our ability to generate leads, we would be in trouble today. That was a year, year and a half ago. And I started obsessing over that problem and I guess I turned to some sense of paranoia. When everyone else around me feels like things are going great, it's like, okay, what is the problem? And for me at a time that was the problem. How do we make that better? And around that time there was maybe an attitude in marketing broadly of we would try things and if they didn't work, we would maybe assume that. I was like, well, those things don't really work for us as opposed to, no, they have to work. We just haven't figured out how to make them work. [00:00:00] S0: What's an example of that?
· Karim Atiyeh
[00:00:00] S1: So let's say we would try to, I don't know, run an ad on a podcast or partner up with a podcast, and it doesn't work. We're like, well, podcasting doesn't work for us. My attitude would be, no, you picked a wrong person to partner with or you picked the wrong format of an ad. Why is the thing broken? It's not that the thing doesn't work. It's you haven't figured out how to make it work. Clearly all these forms of advertising do work, otherwise other good companies wouldn't be doing it. We just need to figure out what works for us and how to make it work for us. That was the lens that we brought to really everything. Direct mail, paid advertising, brand advertising, all the different things in marketing, product marketing, and how we launch products. So I went into it with the attitude of we're going to fix the experimentation mechanism and the system through which we do work and in many ways, apply the Elon algorithm to it. So in a lot of parts of marketing, you need to work with the brand team to, say, generate an image or an asset, whether it's for a product launch or an ad. It's like you want an image, an asset, some copy, and you, as part of marketing, you tend to work with the brand team on those. The way it used to run before is for every single piece of content that you wanted to generate, you had to write a brief. So you would write a brief to explain to the brand team what you're trying to do. That brief would get reviewed by the brand team about once a week. The brand team would decide who to assign to it based on skill set, and then you would get some output two weeks later or maybe a week later. So that meant that no matter what you wanted to do in marketing, if you're working with a brand team, it would at the very least take about two weeks, which is kind of crazy. What if you need to work on something that, I don't know, should take 10 minutes or 20 minutes, it doesn't matter. It'll take two weeks for it to be in front of somebody, and then they'll do the work for 10 minutes. And with that kind of clock speed, it's impossible to get anything done. And while a lot of people would have gone into marketing with, okay, great, the way to fix this is let's come up with a better campaign idea.
· Karim Atiyeh
I went into it with, let's just look at the actual system that generates work and focus on how we can make that system as efficient as possible. I didn't go into it with, oh, I have better creative ideas than the people on those teams because we have amazing people. I just want to put their ideas in front of the world as quickly and as efficiently as possible. That's what I'm focused on. We have great creative people. They'll still come up with the ideas. But when they have an idea and I want to put it in front of someone, I want it to take 10 minutes, not two weeks. And if we do that, we can take a lot more shots on goal. We can take a lot more risk with the things that we do, because we know that if it doesn't work out, we could try something else tomorrow. And that's really the type of attitude that we went into it with. And I think that's helped us a ton. I actually have another example that I love. You could think about billboard advertising. If you want to put a billboard in New York, let's say it costs you $100,000. Funny thing with billboards is you don't really get that much economy of scale. If you want to put another billboard, it costs you $200,000. You want to put three billboards, $300,000. But if you want to change a billboard that you've already bought, it only costs you $1,000. So that means that if you have one billboard in Union Square and you want to change it tomorrow, that costs you another thousand dollars. You want to change it after tomorrow, that's another thousand dollars. So you can essentially have a billboard in Union Square that changes seven times in a week, and that's $107,000. Or you can have two static billboards for $200,000. I would argue that one billboard changing seven times in a week is a much more powerful way to drive a message and get a story out than two billboards, and it's a lot cheaper. So a lot of the attitude that we brought in is, how can we find these hacks and ways to get more out of the systems that exist? The creative is not really changing. I'm not trying to influence that, but the system through which we are doing marketing work is a lot more inquisitive and experimentation driven.