Uri Levine | Fall in Love with the Problem, Not the Solution

Srini Rao: Welcome to the Unmistakable Creative. Thanks so much for taking the time to join us.

Uri Levine: Thank you. Happy to be here.

Srini Rao: Yeah, it is my pleasure to have you here. So you have a new book out called Fall in Love with the Problem, Not the Solution, which I absolutely loved. And you are the co founder of Waze, which solves a problem that all of us absolutely hate with a passion, which is dealing with traffic.

But before we get into all of that, I wanted to start by asking you, what did your parents do for work and how did that end up shaping what you ended up doing with your life and career? My mom was in the education space. She was actually a professor at Tel Aviv University and my dad was An entrepreneur building factories in Israel, multiple factories in the in new settlements and in particular, keep a team in Israel in the seventies.

So what was the combination of narratives when you have a father who's an entrepreneur and a mother who's an educator? What was the narrative about education in your household and the narrative about making your way in the world? At the end of the day, and this is really important people mostly know me as the founder of Waze and assume that I'm an entrepreneur and I have a dozens of startups.

Uri Levine: So obviously I'm an entrepreneur, but I'm also a teacher and and now you're starting to realize where it's coming from. And so I will feel equally rewarded if I build stuff myself or if I will help someone or guide someone to build it. And these two personalities, those strong personalities are pretty unique combination because you usually you will find the entrepreneurs that they are not teachers and teachers that they're not.

And the combination is actually one of the results of this combination is the book. The interesting thing is with an entrepreneur, you're Spending half your time being wrong and finding wrong answers. Yet as educators people are training us to look for right answers constantly.

Srini Rao: Like the entire education system whether it's good for us or not, which in many cases it's not, is teaching us how to find the right answer. So you have these two sort of conflicting. Narratives of, okay, go out and fail a lot, and then, of course go out and get good grades, which I'm guessing based on all the Israeli people that I've talked to, it's very similar to Indians.

It's make sure you do well in school. Actually, in my case, it was very different. If I would come with a crazy ideas to my parents, they would say, in particular, my dad, why don't you give it up? And, yeah. And if I would come with any grade from school, they would ask me if I'm happy with it.

Uri Levine: And and if I'm not, then they will tell me if you're not happy and there's something about it. And if you're happy, then this is fine. So why do

Srini Rao: you think that narrative of if you're not happy with it, do something if you are fine is not more common particularly when you have a entire generation of helicopter parents.

Where you have kids who apparently now at three years old have to interview to get into a preschool. And also I know that you're a parent from having read the book, so I wonder how that philosophy in the way that you were raised has influenced your own parenting style. For a second I would say I I grew up my kids, I educated my kids to essentially find something that they love and that they are good at as a model for their career development.

Uri Levine: I always encourage them to choose their own path and support them in their own path. And even if I would think that there might be something better for them then I'm probably wrong and they will have to discover it themselves. In order to to to, to follow that path. And this is really important because at the end of the day, what we really want for our kids is we want them to be happy, but they need to be happy in their own way.

They cannot be happy in our way. And the only way to develop that is to end of the day is to encourage them and support them in particular and support them when they fail. Encourage them to fail or to experiment and at the end of the day, if you're going to try new things, you will fail as simple as that.

Yeah. And and then the most important part is that there is no judgment. So if your kids will come back from school with a. with a grade that you are displeased and you're going to punish them for that then the reality is that they will be afraid to fail and if you grew up afraid to fail, then you are not going to expand the, out of your comfort zone and and most likely you will not be hacked.

So you might end up as a, as someone that is looking for perfect and and for a second, I would say good enough wins. With a mother who's an educator and somebody who has built multiple companies and who's been at the forefront of the world we live in today if you were tasked with redesigning our education system, where would you change things?

Srini Rao: Like what would you change about the state of education

Uri Levine: today?

So at the end of the day most of the education systems, their main purpose is actually being babysitting so the parents can go to work and, and one of the things that I would say is that the most important thing at school is actually establishing friendships. Friends are the most important ability to actually socially interact is by far more important than studying a specific subject or not.

And then the next thing that I would change is is the exploration. We want them to investigate, to research, to explore, to find out what is it that really matters for them. And we as educators are the one that needs to provide guidance. That's it.

And so I don't know

Srini Rao: how old your kids were by the time you ended up selling ways to Google. But one thing I wonder about, and I remember talking to Jim McKelvey about this was a co founder of square. How do you maintain a sense of humility in your kids and make them aware of the fact that to be raised by somebody like you who has accomplished what you have is actually putting them in an incredibly privileged position that other people are not put in.

Thank you. How do you maintain that awareness with your children? So look, I haven't changed a lot my lifestyle, so I kept on working. I the day after the acquisition, I left and started a new startup. And and and so in, in one sense, there is the issue of whether or not you are externalizing the I would say that the wealth even though that people tend to think that is way more than what it's actually was.

Uri Levine: And in the other part is that it serves as a role model for them at the that success is going to follow your passion and follow hard war. And I kept on encouraging them to find their own, to a certain extent, I would say also they might be privileges, but at the same time I see it a very high mark for them to for accomplishments.

And so maybe I'm also limiting them in that sense. Yeah, absolutely. There's this sort of theme that I keep coming across over and over again. And it's always people who have lots of money tell you it's not going to make you happy. And it's the people who don't have any or yeah, that's great.

