Episode 541: Jon McNeill: Why “Less” and “Simple” are the Smartest Growth Strategies

Summary

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Podcast Summary: Habits and Hustle with Jen Cohen

Episode 541: Jon McNeill – Why “Less” and “Simple” Are the Smartest Growth Strategies

Date: March 31, 2026
Guest: Jon McNeill, entrepreneur, former President of Tesla, COO of Lyft, board member at GM, Lululemon, CrossFit, Stash; co-founder of DVX Ventures and author of “The Algorithm”

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Main Theme & Purpose

In this episode, host Jen Cohen speaks with Jon McNeill about the power of simplicity and focus for massive business growth. Jon shares actionable principles from his new book, “The Algorithm,” drawing from his leadership at Tesla, Lyft, and multiple startups. They examine practical frameworks for scaling companies, making tough decisions, leveraging AI, and why questioning assumptions is an essential leadership skill. Jon distills lessons learned from working alongside Elon Musk and other top performers, highlighting the incredible value in stripping away complexity.

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Key Discussion Points & Insights

Jon’s Unconventional Career Path

• Breaking Into Bain without Ivy League Credentials

  • Jon shares he was one of the first non-Ivy hires at Bain, leveraging experience coding trading algorithms in college (01:49).
  • “I had to beg my way into Bain.” – Jon McNeill (01:51)

• Bain’s Unusual Culture of Entrepreneurship

  • Over half his Bain cohort became CEOs—entrepreneurial DNA was valued (02:48).
  • “Of the 72 kids I was hired with, 45 became CEOs of their own companies.” (02:55)

• First Successful Business Exits

  • First company: call center software. Reached $40M sales in 18 months; acquired by a public company (03:55).
  • Grew and sold five more companies; final exit before Tesla now worth over $1B (05:00).

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Meeting & Working With Elon Musk (Tesla Years)

• Introduction via Sheryl Sandberg

  • Sheryl Sandberg made the connection post-David Goldberg’s passing. Jon and Elon began relationship by problem-solving together on Model X issues (05:43, 08:18).

• Joining Tesla: Demonstrating Value

  • Before being hired, Jon did undercover test drives at 8 Tesla stores and discovered a glaring sales process gap – no follow up from staff (11:50–13:01).
  • He initiated a change that resulted in Tesla meeting/exceeding sales targets, impressing Elon who said, “I think you’re going to fit in here just fine” (13:01).

• Division of Labor with Elon

  • Adopted the “sandbox” leadership approach, splitting roles for efficiency and clear ownership (10:29).
  • “We would respect each other’s sandboxes...it was clear what he was doing, pretty clear what I was doing, and we made it work.” – Jon (10:29)

• Tesla’s Growth During His Tenure

  • Company scaled from $1.8B to $20B in sales in 30 months.
  • Elon focused on “the two or three things that are existential for the company,” delegating all else (11:08).

• Simplicity in Action

  • Example: Transformed Tesla’s car buying from 64 to 10 clicks, creating one-click auto loans by challenging the need for bulky legal forms (19:03).
  • “Most of business is dead simple if you just...go to your front lines.” – Jon (14:10)

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Business Frameworks: Simplicity and Scaling

• Questioning All Requirements

  • “Are all these paragraphs [in legal docs] legally required?” (19:41)
  • Led to massive reduction in friction and process improvement at Tesla and other firms.

• The Power of Focused Product Lines

  • Used Tesla and Apple as examples: few models/SKUs, relentless focus (22:18).
  • “The best leaders are the greatest simplifiers.” — Board mentor Fred Missoni, as quoted by Jon (21:14)

• Hiring and Weeding Out Underperformers

  • Ditched traditional performance reviews in favor of peer nominations — “Who would you want on your team?” (30:27)
  • Consistently removed the bottom 10–15% of performers to keep teams strong (32:04).

• Frontline Feedback as a Leadership Hack

  • Advocates consistently speaking with those closest to the customer for ground-truth insights (33:00).
  • Cites Sam Walton: “He goes in the back and talks to the warehouse guy, because the warehouse guy knows everything.”

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Growing Lyft, Lululemon, and Venturing

• Lyft: Doubling Down on Profit Pools

  • When joining Lyft, discovered most profits came from airport and healthcare rides (44:41).
  • Refocused company on these segments leading to a doubling of revenues and market share (44:33).

• Missed Opportunities at Lyft

  • Uber’s success propelled by launching Uber Eats — an opportunity Lyft missed due to leadership resistance (58:58).
  • “We don’t want our car smelling like Chinese food” was the refrain, to their detriment (59:41).

• Lululemon: Weed the Garden, Return to Core

  • As a board member, Jon pushes refocus on key products: yoga, train, and run (50:06).
  • “The core was about workout clothes that made her look beautiful...now they’re getting back to that.” (50:48)
  • On raising customer complaints: “This is a feedback loop we’re doing right now.” (54:04)

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The Role of AI and Modern Business Building

• AI as a Market Disruptor

  • Predicts self-driving fleets (e.g., Waymo) will eventually “eat the lunch of rideshare” (60:41).
  • Uses various AI tools (Claude, Gemini, ChatGPT) in his venture studio to prototype, research, and launch companies faster and at lower cost (63:05).
  • “It takes us half the people and half the capital to start a company now than it did 18 months ago.” (64:06)

• AI and Work:

  • “Humans are really good at seeing the job disruption...but not good at seeing the jobs that get created.” (66:54)
  • Draws analogies with the industrial revolution—believes new jobs and growth will result from current disruptions.

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Leadership, Habits & How to Stand Out

• Superpowers for Leaders & Graduates

  • Simplicity: “My superpower...is being able to simplify. It wasn’t something I was born with, but something I learned.” (85:10)
  • “If you can question assumptions and be a simplifier, you’re going to stand out.” (84:10)
  • Demonstrating value—even before getting hired — is key (15:55).

• Critical Habits at the Top

  • Eat your own dog food: Use your own product religiously as a leader (77:38; 80:20).
  • “If you’re not using your own product, you’re foregoing a whole feedback loop.” (77:36)
  • Weekly focus: “Drive a weekly cadence on the things that really matter in your business.” (80:24)

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Notable Quotes & Memorable Moments

• "Most of business is dead simple if you just follow your own...go to your front lines and figure out what’s going on." — Jon McNeill (14:10)
• "The best leaders are the greatest simplifiers." — Fred Missoni (21:14)
• "If you can question assumptions and be a simplifier, you’re going to stand out." — Jon McNeill (84:10)
• "He concentrates on the one or two things that really, really matter...and manages them weekly." — Jon McNeill on Elon Musk's leadership (77:36)
• "You can win if your competitors stink at go to market, you can win." — Jon McNeill (72:54)

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Timestamps for Key Segments

| Timestamp | Segment/Insight | |---------------|-----------------------------------------------------| | 03:55 | First business exit and serial entrepreneurship | | 08:18 | Meeting Elon Musk and problem-solving together | | 11:50–14:10 | Jon’s “secret shopper” test drives at Tesla | | 19:03 | Simplifying the car purchasing process | | 21:14 | Value of leaders as simplifiers | | 30:27–32:05 | Radical Employee Review and Weeding Talent | | 33:00 | Frontline insights and Sam Walton example | | 44:41 | Key profit pools at Lyft | | 50:06 | Lululemon’s return to core focus | | 60:41 | AI and the future of rideshare | | 63:05 | Using AI for prototyping businesses | | 77:36–80:20 | Weekly cadence and “eating your own dog food” | | 84:10 | Advice to recent grads: question assumptions | | 85:10 | Jon’s self-identified superpower: simplification |

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Additional Insights

• Board Roles & Venture Building:

  • Jon’s venture firm, DVX Ventures, invents companies from scratch, not just funds entrepreneurs (27:11).
  • Portfolio includes AI ETFs, supply chain and cyber startups (27:53).

• Leadership in Difficult Times:

  • Jon left Tesla due to burnout and the emotional toll of supporting Elon during a mental health crisis (39:54).

• Scaling Mistakes:

  • “Most difficult chapter” is going from zero to $5M; product-market fit and clarity are critical (68:49).
  • Both great product and great go-to-market/focused sales are necessary (71:10, 72:44).

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Final Takeaways

• Simplicity, relentless focus, and the courage to question norms are recurring themes in Jon’s approach.
• Leaders who personally use and refine their own products, foster radical candor, and get feedback from the frontlines cultivate winning companies.
• The “algorithm” Jon espouses is both a mindset and playbook—less noise, more signal.
• In hyper-growth, less is often more, and simplicity is a strategic weapon.

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Learn more:

• Jon McNeill’s book: “The Algorithm” (Amazon, audiobook)
• DVX Ventures: [DVXventures.com]
• Jen Cohen’s Habits and Hustle Podcast: [habitsandhustle.com]

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Transcript

[A]

Hi guys, it's Tony Robbins. You're listening to Habits and Hustle. Crush it.

[B]

Guys, this guy, his name is John McNeil, he wrote a new book called the Algorithm. And this guy's resume will blow your mind. Okay, like, you were the president of SpaceX.

[A]

Tesla.

[B]

Tesla, yeah. A Tesla.

[A]

Yeah.

[B]

President. But you were also at SpaceX.

[A]

I was at SpaceX every Friday because that's where our design center is down in Hawkins.

[B]

Oh, so you didn't work. Okay, so it says here, even on the title of the book, the I'm going to read your bio. Normally I don't. Normally I do a read the bio afterwards and then I input it. But let's just do this together, shall we? Okay, let's see here. The CEO and co founder of. Well, your new company is called DVX Ventures. Former President of Tesla Tesla and CEO, COO of Lyft and current board member of GM, Lululemon, CrossFit and Stash and a company called I Can't assurian. Okay, yeah, but also that's just like the little bit of it. You were also a consultant at Bain.

[A]

Yeah.

[B]

You. You exited your own six companies. You had six companies that you already exited.

[A]

Yeah.

[B]

This is just like icing on the cake. Like being Elon Musk's number two was just like, oh yeah. And by the way, that's also what I do like your resume. And I will give it better service. It will be in the intro. Better is insanely impressive.

[A]

Yeah, I feel like the Forrest Gump of business. Like I've been able to like cobble this together. It's been pretty fun.

[B]

Really though, I mean. Okay, so let's start with the beginning. Because if you're at Bain, were you at McKinsey also? Okay, just Bain. Like they're not picking dummies. So like, you obviously had like pretty a great pedigree even to get chosen to be at Bain. So what was your like, academic background?

[A]

I had to bake my way into Bain because I was a. I went to a big ten school.

[B]

You went Northwestern. Northwestern, yeah.

[A]

They hadn't hired non Ivy League kids before. And so I literally had to bake my way into Bain.

[B]

Really?

[A]

Myself and two other guys. We were the first non ivies hired at Bain.

[B]

Well, that even says something already. Like if they, if you had to beg your way or they took two, only two non Ivy Leagues, what would make you special enough that they picked you?

[A]

I think it was. I worked my way through college and I went to school in Chicago and I worked at The Board of Trade.

[B]

Okay.

[A]

And I was doing these crazy trading algorithms. I was coding in college, and I think that story got me in because they were like, ooh, this kid's been moving, like, 10 or $20 million around per trade. He must not be a dummy, right?

[B]

Definitely not a dummy.

[A]

Yeah.

[B]

And so then you're at Bain.

[A]

Yeah.

