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Transcript of our conversation with Immad and Rajat:
Immad (06:24.812)
Yeah. Okay, let's do it.
All right, one, two, three. Hi, everyone. Welcome to the Founders in Arms podcast with me, Immad Akhund, founder and CEO of Mercury.
Raj (06:35.791)
I'm Raj Suri, co-founder of Lima and Tribe. And today we actually, we had a guest who unfortunately couldn't make it. This is our friend over the pod, Richard Price, who we hope you get better soon. We'll see him back on the show very shortly. He's a good friend. He's got the flu. Yeah, he's okay.
Immad (06:50.328)
I mean, he's fine, he's just got the flu.
Raj (06:55.079)
So hopefully you're actually there's a there's a bug going around. know the CDC recommended that or is telling like nor virus is going around the flu is going around. There's like, you there's a lot of bugs floating around. So I hope he gets better soon. He'll be yeah.
Immad (07:06.626)
Especially if you have kids. I've been sick like a lot for the last few months.
Raj (07:10.715)
Yeah, yeah, the kids are definitely a main vector for disease and there must be a we need to coin a term for this It's like the the bug roulette where the bug goes around the whole family, right? Like take turns before yeah, it's it's it's the worst
Immad (07:22.363)
yeah.
Raj (07:25.511)
But anyways, be better. He'll hopefully be better soon. I'll be back on the pod. so today it's just going to be a modern eye talking about news. you know, what's, what's happening and, yeah, so I think one big thing that's happening in mod is that this is Biden's last week and he only has three days left in his term. And yesterday he gave a very interesting speech where he basically called tech the enemy.
He coined a term called the tech industrial complex and he warned that basically that the country was becoming an oligarchy and he was basically pointing to people like Elon Musk and Mark Zuckerberg and rich people and he called them a threat to democracy. So he's calling people like Elon a threat to democracy. You can see that he really thinks tech itself is a threat to democracy and you probably could see that throughout his last few years of the term where
His regulators and his agencies went after tech very heavily, know, you know including you know us right and other other people we know so What do think of that?
Immad (08:32.332)
I think it's like, so on one side, kind of get it, right? Like if you look at the Mag-7, like all the top companies in the US are tech, right? Tech is like a power center and it's hard to ignore that in the way that like Pharma and Big World, like that, you know, we used to have like more distributed kind of market caps and now it's extremely concentrated towards tech. like this is a power center, but it's also,
kind of the most important things to the US, right? Like what does the US have going? Like if you look at, yeah, I guess there's a few other pieces, but the most powerful part of the US is the tech industrial complex, right? So, and to tarnish it all as like one thing, seems crazy as well, right? Like Google and Microsoft and Facebook, like these are all like very separate companies with like separate kind of motives, separate businesses really. So,
Raj (09:12.765)
Mm-hmm.
Immad (09:31.83)
I do feel like in the last four years, it has felt a little bit like Biden. And I guess therefore the Democrats felt like they were anti-tech, right? There was like, it wasn't just one agency. It was like across the board, like, you know, little &A, lots of antitrust. So this is, you know, he's coined a term now, but this is basically like a continuation of it. I think it's going to be bad for the Democrats to make this a partisan issue.
like to make like tech like have to side with the Republicans. I mean, actually 80 % of tech even now is democratic, right? Like that's what almost every tech employee is a Democrat. Like it's all on the coasts. So it's a weird thing to like be pushing out your own, your own power center in some ways, right? Like I remember when Obama came into office, both times like tech was extremely aligned with Obama and like
Raj (10:07.709)
Mm-hmm. Mm-hmm. Mm-hmm.
Immad (10:29.772)
Part of the reason everyone said he won is because of like social media and tech supporting him. yeah, the whole thing is kind of shooting yourself in the foot, I feel like. And what do you think?
Raj (10:38.481)
You know, it seems to me that all politics needs a bad guy, know, like all political parties need a bad guy to go after and that motivates people, you know, and Biden, his wing of the Democratic Party, which I used to think it was a more centrist wing, but now I think it's more, you know, extremist wing, you know, is picking tech as a bad guy. And I think the risk for everyone working in tech is that like, this becomes a mainstream Democratic Party position. And like,
you see somebody winning in 2028 who is like completely anti-tech, right? And that's like basically de-groather, right? And someone who's like, I want to stop, know, everything that's being released needs to go through all of this like regulation before it's released, you know? The next AI models have to go through all, you know, this is what's happening in China actually today. It's like there's people like, you know, examining every AI model that's released to see if it could like, you know, cause any problems. So I think that's a big risk actually, something to be worried about.
Immad (11:37.294)
I mean, I do feel like the Democrats need something, right? They need, like, their whole position in some ways has been, like, anti-Trump, which isn't, a great position. Like, it would be better to have, like, a specific ideology. I mean, if that ideology is degrowth and anti-tech, that would be, very sad for the country, I think. I mean, on the other side, like, the, yeah, what is the kind of Trump ideology, like anti-immigrant, I guess, is the main one.
Raj (11:40.349)
Yes, they need an enemy. Yeah. Strongman. Yeah.
Raj (11:56.135)
Mm-hmm.
Raj (12:02.489)
Exactly. Yeah, exactly. Anti migrants, I would say. Yeah. Yeah.
