Gokul Rajaram - Lessons from Investing in 700 Companies

“The software companies that should be the most worried right now is where they're pricing the product based on utility. Zendesk is a good example. Literally Zendesk prices seats and each seat comes with utility. In other words, each seat corresponds to a customer service agent that attacks certain number of customer tickets. So that company should be worried because I can have an AI agent sit right next to Zendesk and you can slowly siphon off.”— Gokul Rajaram

Strategy & Decision Making · Business & Entrepreneurship · Economics & Markets

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Seat-based pricing vulnerable to AI agents

“You've got to start with a deep and compelling problem. Second, you want to target a high-value workflow. You want to target a workflow that is deep, that is complex, and that requires custom data. One of the challenges with this whole space is that the models are becoming so good that if you try to build a company that is light, that is not a hard problem, the foundation model companies are going to eat you. I met with the CIO of a Fortune 500 company a few weeks ago.”— Gokul Rajaram

Strategy & Decision Making · Business & Entrepreneurship · Technology & Engineering

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Horizontal AI tools eliminate shallow problems

“Sergey was our sponsor. He came and sat in the meetings. He said, what are you guys building here? We're like, website publishers are going to apply from all across the world. We have to review them and say we should approve them, not approve them to run AdSense. He's like, why do you need to approve them? We were like, what do you mean? Our ads are going to, we are going to be running ads on these things. Google Ads or Ads Powered by Google.”— Gokul Rajaram

Operations & Execution · Strategy & Decision Making

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Shift from approval to real-time review

“There are a few things around durability. One, you need to have ownership of a scarce asset. A scarce asset could be a license of some kind. It could be a regulation of some kind where you have unique insight into it. Second, you might need to, you might basically own a control point. A control point is a thing that controls how people interact with money or with data. Third, you want to maybe have hardware which is hard to replace. Fourth, maybe you want to be part of an essential workflow.”— Gokul Rajaram

Strategy & Decision Making · Business & Entrepreneurship

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Five sources of durability in AI era

“The best candidates had to do that. Every function needs to have a work project that you need to put them in a room without AI and get them to do the project, get them to do the work that is ideally very similar to the work they're going to do. For product managers, we would take a product we were thinking about and we would just say, here's a product we're thinking about, figure it out. Should we build it?”— Gokul Rajaram

Leadership & Management · Operations & Execution

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Best candidates reject the premise

“Stickiness I think comes from a few sources. One, you need to have network effects. The second example of stickiness is when you have financial or money moving through you. Many of the system of records, for example, Toast, have payments going through them. And I think that really is interesting because you can't just start building the point of sale. You also have to have money flowing through it. The third stickiness is from hardware. You can actually have hardware.”— Gokul Rajaram

Strategy & Decision Making · Business & Entrepreneurship

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Four sources of stickiness framework

“There are 3 fundamental ways to succeed in the ads business. 3 and only 3. One, you need to own a very coveted group of users and you need to have a surface on which those users interact. Google Search is a great example. Facebook, very similar. It took us a while to figure out what was coveted about these users. Turns out what was coveted was the identity. We knew who these users were and we could match them to customer and other data.”— Gokul Rajaram

Business & Entrepreneurship · Strategy & Decision Making

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Three and only three ways ads businesses work

“The North Star metric is a metric that is an indicator of company growth and customer value. So it actually balances customer value and business value nicely. North Star metrics, in my opinion, should not be revenue. It should be something that is directly correlated with customer value. For example, if customers are doing well, the North Star metric should go up and to the right, but it should also lead the business doing well.”— Gokul Rajaram

Strategy & Decision Making · Operations & Execution

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NSM plus check metrics guardrails

“The number of designers and product managers related to the number of engineers, when I was growing up in product, it used to be 1:3 or 1:10. It's going to 1:20 now. When I was growing up, products were deterministic where there was a workflow. You knew if a user did X, Y happened. Today you could do X, Y happens, but if you do slight variation of X, something completely different happens. Non-deterministic software.”— Gokul Rajaram

Technology & Engineering · Leadership & Management

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Ratio shift 1:10 to 1:20, PMs own evals

“The one thing I think that's going to be truly future-proof is judgment. Why? Because what is the biggest challenge you have when you have 1,000 AI engineers writing code? You have the big challenge of AI slop. Every product leader I've talked to is extremely worried that because you have these engineers running rampant, they're just going to produce lots of code. Which of this code is even valuable?”— Gokul Rajaram

Leadership & Management · Technology & Engineering · Philosophy & Reasoning

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Judgment is the only future-proof skill

“A product person or product manager, their job is to balance customer needs and business needs. The product manager, there has to be somebody at the company who's a keeper of the why. Why are we building it? What customer need are we solving? Why is this a pain point? How intense it is, how deep it is. And second, how does this add value to the company? Everything you do or build should be attuned to the goal of what customer state change does it lead to?”— Gokul Rajaram

Strategy & Decision Making · Business & Entrepreneurship

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Every feature needs customer behavior hypothesis

“Eric would give a product leader, we would become seconded to Eric for the weekly strategy or the annual strategy planning session. I did it, I think in 2007, where my job was to go to Eric and say, Eric, how do you want to present the strategy of the company? He's like, well, it's very simple. I want you to go and interview each of the different leaders of the different teams. There's only one constraint I have. You can't use any words to describe what they're doing.”— Gokul Rajaram

Leadership & Management · Creativity & Innovation

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Images not words for strategy communication

“Product managers articulated what to build, designers designed it, and engineers built it. Over the last 2 months in particular, December 25th and Jan 26th, it's become very clear that something has fundamentally changed. The notion of a long horizon, a long-running agent. These agents now are resilient to failure and you don't have to be very technical to use them.”— Gokul Rajaram

Technology & Engineering · Leadership & Management · Operations & Execution

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PM role compressed to guardian of why

“The best designers, the best product people edit down things. Similarly, we have 100 features. What are the 2 things that really matter that will drive the customer outcome? The best designers really take 10 pages of design and say, cut out all the experience. I think it's the process of editing, and this goes to judgment. In an AI age, humans with amazing judgment, which is really editorial capabilities, are the ones that are going to do well and thrive, I think.”— Gokul Rajaram

Creativity & Innovation · Philosophy & Reasoning

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Product managers are product editors