← The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: How Model Performance is Plateauing | Two Key Rules for Effective Deal-Making | Company Building Lessons from Keith Rabois, Brian Halligan and Pat Grady | Why Enterprise AI Adoption is Years Off with Harvey CEO Winston Weinberg
01:13:53
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- [00:00]
Winston Weinberg
I think the value of B2B SaaS is about to become astronomical. I think that we're seeing a plateau in performance for consumer use cases. Probably what's going to happen is the economy is going to explode. I think a lot of people in deals, they think that movement is action. Not true. The second piece is know when to not negotiate. There are certain deals where you want one thing from the deal and nothing else matters. If you want to hire somebody, hire them whatever they want to be hired and put them in the position that they want.
- [00:33]
Harry Stebbings
This is 20 VC with me, Harry Stubbings. And I'm so excited for the show today. So I've been sitting back watching the legal AI space, really in awe, specifically at the speed with which these companies are growing.
- [00:44]
Pat
And today we have the front runner, Harvey.
- [00:46]
Harry Stebbings
They announced last week they hit 190.
- [00:49]
Pat
Million in annual recurring revenue, 500 team.
- [00:52]
Harry Stebbings
Members, over a thousand customers. The scaling is unprecedented.
- [00:56]
Pat
And and today I sit down with their co founder and CEO Winston Weinberg.
- [01:00]
Harry Stebbings
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- [02:09]
Pat
You turn those signals into deals.
- [02:11]
Harry Stebbings
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- [04:21]
Pat
You have now arrived at your destination. Winston. Dude, it is so good to finally meet in person.
- [04:28]
Harry Stebbings
It's so great to have you in the studio. I've heard many great things for a while because it was Sarah Guo that found you first before Pat.
- [04:36]
Winston Weinberg
Yeah, I know. If Pat's listening, he definitely needs to give some credit to Sarah here. Yeah, Sarah actually was. So our first investor was OpenAI and then our first two angel investors were Sarah Guo and Aladgill.
- [04:49]
Pat
One, I love the way that under 30 seconds we've already done a sucker punch to Pat.
- [04:54]
Harry Stebbings
But but two, I just want to.
- [04:56]
Pat
Start on something that shows a little bit about your character and it was a story that Pat told me. He said ask him about running a mile, the time that he did it first and how that progressed because it's very revealing of his character.
- [05:09]
Winston Weinberg
Yeah, so I played sports When I was in high school and then didn't as much when I was in college. And you know, when you start a startup, things get pretty stressful. And I had a mentor who gave me advice of basically like, hey, stop lifting so many weights and like start trying to run a mile. And I remember when I started running a mile, I think I was at like eight minutes or something. It was really, really bad. I was like pretty out of shape. And I had basically a goal to get up every single morning and reduce my mile time as fast as possible. And the way that I did it is I'm going to run it one mile no matter what and then just kind of see if I can reduce the back end of the mile again. Down, down, down, down, down, until I can get to as fast as I possibly can. And the, the outcome of that, which I think really helped was and something I'm actually trying to do more and more in my life is every morning and when I wake up, I get up pretty early and I just try to destroy myself and run as fast as I possibly can. It just reduces my stress for the rest of the day. And I've found that like, over time, a lot of company building is just making very good decisions. And if you start your day off with basically something that is very challenging in a physical way, you kind of like have this stress relief through the rest of your day. Your body has like absorbed that stress. And I very much believe that and everything else too. Like, I try to do a stressful thing every week because I think a lot of it is like stress tolerance over time.
- [06:33]
Pat
Can I ask what decision have you made to your daily routine life that has had the biggest positive impact? So like one for me is like, I drink a liter of water when I wake up.
- [06:42]
Winston Weinberg
Yeah.
- [06:43]
Pat
And it just makes me feel like I've accomplished something very quickly and I'm hydrated fast.
- [06:47]
Winston Weinberg
Yeah. Yeah.
- [06:47]
Pat
What would yours be?
- [06:48]
Winston Weinberg
I think it's getting up early. We're in 60 countries now. And so no matter what, I try to keep basically east coast time. So when I'm in San Francisco, I'll get up at like 4am or 4:30am and what that allows you to do is you can kind of like focus before the stream of slacks and the stream of emails come in. And I think that like couple hours in the morning, especially when I can go to the gym and I can kind of think about like product and those things that's like changed the trajectory of how I operate the company more than anything else. And I Do it when I travel too.
- [07:21]
Pat
What bad habit do you have or do that you continue to do?
- [07:25]
Winston Weinberg
One of the ones I have that I think was a good habit in the beginning of the company is now. And now is starting to get bad is I zero out slack like every like 15 minutes. And so I'm in like almost every single slack channel and I read every single thing. It was really good in the beginning of the company because if you do that constantly, you're basically every day all you have to do is catch up compared to what happened yesterday. And so it's really easy to make decisions. The problem with that is I've probably done that for too long. As you scale, you actually have to focus more and more on what is the P0. And I think I've done a little bit too much of like still being in every single slack channel and checking every little thing. There's a time I was talking to someone from Sequoia and they had been living with other founders during COVID and they said that what they. And these are very. Two very famous founders. He was basically saying that a lot of their routine was they would just jump into random meetings at the company. And what they were doing is they were basically checking just to see like, how does this department do this sales call? How does this, you know, part of product create their PRDs and like analyze their PRDs. How does this part of the company come up with okrs or like metrics. Right? And I remember I left that dinner and my co founder and I were like, wow, those guys like aren't working. Like that's like so lazy and all this stuff, right? And now when I think about those guys, I say, wow, they are incredible. Like they're. I get why they're some of the best founders on earth because they've created a machine where they have so many folks at the company that are doing a really good job that they spend the majority of their time actually moving the machine. And you go back to being. I can focus entirely on product. I can focus entirely on what the most important things are at the company are. And like that's really what I'm trying to do this year is transition from kind of all those heroics to can you build a really well run machine?
- [09:14]
Pat
I think the really interesting part actually is that Andrew Bialecki at Klaviyo.
- [09:18]
Winston Weinberg
Yeah.
- [09:19]
Pat
He made the decision to kind of go back to product as a public company CEO and bring someone else in. Is that just testament of the times that we're in the importance of Speed and product centricity, do you think?
- [09:30]
Winston Weinberg
100%. And I think. I think it's also a testament to something else, which is these companies are growing so much faster than they used to. It's very important to go through a couple stages. Basically, I see stage one as product market fit. Stage two is company market fit. In other words, have you created the structures of your company that are the same as traditional B2B SaaS or consumer SaaS, whatever you're doing and what's different, and there are differences. Any VC who says that there are no differences at this point hopefully has changed their mind. There are differences different based off of what vertical and which company you're trying to build. And so you have your product market fit, then you have company market fit. And then do you know what, you want to go right back to reinventing product market fit again. Right. And so it feels like there's a cycle of doing that. And I think for us, and like me personally, some of our first, like, couple years was product market fit. Last year was company market fit. I'm back to product market fit again, where it's like, what I spend a lot of my time on is like, what is the direction of our company and our product for the next six months, year, et cetera. And now you can start thinking like that.
- [10:35]
Pat
You 190 of ARR you posted yesterday and you raised at 8 billion. Do you and Gabe sit and think, gosh, that's quite a lot. I'm worried about scaling into that. Do you sit and think, gosh, we're undervalued. How did you analyze that?
- [10:49]
Winston Weinberg
Yeah, so we. It was, it was funny. This is. I think it was our offside in 2024. And I remember we kicked off 2025 and the first thing I did is go up and I said, hey, we had a good year, but I'm pretty sure anthropic's at like 3 billion in revenue right now. Right. My point is the entire market is massive right now. And I don't mean just like legal AI market. The AI market is exploding. And so I think you have to. When you are a leader of a company like this, one of the biggest jobs that you have is to make sure that your team doesn't feel like they've already won. Because the reality is the market pull is massive. And so sometimes your success isn't just your execution, it's the market pull. And so you have to benchmark yourself against other folks in the market and not just legal AI companies, but actually just AI Adoption. Right. I also think that we're just on an insanely compressed timeline. Like, I think the winners and losers are going to be decided in the next couple of years in a lot of these spaces. And so you really have to, at all times make sure that the company doesn't go, wow, I did a really good job. Chest bump, head pat. Like, like, we're done. Right. You have to instill this. Yeah. Well, anthropic 10x, and they started at XYZ. Billions of revenue this year, 7 to.
