Phil Libin is a serial founder that has already launched and sold startups. His latest venture, mmhmm, aims to bring even more great products to life. The startup, has acquired funding from top-tier investors like Sequoia Capital or Softbank Vision Fund.
In this episode, you will learn:
- Business models
- Making difficult decisions
- Investor relations
- The future of work
- Time machines and top advice when launching a business
See NordPass Business in action now with a 3-month free trial here https://nordpass.com/panthera with code panthera
Also Wingman is sponsoring this podcast. Visit https://www.trywingman.com/dealmakers for more details!
Partnerhero: to waive set up fees, go to http://partnerhero.com/
If you are struggling with projects, sign up for Basecamp. Their pricing is simple and they give you ALL their features in a single plan. No upsells. No upgrades. Go to basecamp.com/dealmakers and try Basecamp for free. No credit card required and cancel anytime. Thank you, Basecamp for sponsoring this episode!
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Phil Libin:
Phil Libin was born in Leningrad, USSR, in 1972, and moved to America when he was eight years old. He served as CEO of the Silicon Valley-based software company Evernote from 2007 to 2015, then became Executive Chairman of Evernote’s board.
In September 2015, Libin joined General Catalyst Partners as its fourth general partner in Silicon Valley. In September 2016, Libin stepped down as Executive Chairman of Evernote’s board of directors to focus on his role at General Catalyst Partners.
Currently, Libin runs the Startup “mmhmm” and the startup studio All Turtles.
Prior to joining Evernote, Libin founded and served as president of CoreStreet, a company that provided credential and identity management technologies to governments and large corporations.
In 2009, CoreStreet was acquired by ActivIdentity and is now owned by HID Global. Libin was also the founder and CEO of Engine 5, a Boston-based Internet software development company acquired by Vignette Corporation (VIGN) in 2000 for $26 million. Post-acquisition, Libin served as principal architect and chief technologist for applications at Vignette.
Libin graduated from The Bronx High School of Science in 1989 and attended Boston University with a concentration in Computer Science, but left just before he was due to graduate to focus on his plans to launch a software company.
Libin has a chapter giving advice in Tim Ferriss’ book Tools of Titans.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Connect with Phil Libin:
Read the Full Transcription of the Interview:
Alejandro Cremades: All righty hello everyone and welcome to the dealmakerr show. So today. We have a one of those founders that I call ti zero founders I mean one of those founders that I’ve been very much inspired. You know throughout my own journey as an entrepreneur myself and such an honor to have a someone of his calib. You know we’re gonna be learning a lot about. Building scaling financing exiting. You know everything? you know that you can think of us proud of as part of the entrepreneurial journey so without furtherther ado like well let’s welcome our guests do today feel living welcome to the show so quite a interesting you know, upbringing it failed. You know, obviously you know.
Phil Libin: Um, hey thank you Great to be here.
Alejandro Cremades: You guys move quite a bit. You know as a family and I think it will be great. You know if you could give us a little of a walk through memory lane. How was live growing up.
Phil Libin: Well I never really grew up but I did I did get older and I am I’m I’m 50 now. So I think I’ve been I’ve been wandering the earth for for half a century and trying to trying to figure out.
Alejandro Cremades: Ah.
Phil Libin: Ah, couple of things. Ah, but yeah I mean I was born in ah what? what used to be the Soviet Union ah you know my my my family is ah mostly from Ukraine and then we came over as refugees from from the Soviet Union um to the us at 1979 so I was I was seven years old and it’s so it’s been kind of ah and of an adventure ever since then.
Alejandro Cremades: And obviously when you’re 7 you do you know notice things you know I’m sure that for you the move. You know the uncertainty I’m sure that that that has shaped you you know quite a bit on who you are as a person.
Phil Libin: But you know it was pretty exciting for me. You know I think my parents did a pretty good job of of shielding me from from refugee life I think it was much harder on them for me I was just I was really excited to see all the cool cars in New York I remember when we got to New York I was just amazed because we only. Didn’t really have cars in the Soviet Union and when we did there was like 3 different types and like seeing you know hundreds of different types of cars in New York every remember being amazed and then of course you know going into supermarkets and discovering marshmallows all the kind of immigrant stuff like that that you expect so was.
Alejandro Cremades: Ah, right.
Phil Libin: So good experience for me I think my parents may have may have made some sacrifices to make it possible.
Alejandro Cremades: Yeah, no kidding now in terms of um, you know, passion here I mean know you see you got into computers. What got you into computers.
