← The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Discord's Jason Citron on Why Everything We are Taught About Hiring & Management is BS | Do Richer Founders & Gamer Founders Make Better Founders? | Never Before Told Moments Behind Scaling to 200M Users
00:50:33
Jason Citron is the Co-Founder and CEO of Discord, a voice, video and text platform for friends playing games. Jason has raised $1BN for the company and was able to scale to 200M users. Prior to co-founding Discord, Jason founded OpenFeint, the...
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- [00:00]
Jason Citron
That period for us when we went from 200 to 1,000 in basically two and a half years, was the moment in time when I think I made the most management mistakes at Discord. I hired a bunch of executives and set the vision and delegated the work to them. Everything ground to a halt. Words today that trigger me, which I think are shadows of this, are words like empowerment, alignment.
- [00:23]
Harry Stebbings
This is 20 VC with me, Harry Stebbings and today we are joined by Jason Citron, co founder and CEO at Discord, where he has raised a billion dollars for the company, with price being a whopping 14 and a half billion dollars. This discussion is an incredible walkthrough of untold stories on product market fit, hiring.
- [00:41]
Unknown
Mistakes, turning down $12 billion acquisition offers.
- [00:45]
Harry Stebbings
Why gaming makes the best founders and.
- [00:48]
Unknown
Our richer founders better founders.
- [00:51]
Harry Stebbings
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- [03:43]
Unknown
You have now arrived at your destination. Jason I am so excited for this man. It is such a pleasure. I've heard so many good things from Danny Romer at Index for many years. So thank you so much for joining me today.
- [03:54]
Jason Citron
Yeah, thanks for having me, Harry. Great to be here.
- [03:56]
Unknown
Not at all. But listen, I have interviewed 800 of the best CEOs of the last probably 10 years and a commonality amongst many of them is they excelled at gaming, ironically in the early years of their life. And I wanted to ask you, why do you think gaming is such good.
- [04:12]
Harry Stebbings
Preparation for CEO ship?
- [04:14]
Jason Citron
Games are like these little sandboxes of life and you think about what you're doing when you play games. You're encountering challenges, you're trying to figure out how to solve them. You're failing. You're thinking about what mistakes you made, how you could do it better. You do it again and you keep doing this over and over until you overcome your challenge. That's growth mindset, right? Isn't that incredible? Kids are experiencing this by playing games. Or you think about playing games with your friends and against other people and what do you need to do? You have to learn how to cooperate, how do you divide up tasks? Who steps into leadership role? How do you be a good follower? When do you trade those places? How do you learn how to be a good not a sore loser and not a sore winner? Like these things all happen when you play Fortnite. So games are such amazing little simulation sandboxes to get to interact with these things that are basically like microcosms of real life and you can learn these skills in safe places. And my guess is there's something to do with being able to do those things over and over and over and over and over again in a way where you don't even realize you're learning those skills because you're just having fun. That may translate to the kind of things you need to do to run a company. Certainly I did.
- [05:21]
Unknown
You mentioned levels there. In games, you have levels. It gets harder. Generally, the way that games work, if we align that parallel to company building, which level of company building was the hardest and what was the cheat code that you used to break it?
- [05:35]
Jason Citron
Oh, wow.
- [05:36]
Unknown
Swahila's like, what the fuck? This wasn't in the schedule.
- [05:40]
Jason Citron
It's a great question. Each level brings about different challenges. And I think one of the hard things about being a CEO is each time you get to that next level, you haven't done it before. So by definition, you're just constantly figuring out how do you work through these new challenging dynamics. It's always hard. But the one thing that I have confidence in myself and my team is that we can figure things out. Comes back to that growth mindset. When I'm faced with a challenge that I don't know how to solve, I can usually figure it out if I work hard enough. That's just kind of my mentality with everything is like, we're just going to figure it out.
- [06:17]
Unknown
I think that that mindset is helped when you're not existentially worrying about rent. And I've thought a lot about how money influences an investor's mindset. I'm interested. You sold your prior company for $104 million, to be precise. I love the 4. Like 100 wasn't quite right. Well done for pushing that one. My question to you is, do richer founders make better founders? And how do you think about the financial cushion benefits?
- [06:42]
Jason Citron
It certainly helps to. Every successful company along its journey gets acquisition offers. And so by having a cushion, it made it easier to turn down offers because we could go for the big outcome. But I think the real. The real impact from being a second time founder actually has to do with the levels and how. There are a lot of levels. I had already played once in my previous company, so there were things about building discord that were easier in the beginning because I had done them before.
- [07:09]
Unknown
What's harder the second time around? Fundraising is easier. Hiring is easier.
- [07:13]
Jason Citron
What's harder the second time around? What was hard was still cracking product market fit. We had an insight around the shape of the business that I wanted to build and the types of products we would make. But getting the specifics right are just hard. Even when you know what you want to make, it's just hard. And so I don't know that it was hard harder, but it was hard and I was able to focus more on it because I wasn't so overwhelmed by like, how do you manage 25 people?
- [07:37]
Unknown
What was the first unique insight that you have with Discord? I always believe that when you go into an investment, you have to have a thesis which can be proved or disproved. When you go into founding discord, what's the thesis?
- [07:47]
Jason Citron
Back in 2012, at the time, my sense was that the way you built a durable company in gaming over time was you actually needed to have some kind of established distribution advantage. I kind of put these things together and thought that, like the shape of the company in the future would be a group chat app focused on gaming that helped developers bring their content to life.
- [08:06]
Unknown
When you went out to speak to investors in the early days, what was the number one reason why they said no?