- [12:06]
Pat
55 and then 55 to 190, and then you're going 190 to. I'm a VC, so I can guess like 400, 420, or like two, two and a half hours from now.
- [12:17]
Winston Weinberg
Our goal is much higher than that, and I think we can do better than that this year.
- [12:21]
Pat
So let's say 500. And then I'm looking at. I'm like, okay, then the 8 billion doesn't feel too much. Because the way that we think about it internally is like, what's end of year revenue?
- [12:29]
Winston Weinberg
Yeah.
- [12:30]
Pat
And then what's the multiple on that end of year revenue? And if it's like 20 to 25, feels. Feels more reasonable, feels fine. If it's 100, feels iffy, then welcome to Series A land. That's what happens at Series A is why it's a bad place to be investing. But you never got to a stage where you're like, this valuation feels like we're going to live into it. We've got to grow too much into it. Which round felt the most uncomfortable?
- [12:51]
Winston Weinberg
Felt the most uncomfortable? High. Yeah, I think maybe the, like, Series C felt very high.
- [12:56]
Pat
What was that?
- [12:57]
Winston Weinberg
It was 1.5 is what we were valued at. And our revenue was definitely lower. Lower. I think maybe that was one of the ones that felt super high. The other ones haven't. Another thing, too, that I. I'm very picky with investors, so I don't spend tons of time fundraising. What I actually do is there's a couple investors that I've become decently close with. And when it's time to fundraise, usually we get preempted, or I say, hey, I think it's like time to fundraise. And I reach out to literally, like one or two people. And so I plan my fundraisers pretty far in advance. So I'll basically be like, I know who I want to lead the next fundraise. My point here is we almost every single time, we probably could have gotten much higher valuations than we took and instead we chose the best investors and the ones that I trusted and personally wanted to work with.
- [13:45]
Pat
What do you know now about fundraising that you think all founders should know?
- [13:49]
Winston Weinberg
I think the main thing about fundraising is you should always think of it as start it six months ahead of time and you will do much less work than if you actually go out and do the process. So what I mean by this is, and I learned this from some other founders who are really good at this, is what they do is they try to basically get folks to come in for couple million dollars, like just like one or two, and you give them information rights. So you say here, like, we're going to tell you how we're doing. And what you do with that is now they can check on the business. Right? And the most important thing, at least that I have found, I think VCs care about this the most. And hopefully they do, because this would be a good thing if they do, I'll tell you is, is trusting that when the founder says something's going to happen, it's going to happen. And if you do that over enough times, hopefully VCs really trust you. And so going back to that strategy, if you let them invest a little bit in the beginning, and then you say, hey, in three months we're going to do XYZ. And then you say, in six months we're going to do XYz, and then in nine months we're going to do this. And at the end of the year, this is what's going to happen. And if those things come true, they start to really trust you and they start to believe you. And then when you go out to do that fundraising process, it can happen in 12 hours. You don't need to make tons of materials, you don't need to go out and do this massive, massive process. The problem with this is you are then not optimizing price. So that is assuming that you are not trying to optimize price. What you are trying to optimize is partner. It's much more targeted. You're basically targeting a group of people and you're saying, these are the people I want to work with and I want to gain their trust, and then they'll invest in me versus I'm going into the market, I'm doing this massive competitive process and I want to maximize price.
- [15:32]
Pat
Totally get that. Rory o' Driscoll at Scale, who's a phenomenal old love. Rory, dear friend of mine, he's like, harry, I'm not gonna fuck it. I might do the ice and Harry. When someone continuously hits plan, give them more money.
- [15:45]
Winston Weinberg
Okay, that's good.
- [15:47]
Harry Stebbings
That's it. It's very simple.
- [15:49]
Pat
When people do what they said they'd do, generally they will continue to do what they said they would do. I don't know if you're an angel in that many companies, but I'm an investor in 170. Very few do what they said they were doing. Very few hit plan.
- [16:00]
Harry Stebbings
So I totally get that.
- [16:01]
Pat
You do you actually believe that venture investors really move the needle?
- [16:06]
Winston Weinberg
I think it really depends on who you get. I'll give you an example of something that I haven't trusted VCs as much with and I think I've been right in some instances, wrong in others is hiring. The areas I've been wrong the most in is when to hire a more Senior exec. The VCs have been right. Like my partners are right. They've been right. I took too long to hire senior execs in some instances and it caused us problems. It created competitors when there shouldn't have been competitors, things like that. The thing that I think they've been wrong about is who to hire. And I think sometimes the problem that VCs have is they're managed up. They don't actually see inside a lot of these businesses. They see the board meetings. And so sometimes the person who like presents really well at all the board meetings or something like that, they think of as that's a really good executive. And then that person gets a reputation for being a really good executive. I'm not from the tech world. I don't know any of these backgrounds. And so I'll sometimes get intro to someone from a VC and they have like incredible background and I'll be like, that person didn't seem very good. And it was just like my gut. And I think I've been right in some of those instances. And I've bet on people that sometimes they say that I shouldn't have bet on and they've turned out right. So when to hire execs, I've probably been wrong the majority of the time, who to hire. I think I've actually been right a decent amount of times.
- [17:23]
Pat
I think actually it's a really smart distinction. I'm generally always wrong on who I suggest to my founders. In the benefit of hindsight, it's like, nah, that wasn't a good one. Often we just bring in people that are actually too senior for the position.
- [17:36]
Winston Weinberg
That happens too. Yeah.
- [17:37]
Pat
Which is a danger. Totally get that, dude. We kind of bonded over the kingmaking where I. Oh, yeah, sure. Where I said some things about kingmaking and you said that's not true. Why do you disagree with kingmaking as a theory?
- [17:50]
Winston Weinberg
Yeah. I mean, I'll give you one example. In our vertical, the vast majority of our customers don't know who Sequoia A16Z or any of those people even are. And so I think that, you know, maybe there's a couple ways that people think about key making. One, they think of key making as it provides you with, like, more capital. More capital does not mean you run a better business. You could have as much capital in the world as you want. If you make the wrong product decisions, you're just going to invest in all the wrong places and it doesn't matter. It's the same as VC. You have 100 billion. And if you put it all into the wrong things, that still goes to zero. Right. So I don't think capital makes folks win. The area where king making, or like people think king making matters is customers, where they basically say, hey, this has branded trust. And so that is good. I think there is a little bit of legitimacy there. But it's not like only the top three VCs give you that brand. A vast majority of VCs give you that brand. And what's actually interesting for us is someone like EQT actually gives you that more than Silicon Valley because they're private equity and a lot more lawyers know who that is, et cetera. So I don't really believe in those two. The third one might be the one area that it is helpful, and that's just recruiting. Humans are very bad at judging how good other humans are. We're really bad at it. Like, we're really bad at it. And I can tell you a very clear reason for why we're bad at it. We still pay so much attention to someone's resume. We care so much where they went to school. And this happens so much in technology. It happens a lot in tech. The only other area where I know it happens an incredible amount is legal. Legal and tech are probably two of the main ones where prestige matters, where you went to school matters, how your grades were, who you worked under, things like that. Right. It does help you in a sense of if you get one of those brands, people assume that there's maybe a higher chance of the company being successful. The reality is that might be the wrong person to hire in the first place. Because the people that think or go to a company because of the investors usually don't care that much about the mission of the company. And so my point with all of these things is there might be some short term games of perception mattering. In the long run, it doesn't matter at all because if you make all of the wrong decisions, nothing matters. It might help you with recruiting though.
- [20:02]
Pat
To what extent does caring about the mission of the company really matter? I know that sounds a little bit cold and mercenary of me, but if I'm a GTM leader and I'm ahead of sales and I'm a machine and I'm here to get the number from 5 to 35 in the year and I've done the playbook three times, I'm going to fucking do it and I'm going to get my equity ramped.