Immad (12:07.04)
Yeah, yeah, ideally, but there was like, I guess because tech kind of got attached to it at the end, there was like a slightly more techno-optimistic idea as well, techno-optimist idea to, least I felt the end of the Trump kind of.
Raj (12:18.204)
Mm-hmm.
Raj (12:24.359)
Totally, totally. Yeah, it changed a lot in the last year, you know, it changed a lot when Elon when Elon got attached to it when sacks got Attached to it. It really changed the tone. I think of the Trump campaign before I mean the whole campaign would have been run on like January 6th and like immigrants right like that would have been the political yeah
Immad (12:42.498)
Yeah, that was mostly. So I mean, I think it's going to be interesting to see, you know, Biden's on the way out. So it's like, who are the next leaders of the Democrats? And yeah, it could end up being, you know, the Elizabeth Warrens of the world, which are like even more anti-tech. I would hope it shifts centrist and there's like some other, you know, common, like I'm even okay with globalism. Like I think globalism was kind of like Obama and Clinton's kind of like narrative. And I thought that was like,
Raj (13:02.673)
Like Pete, Pete Buechig is I think pro or pro tech. Yeah.
Immad (13:11.579)
There's obviously been some issues with it, but at least it's like an interesting ideology that's optimistic in its space.
Raj (13:15.741)
Yeah, you know there was an interesting podcast with Mark Zuckerberg on Joe Rogan last week I listened to the entire three out three and a half hours, which Yeah, I don't know if I recommend that because like half of it Yeah, half of it's about like hunting and like and like martial arts So those parts were not as interesting but but but Mark Zuckerberg really said something really interesting that he felt the Biden administration went after him
Immad (13:24.11)
Mm-hmm.
You made it all the way through. I've been meaning to do it though. And maybe summarize it for the audience.
Raj (13:43.997)
in big way and it and it and the way that the Biden administration went after you know, meta would they called them up and they yelled at them for posting like for allowing people to post about covid and stuff like that, which which which zucks thought were very benign posts. You know, he felt that when the Biden administration went after their own tech industry in such an overt way, it allowed other countries to go even more aggressively after the tech industry countries like the EU and Brazil and you know, even China like.
Immad (14:11.086)
I see,
Raj (14:11.911)
So he felt like the US should be protecting their tech industry, should be nurturing their tech industry versus like going after it. I mean, I have to say, I fully agree with him. it feels very difficult to be trying to innovate in Silicon Valley and try to build the future when your own government's going after you and really creating a lot of risks for you. mean, my company was investigated by the government and it was a very painful process and it really slowed.
lot of things down and so I think I I like to see a lot of other companies where we talked we heard about the debanking you know stuff and all these stories are coming out now I think but like you know you know I know your company you know has gone through some issues too but like it's you know it's just all it just feels like the US should be promoting and supporting their own tech industry as you would think another country would do I mean like any other country would would be so happy to have Elon Musk in their country
Right? Like, the Biden administration harassed him. Yeah.
Immad (15:11.394)
Yeah. One thing that like, you know, there is some truth to it, right? Like it's like some of the accusations against tech are not without warrant. But what I find really frustrating is like, you know, let's go after the tech industry and make it more competitive. Right. Like, you know, hey, like I feel like they just waste time on these weird things. OK, let's go after the app store. Right. Why do why is there no like, you know, when people accused Microsoft for bundling
was that 1999 or something like that. Like, yeah, that was a big deal. But Apple has a completely locked down ecosystem where they bundle everything and you can't even have any competitive app store in there. Like, I feel like I would love if we were gonna go after tech to like push it to be more competitive, right? To force competition to like try to break some of these network effect things. Instead, like it's all these like weird things with the SEC making people's lives harder with like the...
Raj (15:42.045)
Yeah.
Immad (16:08.078)
Coastal Commission making it so you can't launch a rocket. I just find it frustrating that it's inept lawfare. It's not going after actually fixing anything. It's just slowing things down. And that's what frustrates me especially. There's this idea, I won't say who told me about it just in case he hasn't publicly said it, but it's somewhat of a popular article. It's basically the idea of a techno-dollar. What's the actual like?
Raj (16:15.805)
Mm-hmm.
Raj (16:20.701)
Yeah.
Immad (16:36.792)
So you know, there used to be this idea of a petrodollar, right? Like it's like America did a deal with the Saudis and the Middle East basically to make it so all gas or crude oil was sold in USD and that like helped reinforce the USD being like the global reserve currency. That's somewhat dying out, but now we have this idea where, you know, if you take an iPhone, right, that's sold all over the world.
Raj (16:38.973)
Mm-hmm.
Immad (17:05.888)
And everything goes back to the USD, right? It's like Apple buys this thing, they assemble it and they sell it as USD. And then you can imagine the same thing is happening at Google and Facebook. all these huge companies are basically sucking in money and establishing America's prominence. to some extent, it's not all about currency, the techno kind of industrial complex has.
Raj (17:10.567)
Mm-hmm. Mm-hmm.
