Hooman: you have to design for systematic failure. And so I think founders need to embrace that perspective, CEOs in particular need to embrace that perspective that you're thinking in systems of bets. And when you think of things like that and you're like, I'm going to fail, my people are going to fail. man, this is so shocking that, you know, we're not doing as well as I thought we're doing. You're always saying things are great, things are great. So I had treated good people inadvertently like they couldn't handle it. And so you look at the end of the day, our job is founders alignment.
Kevin Holmes: employees alignment, right?
Hooman: Your job is alignment. That's it is your only job, honest to God. I mean if you don't align people, what good are you?
Kevin Holmes: welcome everybody to the Founders Network podcast. I'm Kevin Holmes, founder, CEO of Founders Network, GP and F and Fund. Today's guest is Hooman Radfar, co-founder and CEO of Collective. Collective is an online financial back office platform for solo promoters and businesses of one. Previously, Hooman co-founded Add This, which powered 15 million websites before Oracle acquired it in 2016. He's supported founders on both sides of the table as an investor, as a venture partner, and again today as a founder, providing services and software to founders. today we're gonna talk about success theater. We're gonna talk about venture capital and the state of AI and the buy versus build decision. We're gonna cover a lot of ground and I'm excited to jump into it. So, Hooman welcome to Founderswork Podcast.
Hooman: Kevin, thanks for having me. we're we're gonna have some fun. We're gonna get into it.
Kevin Holmes: Yeah. So let's jump into it. I mean, there's an audience here of founders, tech founders who are building. And the ideas they want to learn from founders who've had success. You built AddThis, you you had a a successful exit, scaled it successfully, sold it to Oracle. You've had your time at Expo where you're a venture builder, building startups, working with with founders and helping them build together. Your current startup with Collective, you've raised over a hundred million. So you've got a A few experiences to share and there's a lot of new entrants to the industry who are building. One of the things we talked about in the prep call was like the success theater culture you're seeing. I wonder if we could just dive right into that and and maybe what you had to say about failure and embracing failure and how, you know, thinking in terms of systems of bets.
Hooman: Yeah, so as you mentioned, I've been lucky because, you know, I I've gotten to really experience the founder experience from a number of different angles. I've founded a couple companies, obviously. I've been lucky through, you know, my personal investments to back founders. At Expo, you know, I was a founding partner and, you know, helped back a number of founders and even co-build. so it's been interesting for me to see it from different angles. But I think one of the most interesting points of view that we discussed that I learned or I guess reinforced is when you're looking at from a venture perspective or an angel perspective, you're building a portfolio. And definitionally, and you do this, you know, and you know this, what that means is you have to design for systematic failure. A portfolio definitionally has, you know, a Pareto distribution if it's a good portfolio. You have a couple they carry you. Hopefully that's it's it's a lot big number. But honestly, it's maybe you're lucky if you have one or two. You have the middle, you want your middle to be fat. Maybe you get a couple, two or three X's, and then you know, a bunch of zeros or ones, and you want to minimize the zeros. But it's it's a line like this. And so you dip to that, you start to get used to like, you know, I remember when I started investing, and you know, at the beginning, you're like, holy crap, I just fail, fail, fail. And you're because you know, the guys who are winning are winning, right? But you don't get to see it's not a meteoric rise. I mean, I know today with AI people. Obviously are are experiencing some accelerated timelines, but you know, for the majority of the history of technology, it's a little bit of wait and see. And so I think founders need to embrace that perspective, CEOs in particular need to embrace that perspective that you're thinking in systems of bets. And when you think of things like that and you're like, I'm going to fail, my people are going to fail. So what failures are acceptable, how do we design for failure not to be part of learning and not to be something that's like catastrophic? And that perspective has been tremendous for me,
Kevin Holmes: Yeah.
Hooman: both in terms of like management tools, but also frankly my my mental well being. because you know, you just you you know you're going to miss things and and you just have to start getting comfortable with where you wanna miss versus saying, everything has to be perfect or else I'm I I I personally am a failure.
Kevin Holmes: Hmm. So there's this this idea you learned from the Expo era after the AddThis era. Did you did you employ that in the AddThis era or was it something new from Expa that now you're applying with Collective? And then you can kind of see like, this is the way. And it's maybe the pace of execution is faster or better, or or that sort of thing.
Hooman: Well, AddThis, you know, was came up in the era of social networking. I would call it the Web 2.0 started off, and you know, you had the social networking and things were growing very quickly. And it was a pretty nice Renaissance post dot com for the web because and there was test and learn. So most certainly, I think in terms of product development, you know, people were putting out b you know, the the term beta became super popular. As you remember when everything Google came came out with, they put the yeah, MVP, lean,
Kevin Holmes: MVP, yeah. Yeah, MVP.
Hooman: beta. So I think there was the beginning of that. And so In some regard, yes, we we embraced failure, but it was I'm talking I think on the product side, but I think there was this culture of like every founder would talk to everyone, like, how you doing? we're killing it. We're killing it, like we're you know, everything's great, everything's great. And what I'm talking about is maybe one level of abstraction higher within the company, which is maybe your product is killing it, maybe it's not, but how how is the business and the systems about like, hey, you know what? You're gonna hire N people. of them are gonna fail. What is your churn rate gonna be? You you are going to lose people. By the way, as you scale, definitionally, some percentage, you're gonna have HR HR problems. Like somebody is going to come to you and there's going to be something terrible that happens. It's just going to happen. You don't get to determine
Kevin Holmes: operationalize this advice and and try to be if say they're erring on the side of success theater, what what's W how you know, how would they imply and what would be oversharing or too much or how do you think about that?
Hooman: Well, let's start with like I think everyone's an individual and they start with their first principles, like who are they? I I know founders that embrace this you know, built in public thing, right? And
Kevin Holmes: Mm-hmm.
Hooman: that's become very like cool for what it's worth and and it has its pros and cons. I think people build followings, they built through an authentic, you know, contribution to the community, telling what's going right, what's going wrong, all that stuff. By the way, it's very, very expensive from a time perspective. You don't you you actually don't work as much. And so That comes at not it's not without cost, but if it helps you build your distribution, maybe that's a good rationalization. So I think you have to say like what kind of founder you're gonna be. I think there's some founders that are more like that, and some people who are, you know, a little bit less, I'm in building in the limelight, I'm heads down. And and based on that, I would say the general tone I I recommend is constructive optimism, right? And so you look at the end of the day, our job is founders alignment. We have to align investors. Because we need to capitalize a project. We need align employees to then go ahead and work on something to build it. And then we need to use that and and basically to deliver value over to a customer and get them excited. So nobody wants to be, you know, nobody wants to hear the like you have to be a very, very judicious about messaging. And the way I think about it is like, how do you package the reality that you have to those three audiences in a way that's authentic, it's true, but frankly, editorialized. and it has to have that lens of constructive optimism, but it has to be true. So for me, that's the way I I always like I Hey, I'm I'm leaning positive. For example, something went wrong. Hey, something went wrong, but here's what I know, here's what I don't know, here's what I'm gonna do about it. But like I'm leaning towards a solution. I'm leaning towards something can happen, right? And that can happen in everything. I think people who you know, I I did this in the past. I would I had a guy actually worked for me years ago who came up to me and you know, the the 2008 happened and sh you know, for for those of you guys that weren't operating there, it was it was not fun to be to be a founder or CEO. Yeah, everyone's doing layoffs. And that was a good scenario. Or you're shutting down your business because there's capital. And guy was just like floored. And he was like, you know, and and he was tell telling me like, man, this is so shocking that, you know, we're not doing as well as I thought we're doing. You're always saying things are great, things are great. And I realized I had become almost like not constructive optimism, but I had become
Kevin Holmes: Mm.