[B]

And then what I also found super interesting about your story was that usually people who are working at the consultancy, like, as consultants, they're not entrepreneurs themselves. Right. But they saw something in you that they thought, hey, you should be an entrepreneur. You should get the hell out of here, Basically.

[A]

I don't know what was in the water at Bain at that point, but they were hiring a bunch of entrepreneurs, and they were kind of entrepreneurs themselves. So they started this venture capital firm because they were so entrepreneurial. And, you know, the name of, like, one of the people that founded the venture capital firm, Mitt Romney founded this thing. So out of the 72 kids I was hired with, 45 became CEOs of their own companies. So, like, more than half were entrepreneurs, really.

[B]

Any that I would know.

[A]

You would know. SurveyMonkey. So this guy, Dave Goldberg was a founder. You would know StubHub. Chris Sokolakis was CEO of StubHub. So all across the valley, you find people that, like, we all started together and we were all entrepreneurial, so it wasn't hard for them to say, hey, kid, I think you're an entrepreneur, and we want to back you.

[B]

What did you show them, though? Like, what was the trait that they

[A]

saw when we met with entrepreneurs? Rather than getting excited about the spreadsheets? I was excited to go back to the office with the entrepreneurs, really, and work on the problem with them. And so they saw that enough where they were like, hey, I think you're an entrepreneur, and we've got this venture fund. We'd love to back you.

[B]

So then what happened?

[A]

So then I looked for, like, three or four months for an idea in a business plan that made sense, and they backed it. And it turned out the first company worked. So we went from zero to, like, 40 million in sales in 18 months, and a public company came out and bought it. And they said, do you have idea number two? And I was like, yeah, I kind of do.

[B]

What was the first idea, though?

[A]

So the first idea was we were writing software. I was writing software. We were writing software for big call centers. Nobody had written call center software before. And so we were writing software to run big call centers, and it just took off. We were right Place, right time, and right team.

[B]

And then you did that five more times.

[A]

Five more times? Yeah. Not all at once, but in a row.

[B]

In a row. That's what I'm saying. Like, so the first company got you. You. You sold the first company in 18 months, you said.

[A]

Yeah, after 18 months, and. And then started a second company. Then that company grew to about a quarter billion in sales in three years. Sold that to a public company, and then just kept doing it. Cause I loved it.

[B]

So what was the biggest exit that you had of the six companies?

[A]

Oh, gosh, probably company number six. They got more valuable over time.

[B]

Wow.

[A]

And so company number six is worth somewhere north of a billion dollars today.

[B]

That's it. I'm joking.

[A]

Yeah.

[B]

Exactly. How much did you sell it for at the time?

[A]

So that. So I. I have rolled into that company. And so, like, I'm. I've held stock in that company for 10 years. It's the company I started right before I worked at Tesla.

[B]

So it's interesting because in your. On your resume, you were the CEO. You were. You were the president of this, but you were never the CEO. Why is that?

[A]

I was. I'd been a CEO six times.

[B]

Right.

[A]

And Elon and I met, and he was looking for somebody, that somebody come help him and relieve him so he could get back to his first Love Rockets.

[B]

Oh. So let's start. So how did you even meet Elon in the first place?

[A]

So a mutual friend of ours, Sheryl Sandberg, introduced this to each other. And so Elon and I. Oh, wait, right.

[B]

Hold on. Not to interrupt you.

[A]

Yeah.

[B]

Because David Goldberg was her husband, who I was very friendly with when he was at a company called. He started a company called Launch right

[A]

here in Santa Monica.

[B]

Yes, in Santa Monica. And I was very friendly with him.

[A]

You were?

[B]

Yeah. Yes. He was a very nice person, and I know his brother also. And then he started SurveyMonkey.

[A]

Yeah, that's what I was talking about.

[B]

That's right. So you knew David from SurveyMonkey, from Bain.

[A]

Yeah.

[B]

So I didn't know he was at Bain.

[A]

He was. He was at Bain. And we both got assigned this terrible project. Our first project out of college. We get assigned to meatpacking plants in Minnesota, Nebraska, and Iowa.

[B]

And wasn't he from, like, Minneapolis?

[A]

He's from Minnesota, and I'm from Nebraska. So I think they looked at, like, where we were from. They're like, nobody's gonna take these jobs. We'll just put these guys on it. And so we became lifelong friends. Cause what else are you gonna do in a meatpacking company?

[B]

Yeah. That's crazy. So when you said, like, when you said survey monkey, didn't it click right away? And then when you said Sheryl Sandberg, you were friends with her, it kind of all made sense. So you met Cheryl, obviously, through David. Yes.

[A]

She loved my friend Dave, and I loved her. She's just fantastic. And so Dave, as you know, passed.

[B]

Horrible.

[A]

Horrific.

[B]

Did they ever find out or figure out, like, the whole situation besides the treadmill? Like, it's.

[A]

I don't know. Like. I don't know. But it was just. It was horrific. And so several months after he passed and Cheryl introduced Elon and I. Wow.

[B]

Okay, so she met you met Elon under what context? Was it like, hey, Elon's looking for a number two, or, hey, just meet him to talk about business?

[A]

It was, elon's looking for number two.

[B]

Right.

[A]

And I sort of went into those conversations, said, I don't know if I'm your guy. I've been like my own boss. I haven't had a boss in, like, 20 years. And none of my companies were as big as Tesla was at that time.

[B]

What year are we talking now?

[A]

You're talking 2015.

[B]

Okay.

[A]

Yeah. And so we start to get to know each other, and he's, like, super intense. No surprise.

[B]

Yeah.

[A]

And so right as we start talking, he's like, I have this problem in my factory. And so he starts to describe the problem, and we start to, like, break down the problem. And, like, two hours go by, and we've kind of work our way to a solution because I'd seen that kind of problem before.

[B]

But what's the problem?

[A]

It was a production problem with the Model X. It couldn't get the doors to work, the Falcon Wing doors. And so he called me, like, two days later, and he's like, I went to the factory and did what we, like, worked on, and it turns out it's helping. And he's like, you want to talk again? So we talked again. He's like, I have the sales problem. Have you seen this before? I'm like, yeah, here's how I'd think about breaking that down. And so we get on these calls, we just problem solve. And then eventually he's like, why don't you join the company?

[B]

So how long were you on the phone with him? Problem solving for how long?

[A]

We could be on for hours.

[B]

No, no, no. Like, how long of a duration? I think two months.

[A]

A couple months? Yeah, a couple of months. We were getting to know each Other. And I just really wanted to figure out if I could help him and. And be useful. And it turned out there were ways I could be useful. So I decided to join the best practitioner of my craft on the planet, because there weren't. There's really no. Entrepreneurs have created, like, four or five companies that each of them are worth multiple. Multiple tens of billions of dollars.

[B]

No, I mean. And by the way, at that time, Elon Musk, I mean, he's a genius. He is, but he's like. Like a crazy genius. Right. But he. He didn't display that amount of crazy back then, as people would say he has now. Right.

[A]

Yeah.

[B]

But did he have, like, elements? Did you see?

[A]

Oh, yeah. Like, he's like. He'll tell you, like, he's out on the spectrum. And I think all geniuses are kind of out on the spectrum.

[B]

In.

[A]

And, yeah, he's. He's fun and nuts and is smartest person you'll ever meet.

[B]

Like, literally the smartest person you'll ever

[A]

meet by a factor. Yeah.

[B]

Yeah.

[A]

Like.

[B]

Like, I. How was it? Like, was it even. How were you even able to work? Like, how long were you at Tesla for?

[A]

Close to four years.

[B]

Right. Were you working with him, like, side by side?

[A]

Yeah, yeah. At the beginning, we'd travel constantly together because we were trying to do this Vulcan mind meld where I could learn as much from him.

[B]

Yeah.

[A]

As I could. And he could get. He'd get a sense of me. And so, yeah, we were together a lot.

[B]

So what would be the dynamic? I mean, you being the CEO, him being obviously the CEO, and, like, brain, basically the. The visionary. I guess that would probably be a very. Like. You'd have to have a lot of, like, social. Social emotional IQ to know how to navigate that relationship.

[A]

We actually asked Cheryl how she and Mark handled it, and we applied a few principles that they had, which is, number one, they had really good, tight definitions around what each other did. We called those sandboxes, and we said, okay, this is your sandbox. So, Elon, it was product and engineering and manufacturing. He's like, these are the three things I love. I'm like, all right, I'll take the rest. And so we would respect each other's sandboxes, which was really good. And we spent at least an hour a week together catching up on those two things. We were in sync. So it was clear what he was doing. Pretty clear what I was doing, and we made it work.

[B]

Really? So he didn't micromanage you?

[A]

No, he was like, I think the Thing that people don't realize. One of the things that's really fun about working with him is he's. He's kind of figured out the two or three things that he has to work on that are existential for the company. And then he gives his team agency on everything else. So, literally, we had agency to go run the rest of the business. Uh, and that was, for me, super fulfilling and a lot of fun because we were taking the business from 1.8 billion in sales when I started. 30 months later, we were at 20 billion. So we 10x the thing. So it wasn't like there was a little bit to do. There was a lot to do.

[B]

There was a lot to do. All over the place.

[A]

Yeah.

[B]

So what was your first, you know, your. Your first piece of business to kind of get that company to 20 billion?

[A]

The first thing, like, when I was. When he and I were getting to know each other, I was trying to figure out, could I be helpful, useful? And so I went to, like, I was traveling a lot for the business that I had just started, and I went to eight different Tesla stores and took a test drive. And each store gave them a different email address so they wouldn't, like, catch on who I was, what I was doing. But this super crazy thing happened. Like, I did eight test drives, and that's supposed to be, like, the pinnacle of the sales process, but nobody called me back. Nobody followed up. So I called the head of sales ops and I said, hey, look, taking eight test drives, I've gotten all the way through your sales funnel. Nobody's calling me back. What's going on? Am I flagged in the system? He's like, no, you're not flagged in the system. I said, so let me ask you a question. How many cars do you have to sell this quarter to meet your targets for Wall street? He said, 12,000. It was a month and a half into the quarter. I said, how many you sold? He's like, 3,000. I'm like, you're not gonna make your number? You're not gonna make your quarter? He's like, no. I said, tell me how many. Go look in the system. Tell me how many people have done a test drive like me and haven't been called back? He's like, give me an hour. Calls back in an hour. He's like, would you believe it? Like, 9,000. I'm like, are you kidding me?

[B]

Wow.

[A]

You could make your quarter. All you have to do is follow up with these people. Why aren't you following up? He's like, I don't know. I said, okay, do this. Shut off all new leads to salespeople until they follow up with all their test drives. And once they've followed up with all their test drives, you can give them new leads. And he said, I can do that. I said, great, do it. Calls me back the next day. He's like, you wouldn't believe it. Like, we're selling cars. I'm like, yeah, no kidding. You're following up with people. And then it dawned on me. I didn't work for Elon yet. I hadn't joined the company. So I called Elon and I say, look, I'm super sorry. I haven't had a boss in a long time and I was acting like a CEO. And here's like, here's the context, here's what I did. And he's got this famous long silence that I didn't know about then. And the call just goes silent. I'm like, oh my God, what have I done? And he comes on after like a minute and he's like, you know what? I think you're going to fit in here just fine. So that was the first thing. And that's how we got it was dead simple, which I found most of business is dead simple if you just follow your own, like go to your front lines and figure out what's going on. You usually see what's broken in your business pretty quickly.

