20VC: ElevenLabs Hits $200M ARR: The Untold Story of Europe's Fastest Growing AI Startup | The Real Cost of AI from Talent to Data Centres | How US VCs are in a Different League to Europeans | The Future of Foundation Models with Mati Staniszewski

Summary

The Twenty Minute VC (20VC) | September 8, 2025

Episode: ElevenLabs Hits $200M ARR: The Untold Story of Europe’s Fastest Growing AI Startup

Guest: Mati Staniszewski, Co-founder and CEO, ElevenLabs

Host: Harry Stebbings

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Episode Overview

This episode features Mati Staniszewski, co-founder of ElevenLabs, reflecting on the meteoric rise of his AI voice startup, which recently surpassed $200 million in annual recurring revenue (ARR), making it one of Europe’s fastest-growing AI companies. Mati discusses the origins of ElevenLabs, the challenges of building world-class AI infrastructure in Europe, talent wars, fundraising stories, and why US VCs play in a different league. The show also covers the evolving role of AI foundation models, product-market fit, European tech culture, and Mati’s philosophy on team and company culture.

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Key Themes and Discussion Points

1. Origins and Early Motivation (04:20–08:30)

• Growing up in Poland: Mati credits the unique advantages and limitations of his upbringing in suburban Warsaw for shaping his ambition and perspective on global scale.
  • “The density of talent was the most motivating factor… that’s what’s most motivating, being part of this incredible set of people.” [05:29 – Mati]
• Partnering with co-founder Piotr: Met in high school, stayed connected through hack projects.
• Origin of ElevenLabs: Inspired by terrible movie dubbing practices in Poland and Poland’s “audiobook” approach to film translation.
  • “All movies are still dubbed… narrated with one single character… a terrible experience and something that we knew needed to change.” [07:03 – Mati]

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2. From Idea to First Product (08:30–12:51)

• Initial attempts focused on movie dubbing; feedback from YouTubers was lukewarm.
• Pivoted to text-to-speech after noting unmet demand for flexible, emotion-rich narration and voiceover tools among creators.
  • “They want to post-produce… voiceover over a movie. A super simple problem which didn’t include anything with language changing.” [09:23 – Mati]
• Built proprietary models after finding existing ones inadequate.
• Reflections on the rapid evolution of AI architectures and multimodal models.

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3. Product Development, Plateauing, and Differentiation (11:59–15:55)

• Voice AI is not plateauing: While some AI fields are slowing, Mati argues voice AI still has a steep adoption curve.
  • “In narration, we think it’s plateauing… but if you just do research, eventually it will commoditize…” [12:22 – Mati]
• Why OpenAI (and others) can’t just do it: Focus, talent density, and product-oriented execution are critical.
  • “The true longer answer is… focus. We want to really own and win in the voice AI research and product space.” [14:13 – Mati]
  • “Exceptional voice researchers: probably like 50 to 100 people at this top level globally. Piotr was able to assemble one of the best teams in the space.” [14:36 – Mati]

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4. Fundraising Stories and Advice for Founders (17:17–26:53)

• Pre-seed fundraising was hard: Spoke to 30–50 investors, facing skepticism about market size and defensibility.
  • “Pre-seed was tough… the market is very small for what you are solving… surprised to even be asked.” [17:35 – Mati]
• Raised $2M at a $9M post-money valuation (2022).
• Beta Launch and Product-Market Fit:
  • Pivot to narration resulted in positive user feedback (e.g., a user producing a full audiobook with ElevenLabs).
  • “It started getting reviews that it’s great… I was like, okay, we are onto something.” [21:00 – Mati]
• Smart fundraising: Announced rounds only when tied to product or research milestones.
  • “Our philosophy was always the round should have another purpose… every round that we would do would always tie into product announcement.” [20:18 – Mati]

Fundraising Tactics and Roadshows

• Reluctance to overvalue traditional PR; grassroots/user-focused channels perform better (Discord, Reddit, newsletters).
• On investor engagement: Use between-rounds periods to test helpfulness, not just chat.
  • “It’s also a good litmus test… see if they genuinely are interested in being there or if it’s just platitudes.” [26:53 – Harry]

Angel Selection

• Advisors and angels chosen for domain expertise, validation in new circles, or go-to-market savvy.

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5. The Transformative $19M and $350M+ Funding Rounds (27:52–37:05)

• US VCs (a16z, Nat Friedman & Daniel Gross) led the next stage—Nat Friedman personally tested ElevenLabs’ APIs before investing.
  • “He was the only person that tested our APIs, decided it was actually valuable, gave me feedback…” [29:14 – Mati]
• Andreessen Horowitz founder involvement: proactive, introduced ElevenLabs to celebrities for voice licensing before investing.
• Differentiation between US and European VCs: US funds more risk-tolerant, networked, and supportive in tough times.
  • “They are all more keen to take the risk. Conversations are always like, how do we bet bigger rather than optimize for negatives.” [36:29 – Mati]
• Importance of reference checks on investors (especially how they behave in tough times).

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6. Team Building, Small Teams, and Culture (37:13–48:57)

• Emphasis on “small, mighty” teams: 250 employees organized into ~20 autonomous teams.
  • “More people frequently doesn’t fix the problem… you don’t need that many people to do something special.” [37:33 – Mati]
• Teams organized by product area.
• Culture Challenges: The fallout when a partner launched ElevenLabs’ dubbing before they did; open communication is key to recovery.
  • “I don’t think the first reaction should be, hey, everything is fine. You should be authentic…” [41:39 – Mati]
• Hiring: Still interviews every hire at 250+ headcount. Fast decision-making is better than drawn-out “wait and see.”
• Titles: Eschewed traditional titles to keep teams nimble and empower up-and-comers.
  • “The main thing that matters is the impact. …Titles felt limiting to that.” [47:08 – Mati]
• European Talent: Values growing talent internally, paired with US advisors as needed.

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7. Scaling, Revenue, and Run Rate (54:00–55:32)

• $200M in ARR:
  • “So we crossed 200 million now… We did 20 months to 100 and then around 10 months to 200.” [54:40 & 55:02 – Mati]
  • “Our biggest contract is around 2 million.” [55:46 – Mati]
• Largest customers are enterprise, often in customer support/call centers and creative verticals.
• Aiming for rapid doubling of headcount (from 250 to 400).
• Cautious about revenue per head, but sees staffing as an investment in distribution.

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8. The Economics and Infrastructure of AI (43:26–46:11)

• Built proprietary data centers—found it more cost-effective than “core weave” or generic cloud.
  • “If we assume we continue training the models… on a two-year horizon break even for having our own and not renting. …It pays dividends because we can just do more experiments quicker.” [43:38 – Mati]
• On AI application unit economics: Early margins are bad but expected to improve.
  • “The unit economics in most of those cases… is pretty poor. But I think the strategy is that… the models will optimize in cost… they’ll be the brands that customers trust.” [44:42 – Mati]
  • “Our unit economics is much healthier than most of those companies.” [45:08 – Mati]

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9. AI Adoption, Agents, and the Future of Work (58:50–61:14)

• Agents will be a huge line of business: Customer support, omnichannel solutions, and deeper AI integration are immense growth opportunities.
  • “Our agents’ work is already huge. But it’s just scratching the surface… a multi-billion dollar revenue generating business.” [58:50 – Mati]
• Automated agents increasingly replacing rote tasks, but humans remain critical for specialized expertise.

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10. On Acquisition Offers, Secondary, and Founder Brand (62:06–69:37)

• Acquisition offers: Evaluated for diligence but “flat no” in ambition.
• Employee liquidity: Offers 10-day secondary windows for vested employees at nearly every round.
  • “We do almost every round we can… so they all feel that there’s actually liquidity.” [63:28 – Mati]
• Founder brand: Some ambivalence, but recognizes it can elevate the company, not just distract.
  • “I sometimes worry… too much of the founder brand kind of takes away from that. But my mind is changing.” [69:33 – Mati]

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Notable Quotes & Memorable Moments

• “We crossed $200 million now. So we did 20 months to 100 and then around 10 months to 200.”
  — Mati [54:40]
• “It truly was… all movies are dubbed… a terrible experience and something we knew needed to change.”
  — Mati, on inspiration for ElevenLabs [07:03]
• “Pre-seed was tough. We spoke with a good amount of investors between 30 to 50, and it was double hard…”
  — Mati [17:35]
• “He was the only person that tested our APIs, decided it was actually valuable… gave me feedback… then told me, I’m keen to invest.”
  — Mati, on Nat Friedman [29:14]
• “The number of researchers in the world working on voice and being exceptional is super small. Probably like 50 to 100 people at this top level.”
  — Mati [14:36]
• “Speed of execution is the only, only thing you have.”
  — Mati [31:37]
• “More people frequently doesn’t fix the problem. You don’t need that many people to do something special.”
  — Mati [37:33]
• “Our agents’ work is already huge, but it’s just scratching the surface.”
  — Mati [58:50]
• “I don’t think the first reaction should be, hey everything is fine… you should be authentic and tell the team what you are feeling.”
  — Mati [41:39]

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Important Timestamps

• [04:20–08:30] — Early life, motivation, origins of ElevenLabs
• [08:43–12:51] — From idea to pivot; creator feedback and text-to-speech innovation
• [15:55–16:47] — Talent retention and “war for talent”
• [17:17–26:53] — Pre-seed fundraising stories and advice
• [29:14–37:05] — Why US VCs are different, securing Andreessen/Sequoia/Nat Friedman investment
• [37:13–48:57] — Organizing small, agile teams; company culture moments
• [54:00–55:32] — ARR milestones: $35M to $200M, contract sizes, growth timeline
• [58:50–59:31] — Voice agents and the future of enterprise AI revenue
• [62:06–63:28] — Acquisition interest and the importance of secondary for employees

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Final Thoughts

This episode gives a rare, candid look at the journey of one of Europe’s most successful AI companies, with detailed discussion on product pivots, the real-world difficulties of fundraising, talent, culture, and the nuances that set apart Europe’s best from their US counterparts. Mati’s approach emphasizes focus, authenticity, and the principle that speed—and the right small team—trumps bloat and bureaucracy. For founders and operators, it’s a masterclass in the scrappy, ambitious new wave of global AI entrepreneurship.

