← School of Hard Knocks Podcast
School of Hard Knocks Podcast
Lucy Guo | How She Became The World's Youngest Self Made Woman Billionaire
00:41:01
Go try Agent Opus and start making your own videos today! Get 600 free credits using our link: https://agent.opus.pro/home?special_credit=SOHK Lucy Guo is the youngest self-made female billionaire in the world and the co-founder of Scale AI, one of...
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- [00:00]
James
You're out in Beverly Hills with the youngest self made female billionaire in the entire world, Lucy Guo.
- [00:07]
Jack
Did your parents not feel any type of way?
- [00:09]
James
Are you sure you really want to drop out?
- [00:10]
Jack
Are you sure you're making the right decision?
- [00:12]
Lucy Guo
My dad was sending me angry emails for probably up to a year and it was landing in my spam inbox because they all look the same. You are so dumb. You don't have any risk calculation. How did I raise such a dumb daughter? You're dumb.
- [00:23]
Josh
Who got rich during the gold rush? It wasn't all the people going out west looking for gold. It was the people selling the shovels.
- [00:29]
Lucy Guo
There are a lot of companies that would not exist if you asked for permission. Like Uber is example. They broke all the laws, but they didn't ask for permission. And now they became so ingrained in society that they kind of just had to exist.
- [00:38]
James
How much did you sell the company for?
- [00:39]
Lucy Guo
26 billion or so. Like, if I didn't become a billionaire, I was a failure because everyone around me was so intelligent. It was very obvious that everyone around me was going to be a billionaire or was already a billionaire.
- [00:49]
James
If me and you died tomorrow and you had one more message to leave with the younger generation, what would that be?
- [00:54]
Lucy Guo
I would say.
- [00:55]
James
What's going on, everyone? Welcome back to the School of Hard Knocks podcast. I'm James and I'm here with Jack and Josh. And we have an incredible guest for you all today, Lucy Guo. Lucy, it's great to be here with you today.
- [01:06]
Lucy Guo
Thank you for being here 100%.
- [01:08]
James
First of all, you have one of the most incredible houses that we have ever seen. I just have to say, it's so inspiring for the three of us. Three of us became millionaires this last year ourselves.
- [01:16]
Lucy Guo
Congratulations.
- [01:17]
Josh
Thank you.
- [01:17]
James
We appreciate it.
- [01:18]
Lucy Guo
It sounds like the podcast is going well.
- [01:19]
James
Podcast and all the counts podcast is growing in the businesses as well.
- [01:23]
Lucy Guo
Yeah.
- [01:23]
James
Get around, you know, people like yourself and it just causes us to think so much bigger. So where I want to kind of get started though is I want you to take us back to when you dropped out of school. I think that there's so many entrepreneurs. You know, funny enough, him here, he's the one dropped out out three of us as well. And you're kind of at that crossroads where you have a lot of expectations from maybe family members, from parents, from people. And it's maybe looked down upon to kind of make that decision. But you ultimately did that take us back to when you made that decision and what that ultimately meant for you in that moment right there.
- [01:51]
Lucy Guo
Yeah, honestly, it was a no brainer. The second that I heard that I got the teal fellowship, I was like, fuck it, why not? Right? It was $100,000 to drop out of school, which is already awesome. But I also didn't view as a risk because I already had job offers lined up. And what's the worst case scenario? Like, I fail and I go back to college. Like, that's not that bad. Or I can take one of job offers that I did have and they were pretty incredible job offers. So for me, I just, I felt like my learning was capped in college. Like I was learning more going to these hackathons than I was being in college and I didn't want to waste any more time in college. I also knew, like in my like risk calculation that it would most likely open more doors for me because when you drop out, people just automatically assume that you are smarter than you are or that you're going to be a prodigy.
- [02:32]
Josh
Right?
- [02:32]
Lucy Guo
So they will want to meet you, they'll want to mentor you, et cetera. So ended up being like one of the best decisions of my life. I dropped out and then I got to hang around some really cool kids.
- [02:42]
James
So we're telling them to drop out of school? Is that what we're saying?
- [02:44]
Lucy Guo
Yeah, drop out of school. I do think that you should do like one to two years of college though, because I do believe that there's no place in the world where you're gonna be around people of similar intelligence levels that all wanna make friends. Because even when you like, you know, go get your first new job, like most people already have friends established and then, you know, it's obviously kind of hard to make friends in like high school, middle school because like, people made friends in preschool already. So it is. And also just intelligence levels are completely different in those situations.
- [03:16]
Jack
Did your parents not feel any type of way or your family in terms of like, hey, like, are you sure
- [03:20]
Josh
you really want to drop out?
- [03:21]
Jack
Are you sure you're making the right decision? Like, what was that conversation like?
- [03:23]
Lucy Guo
Oh, they got so mad at me. I remember. So my dad was sending me angry emails for probably up to a year and I was landing in my spam inbox because they all look the same, which is like, you are so dumb. You don't have any risk calculation. How did I raise such a dumb daughter? You're dumb. Like, it was all pretty much, you know, broken English, same thing. So Google marked it as spam. I also remember they, you know, cut off my phone. They cut off like health insurance, all that, because they really like. And I get it, like, they immigrated from China to America to give their kids a better future. And education is how they got a better future. And they really believed that education was the number one thing you could do to be able to like, raise a future, stable family. Which is why all Asians are like, be a doctor, engineer, a lawyer, because those are high paying jobs. So I was basically disrespecting them. And through them, they felt like all their sacrifices were for nothing when I dropped out. So obviously they weren't happy.