- [20:19]
Winston Weinberg
Yeah.
- [20:20]
Pat
Do you care?
- [20:21]
Winston Weinberg
How many times a day do you think something goes wrong at Harvey?
- [20:25]
Pat
Quite a few.
- [20:26]
Winston Weinberg
Constantly. Like 24 7. How many times a day do you think we feel like there's like an existential threat? The big model providers are going to release something and maybe we haven't released something all the time. Yeah, like startups are very difficult places to work and so you think of like from the outside, oh wow. They're like growing revenue so much. They're the category leader, they have all these investors, etc. Etc. Right. High, all these things. Right. But internally at all of these companies, it's chaos and it goes up and morale goes up and down. You face really difficult things and then you have to figure out how to get through them. Being a missionary really does matter because the reality is once you're on the inside, the brand of the company and the success of the company matters less than when you're on the outside. It matters a lot on the outside because people looking in are like, oh my God, that's the most successful, it's super well run and all these things. Once you're inside, your day to day could be crazy and you could be thinking you're not doing very well. So I actually think it matters a lot. People just don't realize that because they aren't inside of these companies, they're on the outside.
- [21:33]
Pat
You said about kind of existential threats.
- [21:35]
Winston Weinberg
Yeah.
- [21:35]
Pat
What existential threat today concerns you most?
- [21:40]
Winston Weinberg
I think just moving fast enough on product like that is always, I think, the biggest existential threat for all the application layer companies. And it's not necessarily that anthropic or OpenAI are tomorrow going to put 50% of their resources after the legal vertical or tax vertical or anything like that. But they're Just improving their product and models and the value of your product is going to go down unless there is a massive delta between what your product does and what you could get from an enterprise GPT license. Right. And so it's just a constant existential threat of how do you make sure you get to like escape velocity on product so you have enough of a product moat for them to not run you over. And I think about that daily. Like when I'm thinking about competitors, the main thing I think about is just I'm more bullish on these labs than most people. I think. I mean a lot of people are very bullish. They have incredible talent. And I think more about what are the frontiers, problems that our customers have that they're going to solve later.
- [22:40]
Pat
4.5 changed the game for Anthropic and changed the game for the landscape. Did you see usage shift entirely to Anthropic with that?
- [22:48]
Winston Weinberg
Not entirely, but there were definitely. So we route basically based off of the use case. We route to the best combination of models and definitely our traffic went up to Opus. 4.5 significantly. Yeah.
- [23:00]
Pat
Is there a conflict with OpenAI when they're an investor in your company and you're routing the majority suddenly to Anthropic?
- [23:08]
Winston Weinberg
Well, we aren't routing the majority yet, but even if we were, there's no conflict. Basically they want us to win and they want us to use the best model. Right. There's nothing in our agreement or our relationship or anything like that that you have to use OpenAI models. And if anything, I think that for them, getting the feedback from application layer companies on this is where your models aren't doing as well. This is where your models are perform super well and this is where you need to improve is super valuable to them.
- [23:37]
Pat
Do you think we're seeing a plateauing in performance across the different model providers?
- [23:42]
Winston Weinberg
I think that we're seeing a plateau in performance for consumer use cases. And the reason why I think this is like a misnomer or something that people actually shouldn't pay attention to is we don't need them to be better for consumer use cases. I feel like this is something that folks don't quite understand is a lot of the consumer use cases like, like four was like, we're done. You don't need better reasoning to solve these problems. What you need is different contexts. You need to connect to your calendar, you need to connect to all of the different apps that you use and things like that. That's what an increase in performance is for them. There might be A plateau in some of the consumer facing side of things on the enterprise. I think things are going to keep going and especially Cogen. I think we are not going to see a plateau in Cogen. I think that is going to get much better really, really, really fast.
- [24:30]
Pat
What do you expect to see in Codegen in the next 12 months?
- [24:33]
Winston Weinberg
I think the slope will only increase. I think that it will get better and better and better and I think that will unlock a lot of productivity just across the entire world.
- [24:42]
Pat
When you look within Harvey, is everyone not using Claude code? Not cursor.
- [24:46]
Winston Weinberg
It's a combination.
- [24:47]
Pat
In the EK we have a game called Shag Marry Kill. I'm not going to do that because it's wildly inappropriate. But if we were to do a but buy and sell and you had anthropic at 350 and OpenAI at 800, which one would you buy and which.
- [25:06]
Winston Weinberg
One would you sell? Yeah, I know and we talked about this. I'd buy them both at Double.
- [25:10]
Pat
You'd buy OpenAI at 1.6?
- [25:12]
Winston Weinberg
Maybe not quite 1.6. There's a couple of things I need to see from them before I would do 1.6.
- [25:18]
Pat
What do you need to see from them before?
- [25:20]
Winston Weinberg
I think the main thing with OpenAI is they have so much consumer brand. It is so powerful and especially outside of X and outside of kind of like our worlds, it is so unbelievably powerful and I don't come from the tech world and so all of my friends, all of my relationships before this were outside of tech. That brand power is incredibly powerful and I think like more focus on consumer and just tripling down on that. That I think is where I'd be the most bullish. I think that on the enterprise side there will be multiple winners. Like enterprises don't allow there to be one winner. Right. So no matter what there's going to be. OpenAI is going to get some of the enterprise market. Anthropic is going to get some of the enterprise market. But the consumer market, I do think OpenAI has an opportunity to take a lot of this and obviously the main competitor there is going to be Google. But I think they both can be just astronomically huge companies. The other thing that I think feel like folks don't realize is everything could pause. Like both of those companies could stop developing things right now and the amount of saturation of AI that would just happen to the economy would still skyrocket. Like we're so far from just the ability of the models right now being Integrated into daily life. People do not know how to use these systems. Like consumers don't. They don't. And businesses definitely don't. And there's so much of like the capability, capability overhang is so high. Like, I think it's higher than anyone is even talking about. It's astronomical. And so I think if both companies literally just stopped shipping things, their revenues would still explode because there are going to be so many companies building on top of their models. There are going to be so many different parts of the economy that adopt these things that I think we're still in early days.
- [27:11]
Pat
What do you think that time lag is? I know it's a horrible question to ask, but is it like a 2 to 3 year? Is it like a 10 year? You work with some of these enterprises, they don't speak the language that X and generally do. What does that time lag actually look like?
- [27:25]
Winston Weinberg
I think like three to five years until we see like massive, massive productivity gains in enterprise. I think the capabilities are there already. The capabilities were there two years ago. A lot of this is like, if you think about just like the average enterprise workflow, there's like 17 different systems they're pulling data from to get that workflow done. Like literally 17 might be on the low end. Sometimes it's like 50 and you have 100 tabs open and you're opening in all these different apps and they kind of connect to each other. They don't really connect to each other. Right. And so the long tail on actually getting these systems and agents to do a task from start to finish is so difficult. And the problem that you're going to end up happening is you have these vertical companies building vertical agents like US and Sierra, etc. But a lot of even the verticals connect to all of the other parts of the enterprise. So like, one thing that's happening that's interesting for us is, you know, a lot of our revenue is starting to come from Global 2000 or Fortune 500 companies. And we actually haven't built many features for like tax compliance and procurement. Right. Starting to happen is those departments are adopting Harvey even though we haven't built features specifically for those departments. The reason why is the legal department actually interacts. And just like legal documents are such a core part of a business that they interact with all of these different parts of the business. Right. And so we released basically a feature that's multiplayer. It's called shared Spaces. At first, a lot of the impetus for doing it was you want a large corporate like A Walmart or whatever to work with their law firms in the same platform. And that's happening. But actually what's starting to happen is these corporates are using the like legal team is working with the compliance department is working with hr, is working with, with everything else all in Harvey at the same time.
- [29:06]
Pat
I heard from Lagora that the shared spaces was ripped from them. Is that fair?