Immad (17:32.61)
I guess Biden's saying in a negative way, that's like the power base of America now. And I do agree with Zuckerberg's point that it's weird that China goes out of its way to support its industry, whereas America is going out of its way to make it harder for its industry, which is strange. Although China did kind of kill or really hurt their software industry, right? They went after Ali Jackmar. They did a bunch of things. to Zuckerberg's point, maybe this is a
Raj (17:36.733)
Mm-hmm.
Raj (17:48.113)
Mm-hmm.
Raj (18:00.157)
They killed industries, homegrown industries in like a single stroke of a pen, right? They killed the tutoring industry and yeah, yeah, they are. I mean, it's all internal politics, right? Like, they're trying to...
Immad (18:05.41)
Yeah. I guess like weirdly they're both doing it.
Raj (18:14.325)
become more popular with a certain faction of their political base by going after another one. So it is the politics of division. And both parties play it, unfortunately. The Trump administration is coming in and they're not going to have the same problems as the Biden administration, but they may have other ones. we're yet to see what that's going to look like. Who are they going to go after? Because the government has this really strong power, like investigations,
power and all these things that they can do but they you know if they use it in a bad way it can really hurt people so I think there is a I think there's a risk also you know with that but but you know the ideal scenario is the Trump administration and or any other administration it's going to be more freedom focused and that you know let them you know let the country evolve kind of naturally and protect the country against external threats that's what we would all hope
Immad (19:09.4)
Yeah, I think that's like the big benefit of kind of doge and like just deregulation. It's like, let's just have the government do less. I think that's like, I think I'm okay with that. I was gonna make another point. man, this is a pretty good point. Let me just think for a second. completely skipping on it. All right, sorry, carry on. I'll see if the point comes to me.
Raj (19:18.001)
Yeah, yeah. Yeah.
Raj (19:32.977)
Yeah, yeah. Yeah, I think your abstract point is really solid. And this is actually the whole antitrust thing that Biden has really initiated. And I think JD Vance and other people are actually supportive of in the Trump administration. So it may not go away. It'd be interesting to see.
Immad (19:50.136)
But it shouldn't be about breaking companies up. It should be about thoughtfully thinking about how do we make this space more competitive.
Raj (19:56.261)
Yeah, yeah breaking like looking very I mean what monopoly do you think exists today? This is an interesting question, right? App Store I agree is a total monopoly. It is 30 % rake that they take is absolutely way too high
Immad (20:07.672)
I mean, every one of these trillion dollar companies is a type of monopoly, right? Like that's just how they are trillion dollar companies, right? So Microsoft, which one does not have a monopoly?
Raj (20:13.917)
I don't agree. mean, go ahead. I don't think Google has a monopoly. But anyone can make a search engine. Like, where's the monopoly?
Immad (20:21.452)
Google has a search monopoly, are you kidding me?
That's not what monopoly means. Monopoly means that, well, there's two parts to like anti-trust law. Monopoly means like there's a certain significant market share. I think it's 80%, which like Google search has. And then to actually like break the law is to like abuse that monopoly position, but it's definitely a monopoly. You can't say just because I can compete against it, it's not a monopoly.
Raj (20:44.163)
No, no, no, it's not a monopoly. First of all, the switching cost is zero, right? Like you can easily search with any other search engine. That's the most important thing. Yeah.
Immad (20:51.662)
Well, A, defaults are powerful. you know, Apple, they pay a ton to Apple and the government actually went after this point that like you're basically forcing yourself as a default and B, they own Chrome and their own Android where they default to Google. So those defaults are really powerful and I agree.
Raj (21:10.745)
There are other browsers in Chrome out there. And also the market share is actually falling now, which had GPT and all these things growing. They're at risk.
Immad (21:18.326)
Yeah, I mean, that's fine. Like, just because something is a monopoly doesn't mean it's bad, right? Like, it's only the abuse of monopoly power that's bad. And I think all of these large companies have, some really strong monopoly position.
Raj (21:31.183)
I would agree that Google paying Apple like an insane amount of money to be the default browser is somewhat monopolistic. You know, I think it's in that, in that zone, but I really don't think Google has much of a monopoly, you know, power, but yeah, they've, definitely made some deals that, you know, with lots, with big piles of money that make, put them in a favorable position. I think Apple's app store is a monopoly. I, I, know, the fact that you have to use their app store, the fact that you can't negotiate on these 30%.
is actually, I think, egregious. I don't think Microsoft has a monopoly in any of their products.
Immad (22:08.942)
I mean, depends like it's a B2B monopoly. So it's kind of like an obvious monopoly, right? Like in many B2B markets, they have like, like spreadsheets, right? Like show Google Sheets exists, but like Microsoft spreadsheets is like still the dominant, like most of the Google Docs suite is, I mean, Microsoft Word. What is that suite called? don't know. Office suite. Yes. I think most of those are like monopolies in a B2B sense, but
Raj (22:32.709)
Yeah, office suite,
Mm-hmm.
Immad (22:38.784)
It is like an interesting kind of monopoly that's like very B2B specific.
Raj (22:41.723)
Yeah, Microsoft had a monopoly to some niggas. were bundling, you know, the Explorer with their windows. But and I can see that being a problem. But it's you know, I don't think right now they have any monopoly. I don't think Metta has any monopoly. There's lots of, you know, many alternatives for social media. And, you know.