- [04:14]
James
So. So you did kind of grow up in that traditional sense, right? With I guess, the Asian culture being. There's maybe some pressure to kind of go into some of those more traditional jobs. Were you exposed to something early on that told you that, you know, I don't want to necessarily go the traditional route and I maybe want to do my own thing and start my own business. Can you take us back to that moment where you first recalled being exposed to maybe being your own boss or doing something for yourself?
- [04:37]
Lucy Guo
Yeah, that probably goes all the way back to second grade. So my Asian parents realized that the best punishment was taking away my money. I would like, hide them in the middle of Harry Pot books, like cash, and somehow they'd be gone. I'm like, how did you find it? It's literally in the middle of a Harry Potter book. So I one day discovered PayPal and I literally went to Home Depot, bought like a Visa debit card, and then made a PayPal account. And from there on there's like this whole, like underground gaming world where people are, you know, selling like, black hat items, et cetera. So I basically learned to make bots on neopets. And I first started off like, selling neopoints, selling like rare pets, et cetera. And then trading up and then botting for like, rare items. And then I started discovering making websites. So I made a bunch of different websites from like arcade game websites, like streaming websites. And I got addicted to like that feeling of creating products that people use. There's like an adrenaline rush where I'd be like, oh my God, there's like 10,000 people on this website right now. Mostly due to like stumble Upon. It wasn't like people who really actually find a website, but it was cool. It was a great feeling. So I think that was when I knew I, like, wanted to build a company. Maybe I didn't like, fully know because when I was applying to college, I wanted to be a chemical engineer. Actually, my parents said no, but I also wanted to. Like, I then learned that if I applied for computer science, it actually gave me the best chance at getting into college, because everything I had done from, like, you know, second grade was computer science, technically. So. Yeah. And then maybe, like, the next point I knew was just at Hackathons, where I again got addicted to building products.
- [06:10]
Josh
Lucy, you built one of the most influential companies in the artificial intelligence space. For you, obviously, you know, dropping out of college and kind of going your own route. But for you, when was that first deep dive into, like, AI? When. When were you first. Obviously you did computer science when you were in school, but, like, what was that first deep dive for you? And I think it'd be influential for the viewers because there's so many people who really need to be diving in and taking advantage of that. So for you, how did you get that foundation and how did that spark that chapter your career?
- [06:42]
Lucy Guo
Yeah. So I would say that it was all an accident. We didn't intend to be an AI company. We were literally, actually, we applied to Y Combinator with a healthcare app. The IDE was that we would find the best doctors for certain procedures. And there's a whole lot of reasons why that would have never worked. But we ended up pivoting into scale. And when we pivot into scale, it was called Scale API. We wanted an API that would call doctors for us. So we thought we were going to take over the BPO industry, specifically call centers. But what ended up happening was, you know, we blasted every single YC founder, and we're like, hey, we have an API for humans. What do you need humans to do? And the number one thing that people kept on coming back to us for was data labeling. And then one of our investors was like, you know, with data labeling, you can actually use AI once you connect enough data and collect enough data. And we're like, oh, well, true. So we rebranded from Scale API to Scale AI, and then we became like, the picks and shovels of the AI industry. So we helped every single other AI company label data to make their models better, because your models are only as good as the data that you provide it.
- [07:41]
James
We were talking about this earlier today, but again, you touched on it again there. And it's such a valuable point, I think, for entrepreneurs, which is the ability that you had to pivot. Right. The business that you initially sought out to build was to kind of disrupt the call center industry, but you saw that it was a much greater opportunity with which you ended up turning the business into how important has that skill been? Like how vital has it been to your success knowing how to pivot and when to pivot?
- [08:02]
Lucy Guo
I would say it's been my entire success. We actually started off with class pass for clubbing, which is another terrible idea. But we need to pivot very quickly from that. And I would say I generally make pivots like three weeks in because too many founders, I think actually people in general, they fall into sunk cost fallacy. And it's really hard not to fall into sunk cost fallacy because you've invested so many resources. You just want to make the thing that you've invested resources in work. But you like, that's like the number one trap a founder can have. I think it's incredibly important to like just be real with yourself and be like, this does not have the like logarithmic scale that we need it to have. So it's time to pivot.
- [08:39]
Jack
For people that aren't familiar with scale AI, what was the company itself in terms of like, what was the problem it solved and what was your primary role within the company?
- [08:48]
Lucy Guo
Yeah, so I would say the easiest way to describe it is that we help label data for other companies. So in a self driving car example, companies would give us like, you know, their images, their LiDAR data, etc. And, and then we would tell them like what's a stop sign, what's a pedestrian, what's a car on the road. And we did this for like all different sorts of tasks. And then my role, initially I had built out some of the API and then I was on product and I helped build out the operations team. So basically created this like automated process to hire the labelers and then literally hired all our labelers and trained them and helped scale that process.