Hooman: Only showing them things are going right and wasn't showing things that were going wrong. And so they've they it's almost like they had no sensitivity to how the business was actually doing. Right? So
Kevin Holmes: Yeah.
Hooman: when when there was some sort of systemic shock that affected the business, they didn't know how to calibrate. So I had treated good people inadvertently like they couldn't handle it. And so if you're too saccharine and you're selling too hard, yeah, you may have like these loyal acolytes, everyone's drink the Kool Aid Sting up late. But if they don't understand what's happening when you have a shock, man, it's tough to navigate. Those people may leave, they may lose trust in you because they didn't know. And like what else don't they know that you're not telling?
Kevin Holmes: Yeah. Yeah. Do you do you feel like you were doing this at that time? sort of subcon like you weren't aware of doing it, or were you doing it because perhaps of a lack of skill? Yeah. So so the lesson for
Hooman: I I don't lack of skill. Lack Yeah, I mean I think you don't know.
Kevin Holmes: yeah, the lesson for founders is this phrase you said, which I love, constructive optimism. So I would argue that almost builds more trust, right? The problem, here it is, here's where I think the opportunity is, here we're gonna solve it.
Hooman: Yeah. I always try to I would say like, correct. I think you have to say,
Kevin Holmes: Founders don't have to have all the answers, right? Yeah.
Hooman: like, look, here's like it depends on the stage, but you're talking to your employees, hey, this is where we're going, right? I have a vision. This is what I think are the five things we need to do in the next year to get closer to that vision that's financeable. Okay, and just keep working backwards and working backwards and working backwards. You show them the bets that you think you're gonna make. You let them give you feedback and criticize, and then you show them your hypothetical path to those bets and work with them towards it. Now when inevitably
Kevin Holmes: Mm.
Hooman: when you're either wrong about that path or the bets, now you can calibrate together transparently. But again, you you have to open up to kind of show them those frameworks a little bit. It's a little bit more work on my part. I didn't know that was the way 'cause now my team knows, like everyone could in my company could tell you why we're going a direction and what we're doing and also it took me a lot of work to get there, I hope. But if you do that work, the alignment is tremendous and you have shock value. You can you can go up and down, right? Like
Kevin Holmes: Mm.
Hooman: if you can hype everyone up and I could show you all my, I can make this my business look amazing to you. You'd be like, holy shit, this is the best. But then if we're like something happens, like and you couldn't, you know, raising is difficult, or you some something happens. They don't have the tools
Kevin Holmes: Yeah.
Hooman: to understand how to digest that. Is it big? Is it small? Why? Is it is it okay? You haven't prepared them. That's that's the failure as a leader.
Kevin Holmes: Mm. Yeah. So the communication as a founder is one of the core jobs, right? Like it's pitching investors and managing investors and employees alignment, right?
Hooman: That's your alignment. Your job is alignment. That's it is your only job, honest to God. I mean if you don't align people, what good are you?
Kevin Holmes: Yeah. that's a great that's a great takeaway. You you talked about like well, I really want to drill down on the system of bets idea you had and and like paint the picture for us. What does that look like? You know, you you had the time it had this. that was a good run, by the way. How many years was that?
Hooman: I mean end to end it was really long. It was almost ten, ten years. It's really long.
Kevin Holmes: Yeah. Which which I want to highlight for founders too. You gotta be prepared to go the distance. And then the investing side at Expo. And then now at Collective, you've got you've got the benefit of hindsight and you know, sort of mid-career. And how does it what does that look like at Collective? How are you managing Collective with a system of bets? And, you know, are there stories or anecdotes or examples to illustrate that more for founders? Because I I wanna contrast it with sort of the like heads down, never give up, just keep pushing, keep going. No traction, but we'll get there tomorrow. You know, what I think I'm hearing in system of bets is, no, no, you can do it differently and you can go faster, less attachment to your approach. is that kind of what you're saying or?
Hooman: It is it is an outcome of what I'm saying. It actually makes it much easier
Kevin Holmes: Yeah, she's
Hooman: for you to include people on the ride, to have more brain power solving the problem. But it also helps you create clarity around what value creation is. Because if you keep it in your head and you're just like, Well, I know, I'll know when we see it. Okay, well, maybe. But you know, I I think there are simple examples. so you know, for people who are venture businesses, venture back businesses tend to not Fund to profitability in the early stages because you're focused on growth, right? So definitionally you're running out of money all the time. Right? So let's say that you've
Kevin Holmes: Yeah, yeah.
Hooman: you have a seed a seed round, right? And so and and you come in and someone says, Well, how would I think in a system of bets? Well, the first thing is is what is the big bet? Right. And so you either is there's this driver trained underneath the bet bet big bet. Well, the first thing is product market fit. So for us it was product market fit. Okay, well, what does that mean? Like what does it actually mean?
Kevin Holmes: What does that what does that mean in twenty twenty six? Like yeah. Yeah.
Hooman: No, I mean honestly, like what does it mean? And like I think you have to challenge yourself. Like in consumer businesses, it might be in a certain Tao Mao, in you know, in our business and subscription, it might be in a retention rate. But like challenge yourself and say, okay, well, if I qualitative as I want to show product market fit at a sufficient scale, right, such that I can raise my series A. All right. Well, so you have to define that. So maybe it used to be, and I don't know it's not the anymore, but like a million dollar run. And you're showing, and then in my case of scription, you might show a certain retention. And if you show those two things to be true and your go-to-market is, you know, okay for that bet, then then that would be enough to raise. Well, you're gonna run out of money, so those are pretty good things to anchor on. So now let's build the driver train up to that. And so go quarter by quarter by quarter. Like what would what do you have to do? Well, I don't have a product today, so that okay, great. Let's figure that out. We have to launch on X date. Well, okay, well, if I don't launch by this date. I'm not going to be able to get enough data to show the retention. Cause if I launch the day I'm going to raise, that's not going to work, right? And so
Kevin Holmes: Mm-hmm.
Hooman: building that back backwards. And I think sometimes, you know, some of the pushback I've gotten from younger founders is like, well, dude, we don't know this, we don't know that. We don't know this. I hear you. I'm not saying that the plan is sacrosanct. It's that famous adage, planning is sacrosanct because it forces you to think about it and it you put in checkpoints so that you can course correct, either on your plan or where you're going. And that's how you can, and then you'd get better. At betting, because maybe you're like, shit, the three things that I was betting on suck. Like I was betting on million dollar run rate. No one cares about that anymore, right? I can adjust. But if you don't know where you're heading and you don't know how you're getting, you know, you don't have a North Star and you don't have a path, you're just thrashing. And so it's the
Kevin Holmes: Mm.