[B]

Well, it's a couple things I want to say. Number one is I want to know how many cars they ended up selling when they actually followed up.

[A]

They made their quarter.

[B]

So they did, they, did they pass it?

[A]

They, they exceeded it by just a little bit. But it was kind of a miracle because they were halfway through the quarter and less than a quarter of the way to their goal.

[B]

So how did these people not even know to like, like to me that's like a no brainer, right? Like you're going to go in for a test drive. Like, how are they going to make any? Like as a salesperson? That's how you make your money is in commissions and percentages and all these things. What kind of salespeople were you guys even hiring that they didn't even know Salespeople?

[A]

We were hiring people who were passionate about the environment and therefore they were passionate about explaining the car. But they weren't salespeople, they weren't trained to ask for the order and they weren't paid a commission. So they had none of the mechanics lined up for success. But what we started to do Was say we didn't pay commissions, but we started to pay bonuses to the stores based on how many cars that they sold that month. And so we were able to get a team effort going, which was non commission based and a little bit softer, but we were able to get the incentives lined up with what we wanted to have happen.

[B]

And so you went into these eight stores without a job. So what was the position with him? You were just like, you were just in the midst of talking about.

[A]

I was in the midst of figuring out, could I. Could I be an effective number two to him?

[B]

So you just were like, kind of like going around. So this was on your own.

[A]

Yeah.

[B]

Oh, like you kind of on your own accord. Hey, I'm going to go to eight stores and just do all this. Okay. So then when you called him, of course he's going to hire you because you went above and beyond. You probably sold thousands of cars for free. And, like, you showed your value, like, which, by the way, should be like business 101, like everybody should be doing.

[A]

Everybody should show value. Right?

[B]

Right.

[A]

If you can, like, the doors swing

[B]

open for you 100% and, like, you stand out. Right. In a competitive environment. Like, it wasn't like you were applying to, like, work at like, McDonald's as, like the nighttime supervisor.

[A]

Right.

[B]

You know, you were, like, applying to be like, Elon's number two. I would imagine there would be stiff competition. Was he. Was he like, hire. Sorry, was he like, interviewing and talking to a lot of people?

[A]

He. He had talked to a bunch of people. I don't know how many people. He. He. He was talking to a bunch of people for sure.

[B]

So if you were to. When you asked him or did you ever ask him, like, why he made.

[A]

I never asked him that. I never that.

[B]

Yeah, you never asked him that question.

[A]

I never asked him that. But we did talk about it because I kept saying to him, like, I'm not your guy. Like, I think. I think you need a big company car guy because you're becoming a big car company.

[B]

Yeah.

[A]

And he said, that's exactly what I don't need. I need the opposite of that. I need a fellow entrepreneur. I said, why do you need an entrepreneur? He's like, because you understand how to handle enormous risk. Like, you understand what it's like to not be able to make payroll potentially and what that feels like. And he's like, you know how to allocate capital, and I need somebody that knows how to do those two things. I'm not going to find somebody in A big company who knows how to do that. And so I think that's what he saw was just somebody who was wired like him as an entrepreneur.

[B]

So can you just tell everybody, like, what is it? What's the role usually of a COO versus the CEO?

[A]

CEO sets the vision, hires the team, raises the capital. That's kind of the three jobs of the CEO. Set the vision, hire the team, raise the capital, and then the COO or the president has it sort of makes trains run on time. You achieve the vision along with the team.

[B]

So if he's typically. That's what the reason why I was asking you is, because in my experience, is the CEO or the. That the person who was like the founder, like, would be the one raising the capital? The COO typically doesn't have that position. No, but yet he wanted you to have that position to, like, be able to raise capital.

[A]

You said, well, to be able to allocate capital. So once the capital is raised, like, now what do you.

[B]

Now you do with it?

[A]

Where does it get the best return? Because you can put a dollar over here, a dollar over here, a dollar over here. Where's it going to get the best return?

[B]

Yeah.

[A]

And that's typically what a president's pretty good at trying to figure out. Okay, now I can make the trains run on time, and I can actually allocate capital to create a money machine.

[B]

What I love. Okay, so when I was going through this book and reading the book, what I really love is how you create these framework, these frameworks of how to actually build a thriving and successful business, how to scale, how to do all these things. And there's like, a lot of, like, great little actionable things that people should really listen to that can really make a difference between a company being good to great. You know, not to. Not to talk about a different book.

[A]

Yeah. Which is a great book.

[B]

Exactly. It is a good book. And the first thing you talk about is basically to question all the different requirements, right?

[A]

Yeah.

[B]

Can we talk about that? What do you mean when you say question the requirements?

[A]

So literally you start to question the requirements. Like, so to give you an example, like, we. We started to say, could we sell cars online? This is 2015. Nobody's bought $100,000 thing online.

[B]

Right.

[A]

And we said, if we could, our cost of sale goes way down. And we were competing against big, big car companies who spend 2 to $5,000 per car that they sell. We didn't have that money. So we had to figure out, okay, how did we do this? We can't put a store everywhere.

[B]

Right.

[A]

And so we said, how would we sell cars online? Well, you got to remove friction. Today it takes us 64 clicks to sell a car. Could we get that down to 10? Well, the big source of the clicks is all the loan documents that people have to go through. It's like dozens and dozens of pages. So we started to question the requirements, like, are all of these paragraphs legally required?

[B]

Yeah.

[A]

Are they regulatorily required? And the answer was actually, no, they're not. They were designed by lawyers over time to protect the banks that they work for. So then we said, okay, what are you really agreeing to in an auto loan?

[B]

Right.

[A]

Super simply you're saying, this is the price, this is the interest rate, this is the payment, and this is the amount of time I'm going to make that payment. And we said, we can put those four things in four sentences in one paragraph. We could have a one click loan. And nobody had ever done this before, but we just thought, let's first question the requirements. Figure out all this stuff is fluff. It's not necessary. So how could we get a one click loan? We went and talked to dozens of banks. They told us we are nuts and basically threw us out. And then we finally got to this bank in Minneapolis, US bank, and they said, we'll do it. And all of a sudden we had taken a 64 click process to buy a car down to 10. And now you can buy a car at Tesla in about the same number of clicks. You could buy a pizza at Domino's. It's amazing.

[B]

That is incredible. That also is another principle that I read in the book, which is simplicity over complexity.

[A]

Totally.

[B]

Right, Totally. People make the most simple things much more difficult than it ever has to be in every area of life. Right, right, right. And so does that, like, is that part of like how you kind of grew, like all the businesses, all six of the business, like, exits that you had? Tesla and also Lyft. And is that basically the whole like, who's. Whose principal? Is that? Is that your principal? Was that.

[A]

No, it's a. I learned this in my second company. I was super lucky to have a board member, okay. Who's a mentor to me to this day. His name's Fred Missoni.

[B]

Okay.

[A]

Fred was the first person taught by the Japanese their production system, which is all based on simplicity. And Fred told me, like, the best leaders are the greatest simplifiers. And like, we've all heard the line, like Mark Twain's line. Like, I would have written you a Shorter letter if I would have taken the time.

[B]

Yes.

[A]

Simplifying. Super duper. Hard. Really hard. And so he taught me how to be a simplifier. And then when I learned the power of that, it's a complete hack as a leader. And to your point, it's a life skill too, because if you can simplify different aspects of your life, it just gets a whole lot easier to execute than complexity 100.

[B]

And also like the time that you save the efficiency, that you save the stress, the amount of stress that you save all the things. Give me a few examples of how that would play out in becoming like, you know, growing a company or in your own life. Basically, like we.

[A]

So in growing a company, like, I think product is at the core of every company. And if you have amazing product, people will beat a path to your door. They'll rave about it.

[B]

Right.

[A]

Spend on marketing, et cetera. And you think about some really successful companies. So take Apple, take Tesla. They don't have like a hundred varieties of, of their product, they've got like three. And the reason is it's really, really much simpler to get a supply chain producing those three, to get factories producing those, to market them, to sell them, to distribute them, et cetera. And so simplicity, like really, really, really pays in product businesses totally if you have the discipline around it. And so like Tesla has one car, the Model y that sells 1.4 million units a year and it's the best selling car in the world. They don't have 10 or 15 different models.

[B]

Like how many does it sell?

[A]

1.4 million units.

[B]

Still.

[A]

Still.

[B]

Now, even with all the, Even with all the stuff. Craziness. Even with all the craziness, Elan is still selling that many.

[A]

Yeah, it's still the number one single selling car in the world.

[B]

Wow. Why do you think that is?

[A]

Because rather than producing like 10 different SUVs, we produced, we figured out the one that would work for the biggest chunk of the market. So we simplified and then we simplified the production and the parts and the manufacturing process, all that sort of stuff.

[B]

It's so true. Like, you know, I always notice that the companies, I always say start with one skew. Be your hero product.

[A]

Yeah.

[B]

And then like let that be really successful before you branch out and have a million skus.

[A]

Exactly.

[B]

Right, yeah. Because then like you're always going to be like, you're basically competing and cannibalizing your own business.

[A]

Business. Yeah. And we see this like in the athletic market, all this happened. Asia market, where you've got gazillion SKUs coming out of places like Nike and Adidas, et cetera. Yeah. And then they go to compete against on and on's got like 10 SKUs and on's got a simpler business to run and it's faster to grow and it takes less capital, et cetera. So, yeah, I'm a huge believer in simplicity. And that's kind of the second step of the algorithm was once you, once you sort of question all the requirements, then you've got to super simplify the process to deliver against those requirements.

[B]

So if you learn this from your mentor. So did you implement this at Tesla or did Tesla already have this vision?

[A]

I think Tesla had this in the culture because Elon, he talks about this, he's a physicist at his core. Physics is all about simplifying the complex down to the utterly simple. And it's called first principles. And so there are first principles in physics. And so he kind of already had this mentality of simplify, simplify, simplify. And I plugged into that because I did too. I like that was, that was completely natural to me.

[B]

Right, so part of probably why you got along with each other.

[A]

Yeah. And it's I think of why the, why I fit in that culture.

[B]

Right, yeah. If you're not taking glutathione, you're missing out on one of the most critical foundations for your health. Your body is dealing with toxins every single day. Pollution, chemicals, plastics, processed food, alcohol, stress, bad sleep. It's not a question if you're exposed, it's how much. That's where glutathione comes in. It's often called the master antioxidant and for good reason. Glutathione protects your cells from oxidative stress and supports your body's natural detox process. When you're stressed, traveling, eating badly or just giving into the modern world, your glutathione levels drop. So I take ROW nutrition liposomal glutathione because it's not just glutathione in a basic capsule, it's liposomal, which means your body can actually absorb and use it. This is foundational. If you care about long term health recovery and staying resilient when everything around you is working against your biology. If you're feeling run down, inflamed, foggy, or like your system needs real support, start here. Go to rownutrition.com and try Ro's Liposomal Glutathione. Use code Gen20 for 20% off site wide. That's Ro. Nutrition R, H, O N U T O R I T I O N.com and use code Gen20. Did you get along with all the other people like at the company? Did he get along with all the other people? Does he get along?

[A]

I like, I really love that team. Like it was one of the best teams I've ever worked on. We were doing the best work of our lives together. We're still in touch with each other. Like I still text back and forth years later with the, with the core team that I was on really. And two of my partners in my venture firm now were members of that team.