- [09:23]
James
You started to work with some of the biggest companies in the world that came to you that were clients of yours. How did you go about that client acquisition and what was that process like early on?
- [09:31]
Lucy Guo
Yeah, it was quite literally so early, early on we, because YC has so many large companies, we scraped YC's internal database, which you're not supposed to do, but we did. And then we literally just blasted every single founder and we're like, hey, we're also YC company. We have this API for humans, like what do you need it for? And then we were able to get some of our first large customers that way. And then it was really just conferences. So I would print out fly and just leave them on the floor on a table, et cetera. Basically pitching like hey, we're going to be able to label your data cheaper than everyone else. So then people would actually contact us. We also obviously use LinkedIn and would figure out who is the VP of engineering, the CTO, maybe a head engineer that could ask the VP Eng or CTO for budget to label data, and then we would manually label all the data ourselves to start. So we did a pilot. It'd be like boardroom, where we gather everyone. We're like, okay, we're going to label data, give them the perfect pilot, and then they're going to sign a larger contract and then we're going to scale with them.
- [10:29]
James
Yeah. You know, you had mentioned right there, it seems like you had a moment. I remember, you know, when we interviewed Sarah Blakely, the founder of Spanx, and one of the things that she did early on, she talks about how, you know, when she was working at Neiman Marcus, she was trying to get her product into the store. She would go out and buy bins from Office Office Depot and stick all of her products in the, like, at the cash registers of all the different sections of the store. She wasn't supposed to do that. So it seems like you kind of had that moment when you scraped the. The why, you know, Y Combinator database where it's like you weren't going to ask for permission. If anything, you're going to ask for forgiveness.
- [10:59]
Lucy Guo
Yep. I think too many people ask for permission. And yeah, if there are a lot of companies that would not exist if you ask for permission, like Uber is one example. Right. Where, like, they broke all the laws, but they didn't ask for permission. And now they became so ingrained in society that they kind of just had to exist.
- [11:14]
James
So powerful right there. I love that she said that there's a lot of companies that would not exist if they asked for permission. It's so true.
- [11:21]
Lucy Guo
I don't know. I didn't actually realize this and I don't want to be wrong, so cut this out of the podcast if it's not true. But someone had told me that Stripe even was one of those companies that, like, they didn't. There was something that they did where they didn't ask for permission and that, like, later on they just, like, figured it out with regulation.
- [11:34]
Josh
I feel like when, you know, people always like to talk about, let's say, like, the gold rush back in the day in like the 1800s, where, you know, everybody was always. They were moving out west to, like, strike for gold. And. And we kind of see something similar in this event today. With AI, but we always like to say like who got rich during the gold rush? It wasn't all the people going out west looking for gold. It was the, it was the people selling the shovels to go out there. And I almost feel like with your company, like you guys found way for you guys to do that as well. And where you guys were actually labeling data for other AI companies for you when you found that that was the vehicle that you guys were, that was the problem that you guys were going to solve. How did you guys like go about, like, how did you know that that was it and like go about scaling for your company when you figured out that hey, this is the right product market fit for scale AI?
- [12:24]
Lucy Guo
I would say that when we got our first self driving car customers scaling and we realized that every single automobile company needed data labeling, we're like, okay, every automobile company is very well fund AI company is very well funded. And the number one thing that every AI company needs, especially automobile companies, is data because they need to make sure. Like automobiles companies, especially because people can't die on the road. So we realize how much money there is to be spent. So we double down on this. And honestly, like pro tip to everyone here, like one thing I've noticed in like today's age, if you want to invest in the public markets is like, you should also invest in like, I wouldn't say the picks and shovels, but like, you know, the infrastructure for all AI companies exist. Like I'm making a lot of money on Nvidia, like chips, like pretty much everything that powers AI because everyone's building the AI company. So even though not every AI company will succeed, everyone's using resources.
- [13:12]
Josh
I feel like there's probably a ton of startup founders that are watching this and are inspired by your story for them. They might be thinking, okay, should I apply to a Y Combinator and things like that. What would your advice be for those founders as far as just like, hey, should I apply to a startup incubator and even something like Y Combinator, how should they go about doing that and what advice would you have for the them?
- [13:32]
Lucy Guo
Yeah, so I think with Y Combinator, I would suggest Every single like B2B SaaS founder to apply to Y Combinator. The reason being that Y Combinator opens you up to thousands of customers immediately. And there's just a like mutual comrade camaraderie with YC founders where it's like, if you're a YC founder, I'll talk to you. Right? Because we just support the community and we give back. So it's a no brainer for B2B SaaS counters. I think if you're like a consumer founder or you know, like, let's say Your customer isn't SaaS companies, it just becomes a question of like what you want. Like do you want that community, do you want that mentorship, or do you want to save your equity and raise it a higher valuation?
- [14:10]
James
When we were talking earlier, you know, I was asking you a bit about your superpowers in the business world and what were some of the things that you were very good at. And you mentioned two things to me. You talked about how important it is to be like great at sales, selling in the company. But you talked about talent detection, which, you know, we've come to learn is one of the most important things to build any business. You know, from talking to people like yourself and just so many other successful entrepreneurs, we've got up to how many 60 or 70 employees now across our different businesses that we have. Did you have a method, like a method for finding and attracting the right talent to come and work with your company? Because you mentioned especially in tech, if somebody's extremely talented, you've got other companies coming to try and poach them with these big multimillion dollar offers. What was your strategy for not only attracting the right talent but then also retaining it over time?