Phil Libin: Well, we were living in in New York we were living in the Bronx in um, in a pretty pretty dangerous neighborhood in the you know in the mid 80 s and the gangs wouldn’t wouldn’t have me so I just basically stayed inside and you know played around with my computer I big my parents to buy me know Atari. 800 ht hundred excel was my first computer and since I couldn’t really go outside much I just yeah I stayed inside I learned how to how to program I had a modem so I got on all sorts of you know early bulletin boards and I never really thought about working with computers I always assumed that I would be my parents are both classical musicians. And I always assumed but I have no talent. So I assume that I would be you know a lawyer or an engineer or a doctor or something like that. But yeah, always had always had computer growing up and got you know, got decent into programming and was able to make some money on the side doing computer stuff as a kid and yeah, they just kind of stuck with me so it was. Lucky to grow up in a bad neighborhood where I had to sit inside and keep myself occupied.
Alejandro Cremades: Now now 1 thing that that is interesting here. Is you go to Boston for college and you know even there I mean you you started you know with with thinking about building companies. And in fact, you created you know there you know I mean not not not there in high school. You know you actually create your first company. so so I guess why was that drive for on entrepreneurship. What what do you? think you know where’s that coming from.
Phil Libin: Um, you know it’s funny I don’t think I don’t actually think I have a a drive for entrepreneurship like I don’t I don’t really identify myself as as an entrepreneur primarily I mean people they talk a lot of at it because people ask. And I guess you know by lots of definitions an entrepreneur but I’m not I’m not actually driven to like start companies or motivated by that I Just ah I guess I Just want the world to to have the things that I wish existed I Want I want there to be the products that I wish were there and you know if no one is building them then then. Then I guess I’ll build them and so from a pretty early on from a pretty early day. It wasn’t really so much about like wanting to make empires or make money I just wanted to make cool stuff and ah it also was easier than um.
Phil Libin: In some ways being an entrepreneur early on was was failing because it was ah I couldnt I couldn’t keep done a real Job. You know at a hard time actually staying employed for for a long time in a respectable you know jobs an engineer or something so it felt like. You know, always kind of hustling on the side and making money doing you know, consulting and programming and setting up databases and all the stuff I was doing like it kind of felt in starting companies. It it sort of felt like failing because I wasn’t living up to the normal track of being a respectable person with ah with a career and it probably took a long time. It probably took you know 20 years before I realized but like well this is. You know, starting companies and doing okay is ah is a respectable Lifestyle. Ah.
Alejandro Cremades: Yeah, and okay, it now now. Even even you after Boston you know, starting you know the the college there I mean you you worked for other companies as as ah, as ah as a computer engineer so you know eventually you ended up starting your own and the engine 5 so. So walk walk us through the sequence of events that you know needed to happen for you to say hey you know what I think I’m I’m going to go at it with this thing. So.
Phil Libin: Well I was working with some college friends at a company in Boston called ah Atg and you used to stand for art technology group that doesn’t didn’t stand for anything after a while and this was one of the first. Ah, dot com companies. It was like an early you know web technology company. We invented a bunch of the stuff that that kind of powered you know things on things on on the web and this was in the you know in the mid to late 90 s and it was just a brilliant team of people. Um, and we had this experience. Me and and and co-founders where we thought well I think a lot of people have this experience where you’re working for a big company. You kind of say well I I know what I do like I understand what I do and you know I know the person sitting next to me I know I know what she does and she’s pretty good. You know at her work and. You know and I know what that guy over there does and he seems pretty good but but that person over there like what does he do? He doesn’t do anything and and he’s kind of an asshole I’m like why did they hire him I think this is like a universal experience right? You look in, you’re like why are these people like employed like. When they showed up for the job interview couldn’t the company tell that these people were assholes like why and so we just thought well if we make our own company. Could we make a company and if someone showed up for a job interview and we thought they were ah an ass. We just wouldn’t hire them.
Phil Libin: Um, that was so that was kind of our social experiment where like could we make a company with with only home competent nice people in it clearly had never been done before in the history of companies and that was it and we didn’t even we didn’t really have an idea of what we wanted to work on. We just knew we subject with computers and so we just but that was a ninety ninety seven where the dot com boom was going so fast that. You can go to any tree in Boston and just you know shake a tree and say.com 3 times and like a Vc would fall out and give you money so we just wound up working on you know early e-commerce and we build stuff for Nokia Nokki is a company that used to make cell phones and we build stuff for. We actually built the the first website for gamestop.
Alejandro Cremades: Wow.
Phil Libin: Hours and like developed a logo for it with with partners and built that that out and it was great. Yes, so we started. We had a company called engine 5 and it was entirely a social experiment. Ah, but we yeah we were able to do some really cool stuff with it.
Alejandro Cremades: And obviously you know it was a really cool ah outcome as well because first a first company first day you know acquisition you know on the positive side without having you know, raise much or or or really following that hypergrowth path I mean it is pretty unbelievable.
