Category: Startup Advice
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Hi everyone, welcome to IALab's podcast. Today we are here with Phil Green, one of our adviserss, and we are talking about startup myths that we need to leave behind in 2025.
So to kick us off, what are some of the most common myths you've heard or you've experienced that
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you wish people would stop talking about? >> So there I guess there are a couple.
Um the first one that is very common with with a lot of early teams is that once I have an idea, I need to talk to investors. Um and you know the problem
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with that myth is that uh that people think that a good idea will carry the day. Um and a good idea is not going to carry the day.
What an investor cares about is your ability to execute on that idea. Um and if all you have is the idea, then you look like somebody who
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can write a deck but can't really do much. And that's really not a good way to uh impress an investor.
Typically, look, if you're Elon Musk, you can raise money on an idea, right? He's done it a bunch of times and he's had a lot of very big successful ventures, but most
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folks here uh and most firsttime founders don't have that kind of experience, don't have that ability to say, I've I've helped people make a ton of money. So, what you need to do is you need to go out and you need to put your idea in front of people.
that is build
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some sort of MVP, get them to use it and bring in external evidence that people actually want what you've made because the fact is is that the number one reason t startups fail is because people build stuff that nobody wants. And so
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your job when you get an idea is then to further test it, validate it, get some level of traction, make people understand that you know how to run a business, uh, and then go raise money is your typical my advice would be that's
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the typical way you should go about things. >> Completely agree.
Yeah, we talk about that a lot at the lab. Like definitely test it, talk to your customers, get that MVP out there.
Um, one question I would have as a follow-up is what about establishing relationships early? Some people may say, "I'm not ready to raise,
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but I want to talk to VCs." >> I advise teams all the time that don't when you get your idea, start building your business, but then build a a set of adviserss. >> Um, and particularly if you can build advisors who are high- netw worth people who have made money in your business and
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form a relationship with them. Show them that you can set up pins and knock them down that you are you're sending them.
It means you're sending them regular updates. You're you're making things happen and you're building a relationship with those adviserss.
Um, and at some point what you then can do
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is ask those adviserss, hey, I need some advice. I'm ready to raise some money.
What should I do? You've really built a relationship with people who are high- netw worth individuals who you've shown and proven that you're able to move your venture forward.
Some of them will write
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checks. Some of them will point you to people who can write checks.
But you're but you're now getting warm introductions to angels or micro VCs versus doing cold outreach. So it's much much better than kind of build build and then suddenly go do a bunch of cold
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outreach. Cold outreach is much much harder than actually having a relationship with a bunch of really good investors or advisors who are likely to be in your deck.
Um and it's like oh look Sally's in his deck and Tom's in his deck and Jane's in the deck. these
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guys know what they're doing or these gals know what they're doing. So that what you you've got is something that's much more robust.
Then you've got the traction and you have you're surrounded by the people who you want. You get the halo effect from your adviserss.
>> And on that vein, the first investor you
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talk to might be might not be the investor that invests in you, but um maybe they're not investing in your industry for their portfolio, but they might have friends that are. And so building that network early can do a lot later, >> right?
Um, right. >> And another startup myth that I've heard
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in this area is you should only tell your investors or potential investors the good things that are happening. >> Oh, no.
I I mean, look, the world is not perfect and if you try to paint a picture of perfection for your advisors, for your investors, uh, then they know
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that you're just hiding the bad stuff. Um, and so things don't work out all the time.
And you the key thing is not to just say oh this failed is to say this failed but we learned the following 10 lessons. The currency that is much more
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important early in a venture is not revenue but it's learning. Are you learning how to run your business?
Are you learning what customers want? Are you learning what features are important to your customers.
If you're learning those things, that's way more important than getting an investor and or getting
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a little bit of extra revenue. So, so if you're focusing on the learnings and then telling your investors, we've learned the following 10 things, maybe the hard way, right?
But life doesn't always work that everything works out perfectly, right? That's just silly.
So,
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if it if the if all you do is send them, you know, oh, here are all the roses and bouquets and rainbows and unicorns and all that stuff, it's like, this isn't a real venture. It's, you know, there's something fake going on here.
I don't understand what's going on. um they don't they're not going to trust you.
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>> Definitely. Yeah.
So, it's a way to build trust and it's also a way to show that you're resilient like they want to cockroaches that can pivot and iterate. >> Yes.
>> Can you share a founder story where you saw someone here at the lab u not follow
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one of those rules or myths and it ended it ended up benefiting them in a really good way. Like maybe they went to sell before they had a product made or >> Yeah.