- [14:54]
Lucy Guo
I think this goes back to really building a network, especially when you're younger. So the initial talent that we attracted literally came from my college. I hit up the smartest engine years I knew at Carnegie Mellon, which thankfully was like the number one CS program. And they all decided like, yeah, like we'll come work with you. To the point where like some of them didn't ask for how much their equity was worth, which was very confusing to me. They were just like, yeah, like start up, you're building one, I'll come. Which was cool. And that was because of that like emotional connection that I had built with them over college. I would say outside of that, I like seeing people that take action on their own. So for example, like people that attend hackathons, they're great because they're not just sitting in college doing the bare minimum, you know, completing a classes, et cetera. Like they're going out and finding competition to do. Like, they're learning how to like take the theoretical knowledge they learned from college and apply it practically. So I really like hascon kids as well. I think that competitive people in general are very successful at company building. So this can be anything from you know, like math competitions to being an athlete, because it requires a level of discipline and hard work that exceeds, I think the than average person.
- [16:07]
Jack
Was there a mistake that you made early on that shaped how you built the rest of the company? Maybe it was a contract going wrong or you lost data. Was there a mistake you made early on that shaped how you build the rest of the company?
- [16:19]
Lucy Guo
I mean, we've definitely had issues with data that we've given where we almost lost contracts. But. And I think that was always going to happen. But I think one thing we very quickly learned is everything is emotional retention. So we literally sent champagne and a cake and everything was all good. And from then on, I really learned like how much sales and retention is all emotional connectivity.
- [16:41]
James
What kind of taught you that? Like, like how did you understand the psychology of like the people that you were dealing with?
- [16:45]
Lucy Guo
I was pretty early on, I think, like when I was trying to convince, you know, people to choose us over several different offers, I would have to talk to them every single day. And I realized that like, you know, our offer wasn't as high, so I would have to really sell them. It got to the point where I was doing various boot camp with them. I was like buying Pikachu presents for them. I think we also got taught this by our investors though. Like they were tell us the stripe founders would take people on plane rides, would like go on jogs with them. Plane rides is a really cool way to pitch someone, I guess. And then that was the way that they managed to convince people to work with them. So mix of intuition, a mix of just seeing what other founders have done. Which is also why it's so important to be surrounded with smart people. Because when you're around people that have done it before, they can tell you what worked and what didn't.
- [17:35]
James
It was this last year, I believe that you guys ended up selling 49% of the company. Company. And how much did you sell the company for?
- [17:40]
Lucy Guo
It was like 26 billion or so. For 49%, but at a 40. 49% at $26 billion valuation, you are
- [17:47]
James
now building a new company right now?
- [17:48]
Lucy Guo
Yeah, I'm actually building a few new companies.
- [17:49]
James
Can you tell us about some of those companies that you're building right now?
- [17:52]
Lucy Guo
Yeah, so one of them, we're working on infrastructure for the creator economy, so helping creators monetize their brand. But we're also spinning it off into a fintech app because we realize that 80% of the money is through messaging. But we're also seeing a lot of problems in other industries such as service industries or like with psychics, et cetera. So we wanted to make the UX a little bit easier and broaden our tam. Another company I'm working on is an AI growth startup. I can't really speak more specifics to it, but it is going to be very fun. Think just like agentic tools to help you grow your company. And then I am working on an apparel company but I can't speak more to that. There will probably be announcements sometime this summer. That one I'm just excited about because I'm working on it with like two very close friends.
- [18:39]
James
What is your relationship right now with diversification? Like I would imagine when you were building, you know, scale it was all 100% into that business but then after kind of selling part of the company now moving on to some other ventures. Now how do you feel about diversification rather than just focusing on one venture?
- [18:54]
Lucy Guo
Maybe I think in general you should focus on one venture. But the nice thing is I do have flexibility now. So for example, the apparel company I hired a CEO in so I don't have to be day to day with it and focus too much on it. And for these other companies I am doing something very similar. I'd say where like I'm going to be very involved in the beginning but then if I can find leadership to like place into these companies I will. I think that like I kind of doing an Elon Musk approach there.
- [19:23]
Jack
I'd say so do you believe the best way to build companies is from top down with top down leadership or do you? Because I feel like especially new entrepreneurs they kind of place, I will call it like warm bodies to kind of just serve a specific function within the organization. But it sounds like when you're approaching these new companies that you're starting to build, you're going to start out by building the leadership that can then kind of.
- [19:44]
Lucy Guo
So when I hire leaders I hire ICs because I don't believe in hiring a leader or manager and having to blow up teams so everyone I look for can do the entire function themselves. And I also think that they hire better and are able to actually teach the future employees or like their future team how to actually do the function. Because it's very hard to be able to like determine whether your like direct reports are doing a good job if you're not actually doing the job yourself. For example, like let's say you're a customer support lead. How do you actually know that your customer support team is answering tickets on Time answering them well, et cetera. Unless you know how to answer your tickets. Like if you know how to answer tickets, you might be like, oh, this one should have been answered in 30 seconds. Why did it take three hours to answer? And why did you give it the wrong answer? So I hire leaders into companies, but they're all ICs that wouldn't need to hire a team to do the function.
