Billion dollar failures, and billion dollar success | Tom Conrad (Quibi, Pandora, Pets.com, Snap, Zero)
Tom Conrad, CEO of Zero Longevity Science and former CTO of Pandora and VP of Product at Snap, shares lessons from notable product failures (Pets.com, Quibi) and successes (Pandora, Snap, Apple). He discusses the importance of understanding business models, team dynamics, and personal growth.
Deep Dive Analysis
14 Topic Outline
Early Career at Apple and the Blinking Folder Feature
Advice on Choosing Where to Work and Trusting Gut Instincts
Lessons from the Failure of Pets.com
Quibi's Challenges, Lessons, and Renewed Passion for Building
Understanding the 'Math Problem' of a Business
Lessons from You Don't Know Jack: Specialization vs. Generalism
Building Pandora: Genuine Audience Engagement and Missed Opportunities
Experience at Snapchat: Risk-Taking and Executing a Founder's Vision
Balancing CEO Involvement: Dictating vs. Empowering
Transition to CEO at Zero: Personal Health and Business Fundamentals
The Importance of Unit Economics and Business Models
Maintaining Mental Health and Avoiding Burnout: The Ikigai Concept
Contrarian Corner: Not Everyone Needs to Be a Founder
Lightning Round: Book Recommendations, TV Shows, Interview Questions
3 Key Concepts
Ikigai
A Japanese concept represented as a Venn diagram with four spheres: what you love, what you're good at, what the world needs, and what you can be paid for. The intersection of all four is Ikigai, representing a deeply satisfying purpose or reason for being. Intersections of three spheres can lead to a feeling that something is just out of reach.
Business Math Problem
The idea that a company can be fundamentally understood as an equation describing how investment is converted into returns over a certain time horizon. While product execution influences variables, a broken foundational equation or a big swing in itself can lead to failure, regardless of iteration or execution quality.
Performative Contribution
A work culture where recognition is given for the *appearance* of working long hours or being constantly present, rather than for the actual quality and quantity of work produced. Tom contrasts this with valuing actual output and encouraging work-life balance.
7 Questions Answered
Beyond finding a product you're passionate about, it's crucial to find people you can learn from, like, and who challenge you appropriately. Trust your gut instinct about the people during the interview process, as you often know when there's a misalignment of values or working styles.
An excess of investment can be an albatross, leading companies to make unwise decisions like engaging in an unwinnable promotional arms race. Additionally, timing is critical, as a 'stupid business' idea (like shipping dog food) can become successful later when market conditions and internet penetration are more favorable.
Quibi's foundational math was flawed, betting that a bespoke, premium content library for mobile, costing a couple billion dollars, would be sufficient to attract and retain enough subscribers. The required content library was much larger, and the company couldn't afford to iterate on content formats for years like a typical startup due to its high burn rate.
Working with Evan Spiegel taught him the value of taking big swings and making speculative bets, especially when backed by strong financial support and investor relationships. This approach allowed for numerous successful innovations, even if some bets didn't pay off, fostering a culture of bold experimentation.
Product leaders should spend time building a comprehensive model that describes the entire business, aggregating data on historical results, expenses, and future scenarios by manipulating variables. This helps identify high-leverage points for optimization and understand the 'higher order' equation that CEOs and investors use to evaluate company performance.
Finding your 'Ikigai' (the intersection of what you love, what you're good at, what the world needs, and what you can be paid for) is crucial. Additionally, focus on genuine contribution rather than 'performative contribution' (working excessively long hours for show), and strive for a reasonable balance between work and personal life to ensure sustained engagement.
Many smart, creative, and talented individuals who might raise seed funding for a 'stupid company' would be better off joining an existing team that needs their skills. They can achieve significant impact, financial reward, and peer acclaim by collaborating on a problem with a clear market opportunity and a winning mathematical formula, without the burden of being the sole founder.
17 Actionable Insights
1. Understand Business Math Formula
Recognize that companies are fundamentally a ‘math problem’ where investment leads to returns. If the core business equation is broken, even excellent product execution and iteration won’t guarantee success.
2. Prioritize People in Your Team
Seek out collaborators you can learn from, like, and who challenge you appropriately, as daily satisfaction and professional development largely stem from these relationships.
3. Specialize and Go Deep
Focus on becoming exceptionally good at a specific skill or area, rather than being a broad generalist, as this can significantly develop your professional capabilities.
4. Engage Genuinely with Users
Allow every team member, including founders and engineers, to directly respond to customer support requests without macros or strict rules. This fosters genuine engagement and can be a catalyst for word-of-mouth growth.
5. Embrace “Failures” for Growth
View professional ‘disasters’ as experiences that make you better and can open unexpected doors for your ambition and career, even if they are high-profile.
6. Challenge Distribution Assumptions
As a product leader, push back and illuminate the unlikelihood of achieving ambitious distribution targets, especially when the business model heavily relies on them from day one.
7. Embrace Calculated Big Swings
When you have strong financial backing and investor relationships, be willing to take bigger risks and make speculative bets on features or acquisitions that could have an outsized impact.
8. Don’t Be a Founder if Not Suited
Consider joining a team that needs your skills on a problem with a clear path to success, rather than founding a company that won’t go anywhere. You can achieve acclaim, financial reward, and impact in collaboration with others.
9. CEO: Be Detail-Oriented, Avoid Dictating
As a CEO, deeply understand the business and product details without over-dictating outcomes, as your input can disproportionately influence the team’s actions.
10. Identify Natural Motivations in Hiring
Ask candidates to describe a ‘great day at work’ to understand what naturally rewards them and what their highest, best use might be, helping you find the right fit for your team.
11. Foster Work-Life Balance (or Choice)
Create work environments that allow for a reasonable balance between personal and professional life, or at least provide the room for individuals to choose their own balance.
12. Take Breaks to Avoid Burnout
Recognize when a job is hard and demanding, and take necessary breaks to recover and prevent burnout, as this is crucial for sustained effort.
13. Prioritize Relationships Over Experiences
Understand that deep, satisfying relationships are often more valuable than constantly seeking new experiences, and engaging with humanity often means participating in shared endeavors like work.
14. Work on Products You Love
Focus your time and energy on building products you are passionate about, as this passion can be a significant driver of satisfaction and dedication.
15. Trust Your Gut on People
When evaluating a company or potential collaborators, pay attention to your instincts and gut feelings about the people you’d be working with, as these often reveal misalignments.
16. Beware Excess Investment
Be cautious of having too much capital, as an excess of investment can become an ‘albatross’ and lead to irrational spending or unwise business decisions.
17. Embrace Product Details
Believe that the small details are not merely minor elements but are fundamental to the overall design and success of a product, as ’the details are not the details, they make the design.’
6 Key Quotes
There's this belief that everybody needs to be a founder. I think in some ways our industry would be much better off if there were fewer founders.
Tom Conrad
My professional satisfaction is not well correlated with those sort of external metrics and very, very coordinated with, you know, did I love the thing we were building and did I love the people I was working with?
Tom Conrad
I think the thing I've come to better appreciate is that companies are also kind of like a, they're kind of a math problem that describes how you take, you know, investment and pour them into the equation and out the other side comes returns on some time horizon.
Tom Conrad
The details are not the details. They make the design.
Tom Conrad (quoting Charles Eames)
If you want to be engaged with humanity, like where they are on Monday morning is like at work.
Tom Conrad
I now realize that they, they were, they were tilling the soil that I'm talking about. They were tillingly what it, it doesn't really matter what the screens are, what the features are. And like, you know, I mean, it certainly matters, but like if there's another higher order way to look at a company, which is really about the optimization of this equation.
Tom Conrad