Phil Libin: Yeah, we didn’t really know anything about like we didn’t know that there was such a thing called Investors at the time we were all engineers and we didn’t know that like other people would give you money to to invest in things. We just thought that you had to. You know, earn more revenue than than than your expenses were. We had this very very old fashioned idea and so we we never actually took any investor money I think we each had to put in $100 just so like the bookkeeper could like figure out what it started with it started with I They originally $300 and and it was exhausting though. That was the main thing we learned was that like we work Consultants. You know we were basically working we were writing software we were writing it for other people. It wasn’t our own products we were working for you know large companies that wanted to sell things online and what we learned is that that’s a very difficult and tiring thing to do. And it’s a good way to get paid. But it’s not a good way to create value because like you know when you stop typing they stop paying you and so we could be like very well- paid. You know programmers but it was still basically being paid for our Labor. We weren’t making a product that could accumulate in Value. You know by itself.
Alejandro Cremades: Yeah.
Phil Libin: So we were exhausted. We were working 18 hour days you know 7 days a week for 2 years and then when we had an opportunity to sell the company. We were like yes, please we would like to sell this company. Yeah, we just got really lucky and we sold it.
Alejandro Cremades: Ah, and and and and how how has it failed to see the full cycle because I’m sure that for you guys you know, being able to see the full cycle of seeing hey how you start something and then how you get it to the finished line sort of speak I’m sure that. That gave you guys greater visibility on hey you know it’s It’s possible. This is how it’s done.
Phil Libin: Yeah, and again, we we were never really motivated to sell the company when we started. We weren’t thinking about an exit we were motivated to sell it when we realized how exhausting it was ah and we were. We were just very fortunate. We sold the company in January of 2000 which was like 20 minutes before the.com bubble burst and so I think that.
Alejandro Cremades: No kidding. Yeah.
Phil Libin: That the timing was was just you know, really great and it was the first time that that that any of us any of the founders had any kind of real money like I I remember thinking you know I’ve got you know we only sold it for 26,000,000 but we we had no investors. We just split it amongst us. And I remember thinking at that point that like I probably had more money in my bank account right now than all of my ancestors for the past ten thousand years put together ever did because you know my family didn’t come from any any wealth at all. It was it was kind of a weird feeling but then you know dotcomcrash I lost most of it and so was a nice.
Alejandro Cremades: Yeah, but hey you know as they say you know once once an entrepreneur entrepreneur you know, always an entrepreneur entrepreneur you know in this case once you start solving stuff and you want to bring them into the future you keep doing it as as you would say now in your case you know the next day thing that you know you brought to life was course street.
Phil Libin: It was a fun up and down roller coaster.
Alejandro Cremades: You know, obviously another you know outcome there that you guys got so tell us about you know how? how really you you came up, you know with the initiative or or how did this come you know knocking and and how did you think about hey you know maybe we should pay attention to this and and bring this one to life right.
Phil Libin: Um, well we you know we um, ah we started it a month after September Eleventh so it was on October eleventh of 2001 it’s actually when we launched it and you know for people who are old enough to remember September eleventh it was a pretty you know. Pretty traumatizing experience and I think a lot of people back then wanted to felt like they wanted to do something more meaningful and so we knew we wanted to start another company but we also knew that we wanted to work on something that felt more tangible more more real than what we had been doing before and what we were doing before was again, it was you know selling Cds on the internet things like that it just didn’t. Like it seemed like who cares right? Who cares about collaborative filtering and recommendations. You know we wanted to work on something that was more fundamental to the world. So we met this brilliant professor out of mit Sylvia Mcauley and he had this these amazing and inventions and cryptography to really we thought could revolutionize security the way that the way the security was done. And so we started course street to get to work on that and we wound up selling to lots of big governments. You know militaries, intelligence agencies banks. So we we had a pretty you know, pretty significant security product. Let’s say and that was ah that was fascinating. Really really, really interesting journey but also terribly boring terribly terribly boring.
Alejandro Cremades: Ah, well well you guys ended up doing an acquisition there I Guess my my the question that comes to mind here is what was the what was the lesson. The biggest lesson learned you know that you got from from the experience with course read. So.
Phil Libin: That working with banks and governments is very very boring. That’s the biggest lesson. Ah, you know the if the lesson from engine 5 was um, you know don’t hire any assholes that was a big success. We kept that lesson for course street and later for Evernote and everything else and the second lesson for mentioned 5 was.
Alejandro Cremades: Yeah.
