Dalton & Michael: How generosity built tech giants

in thirty seconds. What do you think? Okay. So the basic idea underpinning all technological progress business. You know, very basic stuff Yes. Is if you sell someone a tool Yep. And if they can use the tool to make more money than the tool cost them Boom. You're creating value when people like it.

Yeah. And so, you know, some very basic examples. Google, when they first launched Google Ads Yep. It was very easy to buy Google Ads. You you would pay Google per click and you could sell stuff for way more than you paid Google. So you would just do that all day long and make tons of money. Right? Straightforward.

Sense. Talk about Excel and Microsoft Office. Microsoft Office is a perfect example. If you think about Word, you think about Excel, these are products that made normal office workers and normal kind of financial workers literally like 10 to a hundred times more productive. Yeah. And so, if you can make an employee 10 times more productive,.

people will probably buy And like that tool. Buying a computer back in the eighties was expensive and buying VisiCalc or whatever was expensive, but it was still way positive ROI. $5, 10 grand, no sweat. Massive. Because spreadsheets made them better. Yes. Okay. Classic examples.

So let's get to the problem. There are a lot of founders out there that are building products that deliver no or minimum value to the user. Classic fear is always like, well, I need to grow. Right? The most important thing is to grow in order to raise money and so I'm gonna build something that kinda sucks because like Or or screw that it sucks, right? Because most MVPs suck.

I'm gonna build something that doesn't solve anyone's problem and just try to get money for it so that can go raise money. I think that's a Yeah. It's like it's make something VCs want. Make something It's the make something perverted.

Yes. Thing that we are not fans of Yes. Where you're like, well, superficially, this resembles a software product that superficially people pay for. Yes. Yes. And therefore, we should charge a similar amount of money for it, and like Boom. Boom. The specifics of what it does is details.

Know, we're we we we've got our top folks on that. Yes.

But we've talked about that before, so that's that's an obvious one. Yeah. I think there's another one, which is this fear of being a consultant. I think one of the reasons why people build shitty products that don't solve people's problems is that when they start talking to a user and the user starts saying, here's my problem. I could really use this, this, and this.

The founder starts thinking about that and thinking and fearing, what if this user is different from every other user? What if the problem they have is different? And so what if I have to build something to make them happy? I have to build something that no one else wants.

I think this is a core fear that happens because I think that every founder in the back of their head, thank you Reid Hoffman, is thinking, when can I get to blitzscale?

Like, when can I raise the big round and throw this everywhere and, you know, have everyone use my thing and every founder knows in their heart that if they're not making a simple thing that everyone's gonna use, they can't put scale it? So I think this is the core fear. I'm fearing being consultant. And it's tricky because like this isn't wrong.

Yeah. There's a there's a kernel there's a there is a good idea in there. Yes. Like there's a good there is an insight. There is an insight.

But I might argue it's exactly wrong when you're early. Maybe we should talk about that. Like what's the difference between being early and maybe not even understanding the problem well and being way later on when, like, being a consultant is maybe more of a risk? I think if you're.

on what the customer's problems are and how they make money and how they work Most founders. You make assumptions about how their business should work Yes. Which could be mistaken. So, when the founders of Google started Google, I would imagine they were not experts on performance marketing and how, basically, a lot of the early Google customers, as I recall, were mortgage refinance people Yep.

Where they they would buy people searching for mortgage refinancing, the advertisers would buy those clicks, and they were worth a lot of money to them. There you go. And the founders of Google did not need to be experts on that. No. But as they as they got users and they built the business model, understanding what problems the the customers had was super important. Yes. Right?

I mean, what what are some other examples of, like I mean, we've we've talked about this before, but the classic examples with Twitch, like, we did not understand what streamers wanted until not only did we talk to them, we started building things. Yeah. And so I think that, like,.

maybe the issue here is that if you be fear being consultant early, what you don't end up doing is learning enough about the customer. And so the counterintuitive advice we're giving is basically forget your fear about it being a consultant early, dig in with some customers, actually solve their problem. And in the process, maybe you're building some stuff that's one off Yeah.