- [29:13]
Winston Weinberg
No, we were working on multiplayer a long time ago. I think one of the, one of the things that's interesting about our company is we started with like the hardest customers and we did the same thing actually on the in house side too. So like we had bank customers a while ago. And the security and permissioning systems that you need to build for a bank are so much more in depth and like the enterprise readiness than for a lot of the other folks. And the biggest problem with multiplayer and the way that we're doing it is we're allowing the in house side to kick it off or the law firm side. And to do that, the security and permissioning that you needed in place for both is astronomically high. So we were working on this like a very, very long time. We were on it for like six months to almost a year. We just did all the permissioning and all of that stuff first before you do kind of the UI and on top.
- [30:08]
Pat
Why do you think they continuously say that you rip their product ideas then?
- [30:11]
Winston Weinberg
I think that if you are number two in the market, one of the things that's, that can get you a lot of attention is just attaching yourself to number one in any way, shape or form. Right. You kind of get free press from doing that type of thing. It's a good way to basically jump onto the distribution that the other front has.
- [30:29]
Pat
Do you respect them because you guys hate each other in a way that like. No, no.
- [30:33]
Harry Stebbings
Really, you do.
- [30:33]
Pat
And I, I love it because it's like I feel we got too kind in tech, like, oh, we're all friends. That's like, no, we should be here to win, you know. Saluteman.
- [30:41]
Winston Weinberg
Yeah, it's war.
- [30:42]
Pat
Love him. Yeah. And you guys really, it's wonderful to see the animosity and hatred. But you guys respect each other other.
- [30:50]
Winston Weinberg
I mean, I definitely respect them and I think like one of the things that they did really well is I think they did a great job in Europe. And you know, this is back in 2023. We're, we're not that. I think they're like six months after us or something. It's not that big of a Gap. And I think like, one of the things that I would have done differently in the beginning is just invest like more in Europe in like 2023. And actually we. A lot of our first customers were in Europe. Europe. But having folks on the ground here is just really, really important and respecting kind of like the different cultures and how to productionize that and all of those things.
- [31:24]
Pat
Why, why did you not out of interest in terms of coming to Europe earlier?
- [31:27]
Winston Weinberg
It was just bandwidth. Like when we signed Aino Sherman, which was our first customer, we had four people. So we did a 4,000 person enterprise grade rollout with four people.
- [31:37]
Pat
Was this when you were. I got told this from Pat. You were like in an Airbnb?
- [31:41]
Winston Weinberg
Yeah, we were in Airbnb. The engineer who had joined, who was our first engineer, Gabe, was basically coding everything. Before that, he had been there for I think a month. And then we onboarded a 4,000 person, very large scale enterprise. Security was incredibly important. Team and it was. So it was just bandwidth. Like when you're scaling that quickly, it's harder.
- [32:01]
Pat
Are you shitting yourself that the platform's going to fall over?
- [32:04]
Winston Weinberg
Not anymore.
- [32:05]
Pat
So no, no, not now, but then in 2023 with like one person in an Airbnb.
- [32:11]
Winston Weinberg
But. But actually, I think this is important. This is, this is something that's interesting. When I look at a lot of AI application layer companies, if you go through their LinkedIns and you look at the engineers that they're hiring, it's like 90% front end engineers, which is interesting to me. And a lot of that reason is I think like vibe coding works much better with front end than it does for infra. And a lot of, I think what's happening to AI companies or is going to happen to them, and it happened to us in early 2024, is you do a bunch of front end and you make really pretty UIs and really nice demos, right? And then you use that to land all the customers. And now you have a lot of actual active customers and you haven't invested in the architecture and the infrastructure of hundreds of thousands, millions of customers using your product. And we kind of made that mistake in 2023 and in the beginning of 2024, something that kind of slowed down our shipping velocity is we added just tens of thousands of users in like the Q4 before that. Right. And we didn't quite have the infrastructure to support that. And now if you look at our team, it's almost like 40% of our entire epd. Org is very senior from like a databricks or something like that, infrastructure engineers. And it's a long term bet that as you get these agentix systems that are processing tens of millions for us, I think last year we almost did like half a billion documents or something like that that you need the infrastructure to actually support that. So it's not just about how do you win the demo and how do you win the deal, but how do you actually create an enterprise very scalable infrastructure on your product. And I see a lot of AI application layer companies not doing this.
- [33:46]
Pat
So if you were advising those founders, say would you say hey, really focus on prioritizing infra hiring earlier so you're able to fulfill what you say you.
- [33:54]
Winston Weinberg
Will do to an what I would tell them actually is your GRR matters. And I think like one thing that a lot of investors in the AI space have been not paying attention to is grr. They've been basically just looking at net new ARR and kind of being like ah, churn is fine because they're growing so fast that maybe they'll pivot or they have some customers. I think that's a huge mistake. You're going to see a lot of companies in a lot of verticals that go really, really fast assigning a bunch of customers because maybe there's only one in the vertical and now there's a second player, et cetera, but then they have to actually support all of those customers. And if you don't have the infrastructure in place and you make a bunch of promises upfront and then all of that falls down, you'll start losing customers really, really fast. And I see a lot of AI companies not focusing on this and I think that's going to be like a huge reckoning for folks once they get past 100 million ARR.
- [34:43]
Pat
This is what I worry about though when I look at kind of when you look at GRR figures and you think about like a Sierra and it's like the growth and Brett's amazing and like the best. The best. Jesus. I take my money to Brad, I'm not questioning you but I' gosh, what you have to now fulfill from a per customer implementation service provider aspect to go from 100 to 400 is a lot, a lot. It's not like a plug and play. Like it's much easier to go on the consumer side from 100 to 400 with a PLG motion.
- [35:13]
Winston Weinberg
Agree. And I think that what that requires then is going back to what we were saying which is you go product market fit and then how do you get Company market fit. And that's actually like how you structure your company. And I think part of that is different than how it used to be in the past, where if you have long implementation cycles or one thing that is going to end up happening, I think is a lot of these verticals are going to land at a big Fortune 1 or Fortune 2 or whatever, right? And their product is going to expand massively. This is a really interesting thing about Microsoft. I don't, I don't know how much you know about Microsoft Salesforce, but they started in the beginning and the vast majority of their sellers, it was pre sales, right? So spear fishermen, like you have tons of that, right? Old school spear fishermen. And they actually eventually migrated to a lot of what they have is post sales. Like a lot of their investment is actually in post sales. And the reason why is because their customers just their NDR goes up, up, up, up, up, up. They keep buying more things, they buy more compute, et cetera. And I think a lot of these enterprise companies should start thinking about their company that way in the sense of, like, sure, there's some of a land grab right now, but really what's going to matter is if you are bullish on AI, you should be bullish on your product. The value of your product, like we are in day one of product development, like, it's going to change astronomically. And so what's more important than landing new customers and getting really higher is can you retain those customers? Because that customer that pays you a million. Today there's a real world in which they pay you 100 million at some point. I think databricks is a company that's done an incredible job of this.
- [36:45]
Pat
I had Alex Rampel, who's obviously at Andreessen, one of your investors on the show recently, and he said something I loved, and it sounds a bit awful, but I loved it. He said, I want companies who have hostages, not customers. Okay. And again, as kind of bad as that sounds, I did like it in this space. Are they hostages or customers? How easy is it for them to move?
- [37:05]
Winston Weinberg
Yeah, I mean, there's a third one that now develops, which is these AI products are so powerful, and I think over time the ROI is so high that your ROI can become so massive that it's less of a hostage and it's maybe closer to how Palantir thinks about things. In other words, the more value that you create for the customer, the higher you get paid. And I think that more and more companies are going to start aligning to that. And the Reason why is I'll do the law firm side and I'll do the in house side. For law firms, they bill by the hour. And so a lot of people are like, how could you ever sell to them? There's no way that this is going to work. Right. Two things might happen. One, they might switch to fixed fees. Well, now we're good to go. And efficiency is really good. I don't think it's going to happen that fast. The second thing that actually is happening and we have so many law firm customers that have gained new business by building something custom in Harvey and saying we'll do this M and A with this custom solution that we did in Harvey and they win that deal over another law firm that's not a hostage. That's this product that I'm paying maybe like a million dollars for a year. Just earn me a deal that's 20 million. What is the ROI on that? Incredible. And on the in house side, it's even clearer. It's just if you save time, you're saving tons of money. So I think that hostage thing can actually change to more like how Palantir thinks about it, which is I think the value of B2B SaaS is about to become astronomy astronomical. And if you can figure out how to align your product to that roi, it's not a hostage, it's you're just completely aligned with your customer.