Immad (23:00.28)
So I remember this point I was going to make earlier, which I think is really interesting, is that for a long time, tech kind of thought of itself as orthogonal to politics. And we saw this in San Francisco. was like, hey, we're building companies, but we're not involved in San Francisco politics. Whatever happens, happens. Mostly we were young, uncaring people. But it wasn't also uncaring. We didn't want to take sides.
Raj (23:03.677)
Mm.
Raj (23:10.737)
Mm.
Immad (23:28.778)
Like, was like, hey, we're just making a product for everyone. And obviously in San Francisco, especially, that went down like a really weird hole with like really weird politicians and complete dysfunction. now, thanks to not just Gary Town, but like thanks to like kind of this kind of work that was done online, we've kind of galvanized into like actual like change making. And at least, there was like, I think there was like two YC founders that became like board of supervisors in the...
Raj (23:57.978)
Mm-hmm, yeah.
Immad (23:58.542)
in San Francisco. so tech is... in terms of money and power, tech was the main center in San Francisco, but we were so uninvolved that we had very little political influence. And I feel like, weirdly, that's been also the case on the national stage, right? Tech has all this power and money, but we've generally been uninvolved. And if anything, we've...
Raj (24:07.953)
Mm-hmm. Mm.
Immad (24:26.326)
It's been so unenvolved that tech is mostly aligned with a party that's anti-tech, which is ironic. So I do wonder whether this whole shift in the tech becoming partisan is this shift that's going to happen in the next four years. We're just going to see tech taking sides and there'll be maybe some tech companies are like one party, some other parties. It's happening a little bit, Like Palantir and like...
Raj (24:30.936)
Mm-hmm. Mm-hmm. Mm-hmm.
Raj (24:54.311)
Totally.
Immad (24:56.218)
Tesla like kind of Republican ish and like we still have like in a Google is still like a democratic kind of company I wonder if that's like and you actually saw it first in social media, right? There was like Twitter and gab and all these things. So that's like an interesting kind of change where like tech is involved in politics and becomes like
Raj (25:14.877)
Yeah, I mean what happened was like tech used to make like office suite and now tech is making social media which actually has You know some impact on like, know politics and and that was a big that was a big issue in 2016, right? So they thought the tech was responsible for Trump's win and so tech kind of got pulled into politics that way and then um, then it's been very politicized to some degree over Not really in 2016 2020, but after that it got very politicized in biden administration
And there's really no other way for tech to protect itself other than getting involved. So it is what it is at this point because tech does need to have a seat at the table. Otherwise, it could be basically the punching bag for political parties.
Immad (26:00.622)
But I do feel like there's something unique about tech where it was probably the least political of the major kind of industrial trends. Because like it just didn't involve, most other things involve like labor and like land and resources, And everything is like, whereas tech was like, hey, we're just doing something with software. It's a bunch of geeks that like don't really understand EQ very well. And so like it had a tendency to get like really big without being political.
Raj (26:07.005)
Mm.
Raj (26:23.303)
Hmm.
Raj (26:28.285)
Yeah, the one issue that's stayed intact since then is the immigration issue, right? Like, know, Steve Jobs met with Obama back in 2012 or something or no, past, 2010. And then, you know, his number one issue was skilled immigration. And so that issue is still there even like 14 years later. And so, yeah, but that's always been tech's main interface, I say, to politics. Is that like our employer, employee?
Immad (26:34.817)
Yeah, that's true.
Immad (26:53.848)
Yeah, and that was like the interesting clash between, I guess, Elon and Vivek and co versus like the anti-immigrant kind of far right wing, because that is like actually the line where like the tech really does care about high-skilled immigration and that is like a major political issue, whereas like the anti-immigration rhetoric doesn't allow for that.
Raj (27:03.064)
Wing, yeah. Yeah.
Raj (27:15.869)
This is a major issue, yeah.
Raj (27:20.421)
Yeah, it's been an evergreen issue. You know, one thing I was thinking about was like
Zuckerberg now, he came in pretty favorably for the Trump administration. He's donating, he's going to the inauguration. And this is a guy who gave a speech at Harvard 2015 or 2016, very liberal speech. Basically sounded like an AOC progressive about supporting the poor people and stuff like that. And now he's over to full MMA, just added the UFC guy who was big Trump supporter to his board.
Immad (27:54.265)
Yep.
Raj (27:55.183)
and
You know, one of the things that enables him to do that is that is this tech crash that happened in 2021 or 2022, right? Like he doesn't need to worry about his employee base as much. In fact, he just like announced a layoff like a few days later after that podcast, right? You and you did a 5 % layoff lowest performers get cut. And the fact that AI is going to become, you know, he's saying AI is going to become a mid-level engineer, you know, in his team. So AI doesn't have a policy like, like the fact that
that tech employees had a big political impact on tech as a power center, and that's going to go away or that's going away already because of AI, but also because of the tech crash that happened. That is going to actually affect the nation's politics in a big way, I think, as well. Because now tech, yeah.
Immad (28:43.374)
That's really interesting.
That's also partly because this idea, there was this of woke social justice idea that a company should engender change. And not all the ideas are bad in it, but people turned workplaces into these political vehicles. So I don't think it's necessarily just about tech power.
Raj (29:02.853)
Mm-hmm. Mm-hmm.
