Daniel Gross

Zeroing in on your launch coordinates

Looking at Brian Armstrong's Hacker News history before Coinbase, Daniel Gross described a hacker taking swing after swing on small projects, slowly converging on the right idea. Shaan generalizes that everyone's first projects look unremarkable in hindsight.

“what Daniel tweeted out was, I, you know, I look back at Brian's Hacker News submissions before he started Coinbase. You could see what you see is a story of a hacker working on different projects, slowly zeroing in on his launch coordinates”

Steal thisShip many small projects publicly; the volume of swings is how you find the one that's yours.

A startup raised $8M copying the org-chart idea from the show

After Shaan and guest Daniel Gross brainstormed a public, crowdsourced org-chart tool on the pod, a stealth startup called The Org launched doing exactly that and raised $8M from Sequoia and Founders Fund.

“There's actually a startup that came out of Stealth that is doing this after we talked about it. Clearly stole our idea. It's called The Org. They raised $8 million from Sequoia and Founders Fund, and it looks like they're doing exactly this.”

Pioneer: a startup 'generator' that scouts and funds founders on the spot

Daniel Gross pitches Pioneer as part search engine, part accelerator: it scouts promising people worldwide using psychometrics and ML, then creates and funds a company for them on the spot to overcome self-editing.

“we try to scout the internet for promising people around the world working on kind of interesting stuff, and we spot them using psychometrics, a little bit of machine learning, a bunch of different things. Once we find them, if they seem good, we create a company for them on the spot and then fund them on the spot. Kind of push them over the edge. It's kind of my view that one of the main constrictions on societal growth and also as well as kind of the number of interesting startups we see every year is self-editing.”

Even moonshots start as small, fairly stupid projects

Daniel Gross argues the Silicon Valley myth that everyone starts on grand moonshots is a lie; successful moonshots begin tiny, citing SpaceX's origin as the Green Mars Oasis Project.

“every one of the successful moonshots often starts as a small, fairly stupid project. Project, right? Even SpaceX. Good God, SpaceX, the most moonshot— literal moonshotty company that exists today. People forget, but it started as this thing called the Green Mars Oasis Project. Send a plant into space and put it on Mars. Do everything using Russian rockets. Be as lazy as possible.”

Steal thisDon't wait for a grand vision; ship the small, almost embarrassing first version and let it evolve.

Great investments look unclear at the start, then get a retrofitted narrative

Daniel Gross argues the best deals are tenuous at the beginning (Airbnb almost didn't get into YC, Stripe had no proper batch) and that media teams later retrofit a tidy origin story.

“I actually think all good investments at the beginning are super unclear. A lot of the great YC darlings almost didn't get into YC. Airbnb was super on the fence. I mean, even Stripe didn't properly do— I see there's no actual batch they participated in. And this is the truth about the world, I think, is a lot of the stuff that is great always starts humble and small. Then of course their media teams get together and retrofit the whole narrative”

Writing things down calcifies them: the Enron values warning

Daniel Gross argues writing ideas or company values down makes them rigid; he sends founders Enron's culture-and-values page as proof that written values like integrity and honesty mean nothing.

“I always send people who go through this process the link to Enron's culture and values. Enron, for those who don't know, used to be one of the largest companies in the United States, let alone the largest energy company. It turned out to be a giant fraud and put thousands of people out of business. But of course they had wonderful values they wrote on a piece of paper. Things like excellence and integrity and honesty. None of that matters”

The real innovation at UiPath isn't software, it's the sales channel

Daniel Gross argues founders wrongly attack enterprise incumbents on software quality; like Salesforce, UiPath won via sales machinery and channel/reseller sales, not better code.

“the thing to realize about UiPath that I feel like a lot of people miss in enterprise startups is the innovation here is not the software. The innovation is the sales machinery and the sales channel. And a lot of people, for every sales company, a common meme amongst founders is to look at it and say, "Dude, dude, the software is awful. We're going to make better software." And you forget. Salesforce, the software is just as good as it needs to be.”

Steal thisWhen attacking an enterprise incumbent, copy their distribution and channel sales, not just a cleaner UI.

You can't ignore a market with a lot of IQ working on it

Daniel Gross invokes Chris Dixon's 2012 crypto point: if many smart people are working on a problem, something will emerge, citing Deloitte's $43B revenue (with ~$12B in software consulting) as a market no-code/RPA could eat.

“Chris Dixon made this point about cryptocurrency in, in 2012. You cannot ignore a market if there's a lot of smart humans working on it. You cannot laugh at it. Like, something will emerge. There's just too many There's too much IQ working on this problem.”

Get to the frontier: work at a big company to spot the #1 broken thing

Daniel Gross's advice for finding a company to start: put yourself somewhere with few people looking around, like a big enterprise, observe what's broken, then leave after six months to fix the number-one problem.

“You may want to go work at a large enterprise company and just observe what's broken there. And then you could literally leave after 6 months and start a company to fix the number one broken thing.. And you'll have observed it and it kind of at an experiential painful level where you'd be like, wow, it's really broken.”