[B]

By the way, speaking of your venture firm, then we're going to go back. How big is your venture firm and what are you doing at the end?

[A]

We do this really unique thing. We invent companies from scratch. So rather than funding entrepreneurs, we actually fund our own ideas and we get those companies growing and then we bring a team in to run them. So it's a new model in venture.

[B]

It's a reverse engineering.

[A]

It is. You start with a market and you say I want to attack this market with this product. We're going to build the product, get our first sales and then we're going to find a world class team to come in and run it. So it's really a venture model that I thought a lot about as an entrepreneur and decided to implement. And there's a handful of us doing this in the world, but not many. It's a pretty unique form of venture.

[B]

That's amazing. So name a company that you're working on now that you've done so.

[A]

We've got a cyber company called Cork. We've got the number one AI infrastructure, ETF on the trading on the market. That's called Vista Shares. We've got a supply chain company called Atomic Payment company called Zumi. Like we've got a bunch of, we've started, we've got a portfolio of 17 companies.

[B]

Wow.

[A]

That we started over the last five years or had a hand in starting.

[B]

How big is this fund now?

[A]

It's going to be close to a couple hundred million dollars.

[B]

Interesting. Wow. Okay. So I just wanted to ask you because I was curious but it sounds like a lot of your background is kind of manufacturing software.

[A]

Software for sure.

[B]

Software. Obviously like it's kind of like in that wheelhouse, like what else? Because all the companies you had before cars, I guess now like, like was, was car before you did Tesla, did you have a car company?

[A]

I, I had a couple that were in the auto. Couple car companies, a couple of a Couple of software companies in the automotive space. And it's. So. I think it came from. My granddad owned an auto repair shop, and that was my first job, and I think it just got in my blood somehow. I love cars, so I've had some touch with the car business my whole career.

[B]

Do you drive a Tesla now?

[A]

I have a Tesla because I want to always. I sit on the board of General Motors, and I primarily drive their cars, but I have a Tesla because I always want to be driving the best of the competition. And Tesla is the best competitor to GM right now.

[B]

What kind of GM car are you driving?

[A]

I'm driving a two. I've got a Cadillac Escalade IQ, which is this huge, beautiful SUV that goes 500 miles. And then I've got a Chevy Silverado EV pickup that also goes close to 500 miles.

[B]

Wow.

[A]

I think the pickup might be my favorite right now.

[B]

Really?

[A]

Yeah.

[B]

Wait, where do you live in Nebraska?

[A]

I live in Colorado.

[B]

Oh, Colorado. Okay. So. Okay, so let's go back to the Tesla thing. So basically the phrase so you.

[A]

You.

[B]

Right. So then you. You guys were getting along on the fact that you guys had the same type of, like, mindset or framework ideas about simplicity over complexity. And then. Then you also had something that I heard you talk about, which I thought was fantastic, and I, like, wrote that down.

[A]

Okay.

[B]

Which was how you kind of weed out the bloat of a company and the people who are underperforming. Yeah, it was. It reminded me a lot of, like, Animal Farm or. You know what I mean? Because you make the People make the decision on their own in a very kind of. And kind of like, not sneaky, but slick way. Can you.

[A]

Simple way. Like, yeah, we tried to simplify.

[B]

Brilliant.

[A]

This crazy, crazy thing that happens in companies every year that nobody really likes is called performance review season. Right. And so, like, as a boss, you got to sit down, you got to write a bunch of performance reviews. There's a bunch of recency bias, because you don't remember what that person did all year. You remember what they kind of did in the last few months. So it's not even fair. And everybody kind of hates it. The employees hate it. The bosses hate it. Everybody hates it. So we debated, like, how could we, like, make this actually useful and not a chore for everybody? And what we evolved to was just asking people, like, who have. First question, who have you worked with this year? Write it out, and then just put a check mark next to the people that you would want on your team and that was it. Didn't ask them why, et cetera. That was it. So, like, super simple. I write all the people I've worked with, I put a check mark next to people that I would want on my team, and that creates a list of people that are really useful because you see their name mentioned again and again and again. Those are the people that are up for promotion. You see a bunch of people that are not ever mentioned by anybody. Like, they clearly are dead weight on teams because nobody wants them on the team. Those are the people that you can then kind of clean out and reload the talent system. And so it was a really simple way. Just identify talent and reward that talent and then also identify kind of the bottom 10 or 15% that probably needed to move on.

[B]

That's great. And then how would you get rid of them?

[A]

We would just tell them, hey, like, this doesn't look like it's the place for you, so thanks, but this isn't going to be a place for your future.

[B]

And did you do that every single year?

[A]

Did that constantly.

[B]

How often?

[A]

Sometimes a couple times a year.

[B]

Wow. So you're constantly just weeding out like dead performers. Yeah, yeah, dead.

[A]

These are super smart people. Like to get an engineering job at Tesla, they get like probably 40 or 50,000 applications for every job now. And so these are super smart people, but for whatever reason, they just didn't, they didn't work on the teams.

[B]

But by the way, that's not only at Tesla. You could do that with any place.

[A]

You can do that with any place

[B]

you could do with people. Like on my team, you know, like with eight people. You know what I mean? Like, it doesn't matter.

[A]

Right.

[B]

I just think that when you put the onus on someone else to tell you.

[A]

Yeah.

[B]

Because they're telling you based on their own experiences. You can't be everywhere. You don't know everything. Right. But the best way to know is to ask the people on the front lines. And you talk about that. Yeah, you know, like the fact that if you really want to know what's going on in a company and what's really what's bad in a company, you go to the people who are in the front lines who are, who are like, doing the work.

[A]

Exactly, you know? Exactly. It's the best hack ever. I learned this from Sam Walton because in. I read his book Made in America, and it's basically a book about how he travels from store to store. And the first thing he does when he visits one of his stores, he goes in the Back. And he talks to the warehouse guy, because the warehouse guy knows everything about the store. Knows what product is moving, what product isn't moving, knows who's like, who really works up front, who doesn't work. And he got all the information he needed about the store. And then he'd go talk to the store manager and say, hey, look, I know exactly what's going on in your store. I'd be like, how? And then they finally figured out, oh, he's talking to the frontline people who actually know. So I just borrowed that and I said, like, this is the best hack in the world. Like, I go to the front line, they're dealing face to face with customers. So they know what the customers love, they know what the customers hate, because they're getting the first brunt of that. And you just ask them, like, what do we need to fix about our product? And they're like, oh, this, this, and this. He fixed these three things. I don't have any more complaints. It's like, okay, I can make that happen. And I would have the standard question when I went out to the front lines, which is, okay, you have my job. You have all the keys to the company. What's one thing you do today? And I wouldn't get 500 answers. I'd get like, five to 10. Like, just do this. And so literally, my teams got used to. I would be out on Fridays, typically on the front lines, and I'd send emails and say, here are the three things we gotta work on. And they just got used to it. And then they started to do it because they wanted to be out ahead of me, which is the right motivation.

[B]

What was the most common trait of all the top performers?

[A]

A couple of things. One is, in that culture, believe it or not, there's this really cool combination of humility and confidence, which kind of sounds weird, but the goals were so high. Like, Elon's awesome at setting aspirational goals. So the goals are so high. And you had a choice. Like, when you put a goal in front of you, it was like, you're crazy. No. Or most often, this humble confidence would come out where you'd would say, I have no idea how to do that. They came to me and he said, we need to double this company every eight months, and there's no marketing budget. You can't spend a dollar on marketing. And my first reaction was, that's insane. But then I kind of zipped my lip and I said, you know what? I don't know how to do that. But Then the confidence comes in a bit, like, we're going to figure it out. Like, challenge accepted. And that was core to that culture. And so when you saw people who were really effective there, they had this kind of combination of, I don't know how to do that, but I'm game for the challenge. Let's go figure it out. And then they would work like crazy to figure it out. And what I learned was when you set super ambitious goals for people, then they will work to achieve those. Those challenges. And if you never asked, then they never work to achieve them.

[B]

Absolutely. Because people never know how much they're actually capable of.

[A]

That's what I kept saying about. Yeah. Like, I kept saying, man, I didn't know I had this inside of me. And he was pulling stuff out of me that I didn't know I had. And I saw it in the people around me and the teams that work for me too, that people were given what they were able to accomplish much more than they think they thought they could.

[B]

Right?

[A]

Yeah.

[B]

Because you're constantly challenging them to push themselves.

[A]

Yeah, exactly.

[B]

Because people, like, sometimes people don't see when they don't know unless they know, unless they do it, unless they've been challenged. Right. And then the more they do it, they have more confidence in doing a harder thing and more and more and more.

[A]

Yeah, exactly.

[B]

How are you able to, like, manage Elon's expectations? Like, because he's like, I don't think

[A]

you can manage his expectations. We just had to, like, really work hard to deliver against those expectations because the expectations are reasonable. Like, I used to be a founder too, so I. I had been on the other side of this and was. It was really setting high goals for people and, And. And holding them accountable to achieve them. And so I felt like now that I'm on the other side in the receiving end, I'd be doing the same thing.

[B]

Right. So I was gonna say, like, because, you know, if you're gonna ask other people to, like, do exceptionally hard work, Right. You have to. You have it comes it. Basically it falls from the top first, Right?

[A]

That's right.

[B]

So. Because I. I heard that he, like, sleeps in the office for, like, days on end. Is that true?

[A]

He does. Like, we would have problems in the factory, and we would be sleeping on the factory floor for weeks trying to figure out, like, how to solve the problem. So it wasn't like he was dumping the problem in our laps and taking off. He was in the trenches with us. And that. That then brings a lot of conviction that we ought to.

[B]

100%. Did you do that too?

[A]

Oh, 100%, yeah.

[B]

You slept at the office for how long? Like, didn't go home. For how long? Days.

[A]

A couple of weeks? Well, I mean, I would go home. Yeah. But it might be two or three nights in a row and I'd go home. And then.

[B]

So you go home for. You stay at the office for a couple nights? Two, three nights, and then you go home after a few nights.

[A]

Yeah.

[B]

And then what? Like, just come home and come back to the office and then again for a few nights?

[A]

Basically because the company was, like, in survival mode. And so if we didn't solve these problems, we're going bankrupt. And so, like, it was. It was dire straits. And I don't know if that happens now as much, but in that era, like, we were almost bankrupt a lot and the press was talking about. I totally remember, they weren't wrong that we were really fragile.

[B]

Wow. So then, like, how do you, like, if you don't mind me asking, you could tell me to shut up. But then how do you get compensated as a CEO for something like that where you're like, literally, like, sleeping on the floor of the plants, date for days on end, for weeks on end, like, because you're not there anymore. Right. Like, I know you have stock, probably, but, like, you, you must have felt like you were like a part. Like, there must have been a feeling even of, like, being on a team and.

[A]

Yeah.

[B]

You know, like not letting. I mean, at the end of the day, how are people being compensating for that? Like, are you.

[A]

I think the way the, the compensation comes as a leader, the compensation comes from looking around at the team and the people that are involved. So there are literally like 7,000 people working in that factory per shift. And if we didn't get this right, they'd be out of work. And that was my motivation. My motivation was I would. I'm working beside these people, I'm looking in their eyes, and that was motivation and compensation enough for me. Like, we're not going out of business. You're going to be able to buy groceries, fund your kids education, buy a house, et cetera, if we get this right. And that's compensation enough for me.