Phil Libin: Don’t be consultants like make a product and we kept that lesson forward I think the lesson for course rate was the product you know at Evernote in a course sheet. We were never building for us. You know at course you were building for for retailers at. At sorry at ah at at age 5 we were building for retailers. At course you we were building for banks and governments and you know we weren’t a bank or a government or a retailer. So we always have to ask what does the customer want you know you have to wake up every day for years asking. What does the customer want and we just got sick of it. And I remember we just said screw it I don’t care what the customer wants anymore I want to spend the next few years thinking about what do what do? I want what do we want and could we make something for us. Can we make a product that’s that’s for us where we’re the customer. Um, and that was that was the whole motivation behind Evernote. So we we. We sat around and we and we you know the same core team. Um, and we decided we started thinking about all right? Well what do we love? Let’s make something we love. So what do we love and we went through you know, many ideas until we finally came up with ah what eventually became Evernote.
Alejandro Cremades: Wow and talking about you know something that has touched the lives of many people the evernote. So so tell us about you know the what was the business model of a evernote for the people that are listening to get it. How are you guys making money there. Okay.
Phil Libin: Well, we have this very old fashioned you know business model I guess for all of my companies. We have the same business model which is we only make money when people pay us. We. Never we reject that all indirect revenue. So. There’s no no advertising no like monetizing your data and we still keep this true. This has been the 1 consistent thing throughout. Throughout everything I’m done is it’s only direct revenue so we make money when people or companies pay us to use our products and that’s it and I think it’s it’s. For lots of reasons. But I think a lot of what’s gone wrong with technology is because of these indirect business models engagement based business models and we just avoided. We avoided all of it. So with evernote you know we were freemium. We had a we had a free product and a premium product and we made money when people and people paid us.
Alejandro Cremades: Now with evernote I mean obviously there you you guys raised quite some money How much money did you guys raise forevernote.
Phil Libin: Ah, 300 or so I think I mean.
Alejandro Cremades: And and what was the experience of going through all these different cycles because I know that you know in certain instances there you almost run out of money So you know how was that so.
Phil Libin: Yeah, it was very difficult in the beginning. So the first the first you know 5000000 was you know, much much much harder than the other you know 395000000 became after it. So. The first money was was tough. You know we well the first like the the very first money was was just us. It was friends and family. You know we were all. Ah, done things before so we were able to invest in it cofounder at Evernote was ah this brilliant entrepreneur scientist named Stepan Pachikov he had done stuff before so we were able to kind of selffund with friends and family in the beginning. But then ah you know we needed to raise institutional money and it was very hard. We had a very. Bad pitch and we were raising money at the very the very very worst time during the financial meltdown in 2008. Basically we had a we so we we spent about six months trying to raise ah a $10000000 round that we had. We had a term sheet with the european investor and. On the day that we were supposed to close was the day that Liehman Brothers went bankrupt and the markets really went into freefall and and their investors pulled out. You know we just lost 60% of our fund value this day and they pulled out and we only had about two months to official we only had about three weeks of cash left in the bank at that point and yet we thought we would. We thought we would almost definitely go out of business. So in the beginning. It was hard but then once we had you know once we had once we had traction then we found a way to talk about our traction a way that made it very attractive and all the all the subsequent rounds were very easy.
Alejandro Cremades: That’s amazing now with evernote you know I know that the um, you know there, you know you ended up stepping up. You know to the executive Chairman role and then you know you ended up, you know, figuring out that you had to go on to to other pastures to greener pastures. So So what was I’m sure that. You know for you as a founder du like going through that transition. You know that I’m sure he was saying you know quite quite an experience to say the least right.
Phil Libin: Yeah I mean I you know I always talked about everno as as trying to build 100 year startup you know a company that would be durable. It was bigger than that would outlast me and and the rest of the team and that would still be innovative in 100 years and so we always we always talked about you know I always realized that. My job as the Ceo was to find a better ceo because if I was if I was the last Ceo of ever Knowte that by definition would have failed in our you know in our mission but I never really thought about in the beginning whether I was talking about. You know, replacing myself in in 5 years or 10 years or in six months you know, never really have really thought about it too much. Um, and I stay there for 9 years as the Ceo and then um towards the end I kind of realized they just wasn’t I didn’t think I was very good at it at the stage. The company was at you know the company was about 450 people at that point.
Phil Libin: You know we had hundreds of millions of dollars of of of users um and I think that the the skills for being a Ceo are pretty different at that stage and I realized that I wasn’t um, a friend of mine asked me if I was still having fun and I realized that I really I really wasn’t having a lot of fun anymore. And he said well if you’re not having fun. It probably means that you’re just not good at this stage. Um, and and that really struck me as true and he said you know you need to structure your life so that the company deserves a Ceo who is very good at this stage and you deserve to do something that you’re having fun with so you find find a better Ceo do something else that that that really resonated with me that seemed like the right. Great advice so we started a process. Originally my plan was to um, ah become ah executive chairman and and still stay very involved and you know with ah doing product strategy and things I really enjoyed that it was good ahead and leave the sort of day-to-day operations of the company to somebody else.