Srini Rao: That's easy for you to say. And I keep seeing this theme over and over again in all the books I keep reading where it's no level of accomplishment is going to lead to this eternal happiness that you think it will, then your set point just keeps changing. So I guess when you've accomplished what you have, how do you find a balance between fulfillment and ambition without letting the ambition just lead you astray?

Uri Levine: Look, at the end of the day, and this is my mission and my destiny is create value, right? And make a bigger impact. Yeah. And this is my mission, right? And so as long as the focus of the mission is on the impact then you will remain always on target, always trying to do more, not achieve more, but create bigger impact.

And and in that sense, I will always keep on doing that. Walk me

Srini Rao: through the trajectory of your career that led to the co founding of Waze into writing this book. Because I think that you and I have one thing in common. I know you mentioned this in the book that you've been fired from every place that you worked at.

And I thought, Oh that's good news. I if Yuri has been fired from every place he's worked at, he's turned out all right. There's

Uri Levine: hope for me. At the end of the day, and for a second, I would say entrepreneurs are troublemakers. And they don't take anything for granted.

They will look into different things from different perspective. They would say, wait a minute, what if it's not like that? And if you love, if you work in a corporate, you will end up by being fired because sometimes you're going to piss someone off and then they will fire you. And and this is part of being an entrepreneur.

Entrepreneurs don't feed into a corporate DNA. Because of that, and to a certain extent most of the corporates in general they would say, okay we don't want in the organizations three types of people, right? We don't want victims. We don't want drama queens and we don't want troublemakers.

Yeah. There, there's an irony to that, right? Like the very person who creates trouble in a corporation is the one who's capable of building one. Yeah. Yeah. But we also have to realize that yeah. And this is really important, right? So you think of a corporate and you basically say corporate or a startup will become a corporate once they accomplish the three major journeys of the startup, right?

So figuring out product market feed, figuring out business model. And figuring out growth and then they are independent company and they will keep on growing until they become a corporate size, right? And the DNA of the company will shift throughout these journeys, because at the beginning, you're looking for a reason to exist.

Once you become a corporate, you're looking for a reason to survive, and this is very different state of mind, right? So the first one. It's chasing the change. And the second one is looking for no change. We end up in entrepreneurs by nature. They are looking for the change, right? So in many cases, I would say not all the great entrepreneurs that were able to build successful companies are the one that needs to keep them running.

Occasionally they will, but we are looking into Perhaps the greatest company of these days, Apple, and and we have to remember that that Steve Jobs was fired because he was more of an entrepreneur and later on he become also someone that can run the company to great success.

Yeah, absolutely. For what about you, like what have been the various sort of career inflection points that got you to here? Because I know that you have worked on a bunch of different startups. It makes me wonder about how you choose the problems that you want to solve. And what has led you to this point?

Srini Rao: Like what has been the backstory

Uri Levine: that's gotten you here? So I think that most of the entrepreneurs. They would start from the personal perspective and I hate traffic jams. You and

Srini Rao: everybody

Uri Levine: else. Yeah but and occasionally I would run into something that I get frustrated and I would keep on asking myself, Why is that is there a way that it can be different? And and you will see that in many of my startups, that was the case. Refunded, for example, was built because when you travel to Europe and you buy goods, you're entitled to get the VAT back, the tax free shopping. But when you try to do that, it simply doesn't work.

There are always bad things that happens there. So maybe long lines, stumps. Or or the stores don't have the right forums or something goes wrong. And you ask yourself, what the hell, what if I can change that? And then you basically say, wait a minute, I think I can. Then you start to build your dream and your passion around that.

And you realize that this is going to be a roller coaster journeys, right? With ups and downs and ups and downs. And I think that the best description I ever heard was, ben Horvitz from a recent Horvitz venture firm. And he used to be a CEO of a startup and he was asked whether or not he was sleeping well at night as a CEO of a startup.

And he said, Oh yeah, I slept like a baby. I woke up every two hours and cried. And that's the reality of the rollercoaster journey of it. And and there is a point of time that you tell yourself, I have to do that, right? This is where you fall in love, the problem in particular with the problem. And for a second, I would explain how to do that, right?

Yeah. And and then you think that this is your destiny. This is your mission. This is what you were. Not what you were signed up for, what you were sent to do. And then you go with this passion and start your journey. Now, for me is always starting from a problem, right? So I'm looking for a problem.

And in general, I would say, look for a problem, a big problem, something that is really worth solving. Something that the world will become a better place if you solve that. And then ask yourself, so who has this problem? If you happen to be the only person on the planet with this problem, then I would say go shrink.

It's going to be way cheaper than than building a startup, right? But if a lot of people actually have this problem, what you really want to do is go and speak with those people and understand their perception of the problem and what you will get in return. Is that they will ask you to solve that problem for them.

They will tell you that, you know what, I pray that this problem will disappear. If you can do something about it, please do. And that is the phase that when you start to think about it, this is where you fall in love with the problem. When people sign you up to solve that problem for them. And when you are in love with the problem, and this is really the great news.

You essentially increase your likelihood of being successful dramatically for multiple reasons. The first one is that the problem remains the North star of your journey. And when you have a North star, then your deviations are going to be faster and shorter and less. And so you will eventually go into the destiny much faster.