- [38:39]
Pat
How do you align product to ROI when your customer base doesn't want to pay for a consumption model and they just want to pay for a seat model that they know and can rely on?
- [38:47]
Winston Weinberg
Yeah, I think that that's not, at least in our vertical, what I've seen. I think like there, there are a lot of areas where we are going to start moving to consumption based pricing. At least for us, for our customer base, that would be completely fine with them.
- [39:01]
Pat
Rory o', Driscoll, the Irish guy who I quote so often, he's brilliant, should basically just replace me at this point. He's much smarter than me, but he always says like AI will be magnificent for us all if we see spend shift from human labor budgets to technology budgets. Will we see that shift here?
- [39:18]
Winston Weinberg
Already seeing it happen, how does that happen? Yeah, so there are a couple companies that have basically said that the Harvey budget comes out of their spend on professional services, not out of their tech budget. The budget for professional services is in the billions a year versus the tech budget for that GNA group is astronomically smaller.
- [39:41]
Pat
Sorry. The professional services budget is not the junior talent that they have in their organizations?
- [39:46]
Winston Weinberg
No, and I think that's what's really interesting about our business is a lot of the work that we're doing for like a corporate is not the work that our law firm customers are doing. It's like alternative legal service providers. It's this like lower end work.
- [40:01]
Pat
What percent of revenue is law firm.
- [40:03]
Winston Weinberg
Versus external right now? So you mean corporate versus law firm? Yeah, I think it's around 40% of our revenue is in house corporate and 60% is law firm. Something like that.
- [40:13]
Pat
Is that what you thought it would be?
- [40:14]
Winston Weinberg
Something like that. I mean if you just look at the breakdown of like how many lawyers exist on earth and how many of them are at companies versus in house, that's pretty much the same in five years time.
- [40:23]
Pat
What will that be?
- [40:24]
Winston Weinberg
I think it'll be similar. I think it'll be the same.
- [40:26]
Pat
How will we see law firms change? Will we have a cannibalization of juniors?
- [40:32]
Winston Weinberg
I don't think so. I think we'll just get more work. So interesting. I had a conversation with Are you.
- [40:38]
Pat
Going to make my girlfriend unemployed?
- [40:40]
Winston Weinberg
No. I had a conversation with a pretty large private equity shop recently and they were talking about like their year is going to be incredible. They think it's going to be like a big M and a year. It's going to be great. And they were talking about like how they think about legal fees and the way that they thought about legal fees is the reality is like it's going to be a big year. And whenever we have a big year, we pay more in legal fees. That's just like how it happens. Right? But there are certain things I don't want to pay for anymore. Like there are certain parts of the deal, et cetera that I just marking up. NDAs, whatever it is, I don't pay for that anymore. But there's all these new things that I'm paying law firms terms for AI risk, like should you buy this company? Is there a, you know, a problem in XYZ country with, you know, an act or something like that that's going to change that. There are so many new pieces of work for professional services that my gut is that's not what's going to happen. In fact, I think what's going to happen is the professional services market is going to actually keep growing at the same as gdp. One way to think about this is most professional services is cyclical. So if you have a really good year, professional services have a really good year. That's almost always how it works. Other than Bankruptcy and like litigation is somewhat countercyclical. It depends on the, on the area. And so I think people think about this and they're like, oh wow, like AI is going to impact legal and it's going to just destroy all these jobs. The thing they aren't thinking about is all of their customers are using AI to create more products. What happens when you create more products? You need more product legal advice. What happens when you know you're expanding into other countries faster? What do you need? Regulatory advice? Right. And so I think people are thinking about AI in all of these industries as like a vacuum. And the reality is you should think about AI as like the entire economy. What's going to happen and probably what's going to happen is the economy is going to explode. These companies are going to have crazy expectations for what they can do and the professional service providers are going to have to respond to that.
- [42:31]
Pat
Do you think the economy is going to. I can't believe I'm asking this question because it feels like the most base question that shit interviewers asked. But maybe I'm just a shit interviewer at this stage, to be honest. Do you think the economy is going to continue to explode? We have so much external concern outside of the X Fear which says like, hey, the circular deals are fucking nuts. US borrowing has never been higher. Europe is a fucking museum that is completely unproductive. Beautiful. We are going to have a serious and material slowdown. Do you think that's wrong?
- [42:59]
Winston Weinberg
I don't think it'll be this year. I think there will be bumps. I definitely think we will have more moments like the deep sea moment where everyone freaks out, out. And I think we're close enough to an edge of if enough people say that there's going to be a bust, it's pretty easy for one thing to happen and for everyone to freak out and there to be a bust. And it's a self fulfilling prophecy. Those are usually pretty short. I think that we will have a bunch of short ones. But I think long term AI is going to completely reshape every part of the economy. I very strongly believe that I do.
- [43:31]
Pat
Have to, as you mentioned, Europe and we spoke a little bit about Europe's productivity there. You said you wish you'd been more proactive earlier on Europe, but there's only so much you can do, blah, blah. What do you know now about building teams in Europe that you wish you'd known when you started?
- [43:45]
Winston Weinberg
Oh, I think that it's similar in Europe to where it is in a lot of places, which is you don't want to go into a country or a domain or anything like that and act like you know how to do something right. Like you really need to partner with an industry or you need to partner with a geography. Geography. Right. And when I say, you know, we should have invested more in that, it's more like we didn't invest in it that much in 2023 and 2024. We invested tons last year and we're investing even more this year. And the difference is pretty massive. The difference in kind of the quality of our team last year and the partnerships and things like that, and how our product is localized for each Geo is just a huge difference. But you can't do this from sitting in San Francisco and like kind of thinking about how to do it. You got to travel.
- [44:34]
Pat
What's the biggest difference in talent between the US and Europe?
- [44:38]
Winston Weinberg
It's not a difference in talent. It just takes a long time to hire people. And so you have to just think about it like with a way, way longer time horizon.
- [44:47]
Pat
Because of gardening leave.
- [44:48]
Winston Weinberg
Yeah, it's just like really hard to hire people. And so that was just kind of like interesting to me or something that I wasn't used to. Whereas in the States you can hire someone and they, they start quite literally like the next day. Sometimes like literally, or if they have to give two weeks notice, they start exactly two weeks later. That allows you to be a little bit more just. I quickly need to hire this retroactively. I can fix a problem in Europe. You have to plan out more. And so we've done a, a lot of really big office openings. Like we just announced Paris and Dublin and a bunch of other ones. But you have to just think about this stuff at like a longer time horizon. Horizon, you can't do it instantaneously.
- [45:24]
Pat
Is the US trope of Europeans not working as hard fair?
- [45:28]
Winston Weinberg
That's not what I found. But I will say we interact. I interact mostly with lawyers and like lawyers have billable hour targets and at the end of the day too, they are either at international firms or they're competing against international firms. So I have not found that at all. Right. I mean, there are so many incredible, hardworking lawyers.
- [45:47]
Pat
UK lawyers work pretty hard.
- [45:48]
Winston Weinberg
UK lawyers work, work insanely hard. And so it might be that I don't notice it as much because the domain that we're in, they work the same across the globe. Lawyers are just incredibly disciplined, hardworking people.
- [46:02]
Pat
I totally get you and agree there in terms of the people assessment. Pat told me that you're world class at understanding people. If I were to ask you for a trait that you look for in someone joining Harvey that is less obvious than the foundational integrity or ambition that you normally get. Like, I look for obsessed psychopaths.
- [46:22]
Winston Weinberg
That's a good one. You definitely need to be obsessed. Yeah.
- [46:25]
Pat
What would yours be?