Phil Libin: But I kind of knew that you know there’s a fifty fifty chance that that would work or not it really depended on the the chemistry between me and the Ceo and you know it was it was impossible to predict. Ah so we we brought on Chris O’neill a new Ceo and I stayed as the chairman for about a year but then it it was just became obvious that the. And was just too. It was too painful both for me and and for him like me hanging around it was just too weird. You know having a founder or kind of giving advice and that kind of stuff so I decided yeah, the best thing to do was just to to go my separate ways and that was um, but this is probably my main the most important lesson that I probably ever learned so far.
Alejandro Cremades: Yeah.
Phil Libin: Ah, in in at in life a general 50 years of of life is very often when I think that something’s a hard decision like I need to make a decision they think ah I don’t know what I’m going to do this is a hard decision whenever I feel that. I I realized that really, there’s 2 different types of things. There’s decisions that are actually hard because it’s hard to know what the right answer is and then there’s other decisions where it’s easy to know what the right answer is they’re just very unpleasant. So and whenever I face a decision like that where I go this is a hard decision I always ask myself. Oh is it really hard or is it just unpleasant and 95% of the time is just unpleasant when I look at it that way and of course you know once you realize decision is not hard is just unpleasant then you have to do have to do the right thing anyway, whether it’s pleasant or not like that’s what being an adult is. Um, and and you know stepping away from Evernote was was one of those decisions whereas actually it was very hard but actually it wasn’t hard. It was very easy to understand that that was the right move. It was just deeply deeply unpleasant. But.
Alejandro Cremades: And in in and in evernote I mean what a journey to I mean what? what? how many users did you guys have at the peak when you were there that is absolutely unbelievable. Absolutely unbelievable. So.
Phil Libin: 304,000,000 something like that. But that was that was eight years ago and so yeah I basically haven’t had much to do with a company for for the past eight years I mean I still have a lot of friends there close to some of the investors and things like that. But I decide I tried very hard to you know.
Alejandro Cremades: Yeah, so.
Alejandro Cremades: Absolutely now now for you. You know it’s very interesting here. This sequence of events. You know what you decide to do right after is to go on the other side of the table. What happened there. So.
Phil Libin: Not be kind of hovering just.
Phil Libin: Um, well um I um got an offer to join to become a Vc to join journal catalyst and it was one of these things that seemed too good to be true because it was just this amazing. You know like the job sounded amazing and it. Economics were really good but also like you just got paid a lot to just like learn talk to interesting people so it just seemed like it seemed too good to be true and ah my father always said that when something seems too because it be true, just jump right in and don’t ask any questions and so that was my philosophy I’m like yeah this seems too good to be true. Let’s just do it.
Alejandro Cremades: Ah, hello it.
Phil Libin: Um, and um so I jumped into that job and it was. It was great. I learned a ton but 1 of the things I learned is that I’m not I’m just not actually very good at it I’m not very good. It was a weird experience. It was a weird experience. It was the first time I was I was at a job since I was probably fifteen years old and working at an ice cream store. Where I had the sensation that I’m just not very good at this job. It’s I never felt that way like when I was an engineer I never felt that I wasn’t very good at at the job and even towards the end of Evernote when I was like I was tired and I didn’t think I was the best at it I thought we could get someone better I never felt like yeah this just isn’t I don’t have the skills for this but I but I realize they just don’t i. But wasn’t very good at like early stage venture capital I wasn’t that interested in it I wasn’t that motivated I wanted to build things I didn’t want to just you know pick winners and give advice. Ah and but it was it was fascinating and they learned a ton and we decided.
Alejandro Cremades: Any Any any any insights there into Pattern recognition and what separates the good ones from the ones that probably don’t have that much of a positive Horizon I mean anything there that you learn on on you were talking about Winners. So what. So what separates winners from the rest.
Phil Libin: Yeah, you know Ah, ah, a ton. So the pattern recognition was was fascinating and I think um I think I became a much better Ceo when I when I you know after 2 years of sitting at the side of the table and hearing other ah hearing other investors and and and other entrepreneurs and kind of being pitched at on this side and kind of seeing. Seeing the mistakes that I used to make from that side and seeing them. You know, very clearly. Ah so it’s been It was very very much eye-opening. Um, you know in terms of patternmagining I think like the most important thing by far I think is communication is really really, really. Crisp and clear and non-bullshit communication skills and I’ve like I’ve like developed an allergic reaction to people who are bullshitting to people who are like too glib or they’re just like stolen for time or they don’t know you know the answer I think I’ve gotten pretty good. Determining that and and and to me that’s that’s the biggest thing. The biggest thing that I think marks that that makes you likely to succeed maybe in just about anything in life but certainly in in in my field of work is you just have to be very crisp and very direct in how you communicate and how you explain things.