The second part is that the story that you tell. It's way easier to be told, right? So if I will tell you, if this is 2007 and I will tell you, I'm going to build an AI based crowdsource navigation system, then you don't really give a damn, but if I will tell you, I'm going to help you to

,

avoid traffic jams.

Then you do care and that's the big difference in the story, right? And when you tell a story that relates to the problem, then you create emotional engagement and your story is way easier to be told to your customers, to your users, to your investors, to anyone. And and that's actually refueling your passion into go and change that.

And and so that was the same with Waze. That was the same with pretty much most of the startup that I've started. I ran into something that I told myself, no, I it doesn't work that way. It's impossible that this is how it is. I have to change that. And and then I went and changed that or I, at least that I tried and occasionally it didn't work.

So in some cases, it ended up to be very successful in some cases, ended up to be a complete disaster. The thing that strikes me is always like something one of my old mentors said about finding something that you have some sort of natural aptitude for. So I'll give you a ridiculous example.

Srini Rao: Then I'll bring back a clip from an episode where he said this I was in Brazil for the summer and we were going out at night and we kept thinking to ourselves the Brazilians like to drink a lot and party a lot and people wake up hungover. We're like somebody should have a mobile hangover cure because they have this in Vegas.

I'm like, this would be a lot easier to pull off here in Brazil. The regulatory issues wouldn't be nearly as much of a hurdle. But the truth is I have no knowledge of healthcare in any. Capacity whatsoever. I'm not a doctor. I've never worked at a pharma company. And I want to bring back a clip from an old episode with my mentor, Greg Harlow, and I'm very curious to hear your take on this.

Take a listen. This is another thing that I

Uri Levine: see most new entrepreneurs failing at. They start businesses in which they have zero advantages. That is such a high climb start on third base. If you can learn nothing else from Donald Trump, you can learn not to be an asshole. That's rule number one. But the other thing that you can start to learn is start on third base, start with 200 million if you want to be a billionaire.

And I mean that, of course, sarcastically, but I also mean that honestly, right? If you want to, if you want to start a tech company. Work at Google first, right? Like your odds of success in your own tech company just increased dramatically. If you had a job at Google, but what we do is we start things with zero

Srini Rao: advantages.

As somebody who started multiple companies what is your take on that? Because obviously there are all problems that we have. Like I like I love the idea of not waking up with a hangover and being able to call somebody and say, do that, but I don't have any advantages at that. So I'm curious, like when we think about these problems that we're looking at what's your take on this?

Are people setting themselves up for failure when they try to solve problems where they have no aptitude for them?

Uri Levine: So obviously the likelihood is way lower, right? Because one of the most important behaviors that that you will need here throughout the journey is make decision with conviction.

And the reality is that you can rely on your gut's feeling. If you have guts filling it, then you only have guts filling in areas that you have some experience or a lot of experience. And and this is really important, right? We relate to guts filling as something that is undefined, but let me define that, which make it way easier.

You need to make a decision based on all of the experience that you have in a very short period of time and the fraction of the second, right? So I'm going to ask you yes or no, and you have to say yes or no. If you have experience in this area, your decision is probably going to be right. If you have no, no experience in this area, then you have no idea.

And so in that sense, I would say all of my startups are in, in technology space, because this is what I know. I I grew up as a software engineer and I have the experience of the software developer, and I don't create new medicine because I have no clue.

Srini Rao: So one of the things that you say in the book is in thinking of a problem, look at these, this two by two matrix and ask yourself two questions. How big is the addressable market and how many people have this problem? And then you ask yourself the most important question, which is how painful is it?

Pain can be measured by one or both of two factors, amplitude or frequency. And so the example that I was coming back to, I had two in mind that I thought of one is media companies, right? So for example we run an online media company. Saying that we solve a problem kind of the way the ways doesn't make a lot of sense.

Or my brother in law is working on a startup to combat disinformation. Now the thing about that, what we, in my conversation with them, I said, look, clearly this is a problem and it's a big problem. But is it painful enough? Because the truth is, yeah, we all know that we experience disinformation on a daily basis, but the impact of it on our day to day lives, the pain is not something that we see for years.

For example, disinformation spreads through Facebook and we don't see the pain of that until Donald Trump ends up in office. Yeah, I agree it's so

how do you deal with that sort of paradox when you have a delayed pain that is clearly big and a big problem, but that people don't care enough about in the moment the challenge is that if people don't feel connected to the pain, don't feel connected to the problem, don't think that they are essentially what you're saying is that most of the people will basically say yeah.

Uri Levine: My perception is that I don't have this problem right now or, and and it's going to be very hard to become successful because you need to do market education first and you need people to realize that they actually do have a problem. And and by the way, it's not the only one that is trying to do that.

The previous CEO of Waze Norm Bardeen started a new social network that called TOST. And this is exactly what they're trying to do is to create new flow of information that is valid and not based on. On interests or misleading information and so obviously this problem exists if and and we all realize that, right?

Because today you cannot rely on anything that you are seeing on, on, on Facebook or on any social network, right? You don't know what is true and what is not. You don't know who is the source and what is the source. You have no idea. And therefore the information there is untrusted.

But for most people, this is still trusted. Yeah.