- [46:26]
Winston Weinberg
So obsession is definitely very important. But the one that I look for right now a lot is ownership. And there's a bunch of different ways that you can assess this, but you do, over time, you start to be able to just read if someone actually can take ownership over something or not. And the reason this becomes really important is as you scale as a company, it becomes really hard to figure out where a problem is stemming from. It becomes hard. This is how this ends up going, is it used to be I knew every single thing that was going on at a company and I can just be like, hey, that's where the problem is. I'm going to unblock that right now. We're getting to the point where I know most of what's going on at the company, but sometimes something is like so low down that I don't know what the problem is. And if I ask five people, they'll all do this. It's like the Spider man.
- [47:09]
Pat
That's like bad deals in venture firms. Who did the deal.
- [47:11]
Winston Weinberg
Yeah. And it's just like, it's like all over the place. Yeah, exactly.
- [47:14]
Harry Stebbings
It was Johnny.
- [47:15]
Winston Weinberg
Who was Johnny. And I don't know. And I have found that there are a lot of people in tech that have done a really good job managing up. They have ridden a wave of their team success without being successful themselves. So the thing that I look for a lot is can people admit their mistakes? It is so obvious when someone is actually admitting mistakes versus they're saying that one of the biggest things they've done wrong is actually something that's really great. Great. We'll go back to something you said earlier, like when you said some of the things are bad habits that you're trying to.
- [47:47]
Pat
Well, I mean, yeah, yeah. And you said like checking slack too much.
- [47:50]
Winston Weinberg
Right, right. And. And like that I think is a good example of.
- [47:52]
Pat
I was thinking like alcoholism.
- [47:54]
Winston Weinberg
Alcoholism or something like that.
- [47:56]
Pat
Dude is too good.
- [47:57]
Winston Weinberg
And. And like, I would actually, if I had interviewed myself and I saw that as a, like the way that I answered, the way that I would push on this is I would say, why do you do that? That, like, why do you do that? And my genuine answer to be to that would be, I have Trust issues. Like, I have trust issues. Like, it is hard for me to trust that somebody else is going to handle that problem. And now all of a sudden, it actually is ownership. That is like an actual problem of being a leader. Like, you cannot scale a really good company and get to tens of billions of revenue if you have constant trust issues and you can't trust other leadership.
- [48:32]
Pat
Where do you think that comes from? I have trust issues because I've found that generally when relationships break down, it always comes down to them extorting me for money.
- [48:40]
Winston Weinberg
Great.
- [48:41]
Pat
That's true.
- [48:42]
Winston Weinberg
Yeah. I think my trust issues, I mean, I think part, you know, part stuff is it's hard to tell whether it's, like, nature or nurture. Right. But I think that I definitely had some problems with authority when I was younger, and I had a. Not the normal Silicon Valley kind of background and upbringing. And because of that, I think that I had to. I really went out on my own at, like, a pretty young age and was pretty independent. One thing that you have to learn when you're leading a company is you are a leader and you are a partner to the rest of your team. It is not just you. Like, I am not Harvey. Like, Harvey is not me. Like, it is a group of people that are building this company. And I think that sometimes what founders can end up doing is they can start basically saying, like, I want to be the number one. I think of this as like a sports team. There are people I know that they don't care about winning the championship. They want to be the person who scored the most points, and they're okay with losing the championship as long as they're the one that scores the most points. Those are the exact type of people that I do not want to work with. I want to work with people that do care about how many points they've scored, but they care about that because they. They helped win the game. Right. And I think that's a huge problem in tech, is we. You have too many people that it's me, me, me, me, me, and not company. Company, company.
- [49:59]
Pat
I think the US Is just full of logo chases.
- [50:02]
Winston Weinberg
There's a lot of you guys just.
- [50:03]
Pat
Love to, like, work at a hot company. It's the hot company bouncer, I call it, where it's like they just go two year, two year, two year, two year. And it's like they're doing venture portfolios with, like, company equity.
- [50:12]
Winston Weinberg
Yeah.
- [50:13]
Pat
And it's just, like, I was about to say VCs, and I sit in these operator groups and they're like, oh.
- [50:17]
Harry Stebbings
I hear clay's really hot.
- [50:19]
Pat
Or oh, I hear like notion's really hot and they just jump.
- [50:22]
Winston Weinberg
Yeah, I mean I think the promiscuity.
- [50:24]
Pat
Of American operators is the same thing, but like, look at Brits are too negative. We're like, that's crap.
- [50:31]
Winston Weinberg
This also I forgot who tweeted this. I don't remember who it was, but this was like end of 2022 and it was like right after the ChatGPT launch and someone, I forget which VC did this, so sorry for not giving credit to them, but they basically tweeted. My prediction is what's going to happen is a lot of VCs because they don't understand the AI ecosystem, they're going to revert back to looking at resumes because they don't understand. And this is what people do when there's situations of chaos and folks don't know what's going on. The safest thing is to go look at other social signals to make decisions instead of using your own gut. And so I think that that's happening a lot in AI and hopefully as the markets mature this stops happening. But there's a lot of I don't really understand this. And so what I'm going to do is look at the resume or look at a logo or look at that because that seems like a safe bet.
- [51:26]
Pat
How many truly great researchers do you think there are?
- [51:28]
Winston Weinberg
Hundreds. And that's it.
- [51:30]
Pat
How do you know a good researcher from a resume?
- [51:33]
Winston Weinberg
I don't think you can. That I think is actually a pretty big disconnect the researcher community knows. So like this is a huge disconnect between VCs I think and the researcher community.
- [51:43]
Pat
So what would you advise me investing?
- [51:45]
Winston Weinberg
What I would do is you can use the researchers to pinpoint who is the best researcher. So in other words, if you ask a bunch of the researchers, not other VCs, ask a bunch of the researchers who do they respect the most? They have such a tight knit community and it's all merit based, like I'll tell you, a group of people who do not manage up AI researchers, that is not what they do at all. For better or for worse. And because of that, if you ask that community who are the best folks, they will triangulate for you and they will help you find and usually it's not the loudest, they aren't necessarily the most famous, et cetera. It's not like that.
- [52:23]
Pat
How do you assess the promiscuity of AI researchers? I mean poor old thinking machines how do you assess that? Is that just a sign of the very bullion times?
- [52:32]
Winston Weinberg
Yeah, I think there's a combination of things. I think the reality is what researchers care the most about is working on really hard and interesting problems. And I don't say that as like bullshit. I think that they're sometimes like, to your point of like, people just want to join hot companies. A lot of tech I think is like, people just want to join hot companies. Right. Researchers really genuinely do care about pushing research forward. And I think what ends up happening sometimes is the leaders at some of these companies kind of change the direction of the company and the researchers are no longer interested in that direction of the company. And that happens a lot at these big labs. They're making multiple bets at multiple places and what ends up happening is the people say, ah, this isn't what I signed up for. It's kind of like a bait and switch and they go to something else. And by the way, this has nothing to do with thinking machines. I'm just saying this is what's happening, I think at all of these labs is you go to work at Meta, you go to work at OpenAI, you go to work at Anthropic, and you think you're going to work on something, something, and then you end up not. And they're in insanely high demand. They're able to pick what projects they want to go work on.
- [53:39]
Pat
How bad is the war for talent? You're in the midst of it.
- [53:42]
Winston Weinberg
Yeah, it's incredibly, it's very, very high. And one thing maybe to bring up is I think that over time we have this interesting thing where it's like a lot of the AI companies, like application layer companies, including ourselves in the beginning were like rappers, right? And what's going to happen over time is these companies are going to do two things. One, a lot of just the core software that they build, it's not even going to be AI related, it's just core software building. And that's actually going to be very differentiated. The second thing that's going to happen is none of these companies have access to proprietary data until very recently. And so a lot of the stuff that we're looking at is how do you actually create like custom solutions for like a large end product enterprise? And that is AI problems again. Right? So now we're all the way back to like AI actually mattering. And I think that what we're going to see is that kind of main problem of a lot of these companies haven't hired any AI. Talent and a lot of what they've done is kind of, you know, the model is basically the entire product. And as these companies scale and they have to create more differentiated products, I think having AI talent is going to matter again. And we're just getting, just now getting to the size of the company where we can hire the people that we need to kind of do a lot of that frontier work.