- [08:12]
Jason Citron
Well, in the very early days we started the path that I sort of took us on had some twists and turns and at the very beginning, what I thought we needed to do and the approach we took was actually we started by building a multiplayer game, like a team based competitive game on mobile. My thought was that we needed to build this game to kind of bootstrap the network of the group chat app. So a lot of investors said no because they didn't think the game was going to be successful. And I suppose they were right. Like, the game had a really nice following. I was very proud of it. It was called Fates Forever. But it was not going to be a venture scale business. Like content is tricky. It wasn't a hit and it didn't amass the kind of following that we needed to bootstrap a network. But by going through the process of building the game, we identified a path to market with a group chat app that didn't need a game to bootstrap it. And then so we built discord actually in 2015. The journey, it's one of those funny things where we were like stubborn on the vision but flexible in the details. And it all sort of worked out over time. And as we keep talking, that's kind of the theme of the story.
- [09:06]
Unknown
Did you have immediate product market fit when you launched the group chat app v1?
- [09:11]
Jason Citron
It was pretty fast. I wouldn't say immediate, but it was pretty fast. We started working on it January 2015 within I'd say two months. Some of our friends were very excited about it. We didn't really have any users, but it was pretty clear they wanted to use it. It just wasn't exactly correct. But I'd say within three or four months we had like 20 DAU that weren't us. So pretty quickly, but 20 small.
- [09:33]
Unknown
So do you agree with the principle of build in and they will come?
- [09:37]
Jason Citron
No, I do not.
- [09:39]
Unknown
Why not? And I'd love your thoughts around that.
- [09:41]
Jason Citron
So I think the Discord story was actually a perfect example of how build it and they will come may not always work. When we got to this place where we had 20 DAU, we actually were having a hard time figuring out how to get more people to use the product. We were like, how do we get the word out? Because everyone was actually very skeptical about a group chat app for gaming. People would say, this is the dumbest idea ever. Like, no one's going to use this. And even people who played games, many of them thought like, why would I want this? I already have whatever app I'm using. And so we were having a hard time getting other people to try it. But we ended up figuring out a way to get the word out that people responded to positively that caused them to start trying it. And then it started to grow on its own. But there was like a period of three or four weeks where I remember we were sitting around thinking, like, well, we like this, but maybe no one else does. Like, we had built the product and we just hadn't figured out how to get the word out.
- [10:31]
Unknown
What was the unlock?
- [10:32]
Jason Citron
The unlock for us was inviting people to give feedback on the app as opposed to saying, like, try this thing out, like, we're selling it to you. What we actually did is we went to the Final Fantasy 14 subreddit on Reddit where there was a new expansion coming out for this game. And we got one of our friends to make a post on the subreddit, basically saying, hey, I'm trying out this new VoiceOver IP app. What do you all think about it? And we went into that thread on Reddit and posted a link to a Discord server, which is like the group chat, we call them the servers, where me and my co founder were hanging out and people would like, found it on Reddit, clicked on that link, went into the server, and then they were talking to us and trying it out. And they went back to the subreddit and were like, hey, this is pretty cool. I met the devs. They seem pretty cool. We got 50 users that day from that post. And then that 50 turned into 100 the next day, and it sort of started to snowball. And then we kind of did this playbook a little bit for like six months. And that was basically the beginning of how it started growing.
- [11:27]
Unknown
Did you ever have a plateauing of growth where it slowed?
- [11:30]
Jason Citron
Yeah, it's not all been up and to the right.
- [11:33]
Unknown
What do you do then, Jason? Do you go back to the drawing board and go, what features can we do to supercharge this?
- [11:38]
Jason Citron
Yeah, it's a combination of thinking about how do you continue to make the existing product more useful and better for the people who are using it today for what they're trying to do. And then you got to try to think about how do you make it more approachable for people that aren't using it today? And these are some of the areas where during the COVID years kind of branched out in a way to try to help be more useful to so many people because of what was going on during COVID And over a few years following that, realized that we kind of went down some dead ends and that people were not resonating as much with some of the features we were building. So we kind of pulled it back in to refocus on gaming this year.
- [12:15]
Unknown
Do you regret the expansion into more verticals to attract more people and did you learn anything from that, like, audience creep?
- [12:22]
Jason Citron
I do not regret it. It introduced Discord to a lot of people. Many of those people continue to use to use Discord today. So we went in a bunch of different directions to try to be useful to all those folks that didn't yield as much of a business impact that I was hoping. We certainly our business grew tremendously during that period and I learned a lot about how do you manage the company at the next level. We went from 200 to 1,000 employees in that time period, which was totally crazy. The whole founder mode thing is interesting. I went through my own experience of that, and now realizing other people had similar experiences was interesting.
- [12:55]
Unknown
I have to touch on that 200 to 1000, the scaling there. Incredible. PG obviously famed for many things, but this blog post has been incredibly viral. How do you reflect and think about Founder Mode when you reflect on the journey with discord and the 200 to 1,000?
- [13:11]
Jason Citron
Yeah, that period for us when we went from 200 to 1,000 in basically two and a half years was the moment in time when I think I made the most management mistakes at Discord. A lot of it is basically I hired a lot of People. And because it was a new level that I hadn't really dealt with before and it was hyperscaling and all this craziness, I kind of followed the best practices and I hired a bunch of executives and set the vision and delegated the work to them. Everything ground to a halt. We did a lot of things that didn't end up resonating with our customers. I kind of realized this maybe almost two years ago and went on this journey to try to fix it. But it was hard because I was essentially trying to undo all of the best practices that everyone thinks that you should be doing when you're running a company.