Yeah. Because the pain is just way more challenging to figure that out. Yeah. Okay. So let's take something like an online media company, right? Does a news outlet like vice news or somebody like me do we solve a problem in any way? Because in one way, yes, we're educating people.

Srini Rao: We're giving them. opportunities to talk to people like you, but I don't solve a problem in the way that Waze does. And yet there are media startups. So when you look at something like that, how do you think about this idea of a problem?

Uri Levine: So we do have to remember that there are a lot of companies or a lot of startups that are creating new opportunity or new space and are not solving a specific problem.

My book is about saying that, wait a minute, solving a problem is going to make your life easier because of the North Star, Because of of the ability to engage users, because it's a simpler path. And and for me, it's always, and look, the beauty about solving a problem is that if your solution works, it's guaranteed that you're creating value in my journey.

And my mission in life is about value creation.

Yeah it

Srini Rao: makes me think of a friend of mine who started his business way after mine. He's my best friend, and he started an air table consultancy business. And one of the things he to help people do was use air table automations to automate repetitive tasks. And I realized why he was able to scale that business so quickly.

If it was to your point, he started with a problem. He started with a problem that he faced in his own work at his day job that he ended up not going back to. Yeah it's easier. It's faster journey. Yeah, for sure. Let's talk about metrics in particular because you actually mentioned metrics and you talk about retention as being one of the biggest things and you say that if in the consumer service business, retention is the only indicator of product market fit.

If your users aren't coming back, if your users are coming back, you're creating value. You can't build a company if your retention sucks. And I feel like there is this tendency particularly with content creators in general to focus on vanity metrics and ignore retention, like they're always going after more users and more growth as opposed to focusing on the people who are

Uri Levine: already there.

You look at marketing departments in nearly all of the companies and you ask them, so what's your job? And they will say to bring new users, right? It seems like marketing by and large is focusing on bringing new users. Whereas the product should be focusing on the retention, right?

And so if you combine them both, it's simply different responsibilities. And but in general, look, end of the day, if users are not coming back, you don't have product market fit and the first year of all the startups is about figuring out product market fit. If you will not figure out product market fit, you will die as simple as that.

And product market fit is creating value to your customers, to your users, to your customers, whoever it is, right? If you don't create value. You don't have a reason to, for your existence, right? And in reality, you never heard of a company that did not figure out product market fit. They simply died.

That's it. But if you think of companies that did figure out product market fit, then for just for a second, I want you to think of all the application that you're using every day. So searching Google and using Waze and the Netflix and Uber and whatever it is, right? And ask yourself, what is the difference between any of those today and the first time that you have used that?

And the answer is that there is no difference. We are searching Google today, the same way that we search Google for the first time in our life and with Waze or Uber or Netflix or whatever it is. Because once you figure out for a market feed, you don't change that anymore. You buy yourself a ticket to the next part of the journey.

And the next part of the journey would be about figuring out business model or figuring out growth or so forth. And this is really important. So once you figure out product market fit, you don't change that anymore. It's the hardest part of all the journeys. So most of the startup died because they did not figure out product market fit.

And in many cases, they did not figure out product market fit because they didn't start from the problem. They started by the solution and then they were looking for a problem that a solution that is now looking for a problem. Yeah. And and this is really pretty significant.

And at the end of the day and now the way to measure it is by retention. And it's the same if you're not in consumer space, if you're a B2B, then Renewal, right? So you sold your solution to another business and you sign up they sign them up for contract for a year and at the end of the year, they need to renew and if they don't renew, that means that they are, that you don't bring enough value.

Yeah, absolutely. I've seen this firsthand I started a separate project aside from unmistakable creative where I have a YouTube channel similar to my friend who did air table tutorials with the note taking up mem because I had this huge issue of organizing and managing massive amounts of information.

Srini Rao: And it's amazing how quickly I was able to start selling that course and make money off of it much faster than I was able to monetize this project. You will probably keep on building different projects because end of the day, end of the day, entrepreneurs are entrepreneurs. If you would ask anyone an entrepreneur, what are they going to do after the startup?

Uri Levine: They will tell you, start another one are gonna build another startup. Now, the interesting question is that if you would ask them what this new startup is all about, They actually know when we launched ways in 2009 we started the company earlier in 2007 and we only raised capital in 2008. So formally when we started 2008 but when we.

Launched the product in Israel in 2009. I already knew what my next startup is going to do. And I only started out in 2012 and and left ways the day after the acquisition, so I can be instrumental there because I was too busy but you always know. And when I started that, I already knew what's going to be with the next one and the next one.

And and I still have plenty of problems that I think are worth solving. And some of them I will solve, and some of them I won't, and and I'm still

Srini Rao: here.

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Srini Rao: and the code 50 unmistakable. Don't miss out on this great deal from America's number one meal kit. Yeah. Speaking of problems to solve, there's my conversation with Jim McKelvey based on his book, the innovation stack. One of the things he talked about was this idea of what you have are problems that you can solve them.

What do you call the perfect problem is a solvable problem. One that isn't already solved. But he actually contradicted my mentor saying, maybe you don't have the natural aptitude for it. So for example, he said the Wright brothers didn't have any model for how to do this.

But somebody had to start flying planes. Yeah. So I, I wonder when you think about that like you look at, okay, how do you determine if a problem is actually solvable? I guess is really the question. So number one is guts feeling, right? If you have guts feeling that you can solve that, then you probably can.