- [55:00]
Pat
We said about the skill of people assessment in terms of the talent there. We said about your lack of trust and trust issues, which was another one that I think it was. Pat told me I put one of your investors, but I'm going to throw him under the bus. I think.
- [55:12]
Winston Weinberg
Perfect, great.
- [55:13]
Pat
Sorry, Pat.
- [55:14]
Harry Stebbings
Pat did also say that you're an.
- [55:16]
Pat
Excellent deal guy and I wanted to unpack that. What's your biggest advice on how to get the best deal?
- [55:22]
Winston Weinberg
Maybe two pieces of advice. One is listen more than you speak and it's very, very dumb. But it's true. I think a lot of people in deals, they think that movement is action. So they think that like movement is progressing the deal forward and they think that if they talk the most, they're in control of the deal. Not true. In the same way that in conversations, just because someone isn't participating in that conversation doesn't mean that they aren't listening. It doesn't mean that they have maybe the upper hand or something like that. And so I think listening is really important. And I see a lot of folks think of deal making as like chest forward and if I'm the loudest and I'm saying the most, the reality is like all deal making is just people reading. That's it. And it's people reading at scale. So it's people reading like a one on one conversation and then it's reading groups of people and then it's reading, you know, entire verticals of people excited, etc and it's figuring out what they want. The second piece is know when to not negotiate. This I think is actually really, really important. And the best deal makers I know are very good at this, which is there are certain deals where you want one thing from the deal and nothing else matters. This only works when you understand the value of something more than everyone else does. And if you understand the value of something more than everyone else does, throw all of your principal deal making and you're supposed to negotiate X and then Y and then it'll be 50% in between. And all of that. That's all bullshit. Throw that aside and get the thing that you know is More valuable than anybody else does. Done. The best deal makers, I know, like, the best, they know that very well.
- [56:59]
Pat
When did you understand the value more than everyone else? And how did that shape how you behaved?
- [57:05]
Winston Weinberg
There's just certain deals that we've struck where I wanted one thing in the deal and maybe the financial part of the deal or something else about the deal, like my CFO or my VCs were like, oh, my God, don't agree to that. Like, do xyz. And I knew that if we signed it and we got the particular thing that I wanted from that deal, it would help our company to such a degree that it would help close another deal or it'd help do something else. Like, a lot of what you're doing, I think, like the very good deal makers, and I think Sam Altman is incredible at this, is you're holding multiple ropes and you can kind of think of it as like, you have like 17 ropes in this hand. You have 17 ropes in this hand. You're grabbing all these ropes and at some point you're going to get like pulled apart because it's just too much pressure and you're going to lose, right? And what you do is you get good at tying off one of the ropes and then that pressure is gone and you have one tied and then you tie another one, and then you tie another one, you tie another one. And tying those ropes allows you to pull more ropes. And like, that's a lot of how I think about deal making. I think another company that has done an incredible job of this is Microsoft. Incredible job of they've created this partnership ecosystem, right? A lot of people have given them a lot of flack of like, why do you let people do XYZ partnership? Why do you let people build on this like they're just going to take it. And it's very clear that Microsoft has actually won in a lot of areas because they've decided to partner with, with kind of everyone instead of saying, ah, no, brass tacks, we're going to be very tough on this.
- [58:35]
Pat
I think one actually also is always when you hire people and they say that they want 75 grand. And then so often I meet founders and like, ha. But I got them down to 70 and I'm like, give them 75 day one. They start, they feel valued with hiring.
- [58:48]
Winston Weinberg
This is a huge mistake that people make. Massive mistake. If you want to hire somebody, hire them whatever they want, want to be hired and put them in the position that they want. If they're best in class. If you can't tell if they're best in class, it's a separate problem. But don't go back and forth. It doesn't matter.
- [59:03]
Pat
One of the most valuable bits of advice Josh Kushner actually gave me at Love him is he said if you're and this was on a specific investments, if you're willing to take less, don't do the deal. Imagine I'm a VC and it's like I want 10%. You're right. I can only give you seven. I'm like, I'm actually fine with seven.
- [59:18]
Winston Weinberg
Oh, then you don't go in that company. That's not going to be a legendary category defining company.
- [59:22]
Pat
100%.
- [59:23]
Winston Weinberg
It won't be possible.
- [59:24]
Pat
You said about people and kind of reading people in a deal, when did you most misread someone and how did that shape your mindset?
- [59:32]
Winston Weinberg
I think one of the things that I've done wrong in the past is I think that I have thought that someone couldn't scale because they have bad communication skills. And I've misread that. And then I didn't realize how easy it would be for them to learn how to do it. I think that sometimes, because I feel like I do a lot of in person interviews and a lot of those things that sometimes I also end up making the mistake of reading too much on the surface and not going deep enough. I think I've gotten better at it. But that's one of the things that I've done with hiring is I've fallen for the resume trap too. Like I've definitely fallen for it. And I think that's a huge mistake.
- [60:15]
Pat
You mentioned OpenAI and Sam as the deal maker as well with this.
- [60:19]
Winston Weinberg
Very good.
- [60:19]
Pat
I liked it. I heard that you cold called Sam in the summer of 2022. Can you just tell me about that before we do a quick call?
- [60:27]
Winston Weinberg
So it wasn't a cold call. We cold emailed them and we cold emailed Sam and Jason Kwan. What we had basically done was we went on R legaladvice, which is basically like a subreddit for asking legal questions. And we grabbed a bunch of those questions, ran a chain of thought product that we had basically built on top of it and gave it to a bunch of landlord attorneys. And then we basically said just like look at these questions and tell me if they're you would send the answer. We didn't say anything about AI to the consumer who asked the question. And of 86 out of 100 questions, 3 out of 3 said this is a Perfect answer. I'm done. And we cobbled all that together and we just sent a cold email to Sam Altman and Jason Kwan. The idea was basically, hey, did you guys know that, you know, at this point it was GPT3 and just the API was public. I think the end of 2021 or beginning of 2022, they had an API. Did you know it was this good? Illegal. That was it. That was basically the subject line of the email was like, did you know was this good at illegal? And we met them like pretty recently after that.
- [61:23]
Pat
How did that go?
- [61:24]
Winston Weinberg
It went well. We had a call with Jason first and just kind of talked about like, what is our strategy as a company and what would we build? And then we had a final pitch to kind of the rest of the OpenAIC suite. Actually the morning of July 4th, 2022. Yeah, it was like 11:00am on July 4th and we did a pitch to the rest of the company.
- [61:41]
Pat
Do you get nervous before these, like when you go into a Sequoia and you pitch the partnership?
- [61:46]
Winston Weinberg
Yes. I had a weird thing where like, I didn't know who any of these guys were. And so like when we were doing.
- [61:52]
Pat
Our series, so it's so funny because like, you don't know and like for me as a venture nerd, I'm like, holy. Yeah, I know everything about everyone.
- [61:59]
Winston Weinberg
I mean, like now I do, but back then I didn't know anything. I didn't even have friends in tech. And so when we did, we did our seed and we didn't go to anybody else. It was just OpenAI. And then for our Series A, we.
- [62:12]
Pat
How much did they invest and for how much?
- [62:14]
Winston Weinberg
I don't remember what the post actually was, but the pre investment was like, it was like 4 million or something like that. And anyway, what happened at the Series A was we went and met with basically like, I think it was like 10 VCs or something like that in like 48 hours. Hours, right. And I quite literally did not know who the VCs were. Like, I didn't know, like my co founder was from tech and he like knew and he basically gave me advice and things like that. So I actually think I had like a weirdly unique view of the VCs because my entire judgment of them was just how that first meeting went. Like, I didn't know that like Sequoia was in this tier and this one was in this tier and you know, whatever. I didn't know any of that. I didn't even know who they were.
- [62:57]
Pat
10 VC meetings. How many term sheets did you get?
- [63:00]
Winston Weinberg
I think like half or something like that. Yeah.
- [63:02]
Pat
Which was the worst?