Well, I I work with a a fellow at the eyab now who is a alum of the eyab, alum of HBS. His business venture um was
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that he was as a just before he graduated he was able to raise um a substantial amount of money but and that was based on the fact that they had kind of three customers that were pretty excited about the product. Um unfortunately those were false
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positives. um they could not find a product market fit for the product they had built and they spent a lot of money banging their head against the wall in terms of sales getting people to try it but not getting people to be sticky with it and it was a very painful lesson for
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them and eventually what they did is rather than then build another app which is one of the startup myths is oh I have a great idea I'm going to go build something is what what he did is essentially went into a room almost by himself and with a spreadsheet Pete and
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his own brain started engaging with customers and started delivering outputs that the customer wanted. And then what they did is from there slowly started to automate those things, squeeze the labor out.
So it was a little less the founder
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and a little more the app and eventually got to the point where they had an app, but they were doing 100 100k uh uh you know 10K a month uh really totally manually. Um, and so I think the thing that the myth is I've got to go build an
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app and I have to have it. If I have my SAS product, it has to be 100% kind of coin operated.
People put the quarter in and the product just works. You throw it over the wall and they just adopt it.
That's not the way to start a business. The way to start a business is to do things as manually as possible, but
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focus on the what the outcome the customer wants. Don't focus on building an app.
They don't care if it's a dead parrot, if you have ESP, if you have AI, or if it's just you in the background. They want something done.
You can help them accomplish that. They're happy
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customers. What you But the key thing is again, it's that comes back to that learning.
Do you understand what they want? Do you understand what their outcomes what they want their outcomes to be?
And if you can make those outcomes for them, then they'll be willing to pay for it. Now your job is
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to to squeeze as much labor as you can out of that such that you can scale it up. But but people get confused.
They think I've got to have an app which means it's scalable and then it's really hard to change the app and you don't do the out the outcomes that people want.
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Learn the outcomes and then automate um from there and go in that order rather than the other way around. >> Interesting.
And I think in a way puppet method might really set you up for success. puppet method like when they think it's a robot or AI doing the task, but really it's you behind the scenes
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getting it done like Door Dash going and delivering the food before they had a full team to do it. Um because you get to see the problem and like all of the things that can go wrong and you're right there serving your customer.
>> So I I thought the one of the more interesting conversations I ever had
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with a student was a student had a contract with a uh African country to do delivery of medical supplies via drone. Mhm.
>> Terrain is very difficult. Getting to remote place is very difficult with cars and normal normal modes of transportation.
Um and so drone delivery
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was going to speed this up a lot. They were able to convince the government to pay them a substantial amount of money to be able to do this.
Um and then I and then they they when they engaged with me, I said, "What are you working on now? I'm I'm I'm figuring out how to totally automate the drone delivery."
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It's like, "Wait a minute. You have a contract with the government and you're not doing anything.
You're just working on the software and it it's like, but do you know if somebody will be on the other end when the drone gets there? Do you know if it will hit a tree on the
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way down? Do you know if you can pick up the things that you have to deliver?
You you don't know any of those things. Again, come comes back to learnings, right?
What what are the learnings that you need to know? But if you're focused on automating the drone delivery 100%, so it's autonomous and you don't need
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the people, you're not learning any of those things. You don't know whether it can even get there or what will be on the other end or what's going to happen, right?
So, but if you learn those things, then you would know what to automate versus I'm going to automate it so I don't have to have somebody um and
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in the meantime, the government is sitting there waiting, why aren't we doing any drone deliveries? I give you a contract and but they could manually do it for quite a period of time, learn a ton, make some money which would then fund doing the, you know, squeezing the,
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you know, doing the automation, squeezing the labor out. The same thing is focus on what you what you what they're willing to pay for, get paid for that, and then work on that next piece, which is autom or squeezing the labor out and automating it full more fully.
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>> Definitely in the scalability Scalability needs to wait. It's start it first, then scale it later.
>> Yeah. Figure out what they need.
A test. It's always a test, >> right?
Do things that don't scale, right? That's that's what getting started is all about.
Do things that
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don't scale so you can learn what is the right thing to build and what is the right thing to automate. >> My ne next question is about what you've seen at the lab.
What are some blind spots that you see again and again and again? >> I'm the B2B guy.
Often one of the things that's funny in B2B, people think they
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can do marketing in B2B, it doesn't work, particularly in the beginning when you're a big brand like Salesforce, yes, you're going to run lots of ads. You're you have to promote your brand.