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[Summary by 20VC AI Podcast Summarizer]

Transcript

[Matty]

So we crossed 200 million now. So we did 20 months to 100 and then around 10 months to 200. Our biggest contract is around 2 million. Pre seed was tough. I think we spoke with a good amount of investors between 30 to 50. We raised 2 million.

[Harry Stebbings]

2 million. Do you remember the price?

[Matty]

9 million.

[Podcast Host / Narrator]

This is 20 VC with me, Harry Stebbings. And today we have one of the fastest growing AI companies in the world in the hot seat. So they did 20 months to $100 million in ARR, just 10 months to $200 million in ARR, which they announced exclusively in this episode. Today they've raised over $350 million with the last round pricing them at $3.3 billion. Eleven labs. And I'm so thrilled to welcome their co founder Matty to the hot seat today. But before we dive into the show today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the data and the projects that we're working on across of platforms, products and tools. That's why we use Coda, the all in one collaborative workspace that's helped 50,000 teams all over the world get on the same page. Offering the flexibility of docs with the structure of spreadsheets, Coda facilitates deeper teamwork and quicker creativity. And their turnkey AI solution, the intelligence of Coda Brain is a game changer. Powered by Grammarly, Coda is entering a new phase of innovation and expansion, aiming to redefine productivity for the AI era. Whether you're a startup looking to organize the cake chaos while staying nimble, or an enterprise organization looking for better alignment, Coda matches your working style. Its seamless workspace connects to hundreds of your favorite tools, including Salesforce, Jira, Asana and Figma, helping your teams transform their rituals and do more faster. Head over to Coda iO20VC right now and get six months off the team, plan for startups for free. That's Codacoda iO20VC and get six months off the team plan for free. Coda iO20VC. And while Coda keeps your team aligned, Radix makes sure your startup's name is just as sharp. This one's for all you tech founders out there. You finally come up with the perfect name for your startup. Then you check the dot com and damn, it's taken, parked, unused or priced like rent in Palo Alto. So you settle with extra letters, weird spellings, whatever it takes. But hey, you don't have to compromise because now there's Finally, a domain for tech founders like you. Tech domains get the startup name you actually want on tech. No compromises. What's more, when you use tech, you signal to your customers and investors that you're building tech with just your domain name. Isn't that cool? So if you've got a name in mind, search for it now with tech on a trusted platform like GoDaddy or Visit, get Tech20VC to grab it. You've got the name locked down with Radix. Now it's time to get the fund structure just as solid. If you're listening to 20 VC, you know we have a really freaking high bar. Well, Angellist is the modern platform used by the best in class venture funds where over 40% of top endowments and banks are LPs. Their customers include a top five venture firm, 20VC and they now have, check this out, $171 billion of assets on the platform. They combine an all in one software platform, a dedicated service team that moves as fast as you do. One manager said this awesome quote, Angellist feels like an extension of my fund. Another said, Angellist gives me total peace of mind. The attention to detail, lightning fast response time and just real sense of ownership from the team are exactly what I need to stop worrying about back office ops. So if you're starting a new fund, don't be a moron. Just use Angellist. They're incredible. Head over to angellist.com 20vc to learn more. You have now arrived at your destination.

[Harry Stebbings]

Matti. Dude, I cannot wait for this.

[Podcast Host / Narrator]

I've wanted to do this one for a while so thank you so much.

[Harry Stebbings]

For joining me today.

[Matty]

Hari, thanks for having me. After working on a number of projects together, I'm so happy we can finally speak.

[Harry Stebbings]

Dude, I am so thrilled we could do this now.

[Podcast Host / Narrator]

I spoke to so many people beforehand and I have to say Luke was.

[Harry Stebbings]

Phenomenal on your team in prepping me so much.

[Podcast Host / Narrator]

But I do want to start a.

[Harry Stebbings]

Little bit with the origins. Pre you grew up in Poland and this was Luke's. How did growing up in Poland impact your mindset towards the world and company building?

[Matty]

First, you know in Poland it's a very different, much smaller world. For growing up I was in a very lucky position where I was in suburbs of Warsaw, then went to high school in Warsaw, then kind of started seeing more of that world which was of course incredible because that kind of opens your eyes of what's possible that there's so much world beyond what you've seen, the smaller cities and I think in A similar way as you think about building 11 labs now, the scale of what we don't know is still ahead of us. And this is like, what's exciting that we know that if we climb those traditional hills, mountains, we'll see increasingly. And I think the second thing was I saw the transition where in the suburbs of Warsaw, a public school. So school where you would have just any kids that would live in the area and in high school and where I met my co founder, you would have a slightly different crowd of people that would win competitions, need to go through a few steps to get there. And suddenly that density of talent was the most motivating factor to explore more, learn more and do more. Which now we are trying to of course, replicate at 11 labs where and any other company I'm sure too. It's like you try to keep that density as high as possible because at the end of the day, that's what's most motivating, being part of this incredible set of people.

[Harry Stebbings]

I was most inspired or given hunger because my dad always said, like, when we went into Chelsea, oh, it's a better life here. And like, this is where people who've won live. And I didn't live there, and I wanted to fucking live there. And it fed me with this like insane hunger. Where did your insane hunger come from in those early days?

[Matty]

Definitely it was, you know, the combination of family, my older brother, or kind of trailblazed going abroad to study then motivated us to, like, you need to do the same. This is really helpful. And then the second, it was really this community of people in high school. Meeting my co founder was extremely smart. Meeting some of our close friends, kind of going through this cycle of motivating each other. It's like, yes, we want to study at the best university. Yes, we want to go deeper and crash this exam. And I think this was huge, huge element for all of us just going after it and knowing that maybe it's possible. At the time, everything felt distant and it's still, you know, many of the things do. But I think without that kind of motivation, through the people would be not possible.

[Harry Stebbings]

Speaking of the motivation through the people, you have a very special relationship with your co founder, Piotr.

[Matty]

Yes.

[Harry Stebbings]

Yeah. I have to ask, then you come together. How does the idea for 11 labs come to be? Was it truly inspired by bad movie dubbing?

[Matty]

It truly was. There was two things that coincided for us starting 11 labs. One was through the years prior. He worked at Google, I worked at Palantir. We would meet for A hack weekend project together. So we would try to explore a new technology. One was in a recommendation space. One during the crypto hide, we built a crypto risk analyzer which wasn't very easy and didn't work very well. And then once we did the project in audio, the idea was can it analyze how you speak and gives you tips on how to improve speaking. And that kind of opened our eyes what's possible in the technology space there. And then fast forward later that year, the moment hit from Poland, which is, wow. All movies are still dubbed where you have all the voices from the original, whether it's male or female voice, narrated with one single character. So you have one voice narrating all the characters in a flat, no emotional way. So it's like a audiobook reading of a movie. A terrible experience and something that we knew. Combining the experience from working on audio and now knowing this is a problem that, okay, this will change few years from now as you imagine that kind of advancement. All the voices will have original emotions, intonation sound incredible. And that kind of kickstarted this idea. And of course then it expanded to, okay, we need to fix the research layer to actually make it happen. Then we started with a lot of our creative platform work around 11 labs, and then expanded to agentic platform work. How now interaction is shifting where voice is this big interface for the technology around us? Well, it was very dubbing specific originally. You kind of expanded through to everything voice today.

[Harry Stebbings]

I mean, it must be the most boring movie experience having one single voice for everything.

[Matty]

It's terrible. It's terrible.

[Podcast Host / Narrator]

So what do you do when you.

[Harry Stebbings]

Land on the idea, then in terms of your next steps, you move into the research layer and determine whether it's possible to actually do this.

[Matty]

We first tried to do two things in parallel. My co founder was, okay, can we use existing technology, stitch it together and create a dub of a movie in a better way? And it quickly transpired that you get a good effect, but it wasn't brilliant. So to actually fix it, let's take a step back and fix one of those components and make it great at the same time. When he was doing research, my mission was, does anybody actually want a dubbing product? So I was emailing all the YouTubers, getting the emails, scraping them and trying to message them. Hey, if we had a dubbing product to make your movies available in all languages, would you be interested in that? Roughly, it was like 15% reply rate initially from the first batches that we sent. All were personalized. I mean, we Sent thousands of them. The interest was lackluster. All of them were like, oh, I don't fully believe this is possible. Can you send us a sample? It would be great, but how will I operationalize this? YouTube doesn't support it. So it was somewhat of an excitement, but not a burning problem. I need to solve it. But then the second thing happened. So we started sending the samples, we started speaking more with the YouTubers and it quickly came that what they actually want help with is much simpler. They want to post, produce and correct if somebody said something incorrectly. They want to understand how the script will sound before they need to produce it. They might not want to speak at all. And they want to voiceover over the movie. So a super simple problem which didn't include anything with language changing. And of course my co founder, as he dived into the research, realized that you can actually build completely new text to speech model which will be a lot more emotional intonative. That will make that narration a lot better. So let's put a dubbing problem aside and as we see there's this huge other problem with a lot of the creators. Let's solve this problem first and bring that research just on the text to speech layer.