Immad (29:18.2)
probably like an engineer in Facebook is still paid really well and has like a lot of amenities. But like this idea of like Facebook or Metta workplace being like a place where you do politics and like that idea kind of fell out of favor. like, I think there was like an, like it was kind of an absurd idea anyway. So I think it's just like this kind of like preference cascade happened to it and it's just like become out of favor. So I think it's that as well.
Raj (29:38.791)
Yeah.
Raj (29:46.161)
I don't know if you remember, there used to be walkouts at Google. There used to be people who like, you
Immad (29:50.466)
Yeah. Well, someone tried that Google. Do you remember there was like a while ago they they did like a protest and like Google just fired them. It was like it was like, OK, you five are fired. Like it was quite disruptive. They like took over some office. I can't even remember what they were protesting. This was like a few months ago.
Raj (29:57.083)
Yeah.
Raj (30:04.061)
Yeah, but but you there was a I mean look you and I know that uh back maybe eight years ago or whatever was you know tech companies were very dependent on their talent and there was a huge talent shortage, right and like um If your talent decided that you know, you didn't have the right side on an issue If they resigned your company would be dead, right? So it's like um, they did I think that's really changed. Yeah, I think that
Immad (30:24.694)
Yes, I really changed. mean, if there's enough of a reason. I think the thing that changed is people are not going to resign. I think that's the change. it's people are not collectively. You don't think so?
Raj (30:31.387)
I don't think it's just that. I think actually the power balance has changed between executives and talent within a company. Because A, I think there's way more talent available. And B, because of the crash, because of the fact that the tech industry has taken a few years to take a breather and done a bunch of layoffs. And I think because AI is actually...
Obviating the need to hire more people because you can be a lot more efficient with the people you have I think the balance is fundamentally changed the power balance
Immad (31:01.216)
There was also this 2021 collective madness where these companies were hiring insane. There was this like, I mean, now most of these companies are doing rifts, flathead count, et cetera. But there was a time period where, with huge staff, Google had 100,000 people and they were trying to add another 40,000 people. I think when you're trying to hire the incremental work you have to do to find the next engineer and like,
pay out, etc. It's so painful that people quitting or threatening to quit is much more of a threat. Whereas if you're flat or firing, then yeah, you're not that bothered about it. So yeah, there is a power change, I agree with that.
Raj (31:40.377)
Exactly. Yeah, and I think this could be a long-term permanent shift because of AI, right?
Immad (31:46.562)
I actually think it's been really good for startups. There was a moment where Google, Facebook, Apple, they were just sucking up all the talent. People would graduate that go to these things. It was very hard for a startup to find people and compete against that. I remember after I raised a six million seed round, I was like, okay, let me just go hit up all my friends that work at Facebook and Google. And I was like...
Raj (31:59.759)
Mmm. Yeah.
Immad (32:13.772)
Yeah, you should work here. And they're like, we're making 500k a year guaranteed. And I'm like, I will pay you 150k and the stock will be huge. But it's like such, it's so hard to compete as like a tidy startup. I mean, even a well funded seed startup against like these kind of fanged salaries, it was out of control.
Raj (32:17.041)
You
Raj (32:26.384)
Yeah.
Raj (32:33.615)
I know. Yeah, I mean those days weren't that long ago, but those days are gone. know, like it's much easier for startups to find people now. you know, and also the talent pool is more global than ever. Like I'm seeing this firsthand. you know, the engineers in India, for example, in other countries have gotten way better, you know, over like, you know, over the course of the last five, 10 years, they have much more access, better internet access, they have much more education there. Like they've become closer to the average American engineer.
Immad (33:03.618)
And you think that suppresses kind of salaries and worker power as well? Yeah. I mean, doesn't just have to be India. It's like, I mean, Europe is actually quite cheap. Like an engineer in Europe, like in the UK, it's like, yeah, they're like, they're very comparable to US engineers and their salary expectations are like,
Raj (33:07.365)
I do. Yeah, because it's easy. Yeah. Any country. Yeah.
Raj (33:21.659)
Yeah, and then COVID made it much easier to have a remote culture. So you can hire from anywhere now. I mean, the power balance has really shifted a lot between startup founders, startup executives, and talent. So I wouldn't ignore that. That's a really, really powerful shift. yeah, so it would be interesting to see where we go from here.
You know, I think there was another topic that could be interesting to talk about which is just like the evolution of VC and and founders, you know and also kind of the advice that they get know vis-a-vis raising money and stuff So I don't know what kind of you put a social post out recently about you know, raising money and like the the key things that I thought was really interesting you mentioned founder pedigree. What were the other things on your post?
Immad (34:09.614)
Oh yeah, I mean, there's this idea of like being fundable, right? And this is obvious. Yeah. There's a few ways you can be fundable, right? I think there's a number one, it's like founder pedigree, like, you know, different companies get different levels of like founder pedigree-ness, but like, you know, if you're coming out of SpaceX and you're going to do anything in like industrial stuff, right? Like, it's easy to get funding. If you're coming out of open AI.
or anthropic, can, know, anything that touches AI, you will get like, I mean, in some cases, a billion dollars in funding, but like, you know, you can raise a seed round very easily. So there's there's Fandipedicui. The second one is being on trend. So, you know, most, there's this kind of zeitgeist, like there's, you know, there's this idea that VCs have like a prepared mind. So, you know, everyone's looking for like,
Agents right now like if you have an AI agent that's gonna go do X and I know whatever it is Like I don't know an AI agent that like goes like books a container on a ship or something for you. It's like Any of these things I'm just picking AI agents because that's like the new the new biggest like AI trend But there's like at any one point there's like two or three kind of these trends that like everyone's looking for a company and if you have like some background that
Raj (35:16.541)
Mm-hmm.