There are lots of things you do there. But as a startup, nobody knows you.
People don't people are not going
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to buy something that's reasonably expensive from an ad. Um, what you need to do is you need to knock on doors.
It's it's shoe leather. It's figuring out a methodology to have one-on-one conversations with people, understand what they what they want to do, um, and just make that work.
Um, and then scale
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up from there. So, don't worry about doing the marketing and the branding and those sorts of things.
Those things will come much much later. Worry about just being able to connect with your customers.
And these days, LinkedIn, you should be able to find any B2B customer
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in the US. really everybody's on LinkedIn, you know, and if they're not on LinkedIn, there's probably a problem.
Um, and or use other databases where you can reach those customers and then build maybe some sort of light automation process to to make to have those do
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outreaches so that you because you're going to get, you know, if if you're lucky, you'll get a 20% 30% response rate. If you're unlucky, you're going to get a five or a 3% response rate, which means you have to reach out a lot and you'll begin to then understand who is your ICP, who's your ideal customer,
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what do they look like, how does that work, but have those conversations and build trust with those folks that you can then um basically satisfy some problem they have, produce the outcomes that they want and go from there. So B2B
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is talking to people, B TOC is when you don't talk to people. Um, you know, and a very people, marketing people are very gregarious.
Sales people have to be uh totally the the most gregarious people in the entire universe because that's all they do all day. They talk to people.
Coke,
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>> you run an ad and I go buy it at the grocery store. I don't talk to Coke.
But you don't buy B2B products by not talking to people. >> I definitely think marketing people should talk to the customers here.
But yeah. Yeah.
And especially with EDV, um
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if you don't have any customers, how can you run a marketing campaign because you don't know what people are saying, you don't know their language yet, right? >> Um and so on that note, what do you think about people branding and finding out their slogan before they have their first customers?
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>> I think that's putting the cart before the horse. Um uh you know, don't worry about branding to my mind comes back into the scaling it issue, right?
you first need to understand are they, you know, do they want what you're trying to sell? What what do they actually need as the outcome?
What kinds of pricing might
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work for these folks? Those are really basic things.
And again, if you're solving a problem they care about, they don't really care about the brand. Um that what they care about is they get an outcome that helps them do their job.
That's solves something they care about. I mean, what we try to tell the students
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to do is focus in on um something that that is keeping somebody up awake at night, right? That's what they want to solve.
They don't really want your product. They want to solve some problem that they've already been thinking about because they don't know about your
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product. You're a startup.
Nobody knows about your product, but they care about a problem. and your your job is to hook your product into the thing that they already care about, that they already are sweating about at night.
Uh, and when you can help them solve that problem, then you're going to be in good
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shape. Eventually, what you're going to do is build some branding around that, what how it works so that more and more people can understand it.
But really, the first thing is to help people solve that problem. And if you can, what do you sell people?
You don't sell them your product. you're selling the fact
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that other customers were successfully using your product, right? Um, you know, and so it's it comes back to this whole notion of of people don't go to sleep at night thinking about buying your product because they don't know about your product.
They they go to sleep at night worried about solving some problem. If
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you can help them solve that problem and you can show them social proof that you've solved it for another customer just like them, then they're then they're willing to give you a try. But if you trying to push a the product that they don't know about onto onto their uh you know kind of to-do list, that's
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really really really tough because they don't believe you. You are lying to them.
That's just the nature of how people think about things. So try to bring that kind of that five-star review into the meeting.
Other customers have been very successful with that. Oh, suddenly you have social proof that
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people want your product. That's what you're that's what you're aiming for.
And I think in your PMF workshop, you use Trello board as an analogy, and I thought that was so great. >> Your job is to figure out what's on their Trello board of things they want to do uh that they can't get done or dissatisfied with the options they have
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to try to do that. And what you do is say, I can help you with that problem, and here's how another customer just like you solve that problem by using my product.
So that that what typical, you know, maybe a myth, maybe not, but a typical sales meeting for a startup is
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often introductions and I demo my product. Well, but they don't want your product.
So this is a really bad sales meeting, right? Your job is not to do that.
Your job is to get them to understand that you understand their problem. You understand what's on their
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to-do list. You understand that the options that they they've considered on their to-do list are not so good.
And then your job is to help them understand that you made you solve that problem for somebody else using your product. But you don't sell your product.
