00:18:10 · Waseem Daher, Aditya Agarwal
[00:18:10] S0: So what evolved in our thinking across these three startups? I think one is we were much, much more attuned to market size, which is in the first company, again, it was just like, oh, this is cool. Let's do it. In the second company, it was like, this is a problem we have, and this seems like the world needs this, and it seems big enough. Let's do it. And then with Pilot, I think it was much more like, okay, well, actually, the TAM here is like every small business in The United States, and they all need accounting, and they need tax prep, and they pay a lot for it, and, you know, you multiply the numbers, and, like, the numbers are very big. The TAM is, like, functionally infinity. Like, we spent a lot more time kind of pressure testing against that as opposed to literally for Case Plus, it was like, this seems cool. Like, let's go do it. I think that was correct if your objective is to build a venture scale business, which was our objective. Like, in some ways And you have. And we have. And in some ways, like... One of the, like, maybe not as noble motivations for doing Pilot was a little bit like, you look around, you see, like, these other unicorn or public company CEOs, and you're like, yeah. They're smart, but, like, they're not they're not smarter than we are. [00:19:23] S1: Like, you know, I'm like, we
00:19:23 · Aditya Agarwal, Waseem Daher
[00:19:23] S1: Like, you know, I'm like, we [00:19:24] S0: can do this. Like, I mean, if they're doing it, like, we can probably do it. So there's a certain amount of, like, we chip on our shoulder about that too. And it's like, obviously, that's an input too of, like, okay. Fine. What kind of thing do you wanna build? Because the other path... And this is now, like, more in vogue, and I think, you know, in 2017 when we started Pilot, it was not. It was like, well, you build this thing that's super small, and you don't take a ton of capital, and you have huge ownership. And actually, that probably maximizes dollars in your pocket, but it's a very different shaped thing. [00:19:52] S1: It's interesting. Yeah. So by the third company, you were thinking a lot about markets from day one. Yes. And less about, is this fundamentally something cool? Is this something that is flashy? It's like, hey, I just don't want to take market risk. [00:20:08] S0: Yeah, I think we believed that basically that the technical risks were extremely surmountable by our team because it was just a very, very strong technical team, on almost any domain. It was like, fine, so what are the things that we really need to derisk? What is the market opportunity, and what is the market risk? [00:20:26] S1: What do you think is the biggest market opportunity today?
00:20:26 · Aditya Agarwal, Waseem Daher
[00:20:26] S1: What do you think is the biggest market opportunity today? [00:20:31] S0: Oh, I don't know. I mean, I think that, like, our thesis when we started Pilot in 2017 was this, like, tech enabled services thesis. And at the time, I think it was, like, fairly contrarian. Now, I think it's a pretty consensus view. But very clearly, is a bunch of stuff that today is services that will become done by tech companies, and with all the margin expansion that will come from that and all the TAM expansion that will come from that. [00:20:58] S1: Maybe to ask it another way, it's interesting, right? Pilot's timing is interesting, which is that you're totally correct that back when you first started, probably the biggest question that you got was, is this a services company or is this a tech? Mean, we've spent a long time talking about this, right? Definitely. Today, it's obvious, right? It's like, yeah, of course, AI is going to make these essentially knowledge workers. You'll have knowledge workers who are operating at 1X. Maybe five years ago, the best ones were 3X to 4X. But now you can have people operating at 20x, 30x, with the right set of tooling, right set of essentially LLMs in the loop. How does one capitalize on that almost market realization given that Pilot has also been around for nine years? So how do you, in some ways, not be too early?
00:21:44 · Waseem Daher
[00:21:44] S0: And I think we were a little too early. Okay. Which is... I mean, obviously, we were the right amount of early. We were not too early. We, like, are in in prime position to take advantage of all the new stuff that's coming out, like all the capabilities that are available via LMs. And our thesis was the computer has always been the computer is eventually going to do 99 of it. And I think in 2017, had you asked me, would have said, well, deep learning, neural nets, because that's what everyone talked about back then. But it's like there was a very clear path from the computer does none of the work, which was the status quo at the time. Even if you got the computer to do 70% or 80% of the work, that's still tremendously impactful. And I think the thing that LMs have unlocked is like, well, fine. Now it's probably not 80%. It's probably 95%. Maybe it's 99%. It's like, Okay. But that's like a difference of degree rather than a difference of overall capability in this specific domain. And I think for us, it's like, okay. Well, when this stuff becomes available, you sort of have to lean into it. And then you also need to be kind of thoughtful about, like, well, what is the moat or, like, what is your defensible kind of advantage? Like, every single Y Combinator batch for the past eight plus years has had, like, an AI accounting company in it. At least one. It's just, like, literally every batch. It's like, someone's like, we should do AI accounting. No one's doing AI accounting. Or I don't know. I guess we think we can do it better than Pilot. And there's a certain amount of just... You kinda just, like, wait it out. Yeah. Like, actually, there are real advantages to brand and size and scale and, like, install base, and there's a bunch of, like, hard learned lessons that we've had to contend with that, at first blush, you don't see. So there is a little bit about you kind of just have to outlast the other people in the space.
00:23:29 · Aditya Agarwal, Waseem Daher
[00:23:29] S1: So maybe sticking on that theme around perseverance, surviving, having grit, nine years is a long time, right? Especially in startups because you go through a lot of ups and downs. The classic, every startup is dog years. But how have you maintained, think, your energy and your optimism as well? Because I'm sure it goes through ups and downs. So if you had to mentor a fellow founder on how to deal with the emotions of it, what would you say? [00:24:05] S0: There are times in the company's life where it's like you feel like your success is definitely assured. Of course, you're going to be [00:24:14] S1: It's like 10AM every morning.
00:24:14 · Aditya Agarwal, Waseem Daher
[00:24:14] S1: It's like 10AM every morning. [00:24:15] S0: Yeah. Totally. Exactly. And then there are times when you're like, oh god, this is not working. 2PM every day? Yeah. And everyone feels like that all the time. And so I think one is exactly just actually acknowledging that. That's the experience of every company, even the companies that outwardly appear super super successful. And then thing two is this sounds trite, but I think it is true, which is, like, it really is the journey and not the destination, which is, like, you have to understand kind of why you're playing the game and sort of, like, what you hope to get out of it. Because at every point, it feels like, well, if you just hit this milestone, like, you will have succeeded. Like, oh, if we can just raise that series A, like, it'll really feel like it's working. And then you do that. It's like, well, if we can just raise that series B, like, it'll really feel like it's working. And then you do that. It's like, well, if only we could raise that Series C. The game never ends, actually. [00:25:01] S1: The game never ends. [00:25:02] S0: Even at IPO, it's like that's people... If you talk to CEOs that have IPO ed their companies, with the founders that have IPO ed their companies, they'll tell you the IPO is the beginning, it's not the end.