Raj (35:20.786)
Mm.
Immad (35:32.662)
or even just some progress in the idea, can get funded very easily. So that's like the second category. So pedigree, being on trend. And then the third one is just having enough traction, right? Like if you come in, you're raising a seed round, you've already, like I just talked to someone who's like, you know, they closed like four enterprise deals and they've got 400K in ARR. And it's like literally a seed round for like less than 20 million cap. Like very, I mean, it's even AI, so they're hitting all the check marks, but very easy to raise money.
Raj (35:35.153)
Mm-hmm.
Raj (35:40.157)
Hmm.
Raj (35:56.466)
Mm.
Immad (36:00.226)
But if you don't have one of these three things, or ideally all of them, like pedigree, on trend, or like traction, it can be almost impossible to raise money, right? Like that's like the...
Raj (36:08.285)
Mm-hmm.
Immad (36:12.802)
Fundraising can feel very unfair because it's either easy or impossible and there's very little in between. And in between is kind of the hardest in some ways because you can make some progress and raise a little bit of money, but it's hard to break through. But the thing that's kind of interesting is a lot of the time, the biggest success are things that are not on trend, that take years to build.
So if you take like Figma, think it took them three years to build that thing. no one was thinking, we need a collaborative design tool online. But they did it. And when they got there, they had no competition. And they'd already invested this massive amount of time. And they became the dominant player. So it makes it difficult as an entrepreneur. You have to like.
Raj (36:46.682)
Mm-hmm.
Raj (36:51.581)
Mm-hmm.
Immad (37:08.462)
to actually win often you do have to have this contrarian thing where you're willing to just grid it out when no one believes in you. But if you do do that, I do think some of the rewards are the biggest in that situation. But yeah, if you're an early entrepreneur, let's say you're first time entrepreneur, often when you're a first time entrepreneur, you don't really have great ideas. I don't think I had great ideas in 2006 when I started.
I don't think it's like a bad idea to jump on a trend, like, you know, get your foot in the door. I mean, it's obviously better if you really, really believe in something and like you have an idea of like where the world is going. But I think with entrepreneurship, can, you know, that initial experience you get the first few years, you learn a lot and then the next thing can be much bigger. So yeah, I kind of sympathize with all the sides here and you kind of have to like pick your battle, but
Raj (38:02.603)
Mm.
Immad (38:06.146)
But I do think there's like two sides to it. Either you like really, really believe in what you're doing and you think you're gonna make it work and like you just fight that. Or if you don't have that belief, like I think jumping on a trend or like kind of writing something is like not a bad.
Raj (38:18.907)
Yeah, yeah, absolutely. I think of all the three things you mentioned, like actually being on a trend is the most important. Founder pedigree is probably equal, but I would say actually having traction, if you just have traction and you're not on a trend and you don't have founder pedigree, it's actually pretty hard to raise, I think. I think so, yeah. think because...
Immad (38:37.346)
Do you think so? Is that from personal experience or from like companies that you've seen?
Raj (38:43.185)
I think it's yeah, from personal experience for sure. There were periods at Presto where we were basically not on trend until the last couple of years where we working on AI and then AI actually caught up with us. AI became a trend after we working on it. But for the first 10, 15 years, were basically like...
Do the hardware for restaurants, right? You know, we had a payments business as well, which wasn't it became interesting later, you know, because like payments became interesting later, but when we started, it wasn't interesting. We had a games business as well, which was never interesting to people, even though it made a lot of money. So we had years where we had great traction and and we still found it hard to raise. like, you know, of course, at that time as well, I had no pedigree as well. So like there was.
You know, lift hadn't really become a thing, you know, until later on. So, you know, I think there was it was definitely we struggled with almost every round, I would say, until like until later on. yeah. So actually, if you're a first time founder, jumping on a trend is definitely the easiest thing to do, I would say. It's actually good advice because I didn't take this advice myself, like both the things I worked on.
early on like with Lyft and Presto were super like anti-trend. Like there was like stuff that we believed would happen that nobody else really believed it would happen. And it took us five years in both cases to get product market fit. Five years, right? Which I tell founders about this today and they can't believe it, right? They're like, you know, they can't imagine working on something for five years before it hits product market fit.
Immad (40:14.644)
I think Jared just tweeted that often, he said there's so many, Jared from YComnet, he said there's so many examples of companies that took four or five years to take off. that the main thing you do as a startup is try to survive for four five years. But that's hard advice. If you're 22, four or five years, that's twice as much as your whole working life. I remember as a first time startup, five years seemed like an insane amount of time.
Raj (40:24.251)
Yeah, yeah, I saw that.
Raj (40:44.347)
Yeah, but that's why I think, you know, that's why you should do it. We take the other side of it, which is like really enjoy what you're working on. Like I really enjoyed what I was working on. And if you pick an area that's on trend, yeah.