You sell the fact that you can solve that problem
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for them and that you have other customers who have done that same thing. And is this the kind of success you want in a sense is the question you're asking customer you I'm talking to you but my my you know all my customers they've solved this problem.
These are the kind of outcomes they got. Do you want those
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outcomes? They say yes.
Now you know there's demand. They're actually asking for information about how your product works, but they don't want your product, so don't sell it.
>> Yeah. And it's it's expensive to adopt new technology, too.
So, if it's just a nice to have, people aren't going to
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pockets for that. >> That's right.
>> Um, so another question I was curious about is, is there a myth that used to be a myth, but now it's no longer >> true? So I I do a fundraising workshop and the myth that exists uh if you go and you
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look at you know why why do you need VC money is the there's a cash flow line and it goes negative and then eventually it goes positive after you've built your product after you've garnered customers those sorts of things the problem is that's not true today anymore with with
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uh you know AI uh code building products with no code products you can go from zero to a product and customers and revenue without going cash flow negative at all. Um, and so the notion that you need VC money early on is often not
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true. And in B2B SAS, if you've done any kind of vaguely good pricing and you have a product that people want, you can be cash flow positive very very quickly.
So the reason to raise money in those instances is it's a land grab. It's reinforce mover advantages are huge.
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You've got to do something else. But the notion that you should go cash flow negative in order to build a product is something that a lot of people think I've got to go raise money immediately that usually is bad advice from a valuation perspective.
You will get the worst valuation when all you have is an
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idea. You'll get a much better valuation when you have a bunch of customers.
But also the notion of why you have to raise is totally different. Deep tech companies uh you know health and life sciences companies they definitely have the valley of death.
They will go cash flow negative. They have to prove the
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science. They have to go through a $20 million FDA speed bump.
There's a whole bunch of things why it goes negative for quite a while. But for a lot of B2B or even BTOC companies, you can go you can become cash flow negative very very or in fact so positive very very quickly.
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And that's really what you're you you know you'd like to do. So the myth that you have to raise money kind of very very quickly is something that I think me people need to be disabused of.
What would your advice be for people that can now build quicker than they ever have
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been? >> They should or do you think it's because one myth might have been don't build too early?
Uh would you say like build fast and fail fast or what would your advice? >> So I still think people should talk to their customers before they try to build anything.
You can't you can't do a good
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prompt for an AI code builder um if you don't know what your customers want, right? So you want to talk to your customers.
You want to do some of that customer discovery. You want to build that case study of why they buy.
And then what you can do is start to use
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these uh you know AI generative products that build build apps in you know a matter of seconds. Um and and then test those with customers.
So and then you're understanding and you know showing them a Figma diagram.
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I don't I I don't think there's any value in that. That's that's a that's a UI exercise.
Do you like the UI? That doesn't tell me whether about what the outcomes, but you now you can build a product that actually delivers outcomes very very quickly.
So that's the sort of thing that is a gamecher that you know
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you really were back to I can go in my garage with one or two people and I can build a product in an afternoon and I can start testing with customers and the question is do they like it or don't they like it? Still talk to them, still understand what they want to do.
Um, and
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but if they won't pay for it, then you have not built the right thing, right? They're not getting value.
Uh, understand if they're willing to pay for it. And as they're willing to pay for it and stick around, now you've got something that works.
But that's still going to be a lot of iterations. Don't think you're going to talk a prompt into the thing and you're going to be a
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unicorn next week. That's it's not it's not going to work that way.
It is not going to work that way. Um, you know what the way it's going to work is you're going to iterate on that idea quite a bit.
Um, and your likelihood is you're going to have to get somebody with some technical expertise involved
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to do various things to refine it and to to do things. But you can make a ton of progress really really really quickly now with uh, you know, kind of generative AI uh, code building products with uh, the no code products and no code products now are adding AI
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frontends. I mean it's a it's a very different world than it was, you know, just a few years ago.
>> Definitely. >> Or really just a few months ago.
And I mean even after you have your products and your first few customers, it's always an iteration process. There's there'll be new features you're testing and maybe something changes in the
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industry and and generative AI products are really really good at helping you build those prototypes. So maybe you have a core product and maybe you can basically build prototypes, new features out, test those with customers, um do that with uh generative AI products and
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then kind of harden it and bring it back into the core of the product. But there's so much you can do and and you can go so fast now with those products that any people who are ignoring that and or engineers who are still pounding their chest and saying I'm just going to hardcode it myself.
That's that's not
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going to work in the in the real world anymore. >> And what do you say to people like me that have discovered how great reflet is handling something quickly?
