20VC: The 8 Moats of Enduring Software Companies: How to Analyse for Durability and Defensibility in a World of AI | Why Dropouts are "AI Maxing" the World & Remote Early-Stage Companies are Dying with Gokul Rajaram
Gokul Rajaram is one of the greatest operators turned investors of the last 2 decades. He is trusted as the go to advisor for the greatest founders in the world. Today he serves as a Board Director at three public companies: Coinbase, Pinterest and The Trade Desk. Prior to Marathon (his firm), Gokul served on the executive team at DoorDash and Block. Before Block, he served as Product Director of Ads at Facebook. Earlier in his career, Gokul served as a Product Management Director for Google AdSense. Gokul is also a prolific angel investor, having invested in 700+ companies, including Airtable, Figma, Groq, Runway, Supabase, and Vercel.
AGENDA:
03:53 — Investing Lessons from Google, Doordash and Facebook
05:32 — Why Mark Zuckerberg is the Greatest Distribution Genius Alive
07:23 — Why Every Company Today Needs to be Multi-Product
09:16 — Negative Gross Margins: Are the Best Companies Actually Built on "Shit" Economics?
10:50 — The SaaS Apocalypse: Is the Entire Sector Going to Zero?
12:15 — The 8 Moats of Enduring Software Companies: How to Analyse Companies
14:50 — Why Brand is No Longer a Strong Moat (And What Replaced It)
16:13 — Salesforce vs. Atlassian: Which Systems of Record are Dying?
18:13 — Outcome-Based Pricing: Is This the Total Death of Seat Pricing?
20:16 — The Bolt-On AI Trap: Why Rebuilding Your Entire UX is Non-Negotiable
23:44 — Are the Outcome Sizes of Vertical SaaS Large Enough for VC Today?
28:16 — The Zombie Cohort: What Happens to Private Companies with High Valuations?
32:44 — Is "King Making" Complete Bullshit?
34:21 — Durability Over Margins: What Really Matters in a 100x Growth World
35:36 — The Non-Consumption Miracle: Why Granola and Gamma are Crushing It
38:50 — The PayPal Rule: Can You Raise Prices 5 Times in 3 Years?
42:47 — My Biggest Miss: How I Misread the Shopify Billion-Dollar Mark
45:18 — The Courage to Bet: Why Instacart is the Best VC Deal Ever
46:33 — Seed vs. Growth Pricing: When Does Price Actually Destroy Returns?
50:53 — Does "Proprietary Founder Access" Even Exist?
54:33 — Double Down or Diversify? The Truth About Fund Reserves
59:44 — The Vanta Anti-Portfolio: A Mistake I'll Never Forget
01:01:21 — When to Sell: The "Sell a Third, Hold a Third, Trade a Third" Rule
01:04:12 — Why Remote Early-Stage Companies are Dying
01:07:33 — Why Mid-Level Partners are Fleeing Mega Funds
01:09:47 — The Best CEO Superpowers: Larry, Mark, Jack, and Tony
01:12:33 — The Next 10 Years: Why Dropouts are "AI Maxing" the World
Gokul Rajaram - Lessons from Investing in 700 Companies - [Invest Like the Best, EP.456]
My guest today is Gokul Rajaram, Founding Partner at Marathon Management. Gokul is one of the most prolific product builders and investors of the last twenty years. He has built the core ad and product businesses at Google, Facebook, Square, and DoorDash, working at each company during its most formative scaling periods.
Alongside his operating career, Gokul has invested in more than 700 companies, giving him an unusually broad view into how products are built and scaled.
This conversation is about how product building is changing with AI. We discuss the one thing Gokul believes is truly future-proof in AI, why companies like Zendesk and Slack are more exposed than Salesforce or NetSuite, and the only sources of defensibility.
We also talk about everything Gokul has learned from helping build the most important ads businesses, including the only three ways an ad business can make money, how those constraints shape product decisions, and what consumer behavior change threatens every major platform.
Gokul shares lessons from working closely with Larry and Sergey, Mark Zuckerberg, Jack Dorsey, and Tony Xu.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).
Timestamps
(00:00:00) Welcome to Invest Like The Best
(00:00:53) Meet Gokul Rajaram
(00:02:05) How Product Development is Changing with AI
(00:07:32) Philosophy of Product Management
(00:10:19) What is Future-Proof in AI Era
(00:11:25) Building AI Applications Today
(00:15:03) Systems of Record vs Agent Companies
(00:16:58) Which Legacy Software Companies Are Most Exposed
(00:22:15) Stickiness in the AI Era
(00:24:10) Learning from Larry Page and Sergey Brin
(00:28:15) Learning from Mark Zuckerberg
(00:31:31) Learning from Jack Dorsey
(00:35:40) The Art of Great Product Design
(00:36:49) Weekly CEO Communication
(00:40:27) Three Ways to Succeed in Advertising
(00:44:27) What Should Scare Major Ad Platforms
(00:48:24) North Star Metrics
(00:50:09) Self-Serve Products
(00:54:50) Careers in the AI Era
(00:59:03) Stay Long Enough to Have Impact
(01:00:10) Founder Authenticity and Superpowers
(01:02:21) Navigating the Idea Maze
(01:03:42) Role of Boards
(01:06:31) Excellence in Customer Acquisition
(01:09:11) The Kindest Thing
Gokul Rajaram | Lessons from Zuck, Jack Dorsey, Sergey Brin + Defining your ICP, Evolution of Seed Investing
Gokul Rajaram is an early stage technology investor. As a product leader, operator and board member, he’s helped build seven generational technology companies, including Alphabet, Block, Coinbase, DoorDash, Meta, Pinterest, and The Trade Desk.