Steal thisTake a job at a big enterprise specifically to scout the most painful broken process, then leave and build the fix.

Software that flags when employees' equity cliffs (so managers know who'll quit)

Daniel Gross says no internal HR software told him when his Apple reports' stock would cliff; he wants software that surfaces each employee's financial milestones so managers know when to check in before they leave.

“I just wanted to know for everyone in my org, I want to know what are their important financial milestones. This is Apple, 100,000-person company. There's no software that could tell me this, which is I want to know like "Is most of your stock going to cliff?"”

Steal thisBuild HR tooling that maps each employee's equity vesting and refresh milestones so managers get a 'they may leave' alert.

Org-chart-as-a-service: the wiki that could become the next LinkedIn

Daniel Gross pitches a crowdsourced org-chart product for sales teams trying to map who's who at target companies; solve the employee incentive to update their profile and you may build the next big social network.

“It's industry-specific and it's like a weird Sneakernet-style thing. And like, I think, I think someone could really knock it out of the park here and build something that over time maybe even becomes the next LinkedIn. Just org chart as a service.”

Steal thisBuild a UGC org-chart wiki; crack the incentive for employees to self-update and you have a LinkedIn-scale network.

A better Sci-Hub: highest 'intellectual capital under management' on the internet

Daniel Gross pitches building a better, legal-ish alternative to Sci-Hub (Napster for research papers). The audience is small but ultra-high-value, hedge fund managers and leading scientists, the people that matter.

“If you were to build a better alternative for Sci-Hub that had all the research papers, I don't know about the legality of it. I certainly think it would be moral. That would be a separate issue. I think you could— you would basically have the highest kind of intellectual under-management website on the planet. You would have hedge fund managers, leading scientists all using your website.”

Steal thisPick a tiny but ultra-high-value audience and become their destination; monetization can come later.

Luxury software: charge $1,000/month for a few super high-paying users

Riffing on Superhuman's $20/month email client, Daniel Gross frames a 'luxury software' playbook: build super high-end, super-fast tools and charge a premium to a small base instead of chasing mass free users.

“I think to me that is kind of a model here, going back to our Gulfstream or— Luxury software. Luxury software is a great way of putting it. And I think no one's executed a pocket on that thing. So that's cool. Super high-end, super fast, charge $1,000 a month, and you're not gonna get a lot of users, but you're gonna get a few super high-paying.”

Steal thisTarget the Gulfstream market, not the Prius market: build premium software and charge $1,000/month to a small, high-paying base.

Become a destination, get out of Google: how Amazon and Yelp diverged

Daniel Gross recounts that pre-Prime, 60-80% of Amazon's traffic came from Google, an existential risk; Amazon escaped by becoming a destination, while Yelp got killed when Google promoted Maps over it.

“we forget before Prime, before Prime, Amazon had this giant existential threat, which is I think 60 to 80% of its traffic came from Google. And this is what killed Yelp at the end of the day, because at some point Google was like, "Mm, we're gonna integrate into Maps and just promote Maps over Yelp."”

Steal thisDon't build a business that depends on Google traffic; race to become a destination people open directly.

Venture funding is the wrong instrument for most businesses

Daniel Gross argues many founders erred by taking venture money when bank debt would have left them owning far more of a cash-flowing business; VC only fits companies that must reach tectonic scale.

“venture funding is the incorrect financial instrument for most businesses. I actually think there's a lot of founders that made the mistake of taking venture funding where they would have been much happier off taking debt funding from a bank, owning much more of the business and just leading an amazing life that many founders would secretly wish they have of just like, you know, I have a thing and it makes, you know, $10 million of free cash flow a year and that's kind of it and I own it.”

Steal thisIf your business can throw off cash, consider debt over venture and keep ownership instead of chasing tectonic scale.

The 'buy the brand' growth hack a16z used to launch big

Daniel Gross explains how Andreessen Horowitz launched fast: they bought secondary stakes in Skype and Facebook and put those logos on the site, the borrowed-credibility equivalent of 'I invested in Apple and Amazon.'

“what they did is to get big quick, the testosterone they took, the human growth hormone they took is they did a called buy the brand strategy where he went out of the gate and he put up on his website, you know, Skype and Facebook. I think they bought secondary in both companies, which is not too far from me saying, ah, welcome to my venture capital fund.”

Chase revenue over status: a like costs nothing, money is scarce

Daniel Gross argues SF founders get stuck performing for intellectual approval and accumulate infinite, costless status (Twitter likes); revenue is healthier because money is scarce and proves you made something useful.

“the problem with status is that it's infinite. So it's very easy for me to give you a like. It costs me almost nothing. It's much harder for me to give you money. That's why I think at the end of the day, revenue is a much healthier thing to chase because that's how you know you're creating something really useful for people.”

Steal thisMeasure yourself by revenue, not likes; status is infinite and free, so it tells you nothing about real value.