[Harry Stebbings]

And that's only possible by creating your own models.

[Matty]

Quick answer is yes, all the models at the time just you could tell immediately. It's like Uncanny Valley, not very good. You cannot replicate voices. Dude.

[Harry Stebbings]

How should I know as an investor? Again, I use this show just to get better. As an investor, how should I know as an investor whether a problem needs its own own model or whether you can just leverage alternative existing models?

[Matty]

Wow. I think the answer will definitely change now to 2022. So that was the year where nobody yet kind of was thinking about AI. This was still kind of downfall of metaverse crypto days. The attention to the models was none in the public eye. ChatGPT happened beginning of 2023. That's where it kind of all started spiking across. At the time, you didn't really have a choice. You knew as a user, as an investor that what existed out in the market just wasn't very good. And then more of a question, will this team be able to solve and create something better?

[Harry Stebbings]

If you were creating 11 labs a day, what would you do architecturally differently, given the architecture that we have today?

[Matty]

I think still a current question is to what extent you continue on that kind of single modality space, where at the time it was mostly you train a dedicated model for speech or dedicated model for image. Video, et cetera, over what is now more of a theme where you kind of train a more of a multimodal approach where you combine the reasoning and speech together to create even better speech experience. That's our most recent generation is effectively that or 11v3. If we had that, then I think we would have probably skipped few steps and our experience would have been even better.

[Harry Stebbings]

So off tangent, but I'm just concerned about bluntly the plateauing progression of models. And GPT5 was the embodiment of that. You move from incredible feature descriptions to a description on cost. And when you have a description on cost and efficiency, it's like, oh, we've hit that. Do you agree and are we in an element of incrementalism and plateauing in voice?

[Matty]

I think there's a little bit of like it depends. It depends on the use case. But to make it more concrete, there are use cases like narration. In narration, we think it's plateauing. The new model generations will not make narration of an audiobook drastically different. It will still be in a similar quality. But I think in general the point is right where if you just do research, eventually it will commoditize and eventually that advantage you can deliver from research isn't enough. So you really need to build product. And as you think about 11 we combine both together, do you think we're.

[Harry Stebbings]

At a stage where scaling laws no longer equal an equivalent level of progression.

[Matty]

In a biased way? I feel like the progression is still just scratching the surface where it's just the moment of still seeing that escape curve of AI getting adopted everywhere is just getting started while scaling does continue in the same way.

[Harry Stebbings]

But there's a difference there between adoption. So I agree with you there in terms of the adoption, but actually the.

[Matty]

Development progression, I think it's probably a different answer on LLM space and different answer in the voice space. I think in voice space you are still not slower rated. And then there's an interesting variation of as they all combine. What does that mean for the world? A slightly deeper understanding of everything around you. But I think in voice you still will see pretty quick curve on the lamps. I agree it's probably a little bit flattening to some extent.

[Harry Stebbings]

I spoke to Andrew Reid before the show. I had a great chat to him last night and he said said ask him about why can't OpenAI do it. And I remember chatting to Kieran about this. Kieran obviously being my partner. And there was two reasons why we didn't work together. One is a small check which you very kindly offered. And the other was like, no offence, it was super freaking early. And it was like, why wouldn't OpenAI do this? No offence. Two very young guys in London are doing like, how is this not going to be done by them? How do you answer the question why won't OpenAI just do this?

[Matty]

They definitely will do something, but I think they lack the genius that I'm happy my co founder and the team has. But I think the true longer answer is one is focus. I think in the early days, especially when we spoke then, there was just so many different things you could do in AI space. And I think we took this bet that we want to really own and win in the Voice, AI research and product space. All our work is directly tied to Voice. Then the second thing is I actually think the number of researchers in the world working on voice and being exceptional is super small. Probably like 50 to 100 people at this top level. So Piotr was able to assemble one of the best teams in the space. I think we have five to 10 people that are in the top 100. It's like a mighty team, which I'm kind of time and time again surprised how incredible they are. And to make it specific, I mean, Text to Speech was one that kind of have blown everything out of the water then. Speech to text is beating OpenAI Gemini on benchmarks now music, which is again something that no big company has yet been able to crack or do. It's an incredibly mighty team. And then even if I think if OpenAI does actually do something on research and I think they are trying, then that product layer is where you really need that big advantage of if you are in a creative space, if you do narration, if you do voiceover, if you're a dab, you go for so many additional steps to really make it perfect. We do that. Well, if you're building a voice agent or conversational agent, you need to bring knowledge base, integrations, functions. You need to then deploy, test, evaluate, monitor. All of these pieces are coming together in a platform and I think OpenAI is not investing as much time they could, but they aren't. So combination of mighty research team, speed of execution and then actually focusing on the use case. I think in a deeper way you.

[Harry Stebbings]

Mentioned the mighty team. Those people are very valuable people and an OpenAI or an anthropic or a meta would pay a lot of money, it would seem, for people like that. Do you worry about the war for talent and how do you think about retaining talent when there's hundreds of millions of dollars going across the table for them.

[Matty]

Of course, I think the talent, especially on the research side, is out of the scale across any of those companies, especially in the early days. Of course, to some extent, as I think about Meta and others, they are of course paying for the know how as much as they are paying for the raw talent too. Where getting those early people gets you some insight into the models and architecture that you can then bring across and accelerate. So in early days it's more valuable than late. But I think in our case the reason I think it's still valuable is one, the upside for 11 labs just getting started. So I hope we will be able to compete with any of those companies in the future at the same scale. Two, what you do have, which I think is important as I think about any of those companies, is how close you are from developing research to actually deploying research. And at 11 labs, if you are actually creating new models, models, they get to production and are some of the most important things that our products work on almost immediately. So the gap is super quick. While bigger companies, you go through the usual corporate red tape to get any of that work done. And then three, I think we now have a very small MIT team that can learn from each other and move pretty quickly. I don't think there is a guarantee you'll get that in some of the other companies. I think they are optimizing for a lot of people, but not necessarily the right people.

[Harry Stebbings]

We mentioned that kind of the V1 and building to beta and I think it was 2023 that you raised the pre seed. How did the fundra process go? You're two young guys saying hey, we're going to do this. How did the pre seed fundraise go?

[Matty]

Pre seed was tough. It was similar question that you asked. It was like how will we fix research? The second question which was very interesting, we think the market is very small for what you are solving, which at the time was like a combination of AI voice. Nobody was thinking about that. So that was surprising to ask which we were very disagreeable. And third was defensible. Will it actually be better than what incumbents from the Fang companies will actually solve or how will you outcompete that on long term? So these are the three. So it was tough. I think we spoke with a good amount of investors between 30 to 50 and it was double hard at the time because we early 2022 we got an offer from one of the accelerators in us, not YC and we are thinking like, should we take it or not? And we decided no, we are rejecting. We think we can create something more valuable and we don't need that help at the time. So decided to go independent. And this triggered this more stressful time where suddenly now you need to raise money. We started spending a little bit more on GPUs. We hired the first few people. It's like all of that was going from our savings, which we are lucky to have from Google and Palantir. But I was like, okay, now it's actually getting a little bit more risky and we want to double down, we want to invest even more. So we need money.

[Harry Stebbings]

How much did you raise in the pre seed?

[Matty]

We raised 2 million.

[Harry Stebbings]

2 million. Do you remember the price?

[Matty]

9 million.

[Harry Stebbings]

9 million post.

[Matty]

9 million post. The amount was exactly 11% of the equity that the first investor was buying. And then the other ones were layered in. So it's like just over a million.

[Harry Stebbings]

And this was 2023.

[Matty]

That was 2022.

[Harry Stebbings]

This was not. Dude, I'm so used to stories like this on the show where it's like HubSpot and you're like, when was it, oh, 2006 or 2008 or nine or whatever.

[Matty]

Yeah, it was only four years ago. Which in the end we found we had CREDO concept here in uk. Credo from ze. We had one of our friends from Oxford, Peter Chaban, who invested, was a co founder of Polkadot, which is the cryptocurrency. So we had like a good set of early believers, but together it took us a bit longer.

[Harry Stebbings]

So you raised the 2 million, then what happens? Then you start building out the team, you start investing in GPUs.

[Matty]

Just think of that. The main reason we raised was to accelerate what we would want to do. First one was building a small data center. So we built one and we. And back then it was I think in Poland that we've invested few and then quickly after moved and started buying some in US and then team we started hiring. Not many, but it felt like a lot at the time. It was like additional two people, I think.

[Harry Stebbings]

Don't go too far there, Matti, because you kind of did the pre seed race and the beta launch at the same time. Did you have product market fit on the beta launch? Were there early signs that it was working?