- [13:56]
Unknown
Those being delegation, hiring execs. You've seen it before. Anything else?
- [14:01]
Jason Citron
Words today that trigger me, which I think are shadows of this, are words like empowerment, alignment.
- [14:06]
Unknown
My team have a drinking game where the more the person says alignment, the worse a CEO they are.
- [14:12]
Jason Citron
I now say alignment is a four letter word. Like, I don't want alignment. I want. I want highly opinionated people making decisions and then being accountable for them. Right. So this is like, you know, some of this stuff that I think people get caught up in.
- [14:22]
Unknown
And so was there a realization moment for you? Oh shit, I've become manager mode. I need to go back to founder mode.
- [14:28]
Jason Citron
The realization for me was like, we are not shipping great products anymore. It's not coherent. The stories we're telling don't make sense. I feel like it's hard to get things done. I feel like I'm fighting against the company, not with the people trying to achieve something. So it just like felt broken, breaking them down.
- [14:44]
Unknown
Delegation, something that's told for years to gain scale leverage. How do you approach delegation today? What do you delegate? What don't you?
- [14:54]
Jason Citron
Yeah. So delegation is still very important. And this is why this stuff is a little bit tricky. It doesn't mean micromanage everything, don't delegate anything, don't give people space to be creative. It's not that you shouldn't do any of these things, it's that you need to be careful about how you do it. I'll give you an example. Today I have a process where the way I manage the work is essentially when we do our plan for the year. Instead of me sort of giving a high level vision of like, here's the kind of outcome I want to have next year. I will tell my teams, like, these are the problem spaces that I want you to focus on. These are the kinds of solutions I'm expecting to see. And then they come back to me and I literally pick all the projects now. Like, I'm literally like, okay, we're going to work on improving reactions like that and we're not going to work on. Well, I'm not going to say we're not going to work on. I don't want to leak any features, but I will literally go through and pick all the, all of the, all of the projects now. Whereas, like a couple of years ago, my team was like, oh, we have to be empowered to pick the, the projects. Just tell us what metric you want to move. And I was like, okay, I guess that's how you run a company. But now, no, I'm like, I pick all the projects very tops down on what the strategy is and how we're allocating resources, how these things are sequencing together over time so it, it's coherent to our users.
- [16:05]
Unknown
How do you think about creating an environment of ownership when one is told bluntly direction like that and then making choices?
- [16:13]
Jason Citron
Well, I think that the mistake was pushing those decisions to the wrong elevation in the company. So like, when I, when I go to a team and I say, hey guys, I want you to think about how reactions work and how we can make this better for people. And here's some specific ideas for how to make it better. What I'm actually saying to them is like, I now want you to use your incredible creativity and energy to try to explore this part of our, of our sandbox. So they have extreme ownership over. These are two or three ideas that Jason has that he really wants us to do. They can tell me they think I'm crazy and then we'll argue about it. Maybe they're right. Sometimes I'm wrong. I mean, I'm not right all the time, but. But also there's a problem space there and they can explore and ideate and think within that problem space. But then they're going to pitch those ideas back to me and I'm going to pick the ones that they're going to do. So they still get to have ownership and accountability and creativity on what the work is, but they're not accountable necessarily for. Should we even work on reactions now? That's somewhere else in the organization. That might be me or that might be me with a VP or something and the VP is advocating for me. And I'm like, yeah, okay, that's good. Let's go do that. But the mistake that I made was delegating decisions to the wrong level of the organization.
- [17:22]
Unknown
How many direct reports do you have today, Jason?
- [17:24]
Jason Citron
I have seven today. We're A functional organization. So I have like engineering, I have like epad, which is, you know, engineering and design and analytics and then marketing and finance and that sort of thing. But I work with the directors and the ics. So when we do these product reviews, I have the frontline. Like the people doing the work actually prepare loom recordings, like video recordings, and they send them to me and I will watch like a 15 or 20 minute walkthrough of a feature and then I'll go look at the figma, for example, or read the strategy doc after they talk me through it in a video. And then I often respond with a video recording and I'll Talk for like 20 minutes and give them feedback. And then only if there are questions do we have a meeting. It's incredible. I have so much free time and I'm able to give feedback on so many things because I watch the videos at 2x, I can always find time to watch a video. I can respond to the video. And then these meetings where you, you know, I used to have these meetings with like 20 people and we'd walk through a product. It was 45 minute meeting. And then like everyone wants to talk. If I give feedback, people are defensive. Oh, the CEOs being, you know, giving feedback, they want to respond to it. It's like this whole ceremony, it's ridiculous. And so now like we just cut all that out and it's been transformative.
- [18:29]
Unknown
Do you lose participation and discussion with that loom async response, response, response?
- [18:36]
Jason Citron
Yes, but that's kind of by design. Like most things don't actually need a lot of participation discussion. Like the team has done a tremendous amount of work and they're trying to get feedback from me. And the forum of a 20 person product review turns it into like this bizarre ceremony. I actually don't want everyone to talk. I want to give them my feedback and I want to be direct, but I want to give them the feedback. And some of it is just questions, some of it is try harder here. Some of it is like, I want to see another version of this. Or some of that is like, this is amazing. Here's the 10 reasons why I love it. But the other amazing thing about that is those videos are all public. So if you're not in the meeting, anyone can watch. Like there's a archive of me giving feedback on stuff that anyone can watch at any point. So if you miss the meeting, you're sick. Everyone on the team can hear that feedback from me without having to be in the meeting, which improves the coordination cost is just. It goes down.