Alejandro Cremades: Man Oh kidding, no kidding now for you. Obviously when you realize that this is not for you and that you don’t want to pick up and the winners and give advice then you decide to go at it and that saying now you know you see with what you’re doing.
Phil Libin: Um.
Phil Libin: Yep.
Alejandro Cremades: You know with old turtles which is saying you know, kind of like a studio there where you guys are rolling out. You know, like really really good stuff. 1 one of the companies actually now that you’re leading is mm and they you know, amazing name too. I got to say but but but tell us about you know this company. You know how? well. First and foremost all turrtles. What are you guys doing there and then how did the adl of mm come to life first.
Phil Libin: You know all turtles so is a product studio. So the idea is we want to have a more efficient way of developing product ideas and working with product creators that the typical Silicon Valley you know startup venture capital treadmill um because I think like the the normal model is just It’s it’s pretty broken. It’s pretty inefficient that only captures a very small amount of the value for for lots of reasons but 1 of them is when you think about it. Well imagine this imagine if you were ah, let’s say you are one of the most gifted and brilliant musicians in the world today like you are a mozart level 1 in a million. Super talented, super gifted musician right now you don’t have to like start a music company you just play and there’s platforms that exist like you know Youtube and and Tiktok where you’re going to reach you know a billion people. Um, if you’re one of the most you know 1 in a million most gifted writers on the planet today. You don’t like have to start a publishing company. You know you’re right? You’re write on a you know substag or whatever if you’re one of the most brilliant filmmakers. You don’t have to like make a film studio you you know you go and you make movies for you know Netflix or Disney or something.
Phil Libin: But if you’re one of the most you know 1 in a million most talented product designers like product creators in the world. We say you have to make a startup first like before you you can test your idea you have to make this like fragile thinkle to startup. So we take people who are allegedly, really brilliant. You know product creators and we say okay, yes, yes, we’ll get to your idea. But first you know here’s the Wikipedia page on how to manage your board and how to raise money and here’s what a 4 9 a valuation is and here’s what an 83 b election is and by the way this is how you work with auditors and this how you negotiate contracts. And we force people to become these like mediocre ceos of very brittle things before they can actually do anything else and that seems wildly inefficient and so we wanted to create a structure that had much more support around it where we could we could work with founders with ideas and we could do whatever was necessary to kind of really test whether there was. Something in the product. Give it a lot a lot more support and then ah if some things needed to be spun out as as you know as freestanding companies and that’s great and you know if if some things didn’t then that’s fine as well. So we tried to kind of make a much more professionalized version of this process than we than we typically see and ah. So we started that yeah about five six years ago we’ve worked with I know a couple of dozen different projects now of which some of whom have become very significant. Um, you know one of our companies. The first one we spun out was called spot. It’s ah it’s a harassment. It’s a workplace harassment and discrimination tool.
Phil Libin: We work with carrot fertility. That’s currently the largest fertility benefit provider for for employers with our newest project is called Sora Union it’s a company that hires refugees from from Ukraine and from other parts of the world to do high knowledge work. And yeah and 1 of them is ah is which we we thought of ah you know, almost as a joke kind of at the beginning of the covid pandemic and and and raise a bunch of money for that and spun that out and so my my my full-time job is the Ceo of that’s the that’s the company in all turtles that I’m running and then I also you know help out a bunch of the other. Of the other companies that need it.
Alejandro Cremades: So what tell us about Mm I mean what? what? what? What? What is it about what is the business model there and and and how do you guys make money same way.
Phil Libin: Well, you know we make money the same way. We always make money which is people people pay us to use the products we don’t We don’t believe in any other any other revenue model the problem about giving you communication superpowers. So the idea is ah the.
Alejandro Cremades: So tell us about the product. What’s what’s the product about what’s that.