[Matty]

We actually raised the round in Q3 of 2022, but we announced it in Q1 of 2023 and we do that all the time, is that we don't want to announce a round just for the sake of announcing a round. Our philosophy was always the round should have another purpose, which is bring the product out and help you get the product into the users. Celebrate a set of customers to show that you are arrived in a specific sector. Bring a new research model into play. So every round that we would do would always tie into product announcement. So we actually hauled on for announcement for a few months until we had our beta release and then we triggered, which was January 2023. But to your question, initially when we worked on dubbing and the first early days and we were like emailing, we didn't have product, product market fit. It was like very clear that people were slow to reply. Then we sent samples, they weren't engaging, so we didn't through the 2022 period. And then when we shifted from dabbing into narration voiceovers, then the product market signal started to hit. Maybe it's there. Remember this thing? There were three things that happened. First we did a blog post around the first AI that can laugh and we sent samples that got picked up by newsletters and people were like, wow, this is incredible. The next day we had like 1,000 people on our waiting list. And the second thing happened. We invited the first hundred or so users to 11 labs to test it out. And we had this audiobook author who joined the platform. Our platform is like this small text box where you can type in text, tweet length and narrate it. And he would copy paste his entire book 500 times, download it, stitch it together. Then he released it. He released it on the platform. At the time AI was banned. It passed through as a human content and then it started getting reviews that it's great. And then he came back saying, I want my other book author friends to do it too. So I was like, okay, we are onto something. And then we launched in January 2023 publicly. We knew we started getting more of that signal that creators narrat, love the work. And to be honest, I think from that moment onwards we saw a clear momentum. And then there was more events after the media picked it up, then more creators picked it up. But the moment of release we knew that it's valuable. And then maybe last thing on that, it's like the product market fit concept for us. We never fully, I think know what this actually means. Where we knew users loved our product at the time. But I wouldn't call it at the time we had product market fit as we were thinking of like, okay, how do we make sure it's providing value for the next five to 10 years. Then we'll decide that this will be like something we would call okay, this is clear product market fit. We think this is like self sustaining for as long as we go into the future. So we wouldn't go by that definition. I think we are now closer to that. But we are still know we can create so much more value.

[Harry Stebbings]

So many things I want to unpack that you said about kind of the timing of your announcements and aligning it to actually kind of material news items. Do you have any big lessons on announcements, how to do launches that you found particularly work well that other founders should know.

[Matty]

So that's the first 100% like for us, making announcement close to something big you want to announce from the product, from the user, from hiring perspective, tie it with that. I don't think celebrating the number itself is the right way. I mean in a way it's like you're giving away the company. What are you doing it for? And you want to show as much of that as possible. Second thing would be you really want to focus on how you actually get the users rather than just the media PR element. I don't think the latter is actually as valuable as it seems to a first time founder for us. I remember when we did the beta we were speaking and with some of the bigger publications and one rejected us, the other one accepted us and we felt like it's a big deal. Then we did all the prep for the interview, we did the actual news and then it was posted. We hold it like everything around this post that they told us the deadline for and it had no impact. I think, I mean it's like probably a few more people read about us from the investor scene, but we didn't really care about it at the time. We were all about users. What actually worked was working with the newsletters that were talking about AI, working with our friends from YouTube community that then posted on Discord that we are opening this up. Our Discord community was one of the most valuable. Reddit. Those people picked it up quicker than anyone else. Hacker news posting there, all of those were immensely more valuable. And we since then always spend a lot more time on any of the actual forums where our users are rather than where they are.

[Harry Stebbings]

I think we grossly overestimate the importance of traditional press 100%. I remember when I was first in TechCrunch I was like, I'm gonna be like viral, everything's gonna work. And then it happens and you're like, you're like three followers. And this was when it was Much bigger. And it's like. So I completely agree with you there, the grassroots. The other element kind of tied to that is how do you think about fundraising? And this is advice to founders, fundraising pre or post a launch.

[Matty]

What is frequently happen if a launch goes well is you will get more interest and I think you will get interest from investors, from events, from media. To a large extent, this is like the time you should really focus on getting the product. And kind of all of that is like a distraction to a large extent. Like, you know, the first time we launched that kind of happened. We started getting so much of that and I'm sure I did. The mistake then of like picking up a lot of those and doing more events than we should, where like the best course of action would have been to just spend even more time with users. And then, then early enterprises started getting interested. So more of enterprises. I think on the investor side, I think you want to line up investors. You do want to tell them, okay, I'm not racing now. I'm going to reconsider whether we need more Capital in Q3 or Q2, whatever is the time period of time and then when you actually need the money, then is the best time to actually re engage with them. But I would not. I think it's a waste of time to kind of be in this continuous fundraising. Most it's distractive. You need to have conversation. It's not useful.

[Harry Stebbings]

Do you choose three that you'd like to have that you engage with in between cycles, or do you not even do that? You just say, hey, I'm heads down on building, I'll come to you when I'm ready.

[Matty]

Today, less at the time. We do have a few investors that we think would be valuable that we might not have today in the space through the time, we would have few investors that we wouldn't try to proactively reach out. But if they reached out through any of the conversations, we would try to engage, but the engagement there wouldn't be like, hey, we might be raising. It would be much more of like, hey, can you help me with introduction to X? Hey, can you help me with this hiring problem? And this has worked tremendously well through the work where the investors are genuinely keen to help. If you find the right person and if you have a very clear problem and you don't try to overuse their time too. Like, you come with one, two things that are concrete, useful, and then they know as well that if you are growing as a company, it's good for them to show the help too. So we've done that.

[Harry Stebbings]

It's also a good litmus test to see if they genuinely are interested in being there or if it's just platitudes of niceness.

[Matty]

Oh yeah, 100% totally agree with you. Before it's like kind of the second thing where you do get the interest from investors, I think this is the best time to actually test whether they can be helpful. And before you accept any term sheet and money, it's like now, can you help me with angels that you want on cup table? Do you want the introduction? Then that's the best time.

[Harry Stebbings]

Any advice on angel selection for founders in the early days?

[Matty]

I think the way we approach it is like. Like do they have domain expertise that we don't have? That's one category. Second, can they help us validate ourselves in specific circles we might not have access to? So like if you are an AI founder, it may be valuable to have set of AI founders in there. So you are part of the same events, the same conversations. And then of course in our case it was can we have some of the go to market expertise where we had a lot of self serve, some Palantir experience but the sales led. How can we bring that in place as well?

[Harry Stebbings]

Well, you mentioned starting with the author. Suddenly it was going well and you were seeing this great groundswell and great adoption. And this is kind of January to June 23rd I believe. And then in June 23rd you raised like $19 million from Brian Kim and Andreessen and then Nat and Daniel from. I can't remember what it's called, NDFG or something.

[Matty]

Yeah, nfdg. It's Nat Friedman, Daniel Grass, nfdg.

[Harry Stebbings]

Wonderful. And that was quite a shock because it wasn't a London fund, it wasn't index, it wasn't Excel. How did that round come to be?

[Matty]

Be? Yeah, the nftg. Now I feel like it's a good name but I was pitching that on changing that to a different name for a while. Maybe now it's not possible anymore. The interest started around kind of March 2023. We had a lot of the investors that were in close conversations in the past re approach us. We effectively would be a little bit more in the waiting mode. Let's see how we get through and let's optimize for the partners that we truly want. And what we truly wanted was a combination of making sure that people globally NSF trust and know that we have arrived like we are a company that can be trusted is building something ambitious and then of course, people that we would admire to be able to work with that created something special. And Nat was definitely in that category, in the latter category. And it was a very fun thing because he approached us.

[Harry Stebbings]

Does he just DM you? How does he just approach you?

[Matty]

He emailed us, but then I met him here in London. He flew in and it was like a weird setup where he emailed me, but it wasn't clear whether it will happen, and it happened last time. And then I see him in London in one of the hotels where he was staying. And the first thing he was saying was, which was the only investor ever to do that was so I tested your APIs, and this thing doesn't work, this works. Voice here wasn't good. The stability wasn't a very clear parameter. So he was the only person that tested our APIs, decided that it was actually valuable what we are doing, gave me feedback on what we should change and then told me, and I'm keen to invest. Which of course triggered a conversation of what's the vision, what we are after and what's special about Nat is that you can tell him very little. And he kind of has this beautiful ability of infilling all the context around it, comparing that to any of the past experiences and bringing any of those experiences that then might be relevant to you. But he gets it immediately from the first conversation. He knew kind of exactly what we are after and challenged us with the right questions from the start. And then he moved very quickly. He was very keen to partner with us, we are keen to partner with him. We are trying not to show it too much, but we were. And then at the same time, we know that Nat and Anja were more perceived as the angels, while we admired them from their GitHub and Summer and days, that was still an angel category for many of the externals. So we knew this is our chance to bring a huge investor to actually position us as a top company. And we spoke with all the classic tiers, tier one funds. And a 16Z was just one of.

[Harry Stebbings]

The most functional funds in London.

[Matty]

We spoke with few funds in London. Yes.

[Harry Stebbings]

And then Brian flew to London.

[Matty]

And Brian flew to London. So Brian, I mean, a 16Z was phenomenal. They did exactly what we spoke about, which was they've shown us that they cared before they invested. They introduced us to incredible people, to some celebrities to work on the voice licensing. So they were like on it for two weeks prior or like week prior, all ready to help out in any way they could. And then Brian Flew to London, met with us and then we signed preliminary timesheet which was interesting. He flew in, we were negotiating. I was on my phone call to PIOT to co founders, like hey, what about these terms? Can we accept this? And PIOT would give guidance on where is the hard line, what we can do. And then on speaker we would sign together and finalize.