- [19:22]
Unknown
What is the meeting that is most required for the discussion, for the engagement and could not be done in that way?
- [19:28]
Jason Citron
Sometimes there'll be situations where you need to have like an expansive brainstorm where it's like, we are going to explore something together. And it's not a presentation, it's not necessarily a decision to be made. It's like, we're going to explore something together. So we'll get in a room. And the creativity and the back and forth. The result of the meeting is like 15 options or a wide open idea. Those are good discussions. And then sometimes there are discussions where there's different points of view. And it's clear that from the initial presentation and the reaction, there's still things to be hashed out. And then you get in the room and you have the debate, but you've already had. Everyone's already done this back and forth. So you come in fully loaded up on the context and you can have a really rich conversation and figure it out in, you know, 30, 45 minutes.
- [20:13]
Unknown
Toby at Shopify says, the job of the CEO is to inject chaos into the organization. And I like that because I fucking do that. But I don't like it because I'm.
- [20:23]
Harry Stebbings
Also like, hey guys, we're going to.
- [20:24]
Unknown
Do this crazy batshit idea. And then it's like, oh, that's a load of distraction. Which side do you fall on?
- [20:31]
Jason Citron
I don't think of my job as injecting chaos. I think my job is to make sure that we're creating amazing products for people. And if the chaos helps the organization do that, then I suppose I will inject chaos. But I think on balance, for me at least, I have not found chaos gets us closer.
- [20:47]
Unknown
Do you think the best CEOs are the best resource allocators?
- [20:51]
Jason Citron
Resource allocation is certainly important as being a CEO, because if you have a large group of people, the first thing you need to do is figure out how do you want to organize them together against what problem sets. But I do think that selecting the right problem sets is probably more important than the resource allocation to some extent. Like if you have the right problems but your resource allocation is sort of wrong, you'll notice that and then you can correct it later. But if you have the wrong problems, then the resource allocation can't be right.
- [21:20]
Unknown
So problem selection is down to you. It's also down to your execs. You mentioned kind of some challenges in terms of scaling exact teams there. It's a really hard thing to scale an Exec team. When you think back to mis hires on exec teams, what are some of the biggest lessons for you on that element?
- [21:37]
Jason Citron
The biggest lessons for me on exec hiring, there's two things that come to mind. One is that hiring execs is a bit tricky because by the time someone's an executive and they're interviewing for a role at that level, they're probably very good at communicating and they're very good at talking about the work. And so I have found that actually interviewing execs, sort of more senior, experienced people is really good for getting a feel for whether I would enjoy working with them. Can we brainstorm, can we debate? Do I enjoy being with them? But I rarely find that folks fail the sort of capabilities test in those kind of interviews. I mean, sometimes they do, of course, but I find by the time someone gets to me, they're sort of qualified for the job. So the thing is, you have to reference check the heck out of executives. It's really hard to fake it for like three years if you work at a company. Basically what I do when I hire execs now is I meet them to get a sense for like, do I enjoy being with this person? Can we debate and have a good conversation? And then I call like everybody I know who has ever worked with them to try to figure out what they're actually like to work with. And that's where you get the real insights. And since I started doing that, my success rate at hiring executives has gone up a lot. The second thing is then once you get them into a company, I have like a whole process that I've sort of come up with for how to integrate them in.
- [22:58]
Unknown
How do you do that? That's very hard to do.
- [23:00]
Jason Citron
Yeah. The short version is that I don't expect them to do any work for the first like 60 days they come in and they just need to learn. I just want them to meet the people, learn what we're doing, figure out why we're doing things, and every day what I expect them to do. I have a meeting. I'll set a 30 minute meeting with them every day for like the first 45 days. And I want them to ask me questions about the business. Like they need to learn, there's so much context. They need to learn and develop a point of view on their talent, on the projects for their area. And then sort of in the second month start to express some of that viewpoint with me. And then by the end of the third month, like they take over and they're running their team. And I have found this, like, learning transition really sets them up for success. Because if you expect someone to come in on day one and, like, run it, they don't know what's going on.
- [23:43]
Unknown
What are the biggest reasons why execs become exact mishires?
- [23:47]
Jason Citron
Well, the mistakes that I've made are actually they come in and they start changing things right away. And then the people in the team, around the company are like, why is this person making this decision? I don't understand why they're doing this. And, like, if it's wrong, then they lose credibility, and then it's really hard for them to get that credibility back. Right.
- [24:04]
Unknown
How long do you give someone? Because in those cases, it's really hard. So I come in. Thanks for hiring me, Jason. Thrilled to join. I make a load of changes, and the team's like, who is this guy and why is he making all these changes? And it's like, well, Jason, you hired me. Back me. I'm making these changes. And then the culture just gets worse beneath me. I just continue to make Titanic worse inside the company. But you should back me for a while. How do you think about how long to give versus cut it straight out.
- [24:31]
Jason Citron
This is one of the other things that I came to learn, which is when we went through that period of hyperscaling, I did a lot of. When the executive told me this is how something was supposed to be done, I would always try. I'm a curious person, so I try to understand why. And if I really couldn't figure it out and my intuition said this doesn't make sense, I would actually let them do it anyway. Inevitably, I'd say, more often than not, it didn't work, and I was right. And so now what I've come to learn is that executives and other people are. They're experts in their craft, and we should trust them. But if my intuition says that this doesn't make sense, I now trust my intuition and I won't support them in whatever they're doing. And I'll be like, I want you to do it my way, and I need you to trust me. And more often than not now, that has actually worked out well because it turns out that the context of the company is so important, and I have the context of the company, and the executive is the expert in the craft and the context of the company. The reasons for why you do things should be the beginning point to derive how you run a team or what products you build or what stories you tell. Right. You think about sort of first principles, like, what are we trying to accomplish is where you start, not, like, what are the tools for some function or some craft?