Phil Libin: The main thing to unlocking team productivity is making the switch between when you should do synchronous communication and when you should do asynchronous like this is the key. The key is it is extremely inefficient to convey information in a meeting. Especially an in-person meeting. So what? you? what? you never want to do is have like ah a 2 hour boring meeting where a bunch of very tired people sit around in a room and you know show slides to each other That’s just like it’s expensive. It’s not scalable and it’s very very inefficient. Um a you know. Potentially even worse ways to do it on. Um on video on something like Zoom because those are just like boring and interminable. Um, but a very a very good way to convey information is to have recorded information that you can send out ahead of time as long as you have the flow to make really fun and delightful and easy recordings and the flow of of. Watching them and how you watch them and that whole the whole management of the video workflow and then when you do talk synchronously when you talk live like you and I are doing right now we do it very interactively. So we never have this like long rambling session where one person is talking and everyone else is sitting quietly. Everything is is question and answer everything’ is interacted. Everything’s much shorter. And then when you get together in person which you know we still do those are only 4 experiences those are for you know, going out to restaurants and going on long walks and really bonding as ah as a team and building trust so the idea is we have this this hierarchy of you know, live and in person which is.
Phil Libin: The most precious but also the most expensive and you should never waste and then live video which is good for very interactive short sessions and recorded video which is very good for explaining things as long as you’s kind of do it the right way and our product lets you. Smoothly go from from from one to the other and when we started it really just as a way a couple of months after the pandemic started. We were just really bored with all of the video calls. We just realized they were very thick, tedious and nonproductive and so we just started fooling around with. You know, putting funny things on camera you know behind us on on green screens and doing stuff like that just to make people laugh but we very quickly realize actually this this as a communication medium was ah, incredibly powerful and we’ve been. We’ve been running with it ever since.
Alejandro Cremades: And how much capital have you guys raised for the company.
Phil Libin: I think about a hundred and forty million um yeah so far the company’s only about two years old so it’s yeah.
Alejandro Cremades: Now you you were talking before about you know one of your biggest lesson with engine 5 was the no asshole policy. How do you and you were also talking about sniffing you know things out and and bullshit you know with what you experienced becoming a venture capitalist.
Phil Libin: And.
Alejandro Cremades: So when you combine all those and you’re able to filter the assholes and then also you know filter through the bullshit. How did you implement those to make sure that you were finding the right investors for this journey given your previous experience.
Phil Libin: Yeah I mean the investors are are pretty easy because you know the thing the thing that most entrepreneurs maybe don’t understand about investors is you don’t actually have to listen to them So all you need from legacy their money wants to give you money if they start bothering you just ignore them. It’s fine.
Alejandro Cremades: Right.
Phil Libin: Um, you know like you should you should listen to your investors if they’re really useful at giving you great advice then by of course and I have great investors. But if they’re not just ignore them because it doesn’t like as investors The only thing you care about is their next round from them and if your business is doing well. They’re going to want to invest in the next round whether you’ve ignored them or not. If. Your business isn’t doing well. They’re not going to want to invest whether you’ve ignored them or not so as soon as as soon as some investor starts you know being a nuisance just to start ignoring them. It’s very easy. It’s literally the easiest thing you could do as a founder. It’s kind of a superpower I’m always surprised that more founders don’t realize this. Um, I’m fortunate with investors because I you know I know most of my investors. You know my main investor is is sequoia and I’ve worked with ra the Botha for 50 years he’s also an main investor evernote I worked with Lydia Jeff from Softbank they’re kind of amazing so I have I have a very good team. But even if I didn’t they wouldn’t waste any time on you. Bad investor advice because those are easy to ignore you know coworkers are hard for coworkers are really because you can’t really ignore them. You really do have to work with them. So that’s that becomes more important but I think um.
Phil Libin: The real challenge right now and this is I think the biggest divide that’s happening and in in work right now and I think is going to be maybe the most significant thing for next year for for all of us is not so much the distinction between in-office companies versus remote companies. I think it’s really a distinction between high trust and low trust companies I think the most important thing is there’s a lot of companies right now that are very low trust where they don’t trust the employees and the employees don’t trust the company and you can see this everywhere and if you’re in a low trust environment. You have to have things like well if I can’t see you working. How do I know you’re being productive and so you’re forcing people. You know to be at the office certain hours and you’re installing you know, spyware and computers. But I think and sometimes maybe that’s necessary for some organizations. But I think like working in a low trust environment is a massive massive toll a massive tax. Both in the company and the employees and I was just realized if I was getting started in my career right now. The most important thing to me would be to make sure that I never got stuck working for a company that didn’t trust me I would do everything possible if I was just getting started to make sure that I was never working for a company that didn’t trust me. And and never had employees that I don’t trust. Um, and I think so that’s the hard thing is that that’s that’s different. It’s different from what it used to be especially if you’re if you’re distributed. You’re not seeing people in the office. How do you maintain a high trust culture. Um without the crutches that we had.
Phil Libin: We had before and that’s that’s a pretty new thing that we’re all trying to figure out but I think you know part of it is this is the product we’re making is a product that lets you have a high trust team without without seeing everyone a person all the time and part of it is just ah, the Phil Libin: osophy of knowing that it’s hard and knowing that Jeff would do it anyway.
