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Spencer Greenberg, founder of Smart Wave

Spencer Greenberg, founder of Smart Wave
Spencer is founder and CEO of Spark Wave, a startup foundry (a.k.a. company builder / startup studio) that creates new software companies from scratch, designed to help solve big problems in the world.

Spencer is founder and CEO of Spark Wave, a startup foundry (a.k.a. company builder / startup studio) that creates new software companies from scratch, designed to help solve big problems in the world. He has a PhD in applied math from the Courant Institute of Mathematical Sciences at NYU, with his specialty being machine learning (sometimes referred to as “artificial intelligence”). He also has a bachelor of science degree from Columbia University, where he studied applied math and computer science. He has published papers on a variety of topics in applied math, machine learning, mental health and social science.

Spencer joins me today to discuss his founder’s story and the many projects that his company, Spark Wave, are working on. We learn more about Spencer’s take on ethical value and how this drives him in business and life. Spencer shares how his academic background in mathematics influences the work that he does. He also tells about some of the challenges he has encountered, and advice to all inspiring founders.

“Entrepreneurship is basically the world punching you in the face between 10 and 100 times, and the vast majority of people would give up after a few punches, right?”  - Spencer Greenberg

Today on Startups for Good we cover:

  • Keeping track of multiple products within a company
  • Products and business idea generation and evaluation
  • What an effective altruist is
  • The type of team involved with a general studio model
  • How to recruit a CEO or co-founder to pair with an idea
  • Spencer’s new podcast - Clearer Thinking with Spencer Greenberg
  • Questions to ask yourself prior to becoming an entrepreneur.
  • Net Promoter Score and Dissatisfaction Score and other metrics

Connect with Spencer on Twitter and LinkedIn. For more information about sparkwave.tech and clearerthinking.org

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Thanks for tuning into today’s episode of Startups For Good with your host, Miles Lasater. If you enjoyed this episode, please subscribe and leave a rating and review on your favorite podcast listening app.

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Transcript

Miles

Spencer, welcome to Startups for Good. It's great to have you on.

Spencer

I'm really excited to be here.

Miles

So I find your background to be so fascinating. And you're working on so many different projects. I'm kind of wondering where to start, but maybe we could start with? How did you decide to become a founder?

Spencer

Yeah, you know, for me, I've always wanted to use technology to improve people's lives. I remember when I was a little kid, I kind of imagined I'd be some kind of inventor creating steampunk machines. And then later that became robots. And then later that became, you know, eventually software. And so that's, that's where I am today. So I feel like I've really just been on the same path. And it's just I've just gotten smarter about what that path looks like. So I think that was always in the cards for me of like, how do I create new technology? And this is just my latest incarnation of my, you know, childhood dream.

Miles

Cool. And what are some of the projects you're working on these days?

Spencer

Right, so I run a startup foundry called Spark Wave. And being a startup foundry, what we do is we create new companies completely from scratch, based on our own ideas. And then if they're sufficiently promising after we built the initial version, we recruit a CEO, with the goal of spitting them out into their own companies. So that is contrasted from accelerator, which, you know, people often confuse the two accelerators, you know, usually work with a company that already exists, and kind of help them by giving office space or giving advice or money or things like that. So. So that's what we do. And then because our nature is to create new projects from scratch, we have a bunch of things going on. So one of them is Uplift, which is a app that we created to help cure depression. So the idea is to give people evidence based tools that they can use to cure their own depression, either on their own or as an adjunct to working with a therapist, that kind of thing. So that's, that's one company that we spun out. Another company that we've spent out is called Mind Ease. And the idea of mind is, is to try to be the best app in the world for helping people manage their anxiety symptoms. So if you're fairly, really feeling really anxious, you can download Mind Ease, and it will try to help you feel better, and then give you a bunch of tools, you can also use to better understand your anxiety in the future. So those are two of our projects. And those are both in the area of what we think of as Applied Social Science. So we're trying to take ideas from social science and bring them into people's lives to help improve, improve their lives, improve their thinking, improve the decision making, make them feel better. And so that's kind of like a big chunk of our work. Another example project in that area is a website we created called ClearerThinking.org. And we have about 40, free tools and training programs, you can use them to cover many topics, like forming a new positive habit, making a better decision, learning about how to avoid cognitive biases, things like that. So that's all in Applied Social Science. And then the other big area we work in is what we think of as accelerating social science. So how do we make social science go faster? So we can better answer important questions about how to make humans happier, how to help humans make better decisions, and so on. And so on that side, we have one project called Positly with the idea of basically making it really easy to recruit people for study. So if you need 120, people with sleep problems, and you need to divide them into three groups, and track them for a month as they do different things, like we want to make that kind of research much faster and cheaper. And then another project in that area is called Guided Track, which is a new language we created for building behavioral interventions. So let's say you want to make a meditation app or you want to make a tool to help people think through their decisions. We want to make it incredibly fast and easy to make that kind of tool and launch in the world and get feedback.

Miles

Wow, that's a lot of stuff. How do you keep track of all that and manage your time?

Spencer

Yeah, so definitely a challenge. But the way that I think about it is I want to make sure to have some time meeting with each team every week, so I basically will have those kinds of weekly meetings. And then I want to make sure that as projects have certain demands for something really important is going on then I have enough time to Kind of devote to that, to make sure that I can help in any way I can. So you know, foreign project is in the middle of something really essential, you know, I'll be, I'll be much more focused on that for a week. And then you know, next week, maybe, okay, it's not as you know, there's nothing as serious going on. And then I'll kind of split my time more evenly.

Miles

And some of these are for profit tech startups. And some of them are nonprofit projects, right?

Spencer

So at ClearThinking.org, we've always run it as a not for profit, basically, just as a public service to try to help people better understand themselves, reduce bias, and make better decisions, things like that. The other ones are for profit startups.

Miles

And how do you get the ideas for the startups?

Spencer

So I'm someone that thinks of ideas as something that you can learn to do, I really view it as a muscle you have to practice. So for example, my brother and I used to have a game we would play where every other day, we'd exchange sending in a business idea we came up with to each other via email, and I would use a timer to try to see how fast I would come up with the idea. And so you know, I'd be like, Okay, I need an idea. And I would find it really helpful to like narrow it. So instead of just saying, come up with a business idea, I'd be like, Okay, today, I'm gonna come up with a business idea that is something that fits in your pocket and helps you at work or something like that, right. And then I would brainstorm around that and come up with an idea. And so we got to about 100 ideas, then we went through them and analyzed them and discarded most of them, most of them were really bad. And then some of them were kind of more interesting. And so that's the way I think about it is like, my ideal is to have hundreds of ideas. And then you quickly eliminate the bad ones. And then the ones that you can't kill, because you know, you're like, you keep trying to eliminate them. You're like, Oh, this just seems like there's actually maybe something here. Those are the ones you can do more investigation on.

Miles

Yeah, I really like this idea of quantity is a way to generate quality ideas. And that's where creativity comes from. Also, from those constraints you were talking about. So when you're evaluating them, you're trying to kill them? How do you do that?

Spencer

Yeah, so there are a number of different criteria I think about and it's not so formulaic, or like, I'm not like plugging through an algorithm to decide, but some of the criteria are one, if this idea succeeds, would it be a really big deal, right? And it's like, well, even if it succeeded, if it wouldn't be a really big deal, then like, it's probably not a good idea, and buying a big deal for what I really care about is producing value in the world. So I want the world to be substantially better off for this thing existing than if the thing didn't exist. And, and so for me, you know, that comes down to like, are people's lives better? Do people have a better understanding of the way the world works? They believe more true things rather than false things, do people suffer less? Those are the kinds of values that I'm trying to optimize for. So that that's one really important criteria. A second one is thinking about the causality. Like, if we don't do this, is someone already going to do this, like almost as well? Or as well? Because what's the point, if you're trying to create value in the world, and someone else is like, already doing it as well? or about to do it as well, then maybe you're actually not producing much value causally. Like, you know, it's, you know, it's sort of this conundrum where it's like, if you're a doctor and you feel like you save someone's life, then there's a question well, like, would they just have gone to an equally good doctor who would vote to save their life? Like, ideally, in the best form, you want to do stuff that not only are you helping people, but you're helping people in a way that wouldn't have been helped? So that's secondary care? A third is, are we really the right people to do it? Like do we have? And that kind of breaks down to two things: one, do we have a promising seeming hypothesis about how to do this really well, that others don't seem to be pursuing? And then second, do we have a relevant skill set and so we limit ourselves just to software, because that's kind of our expertise. We don't go into hardware and things like that, because then we are playing to our weaknesses, rather strengths.

Miles

And you're someone who I think is having a really well developed sense of your personal ethics. I'd love it. If you could chat a little bit more about how you think about that value. It's not purely just utilitarian. It's a broader sense of value, right?

Spencer

Yeah, that's right. So basically, the best way to talk about this I know of, is actually related to a program we made for ClearThinking.org. It's called our intrinsic values test. And you can actually go do it online. It's free to search intrinsic values test. And basically what it does is it asks you many, many questions about things that you value, and it breaks them into things you don't value on the first hand, second hand, things that you value, but not intrinsically. So for example, most people value having money, but imagine that you couldn't get anything else from money, right? You couldn't use it to buy anything, you couldn't use it to impress anyone, etc. Then most people, I think, would say, oh actually doesn't have value as a means when it only has value as a means to an end, not in and of itself. So then intrinsic values are the values you have that are ends in and of themselves, like, and so a good example of this would be pleasure, right? If you if you you said, You know, I did that thing, and I really enjoyed I got a lot of pleasure out of it. And someone said, Well, why do you care about having pleasure? You'd be like, What do you mean, why do I care? I just care about you know, feeling good. And so the intrinsic values are the things that you kind of care about fundamentally. And so that that's kind of my frame on how I think about values. And then we actually did a bunch of research to try to figure out what are all the different intrinsic values humans have. So we looked at what psychologists had said about this, what philosophers had said, what career coaches and then we actually ran our own study where we had, we put people through a little training program to teach him about intrinsic values. And we had them submit with a thought there's our, and we got 3000 submissions, and then we duplicated them and categorize them. So through all this research, we ended up coming up with 22 categories of intrinsic values. And not to say that all humans have something that that in these 22, but we think this covers a lot of what humans care about. And it spans everything from lack of suffering and happiness to longevity, like living a long time, to satisfaction, like meeting your goals, to being a virtuous person, like so living with integrity and a number of other things as well.

Miles

Do you consider yourself an effective altruist?

Spencer

My thinking is definitely very much aligned with effective altruists, whether I'm actually an effective altruist. You know, I would say maybe aspiring, but basically, the way I think about that, is that effective altruism, for those who don't know, is the movement of people that are trying to figure out how do i do the most good, right? If I'm donating? How do I do the most good with my donations, if I'm volunteering, how to do the most good of my volunteering, etc, which I think is a wonderful project, and I'm super on board with that project and kind of that community. I think, insofar as I deviate from the effective altruists think, is that they tend to be a bit more utilitarian. In other words, they're thinking about value purely in terms of happiness and suffering, which is something that I care a lot about as well. But I also care about other things. Like, for example, I care about spreading truth in your irrespective of just the happiness and suffering consequences. I also care about equality, like, you know, I'd rather have a world where utility was spread more equally. And I'd be willing to sacrifice a little bit of total utility to make it spread more likely excetera. So I think around the edges, we do have some disagreements, but in many ways, you know, our thinking is aligned.

Miles

I'm curious how you think your academic background influences the work you do now.

Spencer

So I have a PhD in mathematics, and in my specialty was in some of the mathematics around machine learning and AI. I think that math provides some lenses on the world that I think are just incredibly powerful. And I wish that more people learn them without having to go through the grueling process of doing a PhD. One of those is a kind of optimization mindset. In mathematics, there's this theory of mathematical optimization, where the kind of abstract idea is that you have some function, and you're trying to find the input to it that maximizes the output. So like, what can I stick into that function that gives you the biggest result. And the way to visualize this can use your visual brand is to imagine a mountain landscape. And the height like the Z, vertical access is like the output of the function. And then the location, like the x, y axis on the landscape is the input to the function. And so basically, you can reframe this as like, find the top of the mountain, right, that's, that's the intuitive reframing of the mathematical optimization problem. And in mathematics, you learn about these different approaches to trying to find the top of the mountain essentially. And in everyday life, this might be, oh, I want to create a startup that makes the most money or I want to create a nonprofit that produces the most benefit to people, etc, right? That's the landscape you're playing on, you're trying to find the mountain. And I think actually, the mathematics gives some insight about different approaches to doing this. So for example, one very classic approach, in in the mathematical world, is this idea of gradient ascent, where basically, you're standing somewhere on the mountain, you look around just right, where you're standing and say, which direction is the mountain sloping up the fastest, right where I'm standing, find the direction, submit the fastest, take one little tiny step in that direction. And then again, repeat, look around where you're standing, and then take another tiny step going up the fastest. And you can prove that on certain types of landscapes, this will actually get you to the top of the highest peak. But you can also prove that and other types of landscapes actually won't, you'll get stuck on the top of the hill, but it wants to say be the highest hill. So that's just one thing that I think about, but it gives me a lens of looking at like the grand project of optimization, and look what you're trying to achieve and the different approaches to try to get to the top of the mountain.

Miles

So with the startups that you're founding in Spark Wave, what is it that you're trying to maximize? What is the optimization problem you're solving?

Spencer

I think of it as each one has a different objective. So for uplift, the goal is how do we reduce depression in the most possible and that's going to then you take that goal, and then it gets broken immediately into a product of two things. One is reaching as many people as possible. The other is for each person improving their depression as much as possible, right? So it's like never people really times depression reduced per person. And then you can keep subdividing that further because then you're like, well, if someone only like starts the app, but doesn't use it for more than, you know, one day, they're probably not going to get the benefit. So then you now get a retention factor that's going to appear there, which is like, you know, number of people that use it times fraction of those that use it to actually stick with it long enough to get the benefit times the benefit you get if you stick with it. And then I just keep doing that subdivision breaking it more and more and more. And that's where all the kind of sub goals and sub metrics fall out of

Miles

Gotcha, you didn't mention revenue, profit, you know, return to shareholders, is that not part of the calculation?

Spencer

Right. So the way I think about it is we want to align our business model very early on with the benefit we're creating in the world and for our users. So that because what I find is that there's a major problem and social startups that like are trying to do good, where they don't get a very aligned business model early, so that they like doing good is like dislocated from the making money. And then what happens is because startups are like, always, like almost always just on the edge of death constantly. You know, it's like playing a chess match where you like, begin the match, you know, in check almost a checkmate, right, that's like, you know, doing startups. So what happens is that they'll be like, well, do we do this thing that makes money? Or do we do the thing that does good, and it's like, well, we're about to die, of course, you have to do the thing that makes money, right? It's just constantly being pressured to do the thing that makes money. Now the thing that that they intended to do, which is good, so we try to align very early on the doing good with the making money. So then you can basically to a reasonable degree, just slot in like profit or revenue as your kind of top line metric. And that basically becomes a proxy for doing good. But that actually is, you know, you have to have a lot of care in that process to make sure that that's actually working.

Miles

Now, you've used the pronoun we a few times, I'm curious to understand the team that you have on spark wave working on the general studio level, you know, obviously got teams for each of the startups. But just at that studio level, who do you have involved?

Spencer

Yeah, so the we I used it, every time I use, we have referring different group of people, depending on what I'm talking about. This is easier to say we but each, each product has dedicated people working on it, then we have a few cross cutting roles that work across projects. So some of our research staff will work on multiple projects, where there's kind of research to be done. Sometimes we have designers that work across many projects. I also have, like, you know, a couple of research assistants that were across multiple projects. And then I work on all the projects, essentially. So yeah, I mean, but most of the team members have Spark Waive are actually dedicated to just focus on one thing,

Miles

And how do you recruit the CEO or the co founder for a particular project?

Spencer

What's been most successful for me so far, has actually been inbound interest. So basically, I'll put the word out in different communities where there might be really high quality, like entrepreneurial minded people. And yeah, I just get inbound so that that's been most successful. And I'm still experimenting with different approaches for that. But

Miles

You recently launched a podcast, how is that connected with your work?

Spencer

Yeah, so I've been thinking about doing a podcast for a long time. And it's funny because you know, now you're relaunching your podcast, I feel like, maybe I have some more thinking around this. But basically, what I realized a few things. One is that there are a lot of ideas that I think are really valuable, that are not widely known or not widely enough known. And so I was hoping that I could use