- [25:35]
Unknown
When did you have the strongest intuition that turned out to be wrong?
- [25:40]
Jason Citron
At Discord, late 2018, we built a PC game store, which I ended up shutting down after, like, four months. That didn't work. Yeah, there's a long list of things where I have made the wrong calls, but the thing that I've come to learn is that I am still more right than a new executive joining my company. I still have more contacts than most people who join, given the nature of how long I've been doing this. And I also learn over time, and I think this is the trick. One of the challenges with, like, trust your intuition, trust your gut as advice, is like, you don't know where your gut is right and wrong. One of the things I've come to learn over the years is the kinds of things where my intuition tends to be right and the kinds of things where my intuition tends to be wrong. And so when it's one of those things, I discount myself a little bit.
- [26:26]
Unknown
I spoke to many of our mutual friends. I pretty much know all of your cap table. After 2,800 shows, you'd expect me to. So it's at least they said, and I hope it's okay for me to say they said that. But there's so many incredible things about you. But they said you trust more experienced people's recommendations sometimes more than your own, and that was a weakness. Do you think that's fair? And how would you reflect on that?
- [26:50]
Jason Citron
I think there was definitely a period of time where that was true. And we talked about this a little bit. It's this sort of bringing in the executive, delegating the outcome to them, but also the approach to the outcome. That was one of the hard lessons that I learned over the last few years that I stopped listening to my intuition on some of these things. As a result, you know, a lot of things at the company went sideways.
- [27:08]
Unknown
In terms of gut and tough decisions. It's a tough decision. You mentioned earlier, like, actually, it's helpful when you have a little bit of money because you're not tempted to sell early. You had a decision to sell the company for $12 billion, first off.
- [27:21]
Harry Stebbings
How does that feel, Jason?
- [27:23]
Jason Citron
It was pretty crazy.
- [27:24]
Unknown
Yeah.
- [27:25]
Jason Citron
To be in that situation. Yeah.
- [27:26]
Unknown
Do you remember where you were?
- [27:28]
Jason Citron
It was not a short process, and there was a lot of things going on at the time. So it was one of those situations where we. I have always been very Focused on trying to make amazing products, tell amazing stories, and build a great company along the way. Over the years, from time to time, we get interest from people and sometimes we engage with it because like, okay, what's happening here? And it actually began as just another one of those where it was just like, huh, okay. But ultimately we decided that we really just wanted to focus on creating what we're creating. You know, I love creating software and I love solving problems for people around gaming and, you know, having fun with their friends and. And that was the path that we chose to stay on because we thought we had so much opportunity ahead of us.
- [28:08]
Unknown
The reason you sell is because you believe there's more strategic benefit to be had from the acquirer and what it does to your position as a company. Say Instagram with Facebook, say YouTube with Google. Did you not feel that was the case here?
- [28:22]
Jason Citron
Microsoft has been a really fantastic partner for us. There certainly are things that we could have done together with them that we can't do independently. But ultimately it was about controlling our own destiny, I suppose, and really seizing the opportunity in front of us.
- [28:38]
Unknown
What does no one see or think about the gaming industry in the future that everyone should be thinking about or speaking about?
- [28:46]
Jason Citron
We're in kind of a tough period in the games industry right now where after Covid, it's kind of contracting and there's a lot of consolidation, yet it's as big. It's really, really large if you think about how much money consumers are spending and how much time people are spending and how important games are in people's lives. And I think that while it seems it's both large and also feels kind of like we're in a slump, I think in 10 years from now it's going to be so much bigger, so much more important, and so much more pervasive than it is today. If you think games, games just kind of follow the trajectory of digital technology. And it seems like in 10 years from now, there's going to be more digital technology, more people using devices, crazy new ways that we interact with this stuff. And games are always at the leading edge of how people take advantage of and harness technologies. And so you think about, like, how is AI going to change the creative side of game development and the interactive side of game development?
- [29:36]
Unknown
How does AI change the creative side first, before we. I've seen many tools addressing different elements of the creation process. In your mind. Most succinctly, how does AI change the creation process process for gaming products?
- [29:48]
Jason Citron
I mean, I think it's going to Dramatically lower the cost to create incredible content. Which means you're going to get. I think you're going to get games like Elden Ring that are made by teams of like 20 people, not 300. And then it's also going to mean you're going to be able to have someone who, you know, an individual person, a solo creator who will be able to make games that they can't make today because it takes either five years or it's just too hard. And so I think we're going to find.
- [30:13]
Unknown
Do you worry about what that does to Discovery? I think that's amazing. The democratization. But with democratization comes a massive increase in supply. And with that increase in supply, discovery just becomes a war. Often in that case it's just a game of who has the most dollars. Do you worry about Discovery being that problem?
- [30:32]
Jason Citron
I think Discovery is already a problem for developers. It's going to get harder to break through. It's really hard for me to predict how the world will be if there's like 10 times more games and they're all high quality. Because you can imagine when the cost drops so dramatically, the whole business model changes, the whole dynamics change. Part of the challenge today is that it's hard to break through. And it costs $200 million to make a big game. Right. If the costs were much lower, then you could have games where the subject matter is much more niche. And then in that world, what happens? Imagine if you had 20 Elden rings and they all had different themes and they were all as good. You don't need to make $7 billion from making Elden Ring. You could make $10 million or $50 million maybe. It's a great business. So I think that consumers are going to have so much more choice and so much.