Alejandro Cremades: Yeah, so to that point where you know we’re talking here about where things are heading you know and and and also what we’re encountering now especially in the world. You know, post covid if you were to go to sleep tonight Phil and you wake up in a world where the vision of hm. Is fully realized what does that world look like okay.
Phil Libin: Um I think it’s a world where many people can choose ah work in high trust places and have realized that there is no such thing as work life balance that there’s only life.
Phil Libin: And that you don’t have to compromise your life to get good work and vice versa. They think that that compromise is is at the heart of what what went wrong with commercial and capital swirl over the past century this idea that you have to give up fundamental things as a human being in order to have a career. Um, I think what we’ve realized is is that for creative people for people who work on laptops improving the quality of life improves the quality of their work if you let people live in. Ah you know in a nice neighborhood and have time for their health and for their children and for their friends and to experience music and art and good food. And no one ever. You know you don’t have to waste 3 hours every day sitting in traffic if you let people optimize for that quality of life or creative people. They they become more productive. They do higher quality work as long as you can keep this high trust team and if you improve the quality of work that leads to more success and more money. Which you can of course directly invest into having an even higher quality of life and so you have this world has this virtuous cycle of improving quality of life improves quality of work improves quality of life improves quality of work improves quality of life. You get this flywheel that starts spinning and I think I think our goal is to get that spinning for as many people as possible. You know hundreds of millions of people soon eventually hopefully billions of people. Um, because I think we really need to rethink what what is work in you know in in the new economy and I don’t think it’s.
Phil Libin: You know I have to be in a low- trust place and I have to commute and I have to live in someplace miserable and you know I can’t have time for children and friends and food and music I think these are all pretty inhumane things and and maybe we’re hopefully we’re we’re We’re just about. We’re We’re just entering this renaissance of a well-integrated. Life for as many people as possible.
Alejandro Cremades: I love it now. Imagine I was to put you into a time machine Phil and I bring you back in time to that moment where you are coming out of um, you know being um, a programmer a computer engineer. You know one of those companies that you were working at and now you’re thinking about branching on your own and imagine you were able to have a sit down with that younger Phil Libin: .
Phil Libin: Yeah, yeah, you know I’ve thought about this a lot and and I and I know exactly what I would say I would say I would say don’t worry about anything.
Alejandro Cremades: And giving that younger Phil one piece of advice before launching a business. What would that be and why given what you know now first.
Phil Libin: Because in twenty or thirty years you’re going to have a time machine so none of the rest of this matters. You can always go back in time and change. Whatever you want. So I would say remember you’re going to have a time machine doesn’t nothing else is going to be important. Don’t worry. Do whatever you want? That’s that’s what I would say if I knew only if I knew that I would have a time machine. It’s a very specific. This is very specific advice because of how you how you asked me the question. But yeah, yeah, if I knew I would have access to a time machine I would just tell I would tell the younger self there’s going to be a time machine. Don’t worry about it.
Alejandro Cremades: Okay, what? what about what about if there was no time machines and you only had 1 shot one chance.
Phil Libin: Only 1 chance. Yeah, that’s harder I would say um I think that I think the biggest mistakes that I’ve made repeatedly is in in my personal life as well as at work is ah if I um do something that I think I have to do.
Phil Libin: So that I could do the thing that I want to do later. So if I say well. Okay, what I really want to do is this but I can’t quite do that right? Away. So first I have to do that I think most of the time that’s a mistake so I would I would encourage myself to always find ways to do the thing that I wanted to do now work on work on the thing that I really want to do today. Not on what I think I need to accomplish in order to have the chance to work in the thing that I really want to work on. So I think that I think that’s probably been my most common mistake.
Alejandro Cremades: So I love it so feel for the people that are listening. What is the best way for them to reach out and say hi.
Phil Libin: Oh well, you know any I’m I’m easy to reach I Kind of think it’s like a you know it’s a reasonable filter for people. So I am pretty accessible. You know figure it out. But I’m always happy to I’m always happy to to to chat? yeah.
Alejandro Cremades: Ah, all right? amazing. But you’re like on social media linkedin Twitter and all that stuff right? All right? Amazing well hey Phil yeah nowa these there’s all types of tools. Ah so Phil. Thank you, thank you? So so much for for being with us today. It has been an honor.
Phil Libin: I Am yeah you can guess you can guess my email you can do all sorts of things. Yeah.
Phil Libin: Um, and Andrew thank you. It was a big honor to be here and I really enjoyed this conversation.
Alejandro Cremades: To have you in the deal maker show Phil.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected]