00:03:26 · Siqi Chen
So a large part of reason why I learned how to be an engineer is so I can build things myself. Wanted to build more and more things, discovered that to build things of impact, you can't build alone. You have to build with other people. And when I think about impact, I have this mental model of how you increase impact and how you add leverage. If I were to dig a hole in the ground with a shovel, right, the impact I can make is based on my time. If I stop digging, there's no more hole. If you can build like a robot that digs a hole for you, right, you create a lot of new value that'll generate value even if you're not there. That's what software is. When you write a piece of code, it can run 10,000,000 times a second, much faster than a human, that's valuable. That's another level of impact. You increase your leverage. Then to create even more impact, build more valuable and complex things, you need to be able to build things that you can't build on your own. So then it's about finding problems and coordinating people to build it together, and that's a higher level impact. But I actually think about running a business and entrepreneurship very much through the lens of engineering. Like, building organization is almost like higher level programming. On an individual level, you're programming through a keyboard, but then, like, if you're trying to create new products, you're programming through an organization, the people in it, the norms, the culture that you create, the problems that you're trying to solve, the mission. And I just find building things super rewarding. And my second company, my second company was acquired by a company called Postmates. It's this delivery company, and I was VP of product and growth there. And so I was in meeting one time, and someone had said the word contribution margin, and I said, what's that? And someone said, that is one of the metrics your team is responsible for. I said, oh, alright. So I went and Googled it. That sense of insecurity that I had about not understanding business, not being a business person, my background is in math, is in engineering. I never thought of myself as a business person. That stuck with me for a really long time. So when I joined Sandbox VR a few years ago, we didn't have a financial model at the time, and I created a model.
00:05:12 · Siqi Chen, S0
And what we quickly discovered is that, oh my god, we're gonna run out of money in three months because it's a very high CapEx, low margin business, and I moved my family to join this company like three months ago to a different country. Ultimately, the reason why I started Runway is COVID hit, and we had this retail business with many stores. All of our revenue came from people going out and having fun with their friends. And so we had to project out how long because COVID gonna last. Is it gonna last three months, or is it gonna be two years? And we were doing it on these spreadsheets, and, that had huge implication. Ad[00:05:42] S0: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, setup required, compatibility, and availability varies 18 plus.
00:05:42 · S0, S1, S2, S3
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00:06:39 · S3, S4, S5
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00:07:22 · Siqi Chen
[00:07:22] S6: That's what we had to do. We ended up having laying off, like, 90% of the company, including myself. And so understanding business affects everyone, whether you're the CEO or you're engineer. Ultimately, businesses exist to make a profit, to make revenue so that we can have a good time and build great things, and understanding it is incredibly important. So if you think about a spreadsheet, when you get a spreadsheet... I don't know if you've ever gotten a spreadsheet, but the first time you get a spreadsheet, the emotion that everyone feels is universal. You feel overwhelmed. You're like, Oh my god. This is a wall of numbers. I don't understand it. Right? That's how everyone feels. And then when you think about how a engineer or a CEO, a business operator actually thinks about their business, they think about, I'm gonna do things at a certain time in the future to move the business forward. I'm gonna raise money. I'm gonna start a marketing campaign. I'm gonna make the product better. That context lives outside of the spreadsheet. It lives in road map documents, you know, Notion or Google, and it's completely disconnected from your numbers. And so one of the first things that we help people do is we actually can connect your business context with your numbers for the first time. So now instead of looking at a number going up and down, you're saying, okay, well, I have a plan to raise money. I have a plan to improve the product. Here's when it's gonna happen. Here's who's gonna do it. And here's the impact of what I'm gonna do and how it impacts the key metrics of the business. We spent a couple of months building this, like, really cool view. It lets you transform and pivot all of your expenses and revenue by however you want. And the hypothesis is, that is a foundation for other problems that we could solve. We actually disproved the hypothesis, and what we quickly learned is that it did do that. It solved the problem of helping people understand their spend. Because when people started using it, the product was good at what it did, and it told people, hey, you're a startup. Most of your spend is in people. You're like, okay, great. Got it. Next month, most of your spend is still in people. Doesn't change from month to month. And so the amount of money you're willing to pay for that, that's all the problem, is basically zero.
00:09:18 · Siqi Chen
But as we talk to more customers, the pain that is valuable is I have more people in the company and I need to figure out major decisions around how we deploy millions of dollars. Do we hire more people? Do we have marketing campaigns? That's an incredibly valuable problem, but it's much more difficult to solve. You need to be able to model and forecast a business. And so that first initial hypothesis was just proven. And about a year in, we restarted it to focus on planning and forecasting in a team environment for slightly larger companies. And so some of the problems that you think you have and the details of how to solve those problems aren't things that you know. You know, part of Runway's culture that has been really special is everybody is so incredibly close to the customer. Our product team actually is a team that makes very few, if any, product decisions at all, which is really odd, right, because they're the product team. But what's worked for us is the product team is actually tasked with being close to the customer, understanding the customer, and delivering that customer context and creating a culture of customer centricity throughout the entire rest of the organization so that they're the ones making sure that designers, engineers are connecting with customers, talking to them directly. Our designers and engineers are in every single customer Slack channel. When they design things, when they ship things, they will show the customers like, hey, I saw that you had this problem on this call with Tanner. I built a thing. I designed a thing. It works like this. What do you think? Does this solve your problem? And then they'll build it and we'll have them try it. And they're the ones talking directly to customers. So it's not just doing customer support. They're like actually trying get more information from them and partnering with them to build new capabilities in a product to make sure it solves a problem and make sure it's easy to use. They are actually quite literally doing what the job of what a traditional product manager would do. And our product team is a team responsible for creating that call culture, making sure it happens. When we launched our website in June, you know, I literally tweeted, hey, new brand, new website, some jobs, no big deal. And then that went viral all over Twitter.