We talk about lessons learned from Zuck, Sergey Brin, and Jack Dorsey, when big acquisitions can go well, how to define your ICP, why you should always size markets bottoms-up, having a fast response time, how seed investing has changed since 2007, and Gokul’s hot takes on titles at a startup.
Building an enterprise-ready SaaS app? WorkOS has got you covered with easy-to-integrate APIs for SAML, SCIM, and more. Start now at https://bit.ly/WorkOS-Turpentine-Network.
Timestamps:
(00:00) Intro
(02:14) Common thread of success between the founders of Google, DoorDash, Facebook, and Square
(05:50) Gokul’s first job in Silicon Valley
(07:46) How Serendipity led to PMing Adsense, one of Google’s biggest products
(12:20) Lesson from Sergey Brin on reducing friction before a products magic moment
(18:50) How Zuck used founder mode to beat Google Plus in 2011
(22:51) When big acquisitions can go well
(24:47) How Gokul switches from startup helper to public company board member
(28:09) The evolution of Seed investing since 2007
(33:27) How to have a fast response time
(37:40) Lessons from Jack Dorsey always selling
(39:54) How to define your ICP
(42:40) Using bottoms-up to size a market
(44:05) Why Director and VP titles are bad for startups
Referenced:
Who’s Got the Monkey? https://hbr.org/1999/11/management-time-whos-got-the-monkey
Getting Things Done: The Art of Stress-Free Productivity https://www.amazon.com/Getting-Things-Done-Stress-Free-Productivity/dp/0142000280
How to Size a Market in 30 Minutes https://blog.blingcap.com/2023/02/13/How-to-Size-a-Market/
Follow Gokul:
Twitter: https://x.com/gokulr
LinkedIn: https://www.linkedin.com/in/gokulrajaram1
Follow Turner:
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak
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Gokul Rajaram on designing your product development process, when and how to hire your first PM, a playbook for hiring leaders, getting ahead in you career, how to get started angel investing, more
Gokul Rajaram serves on the executive team at DoorDash, where he leads the Caviar product line. Previously he worked at Square, where he was also on the executive team and led a number of key product lines, and as a product director at Facebook, where he helped the company transition its advertising business to become mobile-first. Earlier in his career, Gokul was a product director for Google AdSense, where he helped launch the product and grow it into a substantial portion of Google’s business.
Gokul also serves on the boards of Coinbase, Pinterest, and The Trade Desk and is a prolific angel investor, having invested in companies like Airtable, Khatabook, and 100+ more.
In this episode, you will learn:
1. How to navigate your next career
- What should you focus on in order to improve your optionality?
- What should you consider as you look for your next career adventure?
- Why join winners in a space?
- Why should people entering the workforce join mid-stage companies?
- Why there are many paths to success.
2. How to build a product development process at early-stage companies
- What does the best product development process typically look like at different company stages?
- What are some common pitfalls when building these processes?
3. Hiring PMs
- When should you hire your first PM? What should you look for?
- When should you wait longer to hire a PM?
- What’s the number one secret for hiring a product leader, regardless of industry?
- How much time should you allocate for hiring as a founder?
- How might job titles impact your company’s work culture?
4. How to start angel investing
- How did Gokul start investing in startups? What would he have done differently?
- What does he look for in a startup pitch?
- How much time should you spend as a part-time investor?
- How do you find deals as a new investor?
Where to find Gokul:
- Twitter: https://twitter.com/gokulr
References:
- Gokul’s current favorite app, Coinbase Wallet: https://www.coinbase.com/wallet
- Favorite book, Playing to Win: How Strategy Really Works: https://rogerlmartin.com/lets-read/playing-to-win
- TED talk: TEDxConcordia - Lenny Rachitsky - Losing Serendipity
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Thank you to our sponsors for making this episode possible:
• Amplitude: https://amplitude.com/
• Flatfile: https://flatfile.com/Lenny
• Productboard: https://Productboard.com/
This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.lennysnewsletter.com/subscribe
a16z Podcast: How Founders Hire a VP of Product
Hiring a VP of Product -- especially as the founder of the company -- can almost feel like handing over your baby to someone else to hold, observes a16z executive talent team partner Caroline Horn, who hosted an event on this topic earlier this year (which this podcast is based on). Featuring Vijay Balasubramaniyan, founder/CEO of Pindrop; Shishir Mehrotra, founder and CEO of Coda; Gokul Rajaram, Production Engineering Lead at Square; and Alan Schaaf, founder/CEO of Imgur -- and moderated by general partner Martin Casado -- the discussion covers everything from what the VP of Product role really is to how to hire and integrate it into your company.
Because if you're going to be handing your "baby" over... how can you avoid common pitfalls? And know that you pick the right person for the job?
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
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