[Harry Stebbings]

Do you think speed really is a differentiator as an investor in winning?

[Matty]

Oh yeah. Speed is like for us, even from investor, from product perspective, it's like you need to, especially now, the speed of execution, speed of investing is the only, only thing you have.

[Harry Stebbings]

This is what pisses me off. I'm happy in that world. I can move supremely fast and invest a lot of money. But what I find more and more with founders is they want to run a roadshow and they want to do a 10 day process meeting investors and then have another week to decide which term sheets they want to take. I'm willing to give you a term sheet tonight, save 17 days. But it's more and more common that founders actually want to run roadshows. How do you think about that?

[Matty]

A lot of great companies get built on 11 labs. So I get to be in the conversations now more frequently where they would raise money from our investors. Recently we had a company raise a series A that has built a healthcare voice bot which would effectively help patients calm them through the conversations in an incredible, incredible way. Then there's like another company building for healthcare customer support. So quite a few. And now I'm in the conversations of them raising the money, which is an interesting one. And then usually it's clear that some of the people don't know fully what they are actually optimizing for. And it's good to talk through. Are they optimizing for the valuation, Are they optimizing for dilution? Are they optimizing for the right brand name to help them out? Is it the network of people that this brand name has? Is it the specific partner, is it something, something different? And I think it's like pretty distributed. So when I speak usually with founders or our investors ask me to speak with the founders, it's usually that question like what is it actually that you, that you care about for the thing, what do you miss? And then it's pretty quickly whether they are going after just the roadshow that's there to bump it up because they think the value that the timesheet they got is just not valuable, or is it that they actually want someone else, but they want to keep the optionality of having the first one while running the process.

[Harry Stebbings]

I'm a romantic. I hate this idea of a roadshow where it's like I'm going to meet everyone and then I'm going to compare term sheets and then I'm going to decide. It's like, what happened to the partnership?

[Matty]

Well, but the truth is the other way is true, where a lot of the investors want to give the term sheet, but that is before any show of partnership. So how do you know that this is a good partner? How do you know whether they are giving you good terms? Especially you're a FaceTime founder, you never run this. You don't know how much you are valued. You need to have some relative comparison. And this can happen through conversations of other companies, other founders, or comparing yourself to other companies in the field, or running some form of a process roadshow. Probably sounds pretty bad because it sounds like a lot. The way we approach fundraising was always, especially in the early days, few investors we really care about and first speak with maybe one or two that maybe aren't top priority. So we understand whether the messaging that we want to put across makes sense if it does move straight to the top ones.

[Harry Stebbings]

How do you feel about exploding term sheets?

[Matty]

I don't like them, but we got a few. We had a few.

[Harry Stebbings]

Do you understand them at the time?

[Matty]

I didn't, but I do. It's like I don't like them still, but I won't name the people. So one example was, let's say, a smaller fund. They felt that if they get us the term sheet, we'll use that to bump other timesheets. Very often happens, and that does happen. So I got it. And they came from the approach of if it goes too high, they won't be able to invest, and they didn't want to be part of that. So that happened.

[Harry Stebbings]

Very often. Being an investor, being the first term sheet's the worst because you're used as the stalking horse, where they then go, ha, I've got a term sheet. I've got a term sheet from a great fund. They never name the fund and you get no credit for being the first. And then you're just trampled on by everyone else that comes in.

[Matty]

That's what I don't like. Founders that are trying to do that too much. That if they are trying to get the first times sheet to bump the other ones, I think it's the wrong approach. Okay. If it's like order of magnitude of, it's probably wrong. It's like 5x then yes. But if it's like plus minus 20%, that's like a wrong optimization. There's just so much more value that investors partners can give than the money itself that I think should be optimized for.

[Harry Stebbings]

You've got Andreessen introducing you to celebrities and you've got Nat and Daniel, two of the brightest minds in AI who are querying APIs that that no one else does. Are the Americans just playing a different game to the European VCs?

[Matty]

We love our partners. I mean we have Andreessen team is so incredible. Their network, I mean now Sequoia with Andrew is just another level 2 iconic team. Also crazy help. NEA2 is just like bringing everyone us. They are all us. I think they are playing a different game. I think they are all from our experience so far a lot more keen to take the risk. Even our conversations are always like how do we bet bigger rather than optimize for or negatives. The one trick I always try to do with Piotr for any of the partners that we bring beyond the Capital Network brand is always for the person you partner with or the person you partner with. How will they behave if it's not going well? So we usually try to get any of the back references for how did they behave when the company was failing. All of the ones that we had are in a very positive like they actually were really on the side of the founder helpful when it was not going well, even more so than when it was going well. And I was doing the same check with some of the checks with other companies. And maybe this is getting used to that in us, the kind of the set of companies that went up and down is so high. But in some of the investors we spoke in Europe, that check didn't yield the good results.

[Harry Stebbings]

I had one with Brian Kim that didn't go well. And I have to say Brian was the best. He was the lead investor in the round and he got the money back for everyone. And that's rare. And he really put in the work to do it well and to do it quickly. I was really impressed with him in that way. Way.

[Matty]

No, exactly, it's. It's Brian. Yeah, Brian was one on our checks. Came up strongly. Jennifer too. It's like all of them.

[Harry Stebbings]

It's just crazy how okay, $19 million in the account. Most people suddenly then go on a hiring spree and not two people hiring spree, but like a proper hiring spree. But you favor very small teams. You've said this to me before, but Luke Said it to me, why do you favor really small teams?

[Matty]

I think the first piece is that more people frequently doesn't fix the problem. It's like you don't need that many people to do something special. That's the first thing. Second is by keeping and as an organization today we are 250 people, but really it's more like 20 teams can go to market of like 5 to 10 people that are just executing on specific projects where they have higher ownership, they can move extremely quickly, they see the result and iterate with reality a lot quicker to improve that. And I think this just works in such a beautiful, beautiful way. Of course there are other challenges with.

[Harry Stebbings]

This, but are those 20 teams organized by function or by project?

[Matty]

A little bit. Depends in the product by like a product area. So we have a team working on our studio interface team that will be responsible for all the core experience when you log in. Team responsible for the entire voice agent suite. And within that there's a team working on some of the more enterprise components, another team working on some of the self serve elements. So all of the teams will be organized there on the product area. And then the other parts we try to shard it pretty quickly. So we will have a separate team for talent of course, then the team for people. And they will have a high degree of independence when they actually execute, which helps.

[Harry Stebbings]

You mentioned 250 there. It's small given the size of company in many ways, but it's also still 250 people. When was the company culture the worst and what did you learn from that?

[Matty]

There was moments where I could feel this kind of tension between the go to market research, engineering and this is a specific story where in 2023, late 2023, so we did a text to speech, we then did voices so we could recreate a voice. Then we create like a basic way for speech to text internally. So we had all the components that we originally were speaking about to create dubbing and we haven't done dubbing yet publicly. And we gave all the components to some of our customers so they could use text to speech their voices. And there was a lot of pressure that like it's a valuable technology we can give to our enterprise clients. One of the enterprise clients, we told them that we are planning to launch our dubbing solution combining those components later in that month. And they took the components and released dubbing two weeks before we did. And that was one of the low moments for me, for my co founder, for the entire team, because dubbing was our story. We Told that to everyone. We knew that this is the thing we want to solve first. We had all the components to be able to do it. We're just waiting to optimize it, to make it perfect. And then suddenly this partner released it and got all the attention. All the media, Twitter, all the users were like, whoa, this is the most incredible thing that has happened. How amazing that you can speak in another language and still sound the same. You could feel the morale in the company was low. People were like, we spoke about this. We knew for almost two years that this is something we want to solve. And how did it happen that the customer had this and solved it this first? So Research Engineering wasn't happy. Like, how did they do it before with the components we gave them the go to market wasn't happy because how did we sell this to the customer? Now we are like, all the potential clients we could have had isn't good. And of course me and Piotr were like, hey, this was our idea. Why would you do any of the partnerships if all of that is kind of given to another company?

[Harry Stebbings]

Who was the partner?

[Matty]

I don't know if I can mention. And to their credit, I don't think that we told them it was actually a factor. I think they were just trying to, trying to do something quick. And we had a lot of calls with them those days because we were thinking, what do we do? Does the contract give us flexibility to not continue? So we spoke through with them of like, hey, why did you launch? I don't think it was dictated by our timeline, but the timeline was very close to each other and they told us that they thought it's a good hack weekend idea. So they gave it to their intern. The intern has built that project and then it exploded. But it did give them like, like in tens of millions of revenue over that period of time. So it was significant.

[Harry Stebbings]

What's your biggest piece of advice to a founder who has a moment like that where you just feel the air come out of the company? How do you inflate the company again after such a damaging blow?

[Matty]

I don't think the first reaction should be that like, hey, everything is fine. I think you should be authentic and tell the team what you are feeling. Like, how has this happened? Go through like, like, what have we done wrong? And that frustration was clear. I think it was valuable for us to talk like, we are angry at ourselves, this is wrong. And then as we move from that stage, like, yes, we are angry. What are we actually going to do about this? And move to that second stage very quickly. But I think I've done a mistake sometimes. I was just going to the second stage. It's not a problem, let's just go through and solve it. I think it's actually super valuable to talk through what has happened. But then you need to go into the second thing and then in the long term that will work out, then you can and the relentless execution will prove itself out and show to the world. And the worse if you repeat the mistake, then someone needs to feel the repercussions. But if you've learned from that and haven't repeated the mistake, it's fine.