Uri Levine: If you don't have the guts feeling then you are not necessarily the right person to solve. Now, some of the problems will, won't be solved. That's it. But but in general, I would say, look, all the big problems, it's worthwhile to try to solve. It's really important that someone will try because the world will become a better place if those are being solved.

And and as long as we have entrepreneurs that are basically saying yes, I'm going to change that. I'm going to solve that. Then we are doing absolutely amazing. And in some of the problems you look at them and you look at them from consumer perspective, you look at them from the market perspective.

I'll give you an example. Just imagine that medical services in the U S there are five times more expensive than they are in Germany. Now it's not that they're better than Germany. They're simply five times more expensive. And then you say, wait a minute, if they're five times more expensive than Germany, then obviously there is inefficient in the system.

There are a lot of inefficiencies in the systems. Part of it is that you don't even see the bill. If you don't get to see the bill because it's being sent, submitted directly to the insurance company and you ended up with your copay is whatever then no one is actually looking at the bill and no one cares.

When I was young, my dad once told me that if you don't know how much you're paying, then you're paying too much.

And so this is just an example, right? And and we can think of different perspectives of problems from the market inefficiencies, from the user perspective, from different stakeholders within the value chain, in some cases. If you look at the 4 million trucks that traveling the U.

S. And hauling goods and you ask yourself, okay so there is a truck leaving Miami and traveling all the way to Phoenix to deliver goods and return empty, end of the day they are they are shipping air back from Phoenix to Miami. So return empty is a big problem.

And it's a big problem of inefficiencies. And obviously no one is looking at it because they are everyone is paying for the holding the air back from Phoenix to, to, to Miami. And but the reality is huge inefficient, inefficiency. And if you solve that, then the market will become 30, 40, 50 percent more efficient.

And obviously everyone is going to make more money. And

Srini Rao: so we've been talking largely about the problem and product market fit. Let's talk about Operations in particular, once you get to this point of product market fit, because you say a startup in order to be successful needs to do one and only one thing right and to increase the likelihood of doing so, it needs to say no to everything else.

Focus is not only about what we're doing, it's about what we're not doing. These are the hard decisions to say nay to. The main thing is to keep the main thing. And it reminds me of the work that I've been doing with my mentor, Julian Smith, who every three or four weeks we have a call, 95 percent of our conversation is about what I should stop doing.

Uri Levine: And this is absolutely correct because if we and then, and for a second, I will go back to basic, right? So startup will have at least three major journeys and occasionally. Intermediate journeys as well. One of them is about figuring out product market fit. One of them is about figuring out the right business model.

And one of them is about figuring out growth. And each one of them is going to be long, is going to be a rollercoaster, and it's going to be a journey of failures, right? So it's a long rollercoaster journey of failures. And each one of them is a different phase in the evolutions of the company and requires different people to bring their expertise to, to do that, right?

But they have to come in their own time, right? Because if you're trying to figure out product market fit and you bring sales, then there is no product to be sold. And and if you bring good sales people, then they will sell something. And now you need to fulfill that. And and so obviously in the phase of product market fit, you want to focus only on building the product and bringing value to the users or to the customers.

And that's the only thing that you care about. You don't care about whether or not you will be able to scale. You don't care about whether or not someone is willing to pay for that. Because end of the day, if you create a lot of value to a lot of customers, you will figure out a way to get paid for that.

Then you move in. Once you switch gears, then the entire organization is changed. For a second, I would say the product is now pretty much done. And requires a little bit of support on the front end, on the value that it creates and way more on the ability to support the rest of the organization. So now if you focus on figuring out a business model, then you need new development that are linked to the business model and And you will need to support the salespeople to be able to sell to prove or to demonstrate the business model that it actually works. So each one of those phases requires focus and focus is really hard because the tendency is to say, yes, of course we can do that.

Of course we can do everything right. We could have done ways for pedestrians or ways for bike riders or ways for skiers or ways for whatever, right? And, but the decision was that we're going to focus on the daily commuters. On their daily drive, that's it. And so in order to really remain focused, we say no to everything else.

And the result is that if you would use ways to drive, then it's probably the best application. If you will try to use ways to walk someplace. No, you should use something else, Google Maps or here we go or something else because Waze was not built for pedestrians. And the result is that it's not good for pedestrians.

Oh,

Srini Rao: let's talk about raising money in particular because one of the things that you talk about is the importance of the story. And that being one of the most important parts, you say the story illustrates an important point. If you tell facts, you make your audience think. If you tell your stories, you make them imagine and feel.

If you want them to invest, they need to imagine and become emotionally engaged. I make a living telling stories, so that's not news to me. But what is it that makes that important? How do you tell a story that is compelling to an investor? So I would start by saying that, wait a minute, raising capital.

Uri Levine: If we think that building a startup is a roller coaster journey, then raising capital is a roller coaster journey in the dark, you don't even know what. But it's way more complex than that, because when I spoke with investors and these are two really important stories. So I met one of the largest VCs in Israel, one of the partners, and this is after the Waze acquisition.

And we were sitting in a small meeting room and ask him, how long does it take you to decide if you'd like the entrepreneur or not? And so the guy is looking at me and then looking at the door and looking at me again. And says before they sit down, now this seems awkward, right? So this is their magic wand, instant decision or first impression.