Immad (40:53.42)
I mean, I think you have to like to do anything for five years if you're not enjoying it. I mean, that's like actually like, you know, having a non successful startup, it's, it's not bad, right? As in like the actual work you do, like you're in a room with a very small group of people, you're kind of having fun, you're trying things out. I think when you're running out of money, you can feel like much worse. Obviously, it's like existential, etc. But
Raj (40:58.149)
yeah a phd music
Raj (41:08.924)
Mm-hmm. Mm-hmm.
Immad (41:16.194)
Like if you're not like running our money, like that's actually kind of fun. Like it's like some of my most fun memories in the last 18 years of doing startups is like when shit isn't working and we're just like kind of cranking away.
Raj (41:25.885)
Totally. I had a blast throughout my journey. first few years at Presto, for example, I was sleeping in the office, which was a house. I just slept on the floor and a mattress and I was working every hour of the day and I learned a lot. I mean, I learned the most.
I could in those first few years. I think for a founder, if you want to be a founder for your career, if you want to be running companies and building stuff, it's a great investment. mean, you could learn a lot in those years that pay off later. And it's often on someone else's dime because they've invested. So you can make a minimal salary. mean, you learn way more than you would at a big tech company, I think. And it's more creative, it's more fun. But I do think this
Immad (42:09.486)
100%.
Raj (42:12.605)
Five-year sort of time horizon is what founders should expect. So even though Jared's tweet is scary I don't think founders should expect to reach product market fit in year one or two you and I know that that is very rare, know And like like Drew Houston could do it at Dropbox and Mark Zuckerberg did it right? They created a product and it caught fire, right?
Immad (42:30.328)
Yeah, I mean, I would say the five years doesn't mean you do one idea and you're just like, you just keep doing the same thing for five years. Like this is like five years of iteration and like fighting for product market fair, right? Like it's not going to happen because you're just sitting in a room doing the same thing over and over. It's this is like talking to customers, driving, launching things. The thing that he said, which I wasn't like 100%, at least my advice.
Raj (42:41.713)
Yeah. Yeah, yeah.
Raj (42:47.153)
Totally.
Immad (42:57.078)
My experience didn't match with is that I think he said most of these people were basically working on the same problem for five years. One thing I regret at Hazap where, you know, we worked for six years before we found true product market fit is like we kind of iterated around the space we were in. Like we were in gaming and then we were in ads and we kind of kept doing that. I kind of wish we just like started from like, yes, it would take five years, but I feel like in that time we could have just started from scratch. Like I had this idea for Mercury in 2013.
Raj (43:26.589)
Mm-hmm.
Immad (43:26.894)
Right. And yeah, maybe I needed to wait a little bit, but I could probably have just done in 2013 at my previous company. so, you know, at least my experience is like, go do radically different things over those five years, rather than just do the exact same thing and keep like iterating in that space. But, know, what do you think? do you
Raj (43:32.071)
Mm-hmm. Mm-hmm.
Raj (43:40.413)
Mm.
Raj (43:46.117)
It's hard. You it's hard. Like, I don't think I could have done that. you know, because it's you can't I mean, you can't get really deep in an area, you know, you know, and keep doing that, you know, over and over again. It's really hard. mean, from my perspective, like once you're doing something for many years, because you're seeing some progress, you're seeing some green shoots, you're seeing like customers are interested and like, yeah, they might buy, they may not, you know, like there's some there's something you're seeing. You just don't know how big of a
Immad (44:07.34)
Yeah, that's true.
Immad (44:12.012)
Yeah. And you do end up going down this like, you kind of go down this idea hole because like, like the thing that we ended up doing in Hazer app, like, you know, we were doing something so deep in ad tech. and it was like, yeah, if you came from the outside, you'd never come up with this idea. This was like, you know, you're a game developer and you have like seven different ad networks. Let's integrate them all for you and give you all this data around. Like, I don't like, there's just no way on the outside you'd come up with that idea. So there is that benefit, but.
I guess maybe the advice should be like being huge markets because that ad tech market was just not like big enough. If it was a bigger market, like maybe just like the idea maze you follow would be like this kind of a deep and powerful idea in a big market would be more impactful.
Raj (44:44.381)
Be in huge markets. Yeah.
Raj (44:58.185)
That's actually really good point and actually that's actually one of the biggest mistakes I think I made with Presto is like, we started in a huge market which is restaurants, right? But like when you segment the market, there's actually a very large SMB portion and a relatively small enterprise portion. And yeah, yeah. And what we did was the big mistake we made, was like, exactly.
Immad (45:15.218)
really?
Immad (45:18.646)
Because everyone says go enterprise like as in like that feels like the big idea there.
Raj (45:22.533)
Right. And that's what we did. We moved to enterprise because actually we were developing very sophisticated technology and most SMBs were sophisticated enough to buy it. So enterprise people were smarter than MBAs. They were sophisticated people who could write big checks. So we're like, we should just sell to enterprise. So we went from basically engineering kids to trying to sell large $10 million ARR deals to enterprise with very sophisticated hardware and integrations and all these things.