[B]

Because you were only. You were there for four years.

[A]

Yeah.

[B]

That wasn't. That's not a lifetime. It's a long time, but it's not a lifetime.

[A]

Exactly.

[B]

And then you went. You moved on to Lyft.

[A]

Yeah.

[B]

So were you still working at Tesla when Lyft poached you or how did that whole thing happen?

[A]

So I had, like, Elon and I had this conversation, and I told him I was going to leave and give him months of time to do a transition. And during that, somehow, the investors in Lyft found out about that, and. And so they reached out to me and said, hey, look, we want to talk to you about taking Lyft public. Which, normally I just wouldn't have returned the call, but I'd never taken one of my companies public before. I sold all six of mine to public companies.

[B]

Got it. Okay.

[A]

And it was something that I really wanted to like. It's a box. I wanted to check. I wanted to have that experience of taking a company public.

[B]

But wait, hold on. Why were you talking to Elon about Elon, about leaving?

[A]

I had, like, Walter Isaacson talks about this in his book a bit where. In this chapter at Tesla, there was a chapter where Elon was really, really struggling with mental health issues. And my job went from helping to run Tesla to really helping him with mental health issues, for which I am not equipped. I just am not trained. I don't have the skills. And it was burying me because I just was trying to help, but I didn't have the skill set to help.

[B]

Help in what way, though?

[A]

Just help get him through a really tough time.

[B]

Like, it's a friend.

[A]

Yeah. Almost as a friend rather than a business colleague. Just as a friend. And so Walter has a scene in his book where I'm laying on the floor underneath the conference room table beside Elon, trying to help get him on an earnings call. And at that point, I just realized, man, this is not what I'm equipped to do. And so Elon and I had that conversation. I said, I love you, and I love this business, but I'm not equipped to do this. And it's burying me. I'm going to go do something else. And that was really the core of that conversation.

[B]

Wow. So are you guys friends anymore?

[A]

We're friendly, I would say. And we're, like, in touch every once in a while now. And I'm glad he's in a much healthier place now.

[B]

He is, yeah.

[A]

He is.

[B]

Wow.

[A]

Yeah.

[B]

Okay, so then you wanted to. So basically you wanted to leave the place. I did, yeah.

[A]

I did.

[B]

So because you had a. Did you have a family?

[A]

I did, yeah.

[B]

And so what did they think of your. You probably were working. It sounds to me, like 20.

[A]

I was working like a. Like a madman.

[B]

So I think they were.

[A]

They were relieved. Yeah.

[B]

Yeah.

[A]

Yeah.

[B]

And so that. Okay. So you wanted to leave. So then they. People kind of, kind of heard about it a little bit that you.

[A]

Yeah, somehow, like it leaked out. And I don't know how it leaked out, but it somehow leaked out.

[B]

And so then what? Okay, so now, so now walk me through what happens now.

[A]

So, so then I agree to join Lyft.

[B]

No, no, no, no. So you said, how did that happen?

[A]

So I got a call from Ben Horowitz at Andreessen Horowitz, he's an investor, early investor in Lyft, said, I want to talk to you.

[B]

Isn't he also an investor in Tesla?

[A]

I don't think. No, they weren't. The venture firm wasn't investors in Tesla, but it's a pretty small world. And he said, hey, I want to talk to you. Because Tesla never made really a quarter until you got there, and then they've made a lot of quarters in a row. And so we sat down and he said, hey, look, I need your help getting Lyft public. And I said, you don't know this, but you're pressing a button that you probably didn't know you were pressing. But I haven't taken one of my companies public. I'd love to have that experience. So I joined Lyft as coo. They have two founders. So I came in as coo and we doubled the revenue, doubled the market share and got the company public.

[B]

And then that was also around the time that Uber was being beaten up. Right. With the sex. Was it the sexual override? Like, the sexual override?

[A]

Yeah. I arrived at Lyft at just the right time because the Delete Uber movement was like, well underway.

[B]

Right.

[A]

And so it made it like, much easier than it would have been to double share and double sales because we, we had this opening where a competitor was really stumbling badly and we were able to come in and, and scoop up a bunch of market share as a result.

[B]

What was the. What's really. Why is Lyft. I mean, I, I don't know if you know this now. Maybe you do, but by the way, isn't Lyft and Uber now merged, didn't they?

[A]

No, they're still competing.

[B]

They're still competing.

[A]

Yeah.

[B]

Okay.

[A]

Because two separate public companies.

[B]

Because I. Because I'm going always use lift.

[A]

Love it. Why?

[B]

Okay, I'm going to tell you why. Number one, it's always a little bit cheaper.

[A]

Y.

[B]

And like, just a little bit.

[A]

Yeah.

[B]

And because it's the underdog a little bit.

[A]

Yeah, exactly.

[B]

And I just, the. I find it to be People a little. A little bit more friendly. Sometimes they're a little more. It's more of, like the quirky. Like, quirky young sister.

[A]

Exactly. And that's the brand positioning. We wanted it to be, like, against the Darth Vader. We were going to be the quirky young sister.

[B]

Really?

[A]

Yeah, totally. And position the brand that way so it's more friendly, more quirky, more fun, and just a little bit less expensive. And so if that was enough.

[B]

Just a little bit.

[A]

Exactly. That was enough to tip the scales our way.

[B]

But wait, but doesn't. But now Uber is, like, dominating, though, again.

[A]

Yes.

[B]

So. So at the time. So how long were you at Lyft for?

[A]

Just about two years. Just a little under two years.

[B]

Okay. And then what happened? So you said they wiped. They IPO. I was gonna say YPO'd. They IPO'd.

[A]

They IPO'd. And I stayed. There's a. What's called a lockup after an ipo, where all the insiders, including investors, can't sell for, like, six months. So I stayed for the lockup. And then once the lockup expired, I wanted to go start my own firm. Cause I'd been dying to do this for, like, five years. So that's when I left to go do my own thing.

[B]

Tell me how you were able to then catapult Lyft's business just how you did with Tesla.

[A]

So this is another, like, simplification. So I sat down with my team, all who had been there for a long time.

[B]

Okay.

[A]

And I said, like, there's a really simple question I have for you, which is, where do we make our money? It can't be in, like, $5 rides that are two minutes long. And really, really smart, savvy guy on my team, his name's David Baga. And David said, we make our money in two places. 80% of the cash flow comes from airport rides and rides to the doctor. And so we tested that and was like, if that's where the pro. This is called a profit pool. If that's where the profit pool is, we gotta go hard after that. And it became apparent at this time that Uber didn't have that insight. So we went hard after airport rides, which are corporate, and hard after healthcare rides, which really, really matter to people. Like, there are people. There are people that really suffer from chronic disease, like kidney disease, that have to go get dialysis, like, several times a week, and they have to have a ride to and from. Because once you get dialysis, you can't, like, drive a car. So it turns out their health insurance pays for those rides. And so we were able to cut deals with health insurers, with healthcare providers and with businesses to give those two rides. And that helped us double revenue. And it was just that simplification, that simple insight, asking like, where do we make our money?

[B]

That's really smart.

[A]

Well, it looks at it in retrospect. What I was dumbfounded by was nobody had asked that question before. I'm like, so there were a lot

[B]

of people, nobody asked that question.

[A]

There were a lot of people that didn't know that in the business. But luckily David Baggott did know that and he pointed our team in the right direction.

[B]

So what did you, where did you add value?

[A]

So it was then. Well, it was asking that question and then pointing the business at those two things.

[B]

So that was your idea though, to do that?

[A]

Well, I would say that's the team's idea. That's me asking the question. They come up with the answer. And so now we're all going to implement it together.

[B]

You ask the question, they're going to be like, shit, I don't know. And then they went down a route, rabbit hole, hopefully.

[A]

Well, luckily it wasn't a, I don't know, it was like, no, here's where we make the money. Okay, if this is where we make the money, then this is where we're gonna, this is where we're gonna point all of our resources.

[B]

Do you know what I find so interesting? You know, my grandmother would always say, common sense isn't so common.

[A]

Right?

[B]

And what I've noticed is in both scenarios in Tesla with like, why is no one getting follow up calls when they're doing their test drives? Duh. That's how you're going to sell a fricking car. And then at Lyft, it's like, where are the most expensive rides? And like, who, who is giving the most expensive, like, where are those rides? Like, we're not making money off $5 rides. We're making money off of these hospital rides.

[A]

The $100 trips to the airport. Yeah.

[B]

And the $100 trips to the airport. Like, focus our attention on the, on the more expensive.

[A]

Totally.

[B]

Right. Like I, and I always talk about the fact that also that like you, you work just as hard as having a, you know, whatever. Like when you have, like when I, when you do a partnership that's a million dollars versus 20 bucks, you're still working like the, the same. The amount of work is usually the same.

[A]

That's a great example Exactly. You know, the amount of work is the same, and so why not apply that work to the profit pool? Super simple.

[B]

Exactly.

[A]

Yeah.

[B]

It's like, this is, like, literally, like, things that people just are not focusing on.

[A]

Right.

[B]

Give me another one.

[A]

I think it happens in a lot of businesses. Like at Lululemon, when I asked the question, where do we make our money?

[B]

Yeah.

[A]

Lululemon has historically made their money in bottoms, not tops. And so it's the pant wall. That's where they make their money.

[B]

Yeah.

[A]

So then you'd ask the question, okay, why do we have all the rest of this extraneous stuff going on, then? Because it's diluting profitability, to your point. And it's like the $20 deal versus the $1,000 deal. So, like, this happens all over businesses, because businesses get complex over time, and nobody comes along. It's like a garden that gets weeds, and nobody comes along to weed the garden. And I feel like my job is, come weed the garden. Like, let's figure out which. Which of these plants matter, and let's water the heck out of them, and let's whack the heck out of everything else.

[B]

You know what, though? This is such. This is so true. And, like, I hope anybody who's, like, doing business or interested in business is listening to this, because, you know, if you really think about it. Right. Like, Lululemon is a great example again, because at the beginning, when Lululemon started, they were, like, dominating. Right. Because, yeah, they were known for their, like, pants, because they made girls butts look better or whatever.

[A]

Yeah.

[B]

Right.

[A]

Yeah.

[B]

And, like, that would be the first thing you see when you go into a Lululemon. It'd be. It would be. The swords would be a little bit smaller, and the pants were beyond the sides and whatever else. It'd be, like, the first focal place that your eyes look.

[A]

Yeah.

[B]

You go into a Lululemon. Now there is so much, like, you know, as I would say, dreck. It's. It's a Hebrew word. It's like, there's so much, like, you know, noise and busyness in there with all the bags and the accessories and the bras and all 97 different, like, levels of tank tops, like, crops and. And then quarters and this. And then I'm like, where the hell are the pants? And the pants are in the back, back, back. You got to walk through all this junk, and it's like a small wall versus, like, make more pants.

[A]

Well, hopefully you'll, like, walk into a Lulu. Like, I've been In two today so far.

[B]

Yeah. Okay.

[A]

Because this is part of my spending time on the front lines. I want to be a useful board member. So I go to stores.

[B]

Yeah.

[A]

And we've got a new team running North America. And in literally weeks, they have simplified the store, simplified the story, simplified the product lineup, so that it's focusing on a few things versus a lot of things.

[B]

What are they focusing on now?