- [20:36]
Josh
So obviously one of the companies that you're building right now is to help creators monetize for you. Like what do you see as like the next big opportunity for creators, especially with the platform that you're building.
- [20:46]
Lucy Guo
Yeah. So I would say that at the moment creators haven't really had tech built for them. And I think the next opportunity because creators are really good at creating content, but they don't want to do everything else. It's probably agentic tools and AI tools that help them do literally everything else from like AB testing, like what times to post, to like captions that are going to convert the best titles, like translating videos so like more of your audience can see it versus just like you know, the US population for example. So I'm excited about that for creators and I also think that at the moment, from what I've understood at least like creators are very. Creators aren't well versed in fit. I'm going to repeat that creators aren't that well versed when it comes to actually managing their money. So I think fintech is actually a really big opportunity within the creator economy as well. Especially when you're seeing creators with large teams be able to really do this. Well, creators with incredibly large teams are able to hire people in to help them choose the best angel investments to proceed in or like help them incubate a company or help them partner with the right company where they're getting like co founder level equity. We're seeing this really with you know, like Alix Earl just started her skincare line. Jake Paul did W. Logan Paul did Prime. And this is really how creators I think build generational wealth. So I think that there is an opportunity there as well.
- [22:11]
James
I love it. You know, we were chatting about it earlier as well.
- [22:13]
Jack
Right.
- [22:13]
James
You know AI is the business that you ultimately built your fortune. Right. And are still continuing to crush it in. But for the people out there, right. That they think of AI as like a buzzword and they're not necessarily utilizing it or using it on a daily basis. What are a couple actionable steps that you think all business owners, whether it be tools or applications of AI that you think everybody should be using that are non negotiables in their day to day lives.
- [22:34]
Lucy Guo
Yeah. So I would say that everyone should be messing around with relet, cursor, quad code, etc. Because right now is like really the first time that you could build full scale applications and bring your ideas to life without actually knowing any code. And I think that that's really democratized being able to build companies, especially tech companies, because obviously there's tons of companies you can build that don't require technology. But tech companies scale better than other companies because all you really have is server costs. And now everyone can be a 10x engineer because of all these tools.
- [23:05]
James
Yeah, I'm going to add one more tool in there though. Do you know Opus Clip? Have you heard about them? So they just recently launched, I think it's called Agent Opus, I believe. And we've been using it where essentially you can have have like a script or even just audio and it will turn it into a short form video that's like already ready to post.
- [23:23]
Lucy Guo
That's amazing.
- [23:24]
James
All right guys, we're gonna be right back to the episode. But before that, listen. One thing that I've learned after talking to so many entrepreneurs is this. Best ideas that you will have, they usually come from conversations just like these or meetings that you have with business partners or people that you're doing business with. But the problem is most people forget them. That is exactly why, like I was just talking about, I've been using something new from Opus Clip and it is called Agent Opus and it is honestly one of the most useful AI tools that I' ever seen for content. You can take a simple script or even audio from a conversation just like this, it turns it into a legitimate video that is actually ready to post and promote your brand or your business. And what I like the most about it is like I was saying, guys, it doesn't feel like your generic AI generated content that people cannot stand and they scroll the minute that they see it. It feels like legitimate content. Everything in the content actually matches. The visuals, the message, the pacing. It feels like real content that you would actually watch. Now here's where it gets even better, okay? Instead of having some massive team that you think needed to create this content, you can turn it into one clear idea. You ready to publish and post right away. So if you want to try it out today, check out Agent Opus by going down to the link in the description of this video and watch your business change. Yeah, so, and then in terms of just from like an Efficiency standpoint, though, like, leveraging all those tools in your businesses probably saves you how much time on average would you say?
- [24:35]
Lucy Guo
I would say everyone's a 10x engineer now. Everyone's a 10x employee. Honestly, like, this is very questionable, but I've been using Claude to draft like all my contracts, so I'm saving a lot in legal costs too.
- [24:47]
Jack
Claude is the biggest game change here.
- [24:49]
Josh
D.C. law, we call it the crib law. That's where we, that's where we got our JD from GG from GPT Law.
- [24:55]
Lucy Guo
Although I'm getting really annoyed with all these AI lawyers because today we just got sued actually for using Metapixel and we looked up the guy that sued us and he's just using an AI lawyer and he sued like dozens of companies for ridiculous stuff in hopes of quick settlement. And I'm like, everyone uses Metal Pixel. Like, how did we just get sued for using metapixel? What the hell?
- [25:16]
Jack
Insane. And I just think it's hilarious the fact of like dc, like, so there, there's a meme inside the company called DC Laws, Decrypt Law. And it's because with AI like you, you don't necessarily need an entry level like lawyer to basically like, you know, resolve problems or you know, answer con, like pretty much sort through like all of the legalese. And one of the things I was kind of curious about for you is with now being easier than ever to vibe code and just, you know, create apps and applications, what's the biggest differentiator now? Is it distribution? Is it brand? Because if anyone can kind of create a competitor to another tech product or software easily now, without even knowing how to code, what's going to be the separation between those companies?