- [31:15]
Unknown
It could lead to this incredible unbundling of gaming, this immense personalization.
- [31:20]
Jason Citron
It could lead to a lot of personalization of gaming. People still like to play games in community. So I think you're still going to have situations where like maybe groups of friends will try certain titles or. I think we see potentially echoes of this. If you look at how video entertainment happens today, like on the streaming services, like there are shows that are really popular that no one's heard of because there's so many people who watch these things that you can have these kind of more niche subject matter shows. I think that you're going to start to see something like that. Music is kind of even more like this. If you think about the music industry, how much content there is, it's amazing for consumers, but it is harder for the creative side.
- [31:57]
Unknown
What is the biggest misnomer or mistake that people have or think about how AI will impact the future of creation of gaming products?
- [32:06]
Jason Citron
It's really hard to predict what's going to happen. We're in this world where in gaming there's this concept of a fog of war, which is like when you're playing a game like StarCraft, you can't see what's going on on the other side of the map until you've been there. And so you have to kind of plan without knowing what's happening in the future. And I feel like we're in a moment in technology and because of the nature of AI, it's sort of challenging us to reinvent so much about how we do things in our lives that when I think about where are the capabilities of AI going to be in 10 years, it's just so hard to reason through. To reason through. What are the implications of that? Like, if we actually get AGI, then what happens? I don't know. There's like a tech tree and you can imagine different paths through it that could result in so many different outcomes that it's just very hard to predict. So anyone who's really certain about what happens is probably wrong.
- [32:53]
Unknown
How does AI change the interaction side, how we engage with these games as consumers?
- [32:58]
Jason Citron
Again, I don't know. But some things that I think about which could be pretty compelling are you could imagine how today you might play a game, Legend of Breath of the Wild, for example, or Tears of the Kingdom, one of these big open world adventure games where you're a character and you're in this fantasy land and there's people and adventures to go on that gets handcrafted by a team of people. And because of the nature of it, and it's an amazing game, but there's a lot of repetition for how the sort of structures play out, because you just can't make bespoke content for 90 hours in a game like that. But you could imagine if you have AI that like every one of those characters can have a complete backstory, can respond to you in the totality of all the decisions you've made inside of a game world. And you could have literally hundreds of hours of bespoke content customized to your experience that just never ends as long as you want it to go. And I think that being able to explore and play in a game world that you're passionate about forever could be really compelling. You think about, like watching TV shows and how it's always bittersweet when a series ends because you're like, I'm done being in that world. It's terrible. It was so much fun to be.
- [34:00]
Unknown
There's that point where you ration it out so it lasts longer.
- [34:04]
Jason Citron
Yeah. I mean, I've watched Game of Thrones like four times over because I enjoy it so much. Imagine if it could never end and it was always great.
- [34:12]
Unknown
Does that change the business model?
- [34:14]
Jason Citron
Certainly.
- [34:15]
Unknown
How does the business model change in that world?
- [34:17]
Jason Citron
Again, I don't really know, but you could imagine.
- [34:20]
Harry Stebbings
You would be a terrible.
- [34:21]
Unknown
I've got to interrupt you. You'd be a terrible venture capitalist. We know the future. I will tell you the future and you will listen and write it in your Wall Street Journal article.
- [34:31]
Jason Citron
If you think about the nature of AI and how one of the key differences with it is if this kind of technology could run on a device, on a console or on a phone, then the business model might be different than if it has to use so much compute that it runs in a server, for example. So these details matter. But you could imagine a game like that being more of a subscription service where you subscribe to the game, kind of like World of Warcraft is. It's this never ending story that you participate in, and by paying a little bit every month, you get to continue to explore and be part of that world. That, to me, feels like it could be an approach. The microtransaction model probably has a place you could potentially imagine microtransactions working there. But when everything is AI generated, if all the microtransaction content is AI generated, how will people react to that? If it's effectively free, Will some enterprising creator figure out a different way to monetize it that makes all the content free, so you have to worry about that? My guess is probably so, yeah. It's hard to say.
- [35:27]
Unknown
Jason, what did you believe that you now no longer believe?
- [35:30]
Jason Citron
One thing we've talked about that I certainly believe that I no longer believe is, you know, a lot of the advice out there for how you run a company.
- [35:39]
Unknown
Politics have a place in the workforce.
- [35:41]
Jason Citron
I think that each CEO and each leader needs to decide for themselves how much they want to talk about politics in their workplace. The one thing that seems clear is that we are in a very kind of heated, divided time in the world. I think it's up to each person to make that call.
- [35:55]
Unknown
I spoke to Danny Reimer before this show and he said that his first encounter with you was probably his most memorable first Founder encounter ever. I think he described it as an interrogation, to be quite blunt. So take me to the first Danny Reimer meeting. Where was it? What did you do? How did it go?