[A]

So they're focusing on the three things that yoga or that Lulu is known for, Yoga, train, and run. And so you should walk in and you should see train, run, yoga. And the pants are highlighted, and there's not a bunch of dreck.

[B]

Yeah. Thank you.

[A]

Yeah.

[B]

I mean, that's the way I see it. Right. Because what were they focusing on, like, for. For a bunch of years?

[A]

Well, like, sometimes you, like, lose your way, and you say, like, I've got to have casual clothes. Well, then you're competing with a lot of people that are not in your core. And you said it. In the core. It was about workout clothes that made her look beautiful, and that was the mantra. Like, when I started at Lulu, the mantra was, we exist to make her silhouette look beautiful.

[B]

I didn't say that. You said that. I said the butt looked good.

[A]

Yeah, well, we had a little bit more dressed up way of saying it. Or have. And now they're getting back to that. They're like, we exist to make all shapes and sizes of her body look beautiful. That's what we do. And we do that with a limited set of skus, not a gazillion.

[B]

But the other problem with Lululemon is at the beginning, they had. They had much better quality. Their quality has went down over the years.

[A]

It's now like. Like, it's. I have people say this to me all the time. Like, the quality is so good at Lulu. Like, I'm wearing stuff that's like five years old or six years old, and I've tried aloe, I've tried vori, and the stuff wears out.

[B]

Oh, yeah.

[A]

Alo is exactly like. So that's music to my ears, because we really have put a big emphasis on quality, too.

[B]

See, I don't know. I mean, I find that at the. When Lulu just start, like, right when they're just kind of just starting.

[A]

20 years ago, they had great.

[B]

Their quality was. It was better. I found it to be better.

[A]

Well, I think now you, like, give it a. Give it a run.

[B]

Really. I know that. I agree. The aloe stuff is junk. I mean, it's like, basically like, it's it's basically like the most. The cheap.

[A]

It's almost disposable.

[B]

It is. I was going to say it's like. What do you call fast fashion.

[A]

Exactly.

[B]

And. But they're charging massive prices.

[A]

Yeah.

[B]

And in fact, they want to be like an elevated brand now. They want to be like a luxury brand.

[A]

Right.

[B]

Which I'm. Like, they have nice styles, but, like, that stuff does not.

[A]

Yeah.

[B]

It's not great. It's not great quality.

[A]

Yeah.

[B]

So how are Lululemon Zembers now? Are they still good?

[A]

Now we're. We're really in the midst of a real turnaround in North America. They're great in China. Great in Europe. But we've really had to renew our focus in North America and the team's doing that. So it's. It's working so far.

[B]

What about styles? Are they going to, like, change the styles and kind of, like, be a little bit more. More fashion forward or.

[A]

I think, like.

[B]

Or that's not. It's not with the core. You want to stay with the core of what?

[A]

I think the core of what they do is, is they stay focused on making a few products just absolutely killer. And that can mean it's more beautiful. And over time, they took out some piping and some zippers and things like that that we want to add back in because it adds to the beauty of the product.

[B]

Well, the other thing that Lululemon just to kind of not to like. I know you're not like Chip Wilson, but. Yeah. Is he still on the. Is he still, like, involved? Yeah, he. They kicked him out. Right. For all the other.

[A]

Before I got on the board. Yeah. So that was. Chapter. Before I got.

[B]

There was a. When they kick him out of there

[A]

again, it was the. It was. I think the comments that he made about there are certain people that shouldn't be wearing my clothes.

[B]

I know he. I remember that. And they kicked him out. But how was like, two years ago.

[A]

That was almost ten years ago.

[B]

Ten.

[A]

Yeah.

[B]

My God.

[A]

Yeah.

[B]

God. I'm like in a. I'm in, like, a black hole of time.

[A]

Good. Make time go slow.

[B]

Yeah. Right.

[A]

Yeah.

[B]

But what I was going to say about the Lululemon is this is what you guys do all the time. Not you. Because I know you're on the board, but you guys, like, take things out that are really popular and then never to never be seen again. Like, when things are, like, doing really well, you'll never find them again. Like, so many of the sports bras that I like, gone. Completely gone. And they being replaced by things that are much less adequate.

[A]

I will take that feedback. I'll go find out for you.

[B]

No, would you let me know?

[A]

I haven't been in the bra market, so I gotta go.

[B]

Okay, well, I'm gonna tell you why. Okay, I'm gonna tell you this. And then you can, like, do whatever, whatever you want with the information.

[A]

This is good feedback. This is a feedback loop that we're doing right now. You're giving me feedback that I then get to take back to the team.

[B]

Well, you can. And then I want to get a free bra from it. But I'm going to tell you what they have.

[A]

It's good consulting fee.

[B]

I think so. Right? Very cheap for you.

[A]

Yes.

[B]

Very cost effective for Lululemon. They would make a bra that had pockets. Like, it would have like two layers. It would be like material and then room and then like, the material. So I could put my. My key. I could put my credit card. I could put like my dollar bill. I could put stuff in there. Everyone loved this bra. Everybody loved the bra. And it was like, really good support.

[A]

Yeah.

[B]

Gone bra. Totally gone.

[A]

I'll find out what happened.

[B]

And now they have flimsy bras. Either they have the bras that, like, you can't, like, run in them because they're too, like, flimsy, or they have these, like, matronly, like, granny bras that, like, are like, like from here to here. I'm like, I'm not wearing either one. Where is this other bra? And so. And they're like. And the people I would ask at the stores would be like, yeah, I know. They always do this. It's like they keep on, like, discontinuing the most popular things.

[A]

I will find out for you what happened.

[B]

Can you.

[A]

I can. I know who to ask.

[B]

Okay, good. I know. I know you do. You do know who to. Who is the CEO now?

[A]

So we have co CEOs while we're. We're doing a full search for a CEO.

[B]

Oh, okay, so you are doing a full search. When did you guys. Who Was the last CEO?

[A]

Calvin McDonald was the last CEO.

[B]

Until when?

[A]

Until the end of January.

[B]

Oh, like just now.

[A]

Just now? Yeah.

[B]

How long was he there? Because he.

[A]

He was five years and he tripled the business and he did a fantastic job.

[B]

Don't worry. Where did he go?

[A]

He went to a beauty. He was. He came from Sephora, he built up Sephora, came to Lulu, and then now he's at a beauty conglomerate called Wella.

[B]

Oh, I know. Well, of course. I Want to take a quick break to talk about something I genuinely think is a game changer for healthy aging, and that's fatty 15. Here's what you need to know. Scientists discovered the first new essential fatty acid in over 90 years. It's called C15, and it's a big deal. When your cells don't have enough C15, they become fragile and they age faster. And when your cells age, your body ages, full stop. As many as one in three people worldwide may have low C15 levels, a condition called cellular fragility syndrome. And most of them have no idea. Fatty15 co founder Dr. Stephanie Van Watson discovered C15 while working with the US Navy studying aging dolphins. Based on over 100 studies, we now know C15 is a key nutrient for slowing biological aging at the cellular level. And fatty 15 has three times more cellular benefits than omega 3 or fish oil. By the way, 72% of fatty 15 customers report seeing or feeling benefits within 16 weeks. Things like deeper sleep, improved energy, and healthier hair, skin and nails. It's vegan friendly, free of allergens and preservatives, and clinically proven to raise C15 levels. So if you care about your age, and I know you do, this is worth your attention. Go to www.fattty15.com habits and use code habits at checkout to get an additional 15% off off their 90 day starter kit. That's fatty15.com habits, code habits, and you can find the link in the show notes. Now let's get back to the episode. So now let's get back to the days of Lyft for a second. Okay. And Uber, the whole thing. So then here you are, you like, kind of like, like basically you made the business go from what to what at Lyft?

[A]

So I forget what the revenues were, but it was, it was somewhere in the order of going from 5 billion in gross in gross revenue to 10, something like that order of magnitude.

[B]

Okay, so then, so how, like what happens now? Like that, what year this is 2018. Ish.

[A]

2018. 2019.

[B]

Okay.

[A]

Yeah.

[B]

So they, how, how did Uber then again catapult them? Like, if you did all these good things for, for Lyft, it made it more quirky. It was a little bit like less. Less expensive.

[A]

Yeah.

[B]

Then why are more people not using it? And now everyone, like, everyone only uses

[A]

Uber because Uber, I think Uber. Uber also wasn't resting on their laurels. And they have a really good CEO now.

[B]

They do?

[A]

Yeah. And Dara. And a really good president.

[B]

How long has he been there?

[A]

He's been there. He got there about 2018ish.

[B]

2017.

[A]

2018. So he's been there eight years. And they didn't rest on their laurels. They saw this opportunity in food and they said, okay, we've already recruited a driver. Driver's not busy all day long, especially in the middle of the day and after rush hour. And that sounds like lunch and dinner, so let's get in the food business. And the founders, Lyft, were not, and still haven't to this day, they hated the food business. They didn't. They weren't attracted to it. And so Uber leapfrogged them because they, they could use their drivers twice rather than once, essentially, or in two businesses rather than one. And that completely changes the economics of the business.

[B]

And Lyft just refused to do it.

[A]

Yeah, the. The mantra was, we don't want our car smelling like Chinese food. Well, that's not really how it works, but it was. It's kind of a tragedy because Lyft missed this window and a lot of us on the team disagreed with, with the founders, which is why basically the whole management team left. And so Uber took advantage of that, too.

[B]

And so where are they now?

[A]

Kind of spread all over the place, doing amazing stuff. In terms of the leaders, Lyft now is back to half the market share it used to have.

[B]

Half the market share.

[A]

Yeah.

[B]

What do you think they can do to kind of like, if you had to be back at Lyft, if they brought you back and said, I don't know now.

[A]

Because it'd be very hard to enter the food business because it's super crowded now. It's not just Uber Eats, it's doordash, grub, et cetera.

[B]

Postmates is a million.

[A]

Yeah, exactly. So you've got a bunch of. So I haven't thought about that, but I think it'd be a tough job. Would you turn it around? No, no. I'm much more excited about what's going on in AI and technology and other places of the business, but not that.

[B]

What do you think of AI like ChatGPT, Claude Gemini, I think.

[A]

Well, in that, in that particular business, like the biggest AI problem, maybe the toughest AI problem is turning a car into a robot. That. And that's what I think is going to come eat the lunch of rideshare, because you see it, like, even here in la, Waymo is like, it's really superb experience.

[B]

Oh, yeah.

[A]

And I think that's the future of Rideshare is it's going to be robotic.

[B]

So when do you think Waze is going to take over all rideshare like Uber and Lyft?

[A]

I do. I, I think they are systematically, like, just growing their fleet over time and they don't have a demand problem because they have more demand than they know what to do with. And so they're, they're a safety first company and they're really focused around safety. And right now the technology is good as long as it's not raining or snowing. And so you see them like going across this southern belt of the U.S. the Southern Smile. But eventually they'll figure that out and they'll be in the northern cities too. And so I think they're just being very careful, very systematic and making sure their cars are super safe because they know that as soon as there's a major accident, it's going to be a big blocker in the business. So they're just, I think, being very patient and playing the long game.

[B]

So what would like, do you think other companies are going to come on board pretty soon or that?

[A]

Like, I think it's really hard. It's a really hard technical problem to solve. So I don't think there's going to be a lot of problem companies in this space. Like, they kind of own it today and there's, there's really nobody that can challenge them because their technology is so much better than everybody else's.

[B]

How many waymos are there even?