- [26:04]
Lucy Guo
Well, I mean, you need to be able to move fast. I don't actually think Vibe coding is going to help you create good competitors. Like, you're still going to want to hire the best engineers because Vibe coding has a lot of issues to it as well. I think it's great at creating MVPs and lifestyle businesses because if the, the product has tech problems, that's fine if you're making a few hundred thousand a month even, but it's not going to scale to billions of users. I think that the differentiation right now though is just intuition on product market fit. Because right now, if you were an ideas guy before, it was impossible to raise funding, but now as an ideas guy, you have a good idea, you're going to be able to vibe code it out and you're going to be Able to show investors and then you can raise less funding than before to be able to build large companies because you don't need to hire as many engineers because every engineer can be a 10x engineer. So I would say if you're able to have good ideas and you're able to convince good engineers to work for you, Huge differentiator.
- [27:00]
James
Lucy, when me and you first met, we were at a Kanye west concert. And the reason why I'm bringing this up is because I want to get your perspective on work life balance and whether or not it has changed after becoming a billionaire. When you were initially building your company, did you have work life balance in those early days? Was there always a part of you that was like, I'm going to have some of my time dedicated to this, to not even focusing on the business? Or what ultimately was that like? And how has your perspective of work life balance changed, especially after achieving the status that you're in now?
- [27:27]
Lucy Guo
I don't actually think it's changed. I probably work almost the same amount. I will say that like when I was building out scale, I was doing the 5 and 6am Barry's. So I was waking up at 4am Because I lived a little bit further from Barry's and I also skateboarded there. But now I do the 6 and 7am Berries every day, which means I get to wake up at 5:30 because I have a car now. So, um. But no, I mean I, I would say like I, I think work life balance for me and I literally like put this through Claude and Chatgpt, but I basically, I don't sleep that much. Like I get around five hours of sleep a day but then function well. Yeah, so I function really well and my sleep efficiency score is always like 100% quality. So I got kind of curious and I'm like, I was asking, I was like, I perform really well at Barry's. My mind feels great. Like what's wrong? Or like, am I getting enough sleep? And they basically spit out, they're like, you're not functioning at one, but you're functioning at 85%. And your version of normal is probably still pretty good. But you don't know what. You could be at 100% so you should still sleep more. But the point is I would rather have 85% efficiency and have those extra three hours to hang out with friends and have work life balance versus get 100% and have no work life balance. Because I do think that being happy is so important to not burning out, for example. And if I got three hours more sleep, but didn't get to see my friends. I think I'd be a lot more miserable.
- [28:51]
Josh
And you still even kept that even while you were building scale as well?
- [28:54]
Lucy Guo
Yeah, I mean, I would say at scale, I was probably getting close to, like, four hours because, again, I was waking up, like, an hour earlier per day. So, yeah, I think that by being a billionaire, I guess, like, now I can have security take me to Barry's, and I have a car, which is really nice, and I live closer to Barry's, so I've been able to get those, like, extra hours of sleep. But no, I'm still, like, I literally am at 6, 7am Barry's at every day still.
- [29:20]
Jack
Have your relationships changed since becoming a billionaire? Like, has your relationship with friends and just family changed since, you know, coming into wealth?
- [29:28]
Lucy Guo
I would say in general, no. Most of my friends are actually, like, very wealthy on their own, or they're just like. Like, they've been old friends, like, they've been there before. Everything has happened. Right. I would say with, like, new people, probably, or, like, if I, for example, like, meet a new friend and I'm like, okay, let's go on this trip. Yellow. Then I think that that haven't been on, like, the PJ with me get a little bit salty because they're like, we were your day ones. Why aren't we on the pj? And I'm like, well, the PJ left from London to Ibiza, and you weren't in London, so you're always invited. But it's stuff like that that maybe feels like it changed. But as to that, no. Life is pretty good. I think people treat me nicer. Yeah, I think you get a lot more free things when you're a billionaire, which is great.
- [30:16]
Josh
Did you ever envision this happening? Especially in the beginning when you were first building your company? Did you ever. Was this the Dre?
- [30:23]
Lucy Guo
I would say that in order to be a billionaire, you have to have this relentless belief that you're going to be one because you're going to be starting a company. Doesn't make sense. At least starting a tech company, you have a 99.9% chance of failure. Why would anyone do that? Most people that have the ability to do that, they have multimillion dollar offers at other companies because they're smart. I would say that after dropping out and joining Teal Fellowship, it became the norm. If I didn't become a billionaire, I was a failure because everyone around me was so intelligent and they were raising tens of millions of dollars for obviously, like we knew a few billionaires, like quite literally it was very obvious that everyone around me was going to be a billionaire or was already a billionaire. So I knew that that was like the bare minimum bar for me.