[Harry Stebbings]

Given the commoditization of a lot of technology today, do you feel speed of execution is the core differentiator between those that will win versus those that won't? Or is it quality of research, access to GPUs, how do you think about that?

[Matty]

I think it's both. I think it's the way we approach this in the company is we have research product and ecosystem that we built, which is a combination of distribution and brand. But research for us is a head start. We are investing in research, we'll continue investing in research. We want to be the best across the voice technologies. But all this gives to us is advantage over the competition for the next year. Two, maybe three.

[Harry Stebbings]

How far ahead are you compared to the competition, do you think?

[Matty]

I think it depends on the use case, but six to 12 months, I would say it's depending on the space that we are in.

[Harry Stebbings]

Do you think that's a lot or not?

[Matty]

I think that's a lot. So that research piece of six to 12 months is enough for us to then do the second faring well, which we do in parallel from the start is build phenomenal product experience.

[Harry Stebbings]

What percent of your revenue do you think you spend on compute?

[Matty]

So we've built our own data centers.

[Harry Stebbings]

Why build your own data centers? Most people will just use a core weave or use Nvidia or whatever that is. Why build your own data centers?

[Matty]

So we did the math. In our case it was if we assume we continue training the models the way we want to so very continuously a lot of those models. Then second for the data transfers and as we think about continuous bringing more data, we will likely on a two year horizon break even for having our own and not renting. Assuming of course you need to assume some improvement in the GPU infrastructure, but assuming that wasn't too high of an improvement, we would have been successful. And we were. I think the ROI made sense there and now it pays dividends because we can just do more experiments quicker. And this can still be wrong. At some point there might be innovation that kind of breaks that equation. But for the current time it just makes more sense, more complex control.

[Harry Stebbings]

A lot of investors are talking about the poor unit economics of a lot of companies that we see today. Whether it's your replits or your lovables or any of companies like this. Well, any kind of application of their companies, period. Really. They generally have pretty tough unit economics generally speaking. Do you think that is a fair criticism or do you think it is simply short sighted given the changes we will likely see in the cost structure?

[Matty]

The unit economics in most of those cases that you mentioned is pretty poor. But I think the strategy is that yes we are. One, the models will optimize in cost and then two, they will be the brands that customers trust and then they can actually use a lot of the signal back. And I think to 11 Labs example too, I think our unit economics is much healthier than most of those companies. We control our research, our product and distribution. But it's still if we had a new model that we need to release ourselves, we would optimize less for the cost structure. So we can get that magic out quicker than other competitions even can think about creating their own model.

[Harry Stebbings]

But to be clear, you think the concerns around margin are over expelled and not justified.

[Matty]

Well, it's a risky business where there will be a winner. I love what lovable is doing with anthem but replit v0 bolt are all incredible companies too, or products too that are doing some great work. I do think at least one, maybe more than one will create something special. The market is so big that all of them can create something special. But yes, there will be definitely a loser in that mix too. And that company and the margins that they are carrying does just not make long term sense. And probably the same for coding apps. But I think it's a cool bet. I think it's not even cool from the sense of it's a nice application but it's an ambitious bet that they are trying to win with the biggest companies in the world that will try or are trying and they lovables of the world are winning. Anton is a phenomenal marketing person too. The founder led way he's doing, it's amazing.

[Harry Stebbings]

One thing that's also really interesting is you were very horizontal in your customer from day one, which respectfully I would advise you very much not to be. I think if Philippe was telling me he was advising you the Same be much more targeted in your ICP and have a clear mind of who that customer and user is. And you are much more broad and horizontal. And if you're advising founders, how do you tell them when they're launching from day one whether to be horizontal versus whether to be vertically specific?

[Matty]

You think if you're launching something very new, very different and you don't yet fully know a subset of customer base, but you know that there is a bigger one. I think horizontal is completely fine. If you know and you have domain expertise and this is the category you are trying to win, I think go vertical.

[Harry Stebbings]

You say go vertical there. Normally when you have verticals you have kind of a maturing of organization. You have titles.

[Podcast Host / Narrator]

Titles is something that you decided to get rid of.

[Harry Stebbings]

This is very counter traditional org structures. Why is it better to not have titles?

[Matty]

There are some incredible companies that of course did similar stripe being one example. But in our case it was especially Dan super small teams. So we have a team of five, a lot of people join and what we wanted to optimize for is one, the main thing that matters is the impact. You can join and you can be the most impactful person from day zero in any of those teams. So the title shouldn't define what is your level of decisions. Second thing with the small teams that happens is that you have a lot of those small teams. So if you start looking at who gets the title or not, it just becomes a distraction given that teams are like those small units that just keep executing. So that's the second thing and the third thing. We wanted to also make it very clear in that mix and still do. If you are joining 11 labs today, you can transition to being a leader of any, any team of any function super quickly. And titles felt limiting to that. We felt like people joining in and seeing the wider set of organizations already having set of roles defined for them would make this a little bit harder. You can have a lower tenure and be a manager of people with much longer tenure if you are the right person. Titles we felt were taking away from that while at the same time we have a good structure internally within the sub teams like who is the current lead of that team that will make the decision if people cannot agree on what's the right path, but that person can and it's not guaranteed that the person will remain a lead forever. And the titles in a way when you give a title, it stays usually forever in any other company.

[Harry Stebbings]

Speaking of titles, a common criticism of European tech and scaling is that we don't have these titled people who've seen scale significantly. Your VPs of sales who've seen a billion in ARR unique it. How did you think about broaching that? Do you want to get top US talent here or do you want to grow talent here?

[Matty]

We want to grow talent here. We match a lot of our current talent with the advisors from our network of U.S. investors. And the goal is to grow people. We love growing people. Our approach is almost, if we can, we want to take a bet on the person growing rather than bring them externally.

[Harry Stebbings]

Anton said on a show with me recently from Lovable that building in Europe is building on hard money. Do you agree with that?

[Matty]

I think it is. I think it is building on hard mode. But there are some great advantages too.

[Harry Stebbings]

What are the advantages?

[Matty]

I think the first one is the talent here is incredible and I think you just need to know how to get it.

[Harry Stebbings]

What do people get wrong then?

[Matty]

There is a good subset of people that really want to work hard and create something special and they just don't have that opportunity because there is no US ambitious European companies trying to do that. So the only way they can do that is work for US companies. And I think now there's like you mentioned, I think they are showing that ambition too. And there's just so many more like aura recently in Sweden that race around, we spoke about Synthesia. So there's quite a few companies that are ambitious, they want to show and I think the people joining want to be part of the ambitious company that is competing on a global scale. And maybe in the early days I was even worried to a large extent. I think you want to be able to build from Europe but not build only for Europe. And I think those two get conflated where sometimes building from Europe meant, okay, you are building for European ecosystem, which isn't the right thing. You still want the global aspiration. So even now when I think about describing 11 labs, I think about us as a global company. We are a global company with we want to win in US we want to win in Europe, we want to build in Asia. We have the best team and most of the team in Europe because the talent is incredible.

[Harry Stebbings]

So you think it is wrong when our American friends say, hey, the Europeans just don't work as hard as we do.

[Matty]

I think you can find people that want to work harder. And we've had it actually at some point a team where we hired some people from west coast of US and our people, where we have quite a few from central Eastern Europe, where Like, oh yeah, they don't work actually that hard as we do. I mean we have such a, you know, to credit to the team. It's like the true missionaries that are there on the weekend all the time and really care. They really care about the success of the company beyond just working hard. I think they are and they feel part of the company, which is true. So I do think you can find people in Europe that are phenomenal.

[Harry Stebbings]

Is it bad to hire people who come because you're a glossy name?

[Matty]

It's an interesting one because we, you know, in the early days we, we didn't have much inbound, so all of that was outbound. And it was easier in a way to find people that we felt were right because you didn't have to filter through the noise. And now we have just so much where so many people are going because the AI buzzword or, you know, we now are at scale. That makes sense. But no, I think it's, you know, it's, it's fine. Like not everybody is the risk taker at time the same, same amount. So I'm not in any way discarding them.

[Harry Stebbings]

What's been your biggest hiring mistake and what did you learn from it?

[Matty]

I think the, you know, this is, this is the. Probably a traditional one, but as I think about kind of bringing people in and growing them into the company as like the full hiring process. You hire a person, you of course have very little time frequently to assess how they are, but then as they are in the company, you have a little bit more of the signal. I would have taken some decisions quicker than I would have with separating with people. If you are not unsure in the interview, but let's say you are bringing them, giving them a chance and you are not sure in the first weeks or months you should separate straight away rather than keep giving the chance. I think that's the few times I think I've done it.

[Harry Stebbings]

What's the hardest role to hire for researchers?

[Matty]

Easy.

[Harry Stebbings]

When should a founder no longer be involved in every hire?

[Matty]

So we interview everyone and I hope.

[Harry Stebbings]

You still do now at 250.

[Matty]

Yes, we do. We hope to interview that as long as possible because it's a good signal of who we bring into the company. We get to meet them. But of course we still think the company is still shifting in terms of how we are approaching that one is now even more. We are optimizing for engineering technical skill set in all parts of the company than we would have six to 12 months ago. So it's even increasing in Some aspects, but I hope we'll interview to like a thousand people. The thing isn't so much hard to be involved in the review. It's more how many people you're trying to hire within a specific period of time. So if I try to hire a thousand people in a month, it's impossible because it would be more than the.