And the reality is that we all have first impression, right? We have first impression when we go on a date, we have first impression when we interview a new candidate, we have always first impression. And then in many cases, we allow ourself a few more minutes to either let that first impression sing or change that.

Okay. Now, if this is the case and you are, or you want to raise capital, then you have to start with the strongest point at the beginning, whatever the strongest point is. Maybe it's the size of the problem. Maybe it's the traction that you have. Maybe it's the team that you have. Maybe whatever it is, start with that at the very beginning.

Because by the time you'll get there, it might be irrelevant anymore. So this is one conclusion. We prepared to start with the strongest point. The second part, and this is really important. I asked him multiple investors that invested in seed round. So the first investment in the company, why did you decide to invest in this particular company?

And what I heard was pretty consistent and scary to that extent. They said, I like the CEO. I like the story. That's it. And you try to define that and you realize that, okay if they need to like the co then the c e needs to go by herself to the first meeting, right? The co e needs the entire highlights, the entire stage to perform.

If there are other people in the room, then they prevent the performance, right? If you bring the entire team with you, then there are two questions, right? If you give them the stage, then they take away the stage from you. If you don't give them the stage, then why in heaven did you bring them? And so this is the first conclusion.

The second Colu conclusion is about telling a story. And in a story then this is really important, is about creating emotional engagement. He want them to believe that this is going to work. And and this is not about fact, right? So this is about driving two main messages. Number one, that this problem is worth solving.

Number two. That you can actually solve that you can execute in. And so then these two has to come up from the story in the best ways to start with the problem, right? Because I heard that quite often. I don't know how correct it is, but 95 percent of the investors are not going to invest in something that they don't think they are going to use.

Srini Rao: It just reminds me. So I pod fund, which was radio public's venture arm invested in us. And I remember going in. With a pitch deck. I remember I called a mentor. He's go to Y Combinator's website. There's a seven slide template. Fill that out. And we had Sunil Gupta here who read a book called Backable.

I don't know if you've ever read that book, but one of the things he talked about was a high level of conviction and I showed them these are the things that we want to do with your money. And by the way, here's examples of the fact that we've already done all of these things. You just are going to enable us to do it at a bigger scale.

And so he said, he's okay, you just showed your ability to execute there, but also conviction because you've already done the things you said you're going to do.

Uri Levine: Exactly. And so this is the second part. So this is the ability to execute. The first one is the, does it even worth solving?

And part of it is to understand. The investor side, right? And this is really important. You really would like to understand their business model and the way that they think the investors in order to be able to sell them correctly, because otherwise you don't sell them, correct? And so you will do a lot of mistakes throughout the journey of going to investment, but at the end of the day.

A partner at the venture capital firm is likely to see a hundred companies a year. They're going to invest in one or two and that's it, right? So one or two percent heat ratio in that sense. And you need to prepare to hear a lot of no, and and we mentioned earlier journey of failures.

Look, the number of no's that you are going to hear is going to discourage anyone unless you are, you have the conviction that what you're doing is right, that the mission is right, that it's worth solving this problem. That no matter what you're going to figure them

So

Srini Rao: there are things that I I've talked to several people who are founders. I have David Heinemeyer Hanson here who talked about the whole idea of and saying no to investment Jeffrey Veen at Adobe. And one thing that stayed with me was. What Jeffrey Bean said, he's this is a virtually irreversible path once you take somebody else's money.

And you actually say that once you get in bed with an investor, it's like a Catholic marriage. There's no way to get rid of the investor. They have all kinds of rights. In most cases, we'll put them in a stronger position than you. It's okay to think about the dark side and ask yourself, if things go badly, do I really want this investor to become part of my company?

And I remember the conversation I had with the pod fund portfolio team. They asked for references and I asked them for references. She said you're the only person who has actually asked us for references of the people we've

Uri Levine: invested in. And this is really discouraging, right?

Because they are doing their due diligence. You have to do yours. Yeah. And and at the end of the day, look, there are two things that are really important, right? And. We know the KOSLA one said from KOSLA ventures that that 70 or 80 percent of the investors creating more damage than help. Now, if this is really the case, then give me someone that does not interfere.

And this is at least not going to create that, but at the end of the day, if people ask me about investors, what do I think then I would say, look, I can only tell you those that I have experienced firsthand, because at the end of the day where it really matters is when there are challenges, major challenges, right?

Whether or not they're going to support the company during these major challenges or not. And in their overall behavior in these cases, right? And you need to speak with someone. That have experienced that because otherwise you don't know. Now there are obviously if you go to CEOs that that their relationship with the investors ended due to either company was shut down or liquidation event then they might be able to share with you their perspective.

And that's critical to understand because end of the day it's

,

Catholic marriage, right? There is no way out and And you will end up with working with someone that you hate or they hate you and and this is every day. Yeah.

Srini Rao: Yeah. In the case you mentioned a liquidation event or things just not going right.

But when you think about cases like Adam Newman at WeWork and Travis at Uber, in those cases, do you think those CEOs deserve to be ousted from those companies? I the Travis, I know a little bit more, or the, I don't know, I have a better perspective because it's in the space that I'm very much familiar with, right?