But you're gonna learn a ton about the actual problem. And then you'll have some insights on, okay, what's more generalizable? What can I do that I can give to everyone? And ideally,.

understand the levers in their business that drives economic value. Like, basically, like, don't make assumptions that you think you know how they make money or should make money. Yes. Kind of test those assumptions. Yeah. And once you have a better mental model of that, it's much it's much more clear how you drive economic value. And what's funny is you can even ask them.

Like, you can even say, like, how can this help you make more money? Like, you can literally.

sometimes founders are afraid of asking the, like, the dumb question, but that's a worthwhile question to ask. If you can help your customer make more money, they're probably gonna like you. I think one other area this applies that's counterintuitive is even in your customer outreach.

Because I think that a lot of times, founders when they're reaching out to customers, even in that moment, they're asking for more than they're giving. Right? We see these emails all the time where, you know, hey, I'm building x y and z software. Do you have twenty minutes to jump on the phone with me to talk about it? You know what I'm saying? Is that not the definition of asking Yeah. Before?

Well, I just want feedback. Yeah. Give me feedback. Your time. Customer discovery. Yeah. Your time is clearly worth nothing. Like.

And I need you to help me. And I think one of the things I've seen that works so much better in the initial outreach is when you actually offer something. You should give value upfront. Now we had one company in the current batch that basically was helping with customer onboarding, and they did this in the most simple way.

They actually took a video of the customer's onboarding flow, of the company's onboarding flow, and then provided their advice and feedback on what they could do to make it better. Now, one, that's the definition of consulting. Right? Two, absolutely doesn't scale.

But when they started sending emails with that content in there, when they started giving as the first step with customers started replying saying, thank you. I can use that. Like, yeah, I'm happy to talk to you about how you're thinking to make this even better. So I think in outreach and in building your first products and dealing with your first ten customers, you can give more than you receive.

Let's put this in historical context though because this giving before you receive is not new. Yeah. This is a whole broad topic but just quick crash course. The the history of computers.

involves giving away lot of value for free. Specifically, the original business models of computer companies were to sell hardware Yes. And software was like a thing you had to give the customer to run the hardware to get value from Yes.

And so historically, software was just free and not really proprietary, and this is beyond the scope of this talk here, but if you research the history of Microsoft, people in the audience, Bill Gates kind of pioneered the guilt trip to get people to pay for things. I don't know, go read his letter. I'm not going to do it justice.

But the the the idea of proprietary software and charging for it was like, came out in the eighties. It was innovation in the nineteen eighties or maybe the late seventies. And, you know, before that there was the free software movement which equated software and code to freedom. Yes.

Many of the tools that power everything to this day were created by hippies, created by people with big ideals, created by people that wanted to get more value than they receive. So if you look at the history of GCC, of all the compilers, if you look at Linux, the Linux kernel, if anyone runs an Android phone, that's all free software.

There'd be no Google, there'd be no YouTube without Linux powering all this stuff. Yep. The same with Get, like every web browser, Gecko, Caged TML, where you can research this thing. Also, SQLite Yep. Is this free database that's in everything. Like, I'll bet to just watch this video stream, SQLite is involved like 50 different ways. How many free products do you actually need?

So this is part of the history of software and computing technology is to give out all this value and realize the value that it's created can create enough economic value for the creators Yeah. For the people that make this stuff Yes. And also just unlock more value in the world than what they charge. Yes. Right?

And this is why this is why the graph of how technological progress is accelerating so fast is this factor of giving more than you receive. Yes. And if you take some of their inspiration.

when you're building your products, maybe.

you can have some wild success. Yeah. I think has to be If you leave a lot of the value on the table for your customers Yeah. Instead of trying to take it all Yes.

Then you're in the game. And and the key, let's be clear, is your product actually has to solve the customer's problem. Like it all comes back to like all those free products, all the products people pay for, they actually solve the customer's problem. And so if you can do that in the early stage instead of being afraid of consulting or afraid of fundraising, Bam. You have an advantage.

Alright, man. Great. Great shot.