Hooman: act of planning, it's building the tools to help you drive with your team, is what the planning does, right? The frameworks and all of that other thing. That's I think what I missed early on in my career. And you know, whether you use OKRs or, you know, there's a number of of frameworks that you can use. Again, I'm not I think people really, really tend to in the early stage, like say, we don't need that process. We just move fast, we're all engineers, everyone knows everything.
Kevin Holmes: Yeah.
Hooman: Sure, sure, but do you? I I don't think you do. I don't think you really know what's going on. Well, well, we're we all know we're going for series A. Like we just gotta do what we need to do to get series. So what is it? Can you articulate it? Can you tell me three bullets? I bet you don't.
Kevin Holmes: And in today's world it's what is it, a hundred million in revenue in you know, three days?
Hooman: Think it depends on what you're building, but I mean you're if you want to do the barbell, it's either zero revenue, like incredible burn and a massive
Kevin Holmes: Yeah. Yeah.
Hooman: raise, like how many PhDs did you hire? or yeah, I mean there's this
Kevin Holmes: Aqua hire.
Hooman: yeah, like you know, you're building a neolab or you're building a neo cloud, or you're building one of these new outcome based, you know, application type layer things where in that case I think people are trying to fund towards growth. But look, the reason Let me give you like an example why I think the the system bets kind of system works here. Right now, for example, one of the bets you want to make, if you're growing quickly, you may may ignore margin. Right? You might say, Hey, you know what? Again, this is something that maybe I'm wrong on my my business. I have prioritized margin, maybe to a point where it's too high. You know, we have a really, really high margin. We are with software margins now. And we are in a we do accounting, we have deliver accounting level results, books closed, text, and software. And I'm about I'm approaching enterprise level margin, enterprise software. Account a small practice accounting from 30, 40 percent margin, we're in enterprise level margins. You could argue to me that is a bad bet. You should have kept the margin lower and had your growth go up because the market's rewarding that. Now there's a cost to that because I'm burning cash. And so maybe right now I look bad, but if when the AI market pops, I'm gonna look like a genius.
Kevin Holmes: Yeah. So it's it's
Hooman: So
Kevin Holmes: you're making a bet that we're in a cycle and the cycle will you've been around long enough to know there are cycles. Yeah. Yeah.
Hooman: I'm making a bet. I am. My bet is people like cash flow and they are ultimately. Look, the reason people like SaaS businesses is because they're annuities and they're high paying and they're deterministic. The people, the reason people like software is because the high margins, of course. And and why was Google and all this? People will ultimately like AI for the same exact financial properties. But right now, some of those businesses, I mean, I look at some of these applied AI companies, they're getting 40% margin. Look, when the market turns, Those guys who are telling you to grow really fast are gonna be the same guys like, what are your margin again? What are the components? And you're not gonna know. So just you need to know if you're not gonna do it, understand you're walking away from it and the cost. That's all I'm saying.
Kevin Holmes: Mm. Mm mm. So so not capital inefficient, but more durable, durability and and yeah.
Hooman: That's what we're building towards. That's a bet that I'm I I think is more sustainable because it's market independent. Nobody's gonna ding me
Kevin Holmes: Yeah. Cool.
Hooman: like for having like insanely awesome margins. No one's gonna be like, that's a shitty business at some point.
Kevin Holmes: Well it you know, you could argue it's one more proof point when you go for your next round that this is not a tech enabled services part two. Right. You're actually
Hooman: For us that's that's why I did it. Yeah, exactly. Exactly.
Kevin Holmes: proving that AI can make it like a software company. That's your yeah.
Hooman: You got it. That's for me.
Kevin Holmes: Yeah. super cool. So we were talking about like some interesting stuff around like founder psychology and what motivates founders, what motivates you? I think that a lot of people know they're entrepreneurs usually from a very young age. and there's the classic lemonade stand stories and, you know, first startup idea and whatnot. I think that's interesting. And I think that the more you know yourself and your own motivation, I think the the better founder you can become, better person you can become, right? So know thyself kind of thing. curious if you want to chat about that at all and kind of share your thoughts on what you've learned about yourself as a founder, what motivates you and how that's maybe changed over the years. And and yeah.
Hooman: I think it definitely has changed. It's funny, I was thinking about it as you were going through, and that was what I actually was thinking is like how your arc changes and and and you, you know, like human memory is very flawed and imperfect. We actually
Kevin Holmes: Yeah.
Hooman: don't have like you know, memory, we have a model of a memory, like of what actually happened, and that model actually degrades and changes over time. So like even my perception of what I thought was good before, maybe it's wrong. So let me start with all those disclosures. But what matters to me now? First and foremost, like on a fundamental basis, I like to I love to take ideas and transform them in reality. I've always been like more into creative type things. So whether it was drawing when was younger, like I I was like I would spend hours drawing, you know, a trained studio artist. I would spend hours playing guitar. I I liked coding. So it was always it was like I taking that imagination and bringing it to reality was something that just gave me inspiration, flow, whatever. And then the question is what do you do with that? And I think when you look at the Role of a founder, you're you're it's like a really interesting form of self-expression because a company is an engine to build like you know, building a product, for example, or building a service that someone can use is like a like it's a creative endeavor, but a company is like one level above that. It's like you're building this thing that can last longer than you and can put out multiple things and it exists beyond you. Look at Apple. I mean. Could I if you were to go back in time and go to Steve Jobs in the 70s and be like, this company is gonna be worth trillions of dollars, treat with a T in the 70s. As ambitious as he was, as bright as he is, as big as he thought, probably inconceivable, right? Inconceivable. But so that is that's the output of his my of the of his mind. I mean, this is like it's
Kevin Holmes: You can say E so that's the E. Yeah. Yeah. That's the that's the beauty of it. That's the amazing thing, right? Yeah. Yeah.
Hooman: You gave birth to like a life form. Like it it's it's a life form. It's a thing. It's it persists beyond you. It's it's creative, but it's self-persistent. So I think that's really interesting for me from an intellectual perspective. And then from just what I've learned over time that's I I would say maybe evolved is a bright word. I really love working with people and seeing people succeed. So I like I love watching members when they have a c when they're like, wow, this really works for me. You're getting me out of a jam, you're taking time off my plate. I love seeing our team, you know, and evolve and like, you know, I've seen the arc of some people's careers here, my previous companies afterwards, and playing a role in them having a better
Kevin Holmes: Hm. That's cool.
Hooman: life. And so by my team having a better life, my members, which is what we call our customers, have a better life, and then I get to satisfy that creative like catharsis, maybe. that that's that's probably like I would say the way I I think about.
Kevin Holmes: That's very cool.
Hooman: W I don't know what else I would do. I I think that I would do more individual creative creative work. So it would be almost like instead of me coordinating with like hundreds of people and thousands of people and whatever, I would maybe just go and like write a book or something like that. But it would always be something like that where there's
Kevin Holmes: Creative acts. Yeah.
Hooman: something like that. I think so.
Kevin Holmes: Yeah, I think probably a lot of founders, not all, but a lot would call it would would identify as creative, right? And liking the and this idea of idea to reality and the like you talked about Apple, like looking back, it is, right? When you're there. But before it wasn't. And you cr and that journey is this magical thing, right? That's just a wonderful way to feel like you're having an impact. Yeah.
Hooman: And you know this because you built things, but you know, if you want to be reductionist, the world is quite simple. There's people that build the roads and there's people that walk the roads.
Kevin Holmes: Mm.
Hooman: And the minority of people will build the roads. And there's something beautiful about that, right? And when you become a builder, you see other builders work and you start recognizing that we can shift and shape like reality and our future, and we have some sort of impact. Right, as a group,
Kevin Holmes: Yes.
Hooman: right? Like I'm using this thing because Steve Jobs decided one
Kevin Holmes: Mm.
Hooman: day he he's like, well, just Waz has like a great homebrew kit. Like we are all literally living in world. We also click blue hyperlinks because Mark Andreessen likes blue. Think about that. The entire world knows that when they
Kevin Holmes: Yeah.
Hooman: see a text in blue, that they should click it because one dude likes blue. Right? Like it's it's
Kevin Holmes: Yeah.
Hooman: just. It's amazing. Like aga and and I think that's even if you can have a small impact on that, there's something beautiful about knowing that you get to all it's almost like you see the matrix. Like you we all get
Kevin Holmes: Yeah.
Hooman: as founders get to see like all of this these system of founders that have like shaped our experience.
Kevin Holmes: Mm. Do you feel even more so now in this new moment with generative AI, more of a sense of agency and and, you know, produ capability, empowerment?
Hooman: I feel I I I actually I I at first I felt like anxiety. and I still have that anxiety, but it's you know, it's changed. But now I I don't even know how it would work without it. 'Cause it's like the ultimate I like riff a lot. So like I'll come up with like a movie idea or a book idea or a theory or whatever and like I'll just like start jamming on it and then like I get the itch out and I can stop and then I can go back to work or like say I need to write something and I it's like it's like a great creative partner in that regard 'cause I didn't realize how much I benefit from that riffing piece. And now I don't have to bug people to to riff. And so I feel I do feel more realized.
Kevin Holmes: Do do you think it's making you less social in that sense? Or or broadly, do you do you think maybe it's making people turn more towards AI for those conversations that would have gone to other founders or other friends?
Hooman: Probably. Yeah, no. Yeah, prob.
Kevin Holmes: Yeah. Something I think about, I wonder, yeah. How it's changed technology's impact on society, right? Yeah.
Hooman: Probably. I think what but you have to look at it like So maybe I would have called a founder and and maybe we would had a connection and maybe that that there's value to that and that's huge. Two-way value, by the It's not just you taking that person feels validated and feels something good. They get the oxytocin from being like useful. So there's some loss there, but the positive is like, what if it's eleven thirty when you feel that way? What if
Kevin Holmes: Right. Right.
Hooman: it's one? You know what I mean? And that happens a lot. So like for every time that you can call a f like it's hard to get another founder on the phone. It's hard to get your friend on the phone. And so think of the For all the times that people aren't available, how many people feel that relief or like some sense
Kevin Holmes: Mm-hmm.
Hooman: of comfort that they can get that thing off their chest? So I'm I'm actually positive on them and there's some negatives I think that are gonna occur and we all have to decide like everyone bone up, like it's gonna be hard. But I think there's like some real benefits to having like a consistent creative collaborator that's that's there.
Kevin Holmes: I mean it's it's a game changer. It's incredible, right? Like the the what you can
Hooman: So far.
Kevin Holmes: do now. Yeah, so far. the the I'm an I'm an MBA with a history degree and I've been vibe coding for the past year kind of nonstop. And the feeling of empowerment where I couldn't do this stuff before and I always had to hire and work through other people to do it. it's just incredible. And so what I one of the takeaways is the the barrier to entry, the means of production, the you know, are down around our ankles. When it comes to software, it is incredibly easy now to build build software. I don't wanna overstate how easy it is because there's still some, you know, competency there. But I'm curious, like what how does that change things? How does that change the in environment we're working in? You're building right now. You're building a venture back company. and now, you know, I I I it makes me think about moats it t it makes me think about, you know, How it's gonna change the market of your customers that you're servicing and and all those types of things. Like just curious like we could shift into thinking about the moment we're in and the and what you you talked about a having a point of view. And I'm curious what your point of view is around that and how that shapes the market, you know, that you're operating in.
Hooman: I think when you're in a moment of great change, you have to focus on the things that you know to be true that are first principles as an operator. So it is tempting for one to start to spend a lot of time becoming a futurist when the future is coming to you faster than you thought. There is some benefit to thinking about it, but I actually think for me, I I do spend time thinking about it. I'll I'll tell you what I think about it, but I've actually moved away from that as where I spend my eighty my eighty. I've actually got more violent around my customer. Because what I know is true is there's thirty million people that eighty percent of American businesses that are never going to have a finance department. They will never hire a CFO. They will never hire a I also know that their alternatives for to my product are limited and I know the pain points there. And so I can spend time. That's not changed. Right? What has changed is how I can deliver a solution and deliver on my vision for being their finance department. Right. I can go faster to having an agent be their CFO, right? And that the agent can handle more things better, faster, cheaper. And so if I keep my focus on that first principle and that Obsession on what that person wants and the reality that they're there. And look at AI and the tools as a way to get there versus like I'm subject to this, I'm still adding value. Now, along the way, I I do have some perspectives. And obviously, if I can, if that perspective takes me and says, wow, I'm in a bad business, right? I'll obviate from that. But like I fundamentally haven't gotten to that conclusion. Cause like, you know, you know, people work themselves into these like, Doom spirals now. It's like, well, you know, if you look at the rate of change in the models and you look at how big anthropic is in a trillion dollars, well, why can't they just do this? That is,
Kevin Holmes: Yes. There's a lot of FUD.
Hooman: okay, well, then let's all stop and like not do anything. The reality is they
Kevin Holmes: Yeah. Right.
Hooman: can't go ask, is are people still using Figma? Yes. Is Figma growing? Yes. But did Anthropic release a Figma competitor? Yes. They tried. They actually sat down, they put a team together, and they tried to enter the market. It turns out it's not that easy to build something that it took, you know, Dylan and Co. years to build. It turns out that AI isn't the only piece of it. It turns out there's a GTM and there's distribution, it's marketing. Like they can't just magically go do it, right? Today. And so
Kevin Holmes: Mm.
Hooman: I think like there's a little bit of everyone has to adjust to the realities of what they will be able to do quickly, won't be able to do quickly. And even what their core competence is going to be. I have a again a point of view on AI that I think may be contrarian in the short run. But I just think, you know, I my encourage everyone, just don't lose sight of the of who you're trying to serve. And and and then in that context, you might say, like, look, I can look at AI as an alternative and will that beat me? Well, let me let's work through that. But do it in light of the customer. Don't just go sit there and pontificate on where the market's going. Eighty percent of founders now, in my opinion, are spending way too much time trying to figure out what anthropics gonna do next, models are gonna do next, what VCs they're gonna want, and you're losing sight of the person who's paying you.
Kevin Holmes: Mm. Yeah. Herb Keller, founder of Southwest Airlines, said the business of business as people always has been, you know, always will be, is today. That's basically what you're saying. Like, don't get caught up in the fear, uncertainty, and doubt of this this step change revolution and technology. Just focus on customers because we're still humans, we're still here, and we need to buy from someone. We still have a pain point. maybe it's the what's changed is the software development product is now, yeah, easier. But there's other functions that are not necessarily become you know becoming obviated.
Hooman: Yeah, and and I think people will see Trying to think of the right way to say this, but unless we're in the last cycle, then we are going to see some patterns that we saw in previous cycles occur. So there are people are acting as if we're in the last cycle. If you look at the amount of investments that's going to CapEx for AI, if you look at the way even Google and all these guys are going, there's some level of, well, things are going to go like this. I'm not in the camp that that's going to happen right now. I think there can be a last cycle. Yeah,
Kevin Holmes: A G A G I Yeah.
Hooman: like I think there can be a last cycle. And and so that's a question you should ask yourself. If you really do think that, I would operate fundamentally different. I don't. I think this is going to the bubble will burst to use like the parlance of the times and there'll be a pullback and it will be fairly boring and predictable and what you thought. and then there'll be some corrections. And then I think in the short run, AI and some of these things like the inference is going to become a commodity. And you can see it because go look at open router. And the the level of people that are routing Chinese models. Look at the open source proliferation. Look at the cost per token. We have shifted from token maxing, being cool, to token management being fundable. Why? Is it because people are spending infinite money and willing to spend all the money in the world? That's what Anthropic and OpenAI would have you believe. And they're great companies. Of course they're gonna say that though. I have to buy Gmail, bro. I have to buy like so there is a limit on how much AI you can use. You know what I mean? And so.
Kevin Holmes: Mm-hmm.
Hooman: We're gonna hit that soon and when we do things slow down. When they slow down, things will, you know, where it's a crash, whether it's thirty percent, you know, people are making money on that. That's their their business. But for me, my customer still
Kevin Holmes: Yeah.
Hooman: needs help.
Kevin Holmes: Yeah. I I think this is such an important point for founders, you know, to hear, which is part of our industry, part of the tech industry are these boom bust cycles. You know, when the dot com boom burst, the bubble burst, there was no more traffic on 101 and 280. We had twice the unemployment rate of the national average. It was people were gone. When COVID hit, San Francisco became a ghost town. other cities aren't as impacted. You can go visit London during that time, you go visit New York. There's a lot of energy, a lot of people, it's different here. Because we have tech has these big boom bus cycles and it's just a feature of what it is. And to think that right now, for some reason, and every, by the way, dot com was the new economy and every all the rules have changed, right? There's an echo here with generative AI.
Hooman: Yeah, I would also encourage people to think about, and you can track this among some of the people who are the voices who are saying that the rules have changed. Right? See what they said previously. Okay. Because like when the COVID's a great example. I'm not gonna say any names. You and I both know who they are, but like everyone was like Silicon Valley, like not everyone, but quite a few people. Silicon Valley, it's not it doesn't matter. Talent's gonna be distributed. We're all remote, we're building offices in Miami. We're building offices wherever. And also, I think part of it was due to the zeitgeist because crypto was booming. So there was a decentralization theme that generally was going through. And the people that you view as leaders in the business were saying, great. And they were open, they were look, they were putting their money where their mouth was to some extent. They were opening offices in Miami. They were hiring remote workers. They were investing in all these remote tools, like at extraordinary valuations, right? Okay, where are those tools now? What happened? Well, it turns out everyone's in San Francisco working 996. It is actually worse. It is more sam it's more concentrated than it was when they were doing it. And guess who's saying that you should work 996 and sleep on the floor? And guess who's saying AI is the new normal? It's the same motherfuckers that said that we're gonna go distribute it. So just my point of view as to founders is go and look at the the narrative that these people are gonna say. I'm not saying they're disingenuous. I actually think that they're putting together these, they're they believe the things that they're saying,
Kevin Holmes: Yeah.
Hooman: right? But they're not omnipotent. They're making their back to the language. They're telling you their bets, but they also have incentives for some of those bets to work. They're underwriting against it, they're marketing against it. So you have to make an informed decision. My wife, I had a very simple reason I say San Francisco. 80% of venture capital's here, 80% of middle management's here, 80% of exits. That network effect is impossible to break. Unless I thought we were all gonna live in this disease-ridden world forever, I'm staying here. It'll go back to normal. That was my bet. And it worked. It wasn't,
Kevin Holmes: Yeah. It worked out.
Hooman: it wasn't like some genius bet.
Kevin Holmes: Yeah. Yeah. I I've seen it with founders network, six hundred members globally, all you know, totally distributed in different cities, primarily San Francisco, Silicon Valley, New York. You look at our portfolio for F and Fund, it's the the companies that are in these tech hubs, prime mostly SF, but you could say New York as well, but really a gap between New York and San Francisco, the things that happen for the companies in San Francisco are not happening for the companies in Seattle, LA, Austin. there's that density creates opportunity.
Hooman: Yes, exactly. And and it's very difficult to replicate that. And it's just a fact pattern, you know, there's network effects. There's a whole reason why there's a whole set of science and research and studies around these things
Kevin Holmes: Mm.
Hooman: and why they're so interesting and they they're, you know, they up appear at all levels of emergence, network effects, you know. And yeah, I I I think, you know, you go through a couple cycles too, but again, you should be on first principles.
Kevin Holmes: All right. So we're in a we're in yet a yeah. Would you say, like, so would you say that when you think about your peer group, your friends and folks you check in with, what percentage think we're in the last cycle? What percentage think we're just in another cycle? Do you have a sense of that?
Hooman: that's a tough that's a tough question. it's it's like asking someone who they're gonna who who they're for in politics, you know. You get one answer when they tell you and one answer when they vote.
Kevin Holmes: Yeah.
Hooman: you know what I mean? Like I if I was to if they were to be intellectually honest, I think I don't know. I mean, I think it's the highest number of people I've ever percentage people I've ever met think were in the last cycle. Let me start with that. If I had to guess
Kevin Holmes: Mm. Okay.
Hooman: I don't know. Genuinely 30 to 40, 30 percent, maybe? Forty,
Kevin Holmes: Uh-huh.
Hooman: I mean maybe, yeah. I mean, usually no one ever thinks I mean, this is the first time I've seen people think that the cycles can end in a way that's really
Kevin Holmes: You can go through the selects and you guys really
Hooman: authentic. I mean, with crypto, people thought everything's gonna decent. There's a group, but I would say that was like, I don't know, hand f single digit percent of people. It's like, now we're going decentralized, or you know, things like that. But yeah, I think there's a there's a there's enough people who are.
Kevin Holmes: Yeah.
Hooman: operating in that lens. But the thing is the people who are telling you that this is the last cycle benefit no matter what. They they run businesses that are AUM businesses like venture funds. And so like,
Kevin Holmes: Yeah. Yeah. Yeah.
Hooman: okay, they keep raising money on that thesis. They keep deploying. Well they get their two two percent even if they don't get their twenty percent. And they've already made markup, they're fine. Like so they went either way
Kevin Holmes: Yeah. This is one of those Yeah.
Hooman: is what I'm trying to tell you.
Kevin Holmes: This is one of those misalignments with founders and VC. Because like you like VC wanted hype, hype, hype, markup, markup, you know, management fee next fund. Founders just want to do what? The thing we talked about, right? Take an idea, turn it into reality, have an impact, build, focus on customers, pain points. These are two these are different things.
Hooman: They can be. I think it's all about rate of change. And sometimes when they're aligned, I think, you know, do you have a brilliant result where everyone is happy?
Kevin Holmes: True.
Hooman: But unfortunately, I think VCs in the past would sell that, we're here for the long run. You know, we're 10 year partners. We have deep pockets. We'll we'll be there good times, hard times. Now it's like, well, three three two is like old school. You may be growing to, you know, a hundred million in three years, or you don't matter. And
Kevin Holmes: Hmm.
Hooman: I want to go back and say, what was that VC doing? Look at those people again, back to the look at what they said in the periods that counted. What did they say in 2022? They were the guys backing up the truck in 2021 and created this
Kevin Holmes: Mm. Yeah.
Hooman: cap table issue that we have now, where all these companies have this overhang because they were saying, well, the valuations are different fundamentally now. Because it was, you
Kevin Holmes: Mm.
Hooman: know, from the ZERP stuff. And so here we are. And so again, just take it with a grain of salt. It's tough though, because if you're not operating
Kevin Holmes: Yeah.
Hooman: on the wave on the crest. You still need to get capitalized. And in this particular way of the thing that's different is the concentration of capital has gone so towards this trend that it's almost I've never seen anything like it. It's so asymmetric, you know?
Kevin Holmes: I think you said what Q one, seventy percent of capital was deployed into how many comp how many rounds? Yeah. Yeah.
Hooman: If you look at five, five companies. Yeah, that was from Pitchbook, if I remember correctly. We were talking about that.
Kevin Holmes: Yeah.
Hooman: Five companies, 70% capital. But so then people say, well, that's 30%, and it's still a big number. It's actually not 30%, because that then gets divided down seed, A, B, C, D. And the seed rounds have gotten huge. So now
Kevin Holmes: Right.
Hooman: we have a problem there because it think about like you get five Neoli apps funded, that's a couple billion of the seeds. And remember, seed rounds are like two, three million. So When you say a couple billion's going out, how many seed rounds didn't get done? A thousand. A thousand seed rounds because of Neolabs. So like you have a thousand seed rounds, even Anthropic, that fifty-six billion dollar round that they did, how many growth companies didn't get funded?
Kevin Holmes: Right. It's it's crowding out. Yeah. Yeah.
Hooman: Thousands, thousands. And so this is a very weird odd time. Cause typically in every other cycle, the up spin on one sector has kind of helped lift all boats. All venture capital got cheaper because people were just flooding it and looking for arbitrage. Very different now. Very different. at least
Kevin Holmes: Mm.
Hooman: in my observation, based on the numbers.
Kevin Holmes: Yeah. Well, on the topic of VC, you started to talk about like look at what they've said and and sort of evaluate the perspectives. You've been a founder, you've been a VC, you're back to being a founder. F a lot of the founders out there, like obviously number one j creating alignment, but creating alignment with VC is one of your number one jobs, right? So what have you learned about like how to evaluate investors? Have you been in the fortunate position to be able to pick your investors? Or is it, you know, how has that wor been from you for you and what do you what do you think you've learned?
Hooman: I've had the opportunity in many cases to pick. Sometimes I have not. but more often than not, when it counts, I've had the opportunity to pick and curate good investors. And I've worked with really good investors. Fundamentally, I think the challenge that founders need to accept is when you're accepting an investor, you are not getting a firm, you're getting a partner. And so you need to evaluate both. They're both critical. But you're 80. is the partner. Now, does that partner have longevity? Can they call capital? Are they good partners? Like you need to really vet them. And your hope is that you get them for a number of years. I have news flash for you. They leave. And when they leave, you have to get someone else. I'm you know, I'm I'm going through that my firm. I two two of my my major investors, both of them the partners left in the same period of of a couple weeks, they told me. It was I mean it's impactful. And so then you have to fall back on the firm.
Kevin Holmes: Is it to go to the
Hooman: And so the diligence in the firm is critical, the diligence of the partner
Kevin Holmes: C.
Hooman: is critical. I guess what I would say is try to align
Kevin Holmes: He was saying it's
Hooman: the partner in the firm to the stage you're in. You're not gonna ever get this perfect evergreen investor through every period per se. And because they're changing too. They're an organism. You're getting, you know, you're you're changing, they're changing, right? General Catalyst is not the firm that I signed up with at the very beginning. They're huge. I mean, not they were big when I signed up, but they were I think one of the top three capital allocators in the world now, right? Different different firm. And and kudos to them. But that's a different firm than what I signed up for. The guy that I signed up with is not there anymore. He's not there. And so I think accept it's like do two things at once. Hold really evaluate them and say for this stage, for where I'm at and where I'm going next, and for a short window, are these the right period of people? And then, but also accept that there's gonna be change there and you're gonna have to
Kevin Holmes: Hmm. It's not there. And so I think it's it's like the two things I want to really evaluate and say from this stage. And then source there's gonna be changed here.
Hooman: manage that relationship. And so when you evaluate them. and try to assess it like try to understand what the dynamics of that change may or may not look like.
Kevin Holmes: Yeah, it makes sense. So the the firm can add signal that the maybe not necessarily the partner, perhaps for future rounds, right?
Hooman: Yeah. Yeah.
Kevin Holmes: but the partners who you're gonna be working with and who can keep doubling down with you and it and they're changing.
Hooman: Yeah, the number of founders that I saw that that you be careful what you wish for. Getting Andreeson or Sequoia in that
Kevin Holmes: Yeah.
Hooman: first round is not always the best thing. And it's not always the worst thing. But if if you're up and to the right, it's great. If you're not, not sure. Not sure. Because some
Kevin Holmes: Mm-hmm.
Hooman: of these firms, especially as they get larger, they're AUM based and their incentive is to go with like hang out with the winners, not to help.
Kevin Holmes: Yeah.
Hooman: you know, people that they perceive are gonna have difficulties. It doesn't mean your company is bad or good. It's just the way that it works. There's only a few of them.
Kevin Holmes: Yeah. Let's talk about that. So you doesn't mean your company's not bad or good. VC is tranche based investing. C A you know, A, B, C, et cetera, milestone driven. What how are you thinking about that today? I talked to a lot of founders who are a little like I said, fear, uncertainty, and doubt. They're kind of feeling like if they can't build a hundred million dollar business in, you know, three months, like those outliers they keep hearing about in TechCrunch that they don't have a A real shot. Like how are you what would you say to those founders?
Hooman: Think what you're feeling is real as a founder. I think that is a problem. And I think you have to try to, you need to project forward and at the end of the day, are you gonna create a fundamentally large venture backable business? Okay. And then you need to look at this environment and say, this is not, this is my opinion, it's not gonna last forever. So when this environment passes, what steady state are you gonna bet on? If you can build a company that's doing billion, Venture is still very hard, regardless of AI. You know? Like they're they still want you to be worth billions of dollars. So you build something that and that means generating re do you think you're in a market with a product and a problem that will become be able to generate billions of dollars? If you're behind that, okay, there's then and you you're all for it, then you know, there's a there's probably a path forward. But if this is just exacerbating this, well, I have to get to a hundred faster. Well, did you really think you can even get to a hundred? You know, to me it's like that that's I the first question before the question is like, how big
Kevin Holmes: Mm-hmm.
Hooman: do you really think this is gonna get? Or how big do you want to get? I think it's just forcing that conversation a little bit sooner. you know, for me, I think our business can be tremendously large. I think we can do billions and billions of revenue, and that's from you know, first principles, bottoms up years of beat up thinking, right? But
Kevin Holmes: Yeah. So whether you get there in three months or three years, it's a good venture backed business because the market's there. Yeah.
Hooman: I'm I'm I think so. Exactly. Fundamentally. and I think we're we have some we're we're an AI enabled service. I think we're we do have some we're subject to some tailwinds and all that stuff. But like fundamentally, look, I we were a tech enabled service to think. That's what you would call this a couple years ago. And no one everyone loved it and no one gives a shit about it now. If you say you're
Kevin Holmes: Mm. Mm.
Hooman: tech enabled service today, they're like, What are you talking about? Right? So I think I it was Bezos said something, and I'm gonna I'm gonna paraphrase it, it's not as good, but You don't want to build for a wave. You want to build a great business. And then when you see a wave, so you want to be ready to catch it. Amazon was not, Amazon they built you know during the dot com, and then it was a very unfashionable company. Right? Nobody went to work at Amazon. I mean, obviously people worked at Amazon, but it wasn't for like hot shot CS people in my my generation. Like no one's like, my God, you're working at Amazon. Holy crap. You know, Netflix,
Kevin Holmes: Yeah.
Hooman: my God. You want to go drive
Kevin Holmes: Yeah.
Hooman: to San Carlos to our company that's shipping DVDs? Well, Amazon, the crappy company that I was telling you about before, is gonna get into that. So now you're talking about a business that's like a vertical of Amazon. Then by the way, that company's not doing well. What did they used to recall? Amazon.bomb, remember? For years.
Kevin Holmes: Mm-hmm.
Hooman: It wasn't until AWS. AWS was 2008. That was the company was founded in 1993. Right? what was Netflix was 1996, 1997. They didn't have streaming until 2007. Right? Like so just think about that.
Kevin Holmes: So they th these companies had losses. Amazon had losses for until when? For twenty years, right? I mean, just felt like forever. but they had a point of view.
Hooman: Yeah. They had a point of view. And he was like, I know where I'm going and I know that his fundamental thesis, which ultimately ended up being correct, do we believe fundamentally that people are gonna be online and it's gonna go from thirty million connected users? But when he was doing it was less, like three probably a million, but I think probably when AOL, you look at their whole subscription base, which is the whole thing internet, it was like thirty, forty million people, to every single person being connected. Okay, if everyone's gonna be connected, do I think that people are gonna buy more things or less things online? Okay. Should there be a super brand that could benefit from network effects? Yes or no? And the answer is yes, yes, yes. So his fundamentals were correct. Now, it took him probably way longer than he thought to get all the logistics correct, you know, so that with the magical experience of pressing the button, you know, the whirling dervishes go out and all of a sudden, I have a package this afternoon or tomorrow. I mean, it's amazing. The feat of engineering to get that done is amazing. But like, it wasn't overnight. And so
Kevin Holmes: Mm.
Hooman: He had that perspective, and in that perspective's independent of trends. Trends like AI or mobile or whatever. Like it was bigger. It was it's a bigger vision. And so that's what I
Kevin Holmes: Mm, mm.
Hooman: think would think an entrepreneurs challenge themselves is i are you thinking beyond like just at a human basis of just like these much broader needs?
Kevin Holmes: Hmm. Yeah, I love that. and with Collective, you've got this sort of timeless problem, right, of business that's underserved and it's and it's gonna be underserved. And now with like Bezos betting on the internet, betting on AI enabled service, software like margins, you can actually scale it and maintain the margins, and you're not just saying that those engineers are R and D, right? They're they're actually like a very
Hooman: Well, we we have like a very Amazon y type bet, actually. So ours, I'll tell you what it is, and it's independent of technology. Fundamentally, there's thirty million of these people, and I think there'll be more. And it's worldwide, by the way. There's over a trillion dollars of revenues from these people. Okay. And so if do I think this is gonna get bigger or smaller? Well, it's already big, but let's say it gets bigger. The second bet is if I can deliver them the same service as an accountant that's cheaper and available twenty four seven. Why would they not use that? Right? That's a massive business. That's
Kevin Holmes: Mm.
Hooman: it. There's no I never told you about AI. I never told you about an app or not an app, right? I'm just telling you the value. That is, that is,
Kevin Holmes: Cheaper, better tends to win. Yeah.
Hooman: it's cheaper and it's available 24-7. And you're, you need it. You have to do it. You have no choice but to pay your taxes, right?
Kevin Holmes: Mm-hmm.
Hooman: So you're gonna go to Bob or you're gonna go to me. That's it. And so that that's what keeps me going. And that's like I'm independent of the technology waves. I use these things to surf towards them and sometimes they surf faster than others, sometimes I crash, but that's that's the way I look at.
Kevin Holmes: Yeah. Y you mentioned Bezos. I've heard stories through Founders Network, people who worked directly for him in the early days, and some pretty remarkable stories of kind of a a ruthless character and sort of management style. obviously we could riff on others who embody that. Steve Jobs was famously curial and and kind of a pain in the ass to work with, right? Do you have any thoughts on, you know, do you have to be that way to win? Or what what kind of foun what kind of culture? I can c I can contrast it with Bill and Dave, Hewlett Packard, the most humane, you know, organization that kind of set the tone for Silicon Valley, but we definitely have had these mercurial types. What are your thoughts on that? Like what what do you what are your thoughts for the founders listening on, you know, do they have to kind of take that on or are there different ways to do it?
Hooman: Don't think you have to do anything. I would just encourage if you're a creative at the core and you wanna build, what world do you want to build? And then you have to be the change, as you know, Gandhi said, that you wanna see in the world. And so, do you believe the only way to get people to coordinate and create great results is through fear and intimidation and force? Or do you think there's a possibility that if you treat them with dignity and respect and kill the culture that will they lift each other up in an effort to lift other people up, that you might be able to do something better? Right? And so there's a canonization, glorification of like this founder mode and the Elons of the world. And I'm not gonna disparage and say, like the guy built rockets go to space. So there's something there. But I would bet you that I think it's Gwen is the person that runs SpaceX and the people who are under there. There's a lot of people under there who run very differently. And so I personally, for me, like I want to live in a world where I can go to bed at night. So that means adhering to my ethics, treating people with dignity. I'm gonna push you. We're on a high performance team. That's a different story, right? So I can tell you, hey, these this is my bar. If you're not hitting it, you're off the team. That doesn't mean you're mean. But like there's some people that tend to leverage that confuse those two. You know? I think you should treat people, you know, with dignity and and well. And so look, I'm I came from that batch of like the do no evil, Google, that was cool. Maybe I have some bias, but that's where I want to live and that's what we're gonna try to make the company do. And I think it my bet is that back to our system bets, is that's gonna build a more sustainable company, a higher longevity company, a company that can withstand shock because when we're hurting. People will turn inward and help each other instead of turning
Kevin Holmes: Mm-hmm.
Hooman: outward and go look for some, you know, the hill. Like I think Uber, for example. Uber had a culture that was very, very let's go, let's go, let's go. Travis was top down and pushing and all that stuff. And it's a great company. I was an investor in I don't I don't want to say anything negative about Travis. That's not my point. My point is what happened when things were going south there? You know, that was tough because they didn't build that culture. That was like everyone lifting each other up, helping each other out. They had they ended up having to replace you. And it took Dar a long time to build that
Kevin Holmes: Yeah.
Hooman: new culture. So, you know.
Kevin Holmes: Yeah, I mean that's certainly the the world I want to influence through Founders Network and the Founders and Founders Network to have more humility and and you know, reciprocity, inclusivity.
Hooman: I don't think I think people also like they try to take like let's be honest, you read a couple of things about Jeff Bezos online, you heard some interviews, you don't know that guy. You don't know what he did every day. I don't either. Steve
Kevin Holmes: Yeah.
Hooman: Jobs, same stuff. Like I've met people that work with him and they liked him. Like, you know? So I don't
Kevin Holmes: Yeah. for sure. There's people who choose to work for people like that and they then they like that. Like I remember Safra Katz was at Oracle. She came and gave a talk when I was getting an MBA and she was intense. And it the interesting thing, it polarized the room. Half the room was like, I wanna work for her, she's no bullshit. The other half was like, No way. Right. So
Hooman: Yeah.
Kevin Holmes: it so it's not necessarily assigning a value, objectively, but yeah.
Hooman: I think there's a way to do it. Yeah, there's a way to.
Kevin Holmes: It's just kind of who you are and where do you wanna what do you wanna create?
Hooman: I think the the the poor way to do things, the the undisciplined way to do things is to say, Elon was successful and I perceive that he's a dick and he it's because he just tells people how this and therefore that is the way you should do things. That
Kevin Holmes: There therefore. Yeah. Yeah. Yeah.
Hooman: is a very undisciplined way of thinking. I think you have
Kevin Holmes: Yeah.
Hooman: to look at your challenge, look at the problem that needs to be solved, look at your skill set, right? And say, How do I achieve the best outcome? And I think there's ways to do it. And I will bet that more nine out of ten involves everyone being successful. The more you can make other people successful, actualized, feel good about a problem, passionate about the member, I bet you that they will do better than if you're screaming at them and telling their dicks, even if you're right 100% of the time. Because even if you are right 100% of the time and they learn that to follow your rules, you will go. Steve Jobs is no longer at Apple. Then what are you leaving behind? Because the The genius is gone. You've left no infrastructure. You left no capabilities. The culture is the OS. Now, I would argue he didn't do that, by the way. People, it turns out he left far more than people thought because Tim Cook was able to take it. They were able to do more things. Now, are they the Apple that you and I experienced? I don't think so. But it wasn't the Steve Jobs show. So that that by definition means it didn't all go to Steve Jobs. There were other people doing things too. It's a myth. It's a myth that we all want to believe because it's lazy.
Kevin Holmes: Right. Yeah. Yeah. It's a myth. Yeah.
Hooman: It's easy for founders to say, I am God. God put me on earth to do this. I'm the anointed leader. I'm the only person that can solve this problem well. Listen to me. Probably not.
Kevin Holmes: Hmm. cool. Is there anything else that that's on your mind for for the founders that maybe you've encountered recently that you think would be useful to share perspective on in terms of I mean, all these topics we've covered. We've covered kind of the AI moment adoption curve, the economy, whether it's the last cycle, not the last cycle. We've covered culture, we've covered fundraising, picking investors. What else do you think is important? And and I wanna make sure we kind of cover the full gamut here because we had a lot of like we were riffing a lot early on. I just wanna make sure we cover it.
Hooman: I'd I'd just say this. just focus I think when you're just whenever you get stuck, revert back to first principles. And you're trying to make sure, like you why do you want to do this? You know, do you think your customers have a problem? Focus on the customers, make sure your team is in a great position so that they can serve those customers, and then stay at the edge of the technologies and things you need to do so that you can get your team. The best tools to help your customers in the best way possible. So you it how do I know if I'm doing AI the right way? Well, if I know my problem, that customer's problem better, faster, cheaper, and I've spent my time doing diligence on that problem and the solution set, I will know enough AI, definitionally. That is what I need to know. And so when you get stuck, just don't lose sight of what matters. and and that's ultimately the people you work with, the people there. And and I would say the last bit, maybe this is non-intuitive, is and I have these feelings myself, is Investors are not on average, you know, good or bad. And I think there's this tendency for the community, and especially the way the internet's becoming to polarize and try to divide
Kevin Holmes: Mm-hmm.
Hooman: founders, investors. A lot of investors, they're just normal people. They want to have families. They want to do well. And a lot of them got into investing because they like to be around technology. They want to see cool stuff. Nobody wants to be on that call where you have to like recap or you have to fire people. Like they want you to be up into the right. And some of them don't have the tools to handle that properly because they're humans. Maybe it's first time to dealt with it. So I think by the community just looking at each other and saying, hey, we're a bunch of imperfect people executing a system of bets, doing our best. And you start with the assumption that this person on the other side of the table is just trying to live their best life, things will be okay. it gets hard to do that, but like that's what gets me through it when I start getting destabilized is like I don't think if I'm having a tough situation that the other person on their side is trying to hurt me, even though it feels like that, even though their action may hurt me, I'm like, hold on.
Kevin Holmes: Yeah.
Hooman: What are we doing here? and
Kevin Holmes: Yeah.
Hooman: you know, sometimes they are, by the way. Sometimes they are. There are unfortunately
Kevin Holmes: Yeah.
Hooman: people like that. But if you start with that perception that they're actually, you know, decent normal people, you'll be surprised how how many good things you can drive out of the relationship.
Kevin Holmes: I love that. I it's a great note to end on. One of our core values we talk about at the start of every meeting at FN is humility. And part of humility is forgiveness and giving grace to people for you know mistakes they make. So great note to end on. Yeah. Hooman, thank you
Hooman: It's hard. It's hard. Okay.
Kevin Holmes: so much. wonderful spending time with you again and appreciate you taking the time to give back and thanks for being on the show and look forward to chatting with you soon.
Hooman: That sounds good, man.
