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Advice from the CEO and COO of Open AI, Tips for Building a $100M Company - Tactician: #00107

Advice from the CEO and COO of Open AI

Author

Alexander Lowell Small
April 26, 2024

Their advice? You gotta let everyone have a say.

It’s like having a party where everyone is invited to the DJ booth… And suddenly, you find out that Julia from HR can really drop the bass.

Advice from the CEO and COO of Open AI

Key Concepts and Tactics:

  • Focus on building assuming that AI models will continue to improve at a rapid pace, rather than assuming they will remain static.

    • "There are two strategies to build on AI right now. There's one strategy which is to assume the model is not going to get better and then you kind of build all these little things on top of it. There's another strategy which is to build assuming that OpenAI is going to stay on the same rate of trajectory and the models are going to keep getting better at the same pace. It would seem to me that 95% of the world should be betting on the latter category, but a lot of the startups have been built in the former category."

  • Focus on a small number of critical priorities as a company scales, rather than attempting to tackle too many things simultaneously.

    • "At any given point in a company's life, there's only like one to three things that really matter at that point. Those things change, but there's almost never 10 things that really matter. And I think Sam has an incredible ability to be laser-focused on those one to three things. And that spills over into how we run the team because if I know what he's focused on, and we may disagree on what those things are, oftentimes I think we agree, but if we can at least align on what those things are, and they may not be the right global bets, but they are the ones that feel the right right at the time, then it helps me to translate down to the teams that I'm building."

  • Empower employees with access to AI tools to increase productivity, rather than solely focusing on quantifiable ROI for specific business processes.

    • "I think people criminally underrate how important it is and how much return you really get on just giving people access to the technology. And that there's this kind of, because you can't quite quantify exactly how it works, but someone that used to spend two days doing something that now spends two minutes doing something and is freed up to do like 85 other things in their daily life, that doesn't really show up in how you would think about ROI as an enterprise, but imagine doing that now 10,000 times over, 100,000 times over."

  • Prioritize mission orientation and hire people who are genuinely excited about the company's future vision.

    • "I watched what has happened to other tech companies when they just become the place you want to work because it's a good resume item. And you can filter against that to varying degrees. And as you said, it doesn't literally need to be 100% true in 100% of cases, but I think companies that lose their mission orientation and get taken over by mercenaries usually come to regret that."

  • Recognize that the best ideas often come from unexpected places within the team, not just the most experienced hires.

    • "And by and large actually I would say the really, really good ideas come from unexpected places on the team, not from the most experienced end of the team always. And so that's my advice: Find a way to make sure that there's this very, very flat very, very even playing field when it comes to how you look to the team for perspective, for decision-making, for judgment, and for creativity."

Tips for Building a $100M Company

Why Read:

  • Practical advice on building a scalable business model and achieving successful exits.

Featuring:

Key Concepts and Tactics:

  • To build a scalable business model, aim for $300-400K in revenue per employee.

    • "If you want to reverse engineer things you have to have a model with economies of scale that gets you to $300 to $400,000 per employee or your model is not real it is not scalable."

  • Once you reach 10,000 customers, launch a second product that can be bigger than the first. 

    • "By the time you get to 10,000 customers you better have a second product that and this is this is the nonobvious thing that can be bigger than the first this one took me a while to figure out to be bigger than the first."

  • Aim to get 30% of your revenue from outside North America at scale. 

    • "At scale at scale the average public software leader gets about a third of their revenue outside of the US."

  • Price your product similarly to comparable products to remove friction. 

    • "If you price similar to similar value apps you remove friction. You remove friction from the sales process and that's what you want to do until you're really big."

  • Relentlessly focus on removing friction from your customer acquisition process. 

    • "Your job as a Founder if you want to scale (because no one else in your company will do this) is to relentlessly remove friction from your customer acquisition process."

  • If your goal is to make a $10-50M exit, don't raise more than a couple million in funding. 

    • "If you raise a couple million dollars, which is hard, it looks easy on the internet but it's hard, you've lost no optionality. The only thing you've suffered is some dilution. After a couple million the game changes. I think there's something to be said for raising nothing but most people raise nothing because they can't raise anything… I think there's even more to be said if you can be one and done with anywhere from half a million to two million… not only do you maintain control and have less dilution but then any exit works. Once you raise more than 10 million… you're signing up for a billion dollar exit and anything less than that is a disappointment.”

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