[Harry Stebbings]

Time we spend we have in a year. How many people will you have?

[Matty]

We'll have 400 by end of the year.

[Harry Stebbings]

By the end of this year.

[Matty]

By end of this year.

[Harry Stebbings]

That's a lot. You're almost doubling. You're adding 40% in.

[Matty]

It's almost doubling.

[Harry Stebbings]

Three to four months.

[Matty]

50 offers or so are like joining. So 250 now. Roughly 30 to 50 people that are already scheduled to join and I think we'll get to additional 100.

[Harry Stebbings]

Respectfully, small and mighty. That's not 150 in three to four months.

[Matty]

Still small and still mighty. But we have a pretty global team now where we are trying to break a lot of our go to market and engineering in every location we are at. So we think we can paralyze that building in Brazil and Japan and India and Mexico. So we are really going to that local nuance too where we are building small outposts everywhere and I think we can make it work.

[Harry Stebbings]

Do you care about revenue per head.

[Matty]

In the long term? Yes. Like we want to be an efficient company. I think now we are. We have a very good metric for revenue per head. You know, it's a good show. Like are you an efficient company? But if we think there is a path for us to get there over time, we take easily the new hires that can help us. You know it extremely well as an investor. But of course one of the key metrics is retention or like how you think about NRR for any of the clients. So me bringing people now, helping us get the distribution before competition does might decrease my set of revenue I get. But if the NRR keeps growing and I don't hire more people in the next five years, that metric of course will change.

[Harry Stebbings]

Can I ask what revenues you add now?

[Matty]

So we crossed 200 million now.

[Harry Stebbings]

Whoa.

[Matty]

So it's a good number.

[Harry Stebbings]

That's amazing. Yeah, that is a great per.250 if you've got that now.

[Matty]

Yeah, it's pretty good.

[Harry Stebbings]

Fucking A.

[Matty]

Thanks.

[Harry Stebbings]

What was it? What was the end of 23?

[Matty]

I think we were between 35, 35, 35 million. 35 million.

[Harry Stebbings]

You went from beta launch in January to 35?

[Matty]

We did. So we did 20 months to 100.

[Podcast Host / Narrator]

And then 20 months to 100 million?

[Matty]

Yes, I think something like that. And then around 10 months to 200. A bit longer 15 months maybe just.

[Harry Stebbings]

Crying and.

[Matty]

So depressing.

[Harry Stebbings]

I mean you know, I'm so happy for you.

[Matty]

Well the thing is that of course you know it goes quickly, it can also go quickly down well but is.

[Harry Stebbings]

Your revenue not relatively sticky?

[Matty]

I think it's relatively sticky.

[Harry Stebbings]

You've got large enterprises is the majority.

[Matty]

Our biggest part of the business now and we obsessing is building effectively conversational agent platform like the biggest customers are.

[Harry Stebbings]

Who's your biggest customer? Not name but like size.

[Matty]

Our biggest contract is around 2 million and they are mostly in a call center customer support personal assistance base. All of those companies are orchestrating combination of. Of the research so speech to text lamb text speech and then bringing a lot of those integrations that we now we create so that that's on the enterprise side whether it's Cisco, these are not the contracts there but Cisco, Twilio recently working with Epic Games. These are some of our biggest deployments of the work. And then of course we are in lucky position that we still have a huge self serve distribution of creators and developers building all the time.

[Harry Stebbings]

10 months to 200 million. What's that to 300 million then? Because you halve. You did 20 months to 110 to 200.

[Matty]

Well we are ambitious company so we hope to.

[Harry Stebbings]

Can we do 5 months to 300?

[Matty]

We would love to break. If it's a healthy revenue and we are creating good work. We would love to break the record.

[Harry Stebbings]

What was the price of the last round?

[Matty]

3.3.3.

[Harry Stebbings]

3.3.

[Matty]

All rounds divisible by 11.3.3.

[Harry Stebbings]

And then you did that when you were 150 million in revenue, no lower.

[Matty]

We were somewhere between 100 and 120 I think.

[Harry Stebbings]

Okay, 100 to 120. But I'm just looking at that going. You did that January 25th.

[Matty]

We announced it January 25th and then we did that towards end of 2024.

[Harry Stebbings]

I'm just looking at it thinking okay so they're doing end of year revenues for 25 at 250. 300. It's quite a cheap deal. 1112 x n of year revenues.

[Matty]

So we did the round in October of 24. So we were probably at 80 when we got the docs and then it was signed that then did you need the money? So the way we approached any of the fundraisers it's can we bring some of the bets forward in that case it was Even more spent on models, expand into multimodal. Can we bring our work internationally? So expand into other regions and then double down on Nigentic platform. So start building even more of the true enterprise functionality whether it's the reliability you need, whether it's integration with Salesforce services now sip trunking. So investing in those was the most important but at the time it was 30x current revenue. So pretty good Then how do you.

[Harry Stebbings]

Balance between focus and executing according to plan versus being able to do more? I understand the benefits of being able to do more, but you can probably always do more with more money. It doesn't mean it's the right thing.

[Matty]

I think that the kind of the variation of this is like can you paralyze a new effort without distracting the core for work? And that's roughly why we are trying to approach this. Can we bring our work to a new place? Can we create a new product experience without affecting the core thing that's actually important for our users? If we can, then we'll likely invest, bring the people into it. If it's distracting, then it becomes a question of is it worth the upside.

[Harry Stebbings]

When we think about doing more. The question that I think we forgot earlier was what's the biggest line of business in the future? Future that is not a very big line or non existent today.

[Matty]

It's interesting because on the relative basis I think our agents work is already huge. But I think it's just scratching the surface. I think if we play it right it's like a multi billion dollar revenue generating business just from huge of course creating voice agents and going deeper. So I think this one is on the relative.

[Harry Stebbings]

And these would be voice agents that you sell to companies to manage that customer support.

[Matty]

That's right.

[Harry Stebbings]

Got you.

[Matty]

And then you can go deeper. You can of course expand from voice into conversational agents. And by that I mean you start building omnichannel solution with email integration, WhatsApp integration which is kind of that, you know, more classic customer support which sell.

[Harry Stebbings]

Then to an intercom and a Decagon today.

[Matty]

So we are have a public partnership with decagon. So we do. But of course as you start going deeper, it depends a little bit where Decagon goes and where we go. Are they going to verticalize or they will continue horizontal and go down? Well, we verticalize more. So there might be some areas where we overlap a little bit more. But today given we have very partner horizontal approach that we treat all of them as good partners.

[Harry Stebbings]

Speaking of kind of good partners, right now we are Doing the human plus agent, we're so friendly and we make each other better and there's a time when human plus agent just becomes agent. Do you think we are seeing a lot of resistance from employees with a within companies towards agents coming in?

[Matty]

We do, but the way we've seen this kind of transition happen now is where you will have more specialized humans, where the agents are taking more of the manual parts that nobody really wanted to do or didn't require domain expertise. So a good example is if you're taking appointment scheduling, if you are doing a refund, all of those, of course assuming you have the safeguards and authentication plan place are pretty easily done with AI. But then suddenly if you need to help a patient navigate the outbound flow after going from hospital or understand analysis, that cannot be done with AI. There's too much at stake and you need a deep domain expertise. So we've seen kind of the transition where that side of people helping in that kind of last mile is even more valuable. While of course AI can help with those easier tasks across. And I think this will continue, of course the percentages will shift where you are will have even more automation as it goes deeper and then even more value assigned to the people doing that domain expertise because ultimately it will help automate the task at hand.

[Harry Stebbings]

Does taking money from secure meaningfully move the needle in a way that it doesn't from other funds?

[Matty]

You know, so our first round was with a 16Z and it did meaningfully move the needle for us. Like it was very clear that people.

[Harry Stebbings]

Respected you in a way that they didn't before.

[Matty]

And then Sequoia came in in series B and that kind of doubled down that perception where it's like, okay, a 16Z and sequoia are part of the company. It's also very rare to have both of these investors in any of the companies. So it did help where a lot of clients would be respecting that. And now iconic on top of that is just incredible mix and NFTG too. I think NFTG2 is like clients will usually not have that perception, but the investors do. But investors do. And some of our engineers or users really, really admire and trust Nat and I do too. So he's great.

[Harry Stebbings]

You're a very strategic asset when you look at what you have and what you've built. Have you had acquisition offers?

[Matty]

We did have acquisition offers.

[Harry Stebbings]

Did you contemplate any of them?

[Matty]

Honestly, we always will do like the basic diligence and let our investors know that it's, you know, that we had this. And what was the largest one? Well, the largest one didn't have money. But the ones that we went. It was an interesting conversation because we would frequently try to go into is the strategic partnership and then they would be like, oh, can we consider are we open to M and A activity?

[Harry Stebbings]

Was it tempting?

[Matty]

It was tiny bit tempting, but in a way where in the first one or two examples. So the first one was when we were doing series say was going really well. And then of course we were unclear how this will continue. It's like a very beginning of the curve. And the other first one was like, okay, this is first time we ever are doing this. Let's understand what they are offering. But we were more interested into seeing whether more about the process itself, like how it happens rather than actually giving the company. Then it was clear, okay, they actually want to acquire us. This is what we understand and we, we need to be part of the company. So we were a flat no. And since then through any of the conversation, now that we know that this is even approaching this M and A.

[Harry Stebbings]

Did you do secondary? We did secondary and that helps.