- [31:07]
Jack
I heard this actually in another podcast. And that in order to build great companies and depending on the company that in the size of company that you want to build, it actually requires that level of thinking and a capability within their team. So let's just say if you want to build a seven figure company, you need people who, if they wanted to go out on their own, they would be capable of building a six figure, maybe multiple six figure business on their own. But if you want to build an eight or a nine figure company, then you need multiple people who are capable of building multiple seven figure, multiple eight figure companies on their own. Maybe they just don't have that same risk profile within themselves or the desire to go out and do it on their own. Would you agree with that?
- [31:43]
Lucy Guo
I would agree with that. Because who you hire is what the company is. And people that have the ability to do that and also have the risk tolerance to do that are the types of people that are going to work harder at your company, especially your early hires. Like they're Swiss army knives, right? Like, you don't want the person that's like, oh, this is not in my job description. I'm not going to do that. Like we literally had our engineers labeling data and you want people like that because those are the types of people that are going to help you build from 0 to 1. And I would say that like most, like most of our early hires, they ended up, you know, going out to build their own companies because that's what they eventually wanted to do. I wouldn't even argue it was risk profile. I would just argue like it was a good opportunity so they decided to take it instead of building their own company.
- [32:23]
Josh
I think the best example of that was like the PayPal mafia back in the day, where it's like literally all of them became billionaires.
- [32:30]
Lucy Guo
Yep, exactly. Yeah.
- [32:31]
James
And you know, you were just talking about how for you, with the people that you were surrounded by, it was like you, you had to become a billionaire per se, just because if that was what you were around when you think about in today's world, especially with how important proximity was for you, if you were starting out right, if we're talking to that young entrepreneur out there, what are some cities that, that you would instill in there that it's like, hey, this is probably a great spot for you, for the company that you're trying to build. What are some of the top three to five cities that you would be in today's world?
- [32:59]
Lucy Guo
I don't think there's three to five. I think that San Francisco, by far number one.
- [33:03]
James
And in New York, why those two?
- [33:06]
Lucy Guo
I think that those are where the smartest entrepreneurs go and the smartest people. Like, if you look at like every single Ivy League, you look at Stanford, Berkeley, everyone ends up in SF and New York. And you want somewhere where there's a lot of talent density and a lot of people that want to be entrepreneurs, because those are the people. People that like, are also going to have that relentless belief that they're going to be billionaires and they're going to have that risk profile because you're the average of the people you hang out with. Right? And you're going to have a lot more of that. Like, if San Francisco, every single person is trying to build a unicorn, like, you're going to feel incredibly lazy if you're like, I'm an engineer at Google. And you're going to feel embarrassed every time someone asks, what do you do? And you're like, I'm an engineer at Google. And I think public embarrassment is actually a really great way to like push you to be more ambitious. So, yeah, I don't think any other city really has that. And like, like I say this like in la, even like I, I don't think LA has that. I am here mainly because we're in the creator economy and there are a lot of this is like creator central. But if I were building any other company besides a creator business, I wouldn't be here.
- [34:03]
James
Where do you see the future of the creator economy heading in the next five to ten years maybe, or one to two years per se.
- [34:08]
Lucy Guo
Again, I think that AI is really going to take over when it comes to the creator economy. I think that right now a lot of creators are against AI because they don't know like, how their data is going to be trained. But selling their likeness is probably the future because it doesn't really make sense for them to, you know, work with the brand, fly out, create content and then come back. Because that actually costs a lot more money for a brand to do versus if they can just sell their likeness, the brand can create the perfect piece of content that they want with the creator. And then they'll also be able to scale their time too. Right, because they'll be able to work with more and more brands. Obviously they can't dilute their brand. So don't work with too many brands. But like, let's say you're working with every luxury fashion house out there. Right. That's not going to dilute your brand. You're just going to look even cooler. So I believe that that's the future of the creator economy. But we haven't really gotten there yet. And we need like the first person to really become incredibly rich from doing that before it becomes mainstream. Kind of like when the first person, I forget who was the first creator that, like Kylie Jenner's lipstick maybe. And then everyone was like, I want to build a company too. Right. But before that, no one would take equity. Everyone was like, I just want money
- [35:12]
James
and cash be sponsored by a big company.
- [35:15]
Jack
Someone I feel like actually recently just did that is KB Lame. He makes like, he doesn't talk on any of the, on any of the content. He just makes like kind of just entertainment based content. I believe he.
- [35:25]
James
I don't remember.
- [35:26]
Jack
He doesn't know how much sold it for. It's a lot of money.
- [35:28]
Lucy Guo
Oh, I saw that. Yeah.
- [35:30]
Jack
Yeah, a lot of money. And I mean that's where I was. One of the things I wanted to ask you is do you feel like creators selling their likeness, which you said that you do think it's going to become more common, but do you think like AI avatars and just AI centric creators where it's not even a real person, do you believe that's going to become more normalized or do you think people are going to have a hard time coming to kind of terms that that's not a real person on the other side of the screen?
- [35:52]
Lucy Guo
I think it's a very, very different market. Like for example, there's apps like Replica, which is a romantic partner that's. And the normal person isn't going to talk to like Replica and fall in love with Replica. Right. But there's a whole subset of people because there's billions of people on this earth that do talk to Replica and Replica makes a lot of money. And I think that the majority of people are not going to be enamored by AI creators. But I think there is a small subset that's enough of a market that will be.