Um what are what are your thoughts when people come to you and they say I need a tech founder or I don't need a tech founder because I have Replet.
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>> So I would tell them that they ought to look at lovable and bolt and replet and cursor and bubble um and glide and a whole bunch of those products that help you build those things very very quickly. You've got to decide which of those is the right tool for you and why.
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I mean look the whole CTO thing I need a technical co-founder. The most important thing to my mind is if you think you're going to go out and interview a couple of people and pick your co-founder CTO the to me the analogy is that's like
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saying you're going to get on Bumble and say I want to get married. It's just not the way you do it.
Um, you know, it's it's it's what you need to do is you're if you know the analogy is you're going to date somebody, you're then going to maybe move in together and maybe you'll get married. Your CTO co-founder
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relationship or even a CTO or somebody technical looking for their business partner. They're that person and you are going to work together eight hours a day through thick and thin over a 5 to 7 to 10 year period.
That sounds a lot like a
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marriage. And and so if you think you're going to do that by interviewing a couple people and pick somebody, it's just not going to work that way.
So to my mind, what you want to do is a you maybe want to look for people to join your team as a technical lead, look for
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people to just join the team and to do technical work. Um but don't promise people, you know, is the path maybe a a co-founder, maybe a CTO, something like that, maybe.
But you we have to see because the most important thing is you can work really well together. The most
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important is that they are a good partner with you because uh you got to be able to communicate. You got to be able to go through really painful times, really good times, and not do crazy stuff.
Um but these no code products mean you often delay that conversation
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for quite a bit. You can go test products with customers, get some customers, get revenue going, and then it's a very different conversation with somebody who's coming on as a tech lead.
Say, "Oh, no, we've already built products. we already have customers.
We're already delivering this stuff, but
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I would like a technical person to help me out, right? So, you're looking for assistance, not looking for somebody who, you know, can part the waters of the of the Red Sea.
I can walk through. I mean, it's a very different conversation these days.
>> Definitely, especially in the early days
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where you don't have to have a fully built product yet. That can come later when you have a team.
>> Y >> um so at the we have 13 schools. So people across disciplines means like people coming from the engineering school, the medical school, the business school.
What do you say to researchers
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and um maybe technical founders that say they need someone to help them sell what they built or to to partner with when they have an idea? >> Look, you always have to build a team.
You're not going to do this yourself. The notion of a oneperson AI company is
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a myth, right? I mean, we maybe we'll get there, maybe.
But we're a long way away from that. and and just having different people in the room, the diversity of ideas, different perspectives.
You need that. It's just the, you know, that that's been true for ages and it's hasn't and AI has not
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changed that. So, you need people to help you out.
You need you can't do it all by yourself. Um, you know, when you're fundraising, you're not selling.
When you're selling, you're not fundraising. When you're selling and doing fundraising, you're not building the product.
You know, all you need people to help you do this. So, it's
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going to take uh people to help you out. And so, one of the things that in the ILAB we love is the fact that people meet.
Um, and I love the fact that uh an ex alumni came and said, you know, there are three superpowers of the eye and one of those is the coffee machine. And it
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wasn't the coffee. It was, he said, your job when you're at the coffee machine is to turn around and ask the person behind you, what are you working on and how can I help?
And that's what kind of a community is all about. And that's super important.
Um, so having a community of founders who you can talk to, having a
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community of of of of just people who can help you with ideas, work on your project, all those things. That's really really important.
Doing it by yourself is uh something that's just it's it's not you're not going to do it all by yourself. You need a team.
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>> So that's another myth I wanted to ask you about. What do you think about people grinding away at home and they're in isolation and >> hoping that they'll get there faster and well >> delayed their socials?
>> Yeah, you can make a certain amount of progress, but again, there are usually a
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lot of things to do and if you're the only person doing it, you're going to get bogged down in in a ton of things. And so again, having a team, building that out, ha, assigning different people to do different things is generally speaking going to be a much much much
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better idea than grinding it out all by yourself. Now, I don't advise people to build a team, you know, like day one, you get an idea, try to talk to customers, try to maybe build something uh with AI or a no code product early
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and see if customers like it. And as you begin to understand that people actually want your product, then you can think about the next step of things.
>> All right. Thank you so much, Phil, for covering these myths that we need to leave behind in 2025.
Um, >> absolutely. There's a lot.
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>> We'll definitely be filming some more I live podcasts soon, so definitely stay tuned for that and we'll see you next time. >> Okay, see you.