- [36:14]
Jason Citron
It's funny, he calls it an interrogation. I remember I was meeting with him and I had just read an article, maybe the day before, about a company that he had invested in that I think kind of went bankrupt or something. I wasn't raising money, but I was like, oh, I'll go meet with this guy. People say he's. He knows what he's doing. And so we met at a coffee shop somewhere in the Mission in San Francisco. I forget which one. I'm a pretty curious person. I love to learn from people. There's two ways to learn in life. You learn from your own mistakes or from other people's mistakes. And so I love to read books and talk to other people to learn about what are their mistakes and what can I learn from. So I'm meeting with Danny and I'm like, well, I don't know what to talk about. I just read this thing. It was really interesting to hear about a company that just went bankrupt. So I was just really curious about it. So I just started asking him questions about the experience and what happened and what did he learn from it and what did he take away from it? And I have to be honest, I don't even remember what he said. It was so long ago, but I remember the conversation and I know it really stood out to him.
- [37:08]
Unknown
Do you think you were a good fundraiser and with the benefits of the many rounds you've done, what have been your biggest lessons on how to fundraise successfully?
- [37:16]
Jason Citron
I guess I am a good fundraiser. We've raised almost a billion dollars. At some level, I think raising money, when you're building a business that is growing really fast and has a lot of consumer love, it's kind of easy.
- [37:28]
Unknown
I don't disagree with you. Which was the hardest round?
- [37:31]
Jason Citron
We definitely had hard rounds. Our Series A was actually pretty hard because a lot of investor. This was before we had discord. So when we were working on our game title, this was, I think maybe 2013. And at the time, what I was fundraising on was this vision to build a big gaming business around a group chat app starting with a game. And most people said no because they thought the game wasn't going to. Wasn't going to get there. So we got a lot of nos in that round. And Mitch Lasky from Benchmark said yes. And he thought the vision was exciting and he thought we would figure it out. And so that was a hard round. But I'm very grateful to Mitch for seeing what I saw and supporting us in that. Once we got to Discord and the charts were all up and to the right, it was much easier.
- [38:10]
Unknown
Should you always take the highest price?
- [38:12]
Jason Citron
No. In fact, I got an offer, I think our Series A. I had one other offer for a little bit of a better valuation, but I really wanted to work with Mitch.
- [38:20]
Unknown
Is it a needle mover? Having Benchmark as an investor?
- [38:23]
Jason Citron
Mitch has been very helpful. I haven't spent a ton of time with the other partners. So one thing that I have learned working with so many investors over the years is that it's not really always about the firm, it's about the person. My sense is the other folks at Benchmark are great, but I haven't worked with them, so I don't know. But working with Mitch has been great.
- [38:40]
Unknown
I heard another story I had to discuss was Rockstar Games, where apparently you walked in feeling pretty confident with bags of cash, expecting to buy a ton of ip. What happened there, Jason?
- [38:52]
Jason Citron
Yeah. So we went to New York. This was around the time when we were building our PC game store in late 2018. And I went to go visit with the Rockstar folks to talk to them about whether they would list their upcoming title on our store. They were very gracious folks and we chatted with them and discussed a lot about what their priorities were and tried to do the normal beady thing of what's going on over here. And what I realized as we were coming back was that the games store business was such that they only wanted. Basically what I realized was that we were going to have to spend a lot of money and minimum guarantees to get developers to put their games on our store. And it wasn't just Rockstar, but that trip to New York was one of the moments where I realized that the best games are going to cost us a lot of money. In that moment in time, other people had just launched game stores as well. The PC game store industry was slow moving for a while, and in that window, Epic launched theirs. We launched one. Microsoft was coming. And I realized that to compete in this business, we were going to have to spend a lot of money on minimum guarantees on a lot of titles. And I didn't feel like it was going to really be worth it. I decided we weren't going to spend the money, the bags of cash on that title or on any titles. And we shut down the game store 45 days later and completely pivoted out of that business, which I had just raised a round of funding off of. So I remember calling the investor who had put the money in and I.
- [40:12]
Unknown
Was like, hey, which round was this?
- [40:14]
Jason Citron
I don't know. We've done a lot of rounds. I forget the letter. But in any case, I remember calling them and telling them that we were going to do this. And I was like, do you want the money back? They were like, no, keep going. We think you'll figure something out. And they were right.
- [40:29]
Unknown
I have to ask a question that is top of mind for me. I think there's a generation of incredible private companies. Your stripes, like your starlinks, your discords. The question that I have is, what is the ultimate destiny for this? Does it go public? Does it get bought? Does it run as an independent private company for years and years and years? I'm not saying to make predictions, any teasers, spoilers, Just what would you most like?
- [40:55]
Jason Citron
Well, there's a couple of ways to answer this. You know what I like is creating software for people that is useful and having fun doing it with, like a team of great folks. Like, that's what I enjoy. Like, I enjoy waking up every day coming to work and talking about the features we're building and talking to my customers and trying to figure out how to solve problems for them and then telling our story. So that's what I would like to keep doing. And then the question is, what's the context around that? And of course, we raise a lot of money and the business exists because we've had amazing investors, a lot of wonderful employees who give us their time. So all of those folks are expecting liquidity at some point and I really want to give it to them. So there will have to be some liquidity situation eventually because people want to get paid. But when and how and what that will be, we'll figure that out as we move on.
- [41:40]
Unknown
Would you like to be a public company CEO? Does that hold any desire or interest for you?
- [41:45]
Jason Citron
It's an intriguing mode of operation, but I'll do it. But I don't wake up and go, I cannot wait to be a public company and do an earnings call. That's not the reason why I started the company. I started the company because I'm passionate about our customers and their problems and I want to solve them.
- [42:01]
Unknown
Listen, I would love to move into a quick fire round. So I will say a short statement. You give me your immediate thoughts. Does that sound okay?
- [42:08]
Jason Citron
Yes.