[Matty]

So we do almost every round we can. We do secondary and a 10 day offer for all employees that have vested stock so they can sell the stock. So they all feel that there's actually liquidity to the company. And I think it's valuable because we are betting for something huge and you want to know that you can take the risk to bet on some big outcome. Which of course I think it's very easy to say financial parity is not important and I think it isn't. But there is this basic layer that people want to.

[Harry Stebbings]

I think it is paying for childcare and paying for a house.

[Matty]

No, of course, exactly. That's what I mean. But it's not the goal in itself. But you want to have this bottom set of good life that's covered, which we are extremely lucky as a company to have and to be able to offer. But then now the kind of the aspiration is much bigger. Especially now that basic layer is covered.

[Harry Stebbings]

The thing I often think is how many great European companies of the last 20 years would have not sold had we had secondary and liquidity options available at the time. Because so many did sell because we didn't have that and it was so meaningful.

[Matty]

I think it does, it does help with like the perception where, where you know, there's like you can to some extent I think you can put away like any of the greediness that comes with money just by taking some of the risk. Risk equation away, dude.

[Harry Stebbings]

We're going to do a quick firearm. So I'm going to say a short statement. You're going to give me in immediate thought. Does that sound okay?

[Matty]

Sounds great.

[Harry Stebbings]

So what do you believe that most around you disbelieve that you can build.

[Matty]

A company from Europe at the global scale?

[Harry Stebbings]

You don't think people still think that? You don't think we're moving the needle a little bit?

[Matty]

I think you are helping and I think many of the people in our ecosystem are, but I don't think most people do. Maybe another one which is not that specific to company building. But I do think Voice will be the interface to the technology around us. Be the primary interface for a lot of technology around us.

[Harry Stebbings]

I'm not going to let you wiggle on this one. You can buy OpenAI at 300, Anthropic at 170 or Grok at 120. Which one do you buy and which one do you sell?

[Matty]

Well, I don't know if I like this question.

[Harry Stebbings]

Antoine answered it. Antoine, for context answered. He'd buy GROK and he'd sell OpenAI.

[Matty]

Okay, let's keep it at the positive. I would buy OpenAI, but I love anthropic. If I was on the coding side, I think I would be buying.

[Harry Stebbings]

Do you mandate cursor?

[Matty]

No, we don't mandate. It's like you use what you think is most valuable.

[Harry Stebbings]

What do most people use?

[Matty]

Most people do use cursor. Some people use cloud code, but still more cursor. I think it's shifting a little bit. I'm also to your other question. I don't remember who was the investor, but they did say, which I think I would also, as I think about that decision is I would be happily investing in a lot of the products I use and I do use ChatGPT very often. Often. Every so often I will use Entropic for testing where we are with the space. But I think they are investing more in coding rather than Claude the consumer. And OpenAI is clearly investing a lot in ChatGPT, the consumer solution.

[Harry Stebbings]

What have you changed your mind on most in the last 12 months?

[Matty]

That we previously would not do any of the product innovation if we knew that we are doing any research initiative ourselves. And I think now it's shifted that we will sometimes explore product with outside research even if we don't build it internally.

[Harry Stebbings]

Is speed of ARR growth a bullshit metric?

[Matty]

Depends on time horizon, but in general, yes, I think speed of ARR growth doesn't matter.

[Harry Stebbings]

What's your favorite consumer brand today and why?

[Matty]

I really like eight sleep. I don't know if it's a consumer brand, but I do like eight Sleep. Recently it's changed quite significantly. I am a huge user of Google Maps and love Google Maps. Lovable. I really like from consumer ish applications.

[Harry Stebbings]

You can be CEO of any company for a day. What company would you be CEO of?

[Matty]

I'll choose Google or OpenAI. I would know the know how of some of the incredible models. I think more Google. I would say Google Genie, VO3 models, incredible innovations and then at the same time just the, you know, the scale of operation would be interesting.

[Harry Stebbings]

You're super bullish on Google. People question them with the golden hey.

[Matty]

Didn'T give me Google and previous questions. No, yeah, I would invest in amber for 300. I would invest in Google but that's not an option.

[Harry Stebbings]

But you're super bullish on Google even with the ads model being potentially unchanged.

[Matty]

No, no. It's like super bullish is definitely not super bullish, but I think Google is. I would still put a lot that Google has a good future and especially recently they are catching up in many places. They are definitely in the race.

[Harry Stebbings]

I'm creating a title for you. You're going to be the President of Europe. Okay, I'm aware for all of our American listeners, European is not a country. Even though you like to collectivize and make it one President of Europe, what would you do? One thing to make the European ecosystem have a higher chance of success.

[Matty]

My word goes into law immediately. Yeah, I would proxy a lot of AI law to US law. I know this has a huge set of repercussions, but I would try to follow exactly how US is approaching a lot of AI related regulation and just implement this same or let's create another state in European Union and Europe that people can opt in that follows that law to not make it too hard given all the repercussions.

[Harry Stebbings]

How important is founder brand?

[Matty]

My answer here would be I don't know because in many ways, as we thought about 11 labs, especially in early days, the people that build the company are the people that build the company. And in some ways they kind of still don't know to what extent having some people that are very, very much out there, like let's say I'm now in this podcast, takes away from that and we want to make it complementary because the reason we are successful I think is to a large extent because we've created incredible research. The engineers are just grinding and creating the best product experience go to market team is inventing new ways to combine self serve and sales. So it's like all those parts and then supplemented by operation scaling the company from less than 100 to now 250 in the span of seven months while keeping culture intact. These are all so hard things. And with hyper growth there's less time to be able to appreciate all those individuals than you would otherwise. And I sometimes worry by having that kind of, you know, too much of the founder brand kind of takes away from that. But my mind is changing a little bit. I think like maybe you can elevate that by having a founder brand out there.

[Harry Stebbings]

Final one, and it may be a little bit of a thought, but what's the single best piece of advice you've been given that you think do most of the often?

[Matty]

It's not most often. So in the recent times, I like what Peter Thiel said about the biggest risk is not taking the risk and kind of staying, kind of not taking a decision or staying.

[Harry Stebbings]

What risk did you not take that haunts you most?

[Matty]

It's shifting because if you ask me that I should have taken that risk. So I usually try to take a quick action on top of that. But one that is we are considering is an acquisition of another company now which is a big company and that company is in hundreds of millions of dollars. It will be a huge risk for bringing them in and we think we can do better internally. So I think we want to take that risk.

[Harry Stebbings]

Matti, this has been so much fun. Thank you so much for putting up with my meandering and you've been a fantastic guest.

[Matty]

Thank you. Hari. It's a pleasure. Pleasure to be finally able to speak together.

[Podcast Host / Narrator]

So great to make that happen with Mati Live in the studio. You can find it on YouTube by searching for 20. That's 20 VC on YouTube. But before we leave you today, I love seeing the team come together to make this show happen. What I don't love is trying to keep track of all the information, the data and the projects that we're working on across dozens of platforms, products and tools. That's why we use Coda, the all in one collaborative workspace that's helped 50,000 teams all over the world get on the same page. Offering the flexibility of document with the structure of spreadsheets, Coda facilitates deeper teamwork and quicker creativity. And their turnkey AI solution, the intelligence of Coda Brain is a game changer. Powered by Grammarly, Coda is entering a new phase of innovation and expansion. Aiming to redefine productivity for the AI era. Whether you're a startup looking to organize the chaos while staying nimble, or an enterprise organization looking for better alignment, Coda matches you your working style. Its seamless workspace connects to hundreds of your favorite tools, including Salesforce, Jira, Asana, and Figma, helping your teams transform their rituals and do more faster. Head over to Coda iO20VC right now and get six months off the team. Plan for startups for free. That's Coda C o D A IO 20 VC and get six six months off the team plan for free. Coda IO 20 VC and while Coda keeps your team aligned, Radix makes sure your startup's name is just as sharp. This one's for all you tech founders out there. You finally come up with the perfect name for your startup. Then you check the.com and damn, it's taken, parked, unused or priced like rent in Palo Alto. So you settle with extra letters, weird spelling, whatever it takes. But hey, you don't have to compromise because now there's finally a domain for tech founders like you. Tech domains get the startup name you actually want on tech. No compromises. What's more, when you use tech, you signal to your customers and investors that you're building tech with just your domain name. Isn't that cool? So if you've got a name in mind, search for it now. Now with tech on a trusted platform like GoDaddy or visit Get Tech 20 VC to grab it. You've got the name locked down with Radix. Now it's time to get the fund structure just as solid. If you're listening to 20 VC you know we have a really frickin high bar. Well Angellist is the modern platform used by the best in class venture funds where over 40% of top endowments and banks are LPs. Their customers include a top five venture firm, 20VC and they now have, check this out, $171 billion of assets on the platform. They combine an all in one software platform with a dedicated service team that moves as fast as you do. One manager said this awesome quote Angellist feels like an extension of my fund. Another said Angellist gives me total peace of mind. The attention to detail, lightning fast response time and just real sense of ownership from the team are exactly what I need to stop worrying about back office ops. So if you're starting a new fund, don't be a moron. Just use Angellist. They're incredible. Head over to angellist.com 20vc to learn more as always, I so appreciate all your support. And stay tuned for a fantastic episode on Thursday with Jason Lemkin, Rory o' Driscoll and Twilio founder Jeff Lawson. It's a special one, the news roundup of the week.