Uri Levine: So mobility, but I think that Travis was absolutely amazing entrepreneur, right? One of the best that we have seen on, on, on the planet. And and I realized that later on there were different issues and possibly that didn't work out for the different phase of the company. But I think highly of him I think highly of Elon Musk.

I think that he's Maybe second to Steve Jobs in terms of his entrepreneurship ability and ability to change the world. And maybe even first, right? So I would look at it and then I would say, this is absolutely amazing person. He has changed the world in so many ways that I only have respect for him.

And if he's making mistakes, then this is part of the journey. Absolutely. Let's finish by talking about. Selling a company because I think to your point that you mentioned earlier, we look at people like you. We read the stories and our assumption is Drew is set for life. He probably has more money than he knows what to do with.

Srini Rao: He probably has no problems. He's probably like on cloud nine every day. And having talked to enough people like you, I know that's not true. And at the same time, I'm pretty sure there's a lot of people who would happily trade bank accounts with you, myself included. So you actually say is this a

Uri Levine: life change?

You might be doing a bad deal.

Srini Rao: That's true. I would have to do my due diligence. But yeah you actually say is this a life changing event? Do you want to keep your company forever? Do you want to deal with the headaches of a public company? Do you have alternatives? Yeah. Talk to me about the perceptions and the misperceptions people have about something like a billion dollar Google

Uri Levine: acquisition.

So the first misperception is that, okay, I'm one of the founders. So we were three founders and, but people see me as the founder of Waze. And they assume that, okay, company was sold for a billion dollars. Then obviously somewhere in my pocket, I have a billion dollars, right? That's the. That's the rationale, right?

But when the company was sold, I had less than 3 percent of the company. And then you pay taxes and then you get divorced and you ended up with way less than what people would like to do. Are you sure you want to change my bank account? And the reality is that money is not an objective for me. Is a mean of fulfilling my destiny.

And so for a second, I would say more than half of my money is, was reinvested in other startups, in the different 10 different startups that I and in the state of mind, and usually this is what happened is that most people that makes a lot of money, they switch from make money state of mind to preserve money state of mind.

And I, I didn't, I people looking at my risk profile and they will tell me, they will tell you that I'm crazy because I'm investing. Half of my money in startups, right? And the startups are high risk. And end of the day it, it was life changing event for me. So obviously I have no problem.

I live in an apartment that I would like to live. I drive the car that I would like to drive. I travel a lot. I ski a lot, I do a lot of good things that I like. That that I don't have a private jet, right? Because Cause one of the interesting thing about me is that many of my startups are about helping people to to save money.

And and it's because I hate waste and and I hate waste. That basically means that I try not to waste a lot myself. I can tell you a nice story about waste and, and when one of my ideas of startups that never happened is is the following, right? So you go to the shower and you open the faucet and and it takes maybe a minute or two minutes until you get hot water coming out of the showerhead.

Yeah. During this period of time of one or two minutes the waters that are coming from the showerhead goes directly down the drain and you say, wait a minute, this is waste of water. What if I can do something with it? And I designed in my head a system that takes this water back into the to the heating boiler and and you're only going to get water out of the showerhead once the water are hot.

And then I started to ask people and in and ask them whether or not they care. And I realized that people simply don't care and I never implemented that, but I ended up with putting a bucket in the shower and basically every time that I start the water and I take these waters and I use them to water the garden and so forth.

And that was what I was doing just after or before Waze acquisition and a little bit after that, and then a friend came to me and say, look. Remember the bucket in the shower that you have? You just got divorced. You're gonna start dating new girls. Get rid of the

So I got rid of the Wow. But but I get frustrated from and for me, waste is about underutilized resource I mentioned earlier, returning empty right trucks. Returning empty, yeah. Underutilized resource.

Srini Rao: I have two final questions for you. This one is just a morbid curiosity. So one thing that I noticed about Israel in general was that it just seemed to be this breeding ground for tech startups. Because I remember when I was in college. The amount of chat software that kept coming out of Israel.

Like I remember I see, he was like, what the hell is going on here? Like, why are these guys so good at chat software? So what is it about the Israeli ecosystem that leads to all of these startups? Is it the military mandatory military service? Like, why is it that you guys are this

Uri Levine: innovation hub? Part of it has to do with the mandatory military service.

Unfortunately, Israel resides in a tough neighborhood. And in tough neighborhoods, you grow up tough. I think that we cannot afford to give up. Giving up is not an option. And this is one of the things that happens with it. You're in the military service, but you actually learn skills that are really important, right?

So giving up is not an option. This is one working in teams, it's a different things, right? You rely on other people to survive leadership. And all those makes you a more mature person when you go to build your startups. And so if you compare an Israeli with an American at the age of 22, then we will have a college graduate way more educated than in the U S and and maybe an officer and way more mature person on the Israeli side.

And so this is definitely has an impact. But I think that by and large, when you look at the ecosystems

of entrepreneurship, then you're of failure. There are countries that fear of failure is really high or if you build a startup and you fail, you actually liable for the rest of your life. And so obviously when the fear of failure is high, then you will end up with way less entrepreneurs.

Good news is that fear of failure is low in Israel. It's low in the Silicon Valley as well. So this is about the entrepreneurs. The second cornerstones will be investors. If you invest in my startup in Tel Aviv, you don't pay taxes in, which is the way that it should be, right? But if I would you mentioned earlier, Brazil, if you in a startup in Brazil and that startups ended up to be successful, you pay taxes in Brazil.