[A]

There's like 3,000 on the road today. So not that many.

[B]

Not that many.

[A]

There are 300 million cars in the US so we're talking like right now a drop in the bucket market.

[B]

I'm even surprised that there's not more Ubers and Lyfts like other companies that are competitive with them.

[A]

Right. Because that market, when you have to pay a driver, it's relatively expensive and so it's less expensive to drive your own car. So people choose nine. 99 times out of 100 drive their own car. But once you don't have to pay a driver and the car's a robot, then you open up a much bigger market. And so that's what I think we're going to see.

[B]

How about other places? If the AI, like just in terms of like, Claude chat, like I was saying, just like basic. Basic. Like, which one do you like the best?

[A]

I use Claude the most, probably. Me too.

[B]

For what? What do you use it for?

[A]

I use it for coding.

[B]

Really?

[A]

Yeah. So, like, if we, if we have a company idea, you can literally prototype a company Using Claude, you can prototype the product, you can start to test the product. So I use cloud a lot, and I use Gemini, I use chatgpt. I kind of use them all because I like to compare them.

[B]

Yeah.

[A]

But for tools that we use actually use in business building, we're mostly using

[B]

Claude cloud because it changes so quickly. So what do you.

[A]

It does change like, every month. It's unbelievable.

[B]

It's really unbelievable. So is there, like, what do you use Gemini for specifically? What would you use ChatGPT for? What would you use? I know for Claude, you said you would use it for prototyping.

[A]

Yeah, so I use. Gemini has replaced Search for me. So I use Gemini for search research. Like, if I want to research an industry where before I would ask an analyst, hey, let's build. Let's build a whole picture of this industry. How big is it? Who are the competitors? What's the market share? What are the economics for that kind of research? I use ChatGPT now, and it does an unbelievable job. And then once we have those answers and want to build a company, then we use Claude. So I kind of have three different use cases for each of those. And they're all incredible tools. It takes us half of the people and half the capital to start a company now than it did did 18 months ago.

[B]

It's crazy, right?

[A]

Crazy.

[B]

How are these plate. Like, like, you know, people are sending me these things all the time with, like, you know, this person's not real. That person's not real. This is. How are they creating people? Like, there's like, actual, like, accounts, like, who are growing their Instagram pages and, like, social media pages fast. They're like beautiful girls or really thoughtful men. And they're, like, talking as, like, thought. Like, thought leaders. I think they're real. I'm like, okay, I'll follow them. I'm like, like. And then my friend's like, oh, that one's not real. That one's not real. I'm like, how are they doing this? Like, what are they using? Are they using Claude? Are they using ChatGPT?

[A]

They're probably using a combo. Yeah. Like, there's. Well, there, basically, if you. If you go back to the origin of the AI that we have today, it's really. It's a prediction model, and it predicts what words come next. And words can be turned into numbers. And that's how the math works. And so you can get really predictive about words that turn next. And pictures are also numbers. Pictures are made up of these tiny little specks called pixels. And you can understand. The AI can understand which pixels ought to go together based on patterns it's seen. And so it can create images and it can create text and you can bring those together. And that's like we had bots several years ago that would create fake accounts and create fake followers and all this stuff. Now this is just a souped up version of bots that you're describing because the AI can create the context, it can create the content, and it can create the visuals. And so it's wild to see. And I think AI can spot other false AI. So, like, I have this little tool that I've created that it senses whether this was AI generated or whether this is real. But it's going to get better over time. It's going to be harder to do.

[B]

Wow.

[A]

Yeah.

[B]

So who's actually controlling it? Like, who's creating, like, someone. There has to be a human being who's actually directing the AI.

[A]

Yeah, for sure. It doesn't create itself.

[B]

Right. Because AI is only as good as your prompts. That's what I've noticed.

[A]

Yep, that's right.

[B]

And if you're a shitty prompter, like I am, I'm getting like very basic information. So then who is the experts, like, in the world that are able to create?

[A]

There are experts like, that are doing. They're doing really productive things and kind of just unproductive things too. But like, there are marketers that really understand how to use these tools and they're doing incredible things and we're lucky to have some of them at Lulu and GM and some of the companies I'm involved with, with. And they've just made marketing so much more productive because you can get the right answer, the right message in front of the right person with high, high accuracy, and that then leads to product interest and potentially a purchase.

[B]

God, it's amazing.

[A]

It is amazing. It's fun time to be alive.

[B]

It is.

[A]

It's a really fun time to be alive.

[B]

I mean, but like, so jobs will be like, kind of depleted, but they'll be changed.

[A]

Like, I think humans are really good at seeing the job disruption.

[B]

Yeah.

[A]

But we're not good at seeing the jobs that get created on the other side, largely because it's almost impossible to see that. But so if we were talking about, if we were talking to each other 120 years ago, which isn't that long ago, six out of eight people worked in agriculture and this thing came along called the tractor, and there were a bunch of doomsayers saying, oh, my God, like six out of eight people are going to be unemployed. The country's going to implode. Well, it turned out there were a bunch of jobs that got created in that industrial revolution, like, like car factories and other things that people went and did different jobs. We're not good at seeing that. We're good at the doom and gloom, but we're not good at seeing what's on the other side.

[B]

Exactly.

[A]

And every technical revolution in history has led to an expansion in gdp. So do we believe this is going to be the first one? I don't. I think this is going to lead to expansion of jobs and expansion of wealth, but we just can't see the other side yet.

[B]

Right. Because we don't know what we don't know. Right.

[A]

We don't know what we don't know.

[B]

That's the other issue. Right?

[A]

Yeah, yeah. Yep.

[B]

I mean, so that's what you're really focus. You're focusing really on your venture fund basically creating. You're not even like. Like, it's just you're creating real, like real companies.

[A]

Real companies solving real problems in the real world.

[B]

And then actually, what are some other things that you're noticing? Like, we're in the marketplace.

[A]

I think that's. We want. We want to be solving, like, real problems in the, in the real world that have kind of a physical aspect to them and make that physical process better, because we know that's going to be protected in the end from an AI revolution.

[B]

Wow. So, of course. Okay, so let me ask you a couple other questions about frameworks from your book. Right. Because I think that this is a very good book for anybody who's looking or who is an entrepreneur who's growing a business. Also, what I find interesting, and we can talk about this, actually, is that to get a company from zero to, let's say, 100 million is very different than scaling it from 100 to a billion.

[A]

Exactly.

[B]

Right. What are some of the things that people like, what are some of the things that people get wrong when they're trying to scale a business?

[A]

I think when you're scaling from zero, it's the hardest chapter of a business

[B]

because most hard, most difficult.

[A]

Totally. It's. It's like terribly hard. Like, I'll. I teach in some business schools and students will come up and say, I want to be an entrepreneur. And I'll say, why? It's like the hardest thing ever to take something from zero to get your first million or 5 million in sales. And so we, we do work a lot on what we call product market fit. And that is, do you. Can you get a product that is so attractive that people rave about it? And if they rave about it, then you don't have to spend marketing dollars. And that is. That's a signal that you're onto something. And so we spend a ton of time on the product and, like, polishing it and making it. Making it super attractive to our target. And so that says you gotta know your target and you gotta know what they want, and you gotta deliver against that. And that tends to take a lot of work. It's another form of simplification that's really, really important to get right. I was with Steve Jobs's chief of staff from way back, and I said, give me an example, like how you guys simplified product. And he said, oh, all the work happens up front. I said, what do you mean? He said, like, that's the hardest thing you have to get in a room. You gotta figure out what you're gonna make and why you're gonna make it, and it's gotta be really simple. I said, give me an example. He said, okay, get in the Wayback Machine. We made the ipod. I said, yeah. He said, steve and I got in a room. He said, I was in charge of product for the ipod. We got in a room and said, what has to be true about this product? And at the time, all the music players didn't have many songs, and they were really janky and clunky. So we emerged and said, we want our music player to have a thousand songs, and it only takes four seconds to find a song. That was the total product definition. They came to the engineers and the engineers like. Like, we don't know how to do that. There's no hard drive that'll hold a thousand songs, and there's no software that can find it in four seconds. We said, exactly. That's what we're going to invent. And we find the same thing in our products. If you're really, really, really simple about the two things that matter or the three things that matter, then you can focus yourself on building that. And your first signal is going to be people rave about it. And if they don't rave about it, then you haven't gotten those two or three things right. You got to go back to the drawing board, Right?

[B]

So if people. Like, what if you've. Like, how about all those times that there's a really great product but really terrible marketing? Yeah, all the time.

[A]

It does happen all the time. You're absolutely right. Like, I Noticed this, like, it's not always the best product that wins.

[B]

No, it's not.

[A]

It's the people have the salesforce that wins, the best marketing team that wins. And so we, we realized, okay, these two things have to be true. You have to have a killer product, but you also have a killer go to market because that wins.

[B]

Yeah.

[A]

And there's a bunch of examples in tech. I won't name names, but I think everybody listening to this can name names of tech products that are not the best, but they won somehow. And usually that's because they had an unbelievable go to market.

[B]

Well, no, give us an example of something because this is what you do for a living.

[A]

So let's take Microsoft.

[B]

Yeah.

[A]

Microsoft did not have the best operating system, did not have the best spreadsheet. It used to be something called Lotus 1, 2, 3. Did not have the best presentation platform, the best word processor. But the amazing thing that Bill Gates had beside him was a guy named Steve Ballmer who could sell ice to Eskimos. The guy's unbelievable. And he built a salesforce of unbelievably talented and capable people. And so Microsoft's a great example of not having the best product, but winning market share like crazy. They don't have the best cloud, Amazon does, but Azure's doing just fine. They don't have the best office suite. You could argue Google does, but Microsoft's Enterprise Salesforce crushes Google's enterprise Salesforce. And so oftentimes, like, you've got to have killer go to market to actually win.

[B]

Absolutely.

[A]

And so we, we concentrate on both of those things.

[B]

So really what I'm gathering is that the most important skill to scale and to grow a business is sales, is

[A]

to be able to sell. You've eventually got to be able to sell your product.

[B]

At the end of the day, you can say anything you want about product being wonderful and this being great and this being wonderful. At the end of the day, if you can't, if you don't have the sales team that can, that can sell, you're in big trouble.

[A]

It's true. There really, it really is both and it's not either or you got to have both, both great product and a great, great go to market.

[B]

Or what you just said yourself is like, you can have a mediocre product and still win.

[A]

You can win if, if your cost, if your competitors stink, it go to market, you can win.

[B]

I know a lot of things that I'm like, wow, that's like, I found this like, like nothing product that's so much more like this dominating, but yet like they have no money to market. So nobody knows about it.

[A]

Nobody knows about it, right? Yeah.

[B]

And look, you can look at all the things on social media, TikTok shops shop crap like stuff from China that costs four and a half cents that like you have a million people just like pushing this. Like all these like moms who are really good sale sales people, young girls, whatever it is, they're selling millions and millions of chotsky, like nothing like chachkas. Whatever, you get it. You're like, what the hell is this? But they, so they're selling them because how about the supplement business? Like again, it's about having a dominating sales force. You don't have to have.

[A]

It makes up for a lot.

[B]

It doesn't have to. You don't have to have anything else. Like you just like that's why when people say, oh, have it, you know, really work on the product. Product, product. Really.

[A]

I believe the product's got to be good because eventually your customer figures it out.

