Invest Like the Best with Patrick O'Shaughnessy
· Karim Atiyeh
[00:00:00] S1: I mean, you want to shorten the cycle as much as possible between idea and putting the thing in front of a customer. And there's just so many ways to do that. You could simply just focus on, great, I'm writing code. How long does it take to get to production? And then there's, well, how fast do your tests run? How quickly can you actually deploy? I'll share a story on that, which is quite funny. The first time we hired a product manager at Ramp was Jeff. He came into the organization. He had some experience being a PM at another organization, and he looks at the way we are prioritizing work and cutting up chunks of work, and he's a little bit appalled that we are not sizing the different levels of effort for the different tasks. Companies will do this. Oh, there are 10 things we want to do. This one is five points, and it'll take five hours. And this one is one point, and it'll take one hour and whatever. And he's freaking out that we're not really measuring how long we think things will take. And he's trying to introduce that. And I get freaked out. I was like, why are you doing this, Jeff? He's like, because so that we can know how fast we're actually moving. I was like, wait, you don't think we're moving fast enough? He's like, no, no, I think we're moving incredibly fast, faster than any place I've seen. But I just want to measure it. And I believe that there's a little bit of a Schrödinger's principle there, where you can get a lot of precision on how long things take or you could do them very fast. It's hard to get both because if you start to put a lot of importance on measuring in advance how long you think things will take and making that long. Exactly. You end up rewarding and punishing people who make the right estimates. So you incentivize estimates that are longer than they should take so that they can hit those estimates. So it's a very simple tactical thing that you could do. But it's hard because you need the natural ability to understand how quickly it is to actually develop things. And it's hard to do that without expertise in the thing that you're building. It's hard for non-engineers to know how long an engineering task can take if you're really good at it. It's hard for designers to know how long a design task should take, et cetera.
· Karim Atiyeh, Patrick O'Shaughnessy
So not following a lot of the processes that other companies follow because very often process gets in the way. I think processes are a good way to move you to average in a discipline if you feel like you're below average. But often some of the people who are most extreme on how fast they move or on any dimension that you're trying to measure tend to do things in a very odd non-standard way. So avoiding standards is probably one way we do this. [00:00:00] S0: What's your commentary on the base level players and infrastructure in and around this business where people have talked about Visa and MasterCard as the best business model of all time or something like that. This the introduction of stablecoins and what Stripe's doing there, things that Visa or MasterCard might be trying to do themselves. What are the interesting shifting sands to you that might affect how you build the business? What opportunities might become opportunities that haven't been in a long time. The worst idea you could have had the last 50 years is try to beat Visa at its own game. Network effects too strong. What shifting sands loosen some opportunity in your perspective?
· Karim Atiyeh
[00:00:00] S1: This is an interesting one. I think a big misconception is that the reason payments are maybe more expensive than some merchants would like them to be online is because Visa takes such a big cut. That's not true at all. One of the reasons that maybe card payments might be a little bit more expensive for merchants in the US is a lot of the expense comes in the form of rewards for consumers. And American consumers are very, very attached to their rewards. It's going to be interesting to see in what areas people are willing to give up any of their rewards in order to, I don't know, maybe get a differentiated experience in some way and the merchants get cheaper payments. But the stablecoin promise as it stands today for merchants is one where payments are maybe faster and cheaper, but it's still not very clear what it is for consumers or the people paying. Because at the end of the day, if you want to buy something, you just care about the price and how quickly it's going to ship to you and the quality and things like that. Do you really care how you're paying or what is happening behind the scenes? Not really. So in a way, I think a lot of the shifting sense around what is the underlying technology through which money is moving, I'd say that's very irrelevant to the people making payments. But what may become interesting is if you believe in a world where individuals themselves are less involved in making the payments and you have agents doing that on their behalf, it's okay, help me buy that thing. Those agents might not care about rewards as much as you do, or it may help you make more optimal decisions. You could see a world where agents are deciding to optimize the rails and pick different rails based on some different maximization function that's not related to rewards. So in other words, if the decision makers are shifting, the path that they take to make the payment might shift. So it is interesting. I mean, stablecoins are certainly very interesting. It's kind of crazy that today payments cannot settle on a weekend or outside of business hours. In certain cases, there's no reason why payments shouldn't be settling live 24/7 all the time and be very cheap. So I think that will change. But to be honest, from our perspective at Ramp, we are in the business of optimizing and speeding up the workflows of our customers.
· Karim Atiyeh, Patrick O'Shaughnessy
And in many ways, I couldn't care less whether that runs on ACH rails or the card rails or the stablecoin rails. [00:00:00] S0: You'll be the beneficiary of whatever positive change. [00:00:00] S1: Exactly. It's exciting. [00:00:00] S0: Exciting. Let's say we did this again in five years. We have every five-year tradition. And at that next increment we have the benefit of telling the most exciting possible version of the story that happened between 2025 and 2030. What do you think that looks like for Ramp?
· Karim Atiyeh
[00:00:00] S1: This is going to be a pretty funny one, but my hope is that people don't have to log into Ramp at all. Basically is the way to think about it. If you're really obsessed over minimizing the amount of time that things take. And today you're having to log in to Ramp and it's taking five seconds and it'll take four and then eventually it'll take zero. And you have a lot of your finances that are essentially self-driving. One of the analogies I use is what's happening with cars. You've gone from very mechanical cars where you have to do everything and fix everything and you have things like lane assist and park assist and early signs that the car can assist you and do a little bit more. And we're getting very close to the Waymos where you could just sit in the back and press a button and you go from point A to point B. I think something very similar is happening in many areas of business. And the one we're focused on is all the workflows and decisions that happen before money is moved, after money is moved, and how you optimize these decisions over time. There's this endless cycle and loop between you spend on something, something happens in your business, it's good, great, you do more of it, it's bad, maybe you should minimize that. So you end up having the infinite cycle of making just better decisions with your money and not wasting a lot of time in bureaucracy. So I would love Ramp to be as self-driving as possible and for people not to have to log into Ramp at all.
· Patrick O'Shaughnessy, Karim Atiyeh
[00:00:00] S0: For that vision to come to reality, is most of it the infusion, I'll call it, of intelligence, AI? Basically building the chain as you've described doing so many times. As an engineer, you're always thinking in terms of what are the increments here and then just attacking each one with intelligence, for lack of a better term. [00:00:00] S1: I think that's right. I would also add that there are indirect benefits of the models getting better that we benefit from ourselves as well. And the accumulation of more artifacts and data about how customers are using our product every day and for what reasons. This allows us to infer a lot of what their intent is from their actions and the way they decide to fill forms and what they approve and not approve. So it's the more our customers are using the product and deriving positive outcomes, the more we can learn. And as those models get better about reasoning over more complex tasks, we benefit from it either. Very exciting place to be in. [00:00:00] S0: Can you tell the story about constraints that led you to become a good manager?