And you don't want to pay taxes in the other place, you want to pay taxes wherever you pay taxes. And then so this is about encouraging investments and the regulations has a lot to do with that. Fear of failure, by the way, the the media has a lot to do with, right? If we basically would say every day that the entrepreneurs are heroes because they're trying to change the world, then there will be more, more young people that would like to become entrepreneurs.

So these two are the critical cornerstones. And then we have two more. One of them is engineering in many countries, not enough engineers. US is doing the right things by allowing. Tens of thousands or sometimes even more engineers to come into the country and increase the number of engineers that you have.

And every country that would like to change this equation need to encourage engineers. And the fourth one is experience. And and at the beginning of the ecosystem, we did not necessarily have enough experience, but now these days we have plenty of experience. Of successful entrepreneurs, of second time, third time entrepreneurs that are helping other entrepreneurs.

And this experience is critical, right? I always recall the story about a very successful CEO that was shy away from the media and never got any interview. And one day he said, okay, I'm going to give you a five minute interview. And then the interviewer asked him the first question. So how you become such a successful CEO?

And he said that two words. Right decisions. Okay. But how do you know how to make right decisions? Say one word, experience. Okay. But how do you gain this experience? Say two words, wrong decisions. And obviously the, when I help a different CEO, I brings a lot of experience into. Into the table and that experience will prevent some of the mistakes that that and essentially increase the likelihood of being successful.

And so these four cornerstones are mandatory in order to have a very successful ecosystem. Silicon Valley definitely have that. Israel definitely had that. Not a lot of other places actually had that.

Srini Rao: Amazing. I have one last question for you, which is how we finish all our, of our interviews with the Unmistakable Creator.

What do you think it is that makes somebody or something unmistakable? You have no idea, but I actually have something more to say. And and this is and refers to one of the chapters in the book that called Firing and Hiring. And And I spoke with many entrepreneurs that their startup failed and ask them why, what happened yet?

Uri Levine: About half say the team was not right. And I kept on asking, okay, what do you mean the team was not right? And they said we had this guy not good enough for this guy. So not good enough was one reason that I heard quite often. Another reason that I heard was we had a communication issues, something that I actually called Ego management issues.

And then ask them the most interesting question. When did you know that the team is not right? All of them said within the first month. There was one guy that told me before we even started, and they said, wait a minute, if you knew within the first month that the team is not right, and you didn't do anything, the problem was not that the team was not right.

The problem was that the CEO did not make hard decision. Making hard decisions is hard. Making easy decisions is easy. This is why in small organization like startups, the hard decisions will go all the way to the top. Now here's where it's becoming more complex, right? If there is someone that shouldn't be there, right?

And it doesn't matter that, that someone shouldn't be there, maybe because he is way underperforming, maybe because it does not fit into the DNA or the culture of the company. Maybe people don't like to work with this person. Doesn't matter, right? If there is someone like that in a small organization like startup everyone knows, and the CEO doesn't do anything.

This is where the problem resides. And this is why I write the chapter and I call that firing and hiring. And when I sent that initially to to the publisher, he said, it should be hiring and firing. And I said no. Firing is hard decision. Hiring is easy decision. One of the most important conclusions from this chapter is that every time that you hire a new person.

Mark your calendars 30 days down the road and ask yourself one question, knowing what we know today, would I hire this person? The answer is no, then fire them immediately. This person is already set for a failure, right? They are not going to be successful because you already have the point of view and the rest of the team members have already the point of view.

If you fire that person today. Then you increase the likelihood of the company being successful, you recognize, or you the support of the entire team is going to be greater. And by the way, you are doing that person a favor. You are allowing them to be successful.

Now, going back to the question that you had in mind. Yeah. Ultimately, what is it that makes in your mind somebody or something unmistakable?

Srini Rao: So

Uri Levine: sorry, say that again?

Srini Rao: Yeah. What is it that you think makes somebody or something unmistakable,

Uri Levine: making mistakes. The simplest that I don't think that we need to be unmistakable. I think that we need to be to recover fast from the mistakes that we are doing. And we need to accept the fact that we are going to make more and more mistakes, right? Even Steph Carey doesn't hit a hundred percent from the free for all line, right?

He's really good, but not a hundred percent.

Srini Rao: Beautiful. I can't thank you enough for taking the time to join us and share your story, your wisdom and insights with our listeners. Where can people find out more about you your work and the book and everything else you're up to? So

Uri Levine: obviously my website UriLevine. com and and then the book is available on Amazon, on Barnes and Nobles, on all the online stores and on my website and so and I think that, look, when I wrote this book, for me, that was fulfilling my destiny of creating value.

And I want to believe in the Steve Wozniak say that he called that the Bible of entrepreneurs. And. And when I spoke with him, he said, I wish I had that when I started. And and if he say that, then I want to believe that this could be helpful to to anyone that wants to build a startup, but anyone that actually is running a business or managing a business or wants to run a business, because when we speak about firing and hiring, this is not just about startup, this is every when we speak about understanding users.

All the people, all the businesses in the world have users or customers. And so I want to think that this booth is going to create more value than any of my startups. And hopefully it

Srini Rao: will. Like I said, I can't thank you enough for taking the time to join us and for everybody listening, we will wrap the show with that.