[B]

No, what I think that happens is people will buy it once and then they'll never buy it again.

[A]

Exactly. So you just said, you just made that point about aloe and.

[B]

Well, but no, I made that point about aloe. But aloe was dominating the market.

[A]

They're really good at selling. But if you don't have the product eventually, like as you said, people buy it once and then they don't come back. And if they don't come back, you don't have a business.

[B]

True.

[A]

So. But that's why I say you got to have both.

[B]

But listen, but that fashion's a different animal because aloe has not the greatest quality but this. But their aesthetics are really nice. Like they've got great style. Aesthetics. So it's like, like you said, fast, fast fashion. Like a. Yeah, like a. What do you call it? Fashion Nova or like Zara. Because people will keep on buying it because it looks good and it's like athletic leisure is super popular. It's comfortable. Right. So that's why. But in anything else, if the product, like that's why you'll keep on buying that. But in anything else you'll buy it once. And if it's really shitty or not, like a food or supplements is a hard one because you only don't taste the supplement.

[A]

No. And you can't tell. You can't like run a test on your body to figure out if it's really working.

[B]

No, but you can run a lab test. You can take that Stuff to a lab. And you know, before you got here, I was with Ken Ryder, we were talking about all the supplement stuff. And it's. If you take some of this stuff to the, to the labs and you'll see whatever they're like, like they're telling you, oh, it has this in it, that in it. You'll take it and it's like zero of the, of the ingredient that they tell you like, you know, often that happens.

[A]

It must happen a lot because it's unregulated. Yeah.

[B]

Unregulated, yeah. Right. So those are bad examples. But like, other than that, like maybe some technology stuff. If it doesn't work. If it doesn't, you'll never buy it again.

[A]

Right.

[B]

But you'll buy it once and you'll know. But like the product should be good enough.

[A]

Well, I think like right now we see it in AI because like Microsoft has this product called Copilot which doesn't hold a candle to Claude or to OpenAI's codecs. And so eventually engineers show up and they're like, I'm not using Copilot, I gotta use cursor or I gotta use Claude code. And in those cases, the best product wins.

[B]

Yeah, that's true. Well, Claude is, I mean, also that's true. Microsoft. I agree with you. Like, they're. It's clunky.

[A]

Yep.

[B]

You know.

[A]

Yeah. But really good salesforce.

[B]

Really good salesforce. Exactly. Let me share my daily routine game changer with you. It's the Momentous 3. I've been using their protein, their creatine and omega 3 combo for months now and the results are undeniable. These nutrients are key for long term health and performance, but hard to get enough of through diet alone. The crea pure creatine boosts both physical and your mental performance. The grass fed whey tastes great with no weird aftertaste. And their Omega 3 is a must for recovery. Since adding these, my energy, my recovery and my overall well being has really improved. So if you want better performance, this is the way to go. Visit livemomentous.com and use my code Jen for 35% off your first subscription. That's livemomentous.com code Jen for 35% off your 1st subscription. Trust me, you'll be happy you did. Okay. Well, I don't know how long it's been, but thank you for coming on this podcast.

[A]

Yeah, it's been fun.

[B]

Is there any, is there anything else that I forgot to ask you that's really important for like, you know, you Talked about this hyper growth formula. Is there any other piece of, like, of material?

[A]

Yeah, I'll give you two.

[B]

Thank you. Go ahead.

[A]

Yeah. So two. Two. So one is. And I call these the secret ingredients around the algorithm. And one of these, like, will be written about in the future as people try to understand Elon's leadership style and how he actually gets stuff done inside these companies. But here are the two principles. The first is what we call eat your own dog food, which is use your own product. And I can't tell you how many entrepreneurs and CEOs don't use their own product. And if you don't, then you're foregoing a whole feedback loop. I was with a group of banking CEOs, and I said, raise your hand if you use your Apple up on a regular basis, like weekly, monthly, almost no hands went up. And I said, I knew that was going to be the answer. You know why? Because I use your apps and they suck. And if you were using them, you couldn't live with that suck for one more day. But you don't use them, and therefore they're not getting better because you're not in the feedback loop. And so we used to take. Each of us used to take a car off of the end of the factory line every night to go home. And we would drive the car home, we'd drive it back to the factory, and we'd give engineers notes on the car. And the principle was we have to eat our own dog food, we have to use our own product. And if we are, then we're going to be the first to spot flaws. And as an entrepreneur, as a leader, you can't live with those flaws. Like, why would you want to put your customer through that? So you fix them. It's a great feedback loop. So that's thing one, thing two, and this is kind of the genius of Elon. He concentrates on the one or two things that really, really matter in a company. And he finds those one or two things and he manages them weekly. So let's say I'm on a team. That is now the number one issue on Elon's mind. At Tesla, I am meeting with him once a week, and two things happen. One is the teams that meet with the CEO don't tend to bring their B game. They bring their A game, and so they're on their A game almost constantly. And they show forward progress every week. And if you're making progress every week and your competitor's not doing that, you're compounding progress against Your competitor that stacks. And it gets really hard over time to compete with somebody who's doing that. And I think what they'll write about in the future, about Elon's leadership at Tesla and SpaceX and his other companies is this weekly cadence thing that the CEO is driving personally turns out to be a huge advantage builder. And so 10 years on from SpaceX's first successful launch, they now own 90% of space launches. It gets really, really hard for a competitor to keep up with that or even catch up with that now because they every week are improving. The way that that rocket gets built, the way that that rocket gets recovered, and the way that that rocket gets designed. And it's almost impossible to catch people like that.

[B]

So what would you say the most important quality would be for a leader?

[A]

I think drive a weekly cadence on the things that really matter in your business and use your own product so that you're it. You're making sure it meets your standards as a leader.

[B]

That's so true. Because people are not using. I see that a lot, actually.

[A]

It's unbelievable. Like, I just. It floors me that people don't use their own product. It's why I insist on driving GM cars, even as a board member. And it's why I was in two Lululemon stores today, because I feel like I have to go eat the dog food I need to.

[B]

But you're not wearing any Lululemon.

[A]

I'm wearing Lululemon shoes. I got a Lululemon shirt on. Another Lululemon shirt on. Lululemon socks box. So I've got. Yeah, I. I want to eat the dog food.

[B]

How are those Lululemon shoes?

[A]

These are unbelievable. These are like the most comfortable running shoes I've ever had.

[B]

What?

[A]

Yeah, yeah. And this is a newer product for us, but it's fantastic.

[B]

You just finished telling me, like, the core. The core pieces of. Of clothing.

[A]

Yeah.

[B]

Should be the pants.

[A]

Yeah.

[B]

But why would they come up with shoes?

[A]

Because our three core. Our three core activities that we. Running is run, yoga and train. So these shoes, our customer actually looks to us for innovation in shoes. And what we found out was when we started to. This is a great example of, like, the algorithm in action. When we said, how are we going to design a shoe that anybody's going to care about? There's a lot of shoes on the market. It we said, for women's shoes, how are they designed? So we started to question the requirements. And what we found out was all women's shoes are designed around a men's foot. Men's feet have, like, determined the shape of women's running shoes. And so we went out and scanned tens of thousands of women's feet and created the first shoes. Like, this base of the shoe is called a last. This is the first last that's created for a women's foot. And then we launched that product as the first women's shoe design around women's feet. It's amazing. It hadn't been done, really. We just asked the question, like, how do they get designed?

[B]

I should try on a pair of those shoes.

[A]

You should try them on. Let me know what you think.

[B]

What's the price point of those shoes?

[A]

This is about $109, I think, something like that.

[B]

Oh, they're not. They're not as crazy. They're not crazy expensive, but what's your cost on them? $8.

[A]

I know it's well north of that, but I don't know what the cost of the shoes is. Great question. Question.

[B]

Do you get free clothing at Lululemon?

[A]

I buy it.

[B]

You do?

[A]

Yeah. Because I want to go through the process.

[B]

Yeah, you do. Okay. So what do you like? Would you like the process?

[A]

I, I. There are things I do like about the process. Like, there are people that are passionate in the stores about educating people about yoga, run and train.

[B]

Yeah.

[A]

And I love interacting with them, and they're really passionate about the product. Are the things we can improve. Definitely. And we're working on some of those.

[B]

Would you go to Lululemon? They're looking for a CEO. I heard.

[A]

No, I'm done being a CEO now. I'm like, now I'm investing in other CEOs.

[B]

Damn. Okay.

[A]

Yeah.

[B]

I was trying to catch you to see if you'd ever.

[A]

Yeah, exactly. If I'd slip up.

[B]

Yeah, exactly. So no. No lift again. No, no, no, no.

[A]

I've got a bunch of investors that I've told I'm going to take good care of their money, so I got to do that.

[B]

Okay. You got to do that instead. Okay. Okay. I feel like I want to make sure there's, like, I have my computer with all my. I didn't even open my computer to ask you the questions I wrote down. Do you know that? But. But that's okay. I wanted to. I wanted to have a conversation with you. I don't like to usually, like, look

[A]

at my conversations, too. That was super. Super. It flowed super well.

[B]

Like, I mean, I do. I. Did I forget anything else that's important about company business? Are you sure?

[A]

Yeah.

[B]

Because I really like the eat your own dog food. I think that's really important stuff. Okay. I want to ask you this because this is on a piece of paper that you guys, you know, wanted to add me to ask or. I never ask these questions, but.

[A]

All right.

[B]

If you were mentoring a recent college grad, how would you tell them to use the algorithm? Ooh, right. To stand out early in their career?

[A]

I think when you come in and you can do two things. You can question assumptions and be a simplifier, you're going to stand out. And if you can do those two things, you tend to be able to figure out where the value is and you can add value. So back to the early part of our conversation. That's essentially how I was able to join Tesla, was demonstrate value through simplifying and questioning assumptions. If you do these two things, you can apply the algorithm, and I think as a recent college grad, you can become very valuable and stand out from all your peers.

[B]

So I'm going to ask you one more question about this, because I know I've kind of asked you seven different ways, but what is your superpower, then? Like, you obviously can make the common sense seem calm. Like, you know, like you're picking up on, like, things that are very obvious to some, but obviously not that obvious. At most, you go above and beyond you, like, kind of like show your value, all those things. But what's that one thing that you're like software we got. With all that being said, what is your superpower?

[A]

It's being able to simplify. I think that's it. Like, it's a skill. It wasn't something I was born with, but it's something I learned over time.

[B]

Yeah.

[A]

Yeah.

[B]

So. And you do such a good job at it.

[A]

So important. Yeah. Because I think once you become a leader and people are looking to you, they need you to is be very clear about what the goals are and what they. And what we're trying to accomplish. And to do that, you have to be a simplifier. Can't take a lot of words.

[B]

I love it. Okay. The book is called the algorithm by John McNeil, who is just, like I said, super impressive. I mean, your. Your background is insane.

[A]

Been super lucky.

[B]

Yeah. Okay. Lucky and hard work. I. Luck. Luck doesn't just happen usually. Like opportunity and the whole. That whole. Yeah, that whole.

[A]

And what favors the prepared.

[B]

Yeah, exactly. So thank you for being on the podcast.

[A]

Thanks for having me. It's been fun.

[B]

It's been so fun. And where else can we find more information about you? If they were ever curious.

[A]

You can find the book on Amazon and the book or the audiobook and you can find more about me on DVX Ventures.

[B]

Amazing. Thank you so much.

[A]

Thank you. Shift.