And we did it successfully. But what I didn't realize when I made that shift was that the enterprise market was actually relatively small. we conquered the enterprise market. But at the same time, the opportunity wasn't that big. So then we made another pivot into voice AI for fast food enterprise, which is a different segment. And that was a much bigger market. And the company is still doing that today. what I should have done. Yeah, so there is a big company, SMB.
Immad (46:02.936)
Mmm.
Immad (46:16.344)
So you would say, hey, you should have stuck to SMB.
Raj (46:20.283)
Right? Toast. Right? Toast is like a 20 billion company now. And SMB is just a much bigger market. Toast only has, yeah, a years before Toast. Also MIT founders, like, you know, around the same time. And they, you what they did was they just really focused on SMB and they actually raised a good amount of money. They got Google Ventures to back them and stuff. they...
Immad (46:25.122)
Hmm. And you started way before toast, right?
Immad (46:41.72)
You know, this kind of ties into this like pet peeve I have where like so much of like startup advice and VC advice is like, don't do SMB. And I'm like, are you crazy? Like the, like the biggest B2B companies, ISMB, right? Like QuickBooks, I Salesforce is more enterprise, but like, I just hate that advice. I think it's hard to do SMB, but I think it's also like powerful if you can like crack it.
Raj (47:10.789)
big market, In many segments it's a huge market.
Immad (47:12.962)
I mean, would you say it was that advice that kind of made you go enterprise? Like, because people were like just down on SMB.
Raj (47:17.531)
Yeah, yeah, absolutely. I didn't know what I was signing up for, know, like when I did it. you know, I remember we I remember the meeting. We had a meeting, but a bunch of people got together. They're like, look, we have to make a bet. We can't do both. Right. We have to like, so like one. I personally was more interested in SMB and like, but but there were investors, but they're also like my team, you know, and and so we had to make a decision on which one to pick and we had to kill basically.
Immad (47:36.654)
What do mean a bunch of people? Like who were the people?
Immad (47:41.868)
I see.
Immad (47:45.744)
but you were the CEO, Yeah. Yeah. Well, you shouldn't be making decisions by committee on this kind of stuff. Yeah.
Raj (47:46.609)
Yeah, I was. I made the wrong decision. like, there's no, there's no.
No, but it wasn't committee, but it was like people, you know, the people felt like we had to make it. Yeah. Yeah. Yeah. And I didn't know what I was getting into. The truth is actually we actually did a good job and we mastered that. We actually got really good enterprise sales. It's very hard to do enterprise sales well. it's like and almost every startup we competed with failed at it. Right. So we actually did really well. And but it still was a small market. So the outcome was that big, you know, but so like that's
Immad (47:58.08)
I see your point, right? You're obviously influenced by the people around you. Yeah. that's super interesting. Yeah.
Raj (48:21.809)
That's the killer, going back to your point. actually, my number one advice to founders in general would be work in a big market. That would be the first thing I would say to any founder, because you could fail upwards in a big way.
Immad (48:37.314)
But you also have to define it well, Like the Airbnb market was tiny when they started it, like, and they created the market and same with Coinbase, right? So how do you, is that like counter-advice? It's like, because they're kind of working in small markets, but.
Raj (48:49.149)
I would say that's the hospitality market. How many people want to stay somewhere? It's a big market, I guess maybe, yes, how you define it makes a big difference.
Immad (49:01.582)
I think there's probably like two actual pieces of advice. One is just find a really big market like Mercurys and banking and that's a huge market. Or the second piece of advice is find a market that's just growing really quickly. Right. Crypto was like growing. Actually like crypto grew faster than Coinbase grew, which is kind of crazy to think. Like normally you're in a market and you try to capture some portion of it. like it's know, similarly with like Airbnb. Airbnb kind of defined the market and grew it.
Raj (49:17.777)
Mm-hmm.
Immad (49:29.678)
But that one is kind of harder. It's like you have to predict the future and that in some ways is tricky.
Raj (49:32.677)
You have to predict the future of a market for sure. There's no doubt about it. Look at Lyft and Uber. they started, basically you look at the taxi. Yeah, you could say like, yeah, if you define it as the taxi market, then it seems too small. But if you define it as all the people who wanted to get from point A to point B, it actually seems like a big market. And the truth is these companies actually end up expanding the market just by their existence.
Immad (49:39.564)
Yeah, but you could say they were in like the transportation market or something, right?
Immad (49:57.933)
just by the existence, yeah, 100%. And those are like some of the most important companies that expand the market. Okay, I gotta go, Raj. But maybe a good point to finish off. the summary is it's gonna take you five years. Make sure you pick a big, market that's big and make sure you enjoy your journey. Easy peasy.
Raj (50:02.501)
Yeah.
Raj (50:12.37)
Mm-hmm.
Raj (50:16.347)
Yeah, and don't take everyone's advice. You have to think for yourself.
Immad (50:22.134)
Yes, 100%, which is probably the hardest part. This was a fun chat. Make sure you subscribe, leave us a review, join the Tribe chat, and see you all next week.
Raj (50:33.341)
See you next week.
Immad (50:45.294)
I need to run, I have like a VC showing up in a few minutes. But can you stop the recording so I can...
Raj (50:46.363)
Yeah. Yeah. OK. You can decide, Candice, or I can say with you. Yeah.
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