- [42:08]
Unknown
So what book written before 1965 would you most recommend?
- [42:13]
Jason Citron
Winnie the Pooh because it's just such a wonderful book. It's a story of friendship and fun.
- [42:18]
Unknown
Yeah, I can see why you're not an investor.
- [42:21]
Jason Citron
Yeah. Were you looking for like Benjamin Graham or something?
- [42:25]
Unknown
Ginger, My takeaway from this episode is, honestly, I think you are fricking great. You are such a lovely human being. But we also could not be more like other ends of the spectrum. I had a great conversation the other day and they were like, hey, how faith impacts how you act in the world. And I responded, I have faith. I believe in liquidity.
- [42:45]
Jason Citron
Capitalism is. Well, yes. Okay.
- [42:48]
Unknown
Don't say anything that purges you. Don't say anything.
- [42:50]
Jason Citron
Yeah, I'm like, that's not a soundbite.
- [42:52]
Unknown
We're going to what's the most what blog post written? Post 2000, other than founder Mode is your favorite?
- [43:00]
Jason Citron
Yeah, I really enjoyed a series of posts by Mark Schuster. He used to write in the late 2000s. He had a blog called Both Sides of the Table where he would share his experience and I really, really learned a lot from him.
- [43:12]
Unknown
What's the most contrarian or unorthodox advice you'd have for founders listening today?
- [43:16]
Jason Citron
Yeah, I think it's that if you're building a consumer product, you have to build it for yourself. It's really hard to build consumer products if you are not the customer.
- [43:23]
Unknown
Is it wrong to do it for the money?
- [43:25]
Jason Citron
No. Do it for whatever reason you want.
- [43:27]
Unknown
What concerns you most in the world today?
- [43:29]
Jason Citron
Jason I'm worried about our institutions and like civic engagement future of education. There's things about the world that seem to be getting worse and I'm worried that we may not figure out how to fix them. So I'm trying to think about how to help fix them.
- [43:44]
Unknown
If you were to reshape parts of education in any way, how would you change education?
- [43:49]
Jason Citron
Well, I think that I would try to redesign the school experience to be more about hands on problem solving that is engaging and less about memorization because I think about games. People learn better by doing and through experience and repetition. So much of what you learn in school about recalling facts is just not actually that useful. Even today we have Google and with AIs in the future it's going to be more about creative problem solving and critical thinking and judgment. These are soft skills that you do learn in school, but they don't really seem to necessarily always be the focus. So I think that's one. On a smaller scale, I think access to higher education for people in America at least is something that is a Problem. So there's a really cool startup that I'm involved in. It's actually the only other company I'm on the board of called Campus. They're an accredited online university where students in America can apply to get accepted and take online classes taught by adjunct professors from Ivy League schools and get a two year degree that they can then transfer to a regular school. And it's such a cool company run by this amazing founder.
- [45:00]
Unknown
Unless it is mission critical degrees. Do you think university is worth the hugely inflated cost anymore?
- [45:06]
Jason Citron
I do think it's too expensive.
- [45:08]
Unknown
So if I were 18 and I said I have this offer from this great school, should I take it or should I go and work at a startup and learn?
- [45:16]
Jason Citron
If you're turning down an acceptance letter to an Ivy League school, that means you've already figured out a bunch of things about how to about some of the stuff I talked about. You probably have figured out some level of critical thinking and follow through and focus and you're probably quite smart. Maybe you should actually not go to Harvard and go work at a company and start doing something. But if you're not that person, there may be value in going to a higher education to learn some of those more structured skills.
- [45:45]
Unknown
You can change anything about the internal workings of discord today, what would you change? Forgetting difficulties in logistics?
- [45:53]
Jason Citron
I've changed pretty much everything.
- [45:56]
Unknown
Do you have recurring meetings?
- [45:58]
Jason Citron
I have meeting slots, but I have very few actual recurring meetings.
- [46:02]
Unknown
Do you like them?
- [46:03]
Jason Citron
The ones that I have now, I like the ones that I used to have a lot of them but I no longer have those.
- [46:08]
Unknown
That was elegantly done. I like that. Yeah, strong. Final one. In other words, I fucking hated the old ones. Final one. No, I said it. As long as I said it's fine. Final one for you. What is the most underrated piece of technology or advancement that not enough people discuss today but you're excited about?
- [46:26]
Jason Citron
I don't know why we don't have more nuclear power plants. Energy is such an important factor in our society and we have this amazing technology that we have for some reason, at least in America, regulated essentially out of usefulness. And wouldn't it be amazing if we just had kept building them over the last 50 years like wow, wouldn't that be pretty amazing? There's something there.
- [46:47]
Unknown
I think it's the mass potential harm to surrounding areas that could be caused that prevent it.
- [46:54]
Jason Citron
No, my understanding from the little research that I've done is that there's actually just a lot of misinformation and fear mongering around it. It's actually like much safer than people think. And that like living next to a coal plant is actually more harmful to your health than living next to a nuclear power plant. And that they're quite safe.
- [47:08]
Unknown
You have been fantastic. Thank you so much for putting up with my prying and I so appreciate it.
- [47:13]
Jason Citron
Yeah, thanks Harry. Really great questions. It's been fun.
- [47:17]
Unknown
I absolutely love shows like that. For me, shows which are a real.
- [47:20]
Harry Stebbings
Reflection on the lessons taken to build a 14 and a half billion dollar business.
- [47:25]
Unknown
Just an incredible opportunity. If you want to watch the full episode, you can find it on YouTube.
- [47:28]
Harry Stebbings
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