- [36:19]
Josh
I think we saw that 13 years ago at the movie her. But the guy's talking to like the AI voice. Yeah.
- [36:26]
James
I wanted to just briefly touch on the mindset that you had when you were building this company. Right. You know, we were talking about, about it earlier that among yourself and all the Billionaires that, you know, like there's a certain level of kind of crazy that they have to be like that unwavering self belief that they have in themselves. Do you recall back and maybe even in the earlier days in the first couple years into building your company that like maybe there were some low points in the company, maybe you had a bad day or maybe a mistake was made. What, what was your self talk in that moment? Did you always have a certain kind of motto or, or a certain level of self talk that you would kind of resort back to where it's like we're going to persist through this. This.
- [36:58]
Lucy Guo
I don't think failure is an option. Like I hate the idea of losing people money and disappointing people. Maybe it's like, you know, the Asian parents that I had. But I really don't like disappointing people. Maybe I'm a people pleaser, who knows? But I just like, I think I just thought by myself like you have to get through this because you can't disappoint anyone. Yeah.
- [37:18]
James
And then the process of taking on investors, was there any money that you kind of turned away per se that you didn't necessarily want them to kind of come into the company? What was your, I guess, thought process and how, what, what was your decision making process for capital that you brought in and then decided not to?
- [37:32]
Lucy Guo
Well, I mean we were oversubscribed so I would say the thought process is just like, are you going to be value add as an investor? So for example, like could your company be a customer? Or like are you going to help us hire engineers? Like where is your value going to be? I think that like value add investors are the best and then you want investors that are just going to leave you alone. But the number one thing you don't want is investor that like wants to be really, really helpful and like be a little bit too involved in business because you know that when things go south they're going to be really annoying. And the best thing you can do when things go south is leave a founder alone unless they reach out to you for help. You don't want someone hitting you up going how's the business doing? How can I help? You're doing this wrong, etc. Etc. Because you don't want bad advice and most investors will give bad advice.
- [38:15]
James
It's a really interesting philosophy. Did you experience that at all at any point in time with people?
- [38:19]
Lucy Guo
I have definitely regretted bringing some people onto the cap table, which is fine, but, but I've in general, like, like even those people I Like, knew, oh, this is probably a bad idea, but I got guilt tripped into it.
- [38:31]
James
Well, Lucy, we like to end these podcasts off with two questions for our guests. I'll start and then. And then Jack will end it off here. So, Lucy, how old are you today?
- [38:39]
Lucy Guo
I am 31 years old.
- [38:40]
James
31. Became a billionaire this last year.
- [38:42]
Lucy Guo
Yes.
- [38:42]
James
If me and you died tomorrow and you had one more message to leave with the younger generation, what would that be?
- [38:47]
Lucy Guo
I would say, especially if you're in college, go make friends with every single person that you know. There is literally no other time in your life that going to be surrounded by such intellectual people that all need friends because you're freshman in college. Let's say no one has friends. Everyone wants to make new friends. And these people are going to be your future hires, your future investors, your future co founders. And if you miss out on that, it gets a lot harder as people start building new friend groups and new lives after they graduate. And if you have graduated, just try to stay close to the people that you did meet in college, because there's a level of, like, emotional. There's a level of emotional bond that you guys have that can't be replicated, and that is probably like, if you stay close to them, they're still going to end up being your future hires and your future co founders. But once you lose touch, like, you lose your college network, and when you lose your college network, it really does become a lot harder.
- [39:47]
Jack
I'll just say this. That's one of my favorite closing answers I think we've ever received, because I even look at when I have kids, kids, one day, it's. I. I don't want to send my kids to college, like, solely for the education. Of course I'd want them to go to a good school if they want to go to college. But it's not about the education itself. It's about who you meet.
- [40:02]
Lucy Guo
Yeah. I don't think any single person from college is like, wow, I use everything I learned in college in my job. Like, I don't think not one single person. Especially, like, in engineering, like, when you study computer science, all you learn is theoretical stuff.
- [40:12]
Josh
Obsolete.
- [40:13]
Lucy Guo
And it's. Yeah, exactly.
- [40:14]
Josh
And, Lucy, for, you know, everything you've accomplished, looking back at your legacy, how do you want to be remembered? Remembered?
- [40:20]
Lucy Guo
Honestly, just a nice, friendly person, like, that's super happy all the time. Which I'm glad I actually had that reputation.
- [40:25]
Josh
So.
- [40:25]
Lucy Guo
Yay.
- [40:26]
James
Well, Lucy, this was an excellent podcast. Thank you so much for being on. And the incredible advice you dropped from start to finish.
- [40:31]
Lucy Guo
Thank you.
- [40:31]
James
But for everybody watching right now, guys, be sure to like and subscribe for amazing content coming every week to the School of Hard Knocks podcast. We're going to put the links down to Lucy's socials that we're able to follow along with her as she continues to build more billion dollar companies. And lastly, we're going to put the link down in the description to join the School of Mentors where every week we host live calls with the eight, nine and ten figure entrepreneurs that you on the School of Hard Knocks. So if you want direct access to the School of Hard Knocks billionaire network, go down, click the link in the description to join. We can't wait to see you on the inside. With that being said, we'll see you in the next video.