- [63:03]
Winston Weinberg
The worst term sheet or the worst meeting?
- [63:05]
Pat
Worst meeting.
- [63:06]
Winston Weinberg
Oh, I'm not gonna say that publicly.
- [63:07]
Pat
It's worth it.
- [63:08]
Winston Weinberg
There was one, though. There was one.
- [63:09]
Pat
Why was it bad? Just tell me that.
- [63:11]
Winston Weinberg
Yeah, so there was one where the person was quite literally on their phone. It was a zoom. And they were on the phone the entire time during the pitch. Did not even make eye contact. Literally zero.
- [63:21]
Pat
They were just taking notes. Yeah, they were taking notes.
- [63:24]
Winston Weinberg
No, I think they were texting a friend.
- [63:27]
Pat
Can't believe this knob is still talking about leading.
- [63:30]
Winston Weinberg
What are we doing here? That was the worst one. That was really bad.
- [63:32]
Pat
That is absolutely amazing. Listen, I want to move into a quick fire round. What have you changed your mind on in the last 12 months?
- [63:39]
Winston Weinberg
So I said earlier that a lot of company building has changed. I actually think a lot of it remains the same. And so there's a lot of core first principles of scaling a company that I am much more focused on that I wasn't focused on in the beginning. I'll give you the dumbest example ever. For the first, like, two years of the company, when I was doing, like, revenue projections, I never, and this is embarrassing, really embarrassing. I never was like, huh? If I want to hit this amount of net new ARR, you need to hire this many AES at this quota, and this is how long it takes to ramp them. So you need to have hired them at this point before you do that. I'm dead serious. Like, I never even thought about that. Right. And it's these really core, like, laws of physics about companies that remains the same. Like, there's no different in AI. And I think, like, in the past, maybe what have I learned in the past 12 months, maybe it's more what have I learned in the past. Like, 18. Like, the second half of the company basically, is how much of a lot of the company building is actually the same. And I probably should have listened to. To people a little bit more about that.
- [64:42]
Pat
You have Sequoia and Andreessen on the cap table. How are they different to work with? I'm not asking for better or worse, but how did you say, how are they different to work with?
- [64:50]
Winston Weinberg
Yeah, I think that there's obviously, like, a difference in scale, right? Like, a 16Z is just, like, a lot. A lot bigger. I would say that a 16Z is also, like, louder. And so they're a little bit more in, like, these other regions and other areas. And Things like that. Whereas Sequoia is, you know, it's just a different style. Right. It's closer to. There aren't as many partners and. And things like that.
- [65:11]
Pat
Were you nervous pitching to Mark and Ben? You knew them coming in?
- [65:16]
Winston Weinberg
Definitely, yeah, definitely. I mean, I'm always nervous. And I think, like, one thing too. I think I said this earlier, but I think Keith Rabois says this, who I've actually never met in person. There's. There's a couple people. I have a list, actually, at the top of, like, my doc. I have like an operating doc, and I have a list of people, and they all have, like, two words next to them. And it's like the thing that I've, like, learned from them or something like that. One of the things I think he was talking about at some point is, like, how important it is that you should be constantly stressed. Like constantly stressed and do things that make you stressed every day. I strongly agree with that. Like, really agree with that. Like, I think the times that I've stagnated or the company has stagnated is every day I don't have something that's, like, really stressful. The weeks that I do the best work or feel like I did the best work is every single, like, night before I go to bed, I'm like, oh, shit. Like, I have, like, tomorrow is going to be. There's so many things. Everything needs to go right. I'm really stressed. It's compounding, like, massively compounding for you as an individual to just put yourself through that stress.
- [66:16]
Pat
I freaking love it. Pat tweeted, like, hey, if you are, like, ambitious and you want to learn about working in AI applications, there's no better place to work than Harvey Keith, for a boy.
- [66:28]
Winston Weinberg
Somebody said.
- [66:31]
Pat
My point is they do. I love the way you didn't see that. But like, all VCs, I mean, but.
- [66:36]
Winston Weinberg
But it's interesting. Like, I think Pat also has this too, and all of my VCs do. And in particular, he really thinks of, like, just constant. Like, it's relentless application of force is what he says. And that's actually what I have next to his name. That's incredibly important. And I think that if you lose that as a company, the company is pretty much over. I think that you're. You as a founder need to constantly, constantly be a applying force. And it starts with applying force to yourself. And if you aren't applying force to yourself, you don't have that ownership mentality and you'll start to get weak. And I Think that will trickle down through the rest of the company.
- [67:12]
Pat
A couple of other people on that list and what they. What do you have next to them?
- [67:16]
Winston Weinberg
I have Brian Halligan's on there, and his is no. It's just the word no. And one of the things he's been incredibly influential and helpful to me. And one of the things I had a problem with is just like saying no to things. And it's a huge, huge problem as you scale as a founder of figuring out an ability to actually block off time for yourself and to say no, this is my priority. I'm saying no to everything else. Right. And it's the same with. This is also probably one of the main things that hopefully I've improved on product is I used to every quarter just be like, and there's a P0 and then also there's a P00 and then there's this and this and this. Right. And I've started to be a lot more disciplined and try to be disciplined with my team of like, every time that we do product planning, something should hurt. It should feel like a breakup. Like you are. You have to. There has to be a couple really good ideas that you say no to. And it's the same as across the entire company. And Brian Halligan has been really helpful with kind of teaching me how to do that for myself and how to do it with the rest of the company.
- [68:19]
Pat
I always go to the Johnny I've. Which is like, you know, prioritization is saying no to even really good ideas.
- [68:24]
Winston Weinberg
Yeah, yeah, yeah, yeah. No, I think that's right. It should feel painful. It really should. And I didn't do that in the beginning. I was like, ah, we'll just do everything, whatever. And I think, having said that, I do think you can do more and I think you can be very ambitious. But you do have to strike a balance between the two.
- [68:37]
Pat
Who do you not have on your board who you'd love to have on the board?
- [68:40]
Winston Weinberg
I've always respected Founders Fund. Like, I've always really, really respected them. I've respected the hell out of their companies too, and a lot of their founders. I just. I respect them a lot. And we have never worked with them.
- [68:51]
Pat
In a year's time. Where is Harvey then? You did this great tweet yesterday, and it was like 190 Millionaire. Oh, I can't remember the customer base and can't remember the other stats.
- [68:59]
Winston Weinberg
It's all good.
- [69:00]
Pat
Such a vc. It's like, revenue number great.
- [69:02]
Harry Stebbings
That's the take.
- [69:03]
Pat
What does that Tweet, say in 12 months.
- [69:05]
Winston Weinberg
I mean, we obviously have revenue targets and things like that. But what I want to switch from is a productivity software that is like a nice to have to closer to like an operating system that is like pretty much crucial to the industry. And so it's more. How do we. How do we. We built a lot of different, like features across the board, right? Like we very much like in Parker Conrad's voice, like built a compound startup, like very much. We haven't tied it all together yet. We've done a really good job of creating all the pieces hasn't tied together. Maybe an interesting stat on this is our DAU over MAU for people that use four plus product lines is 74%. That's like slack level, right? Slack was like 80 or something like that. It's incredibly high. The percentage of people that have used four plus products is very low and it's doubling every quarter. But what I really want to care about next year is can we make this like infrastructure? Can we make it so it is like this is a core piece of a lawyer's work and day and they live in it.
- [70:06]
Pat
It's a move from product to platform.
- [70:08]
Winston Weinberg
It's 100% that. And I think we've done a good job of creating the features, but now I want to combine all of them together so we can get to that 75% DAU over MAU. That is how you really show that you've created something that's integral to the industry.
- [70:20]
Pat
Dude, it's such a pleasure to have you on the show. Thank you so much for doing it in person. It makes such a difference and you've been incredibly amenable to my pressing.
- [70:27]
Winston Weinberg
Well, thank you so much for having me, man. Took too long.
- [70:32]
Harry Stebbings
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- [71:41]
Pat
You turn those signals into deals.
- [71:43]
Harry Stebbings
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- [72:23]
Winston Weinberg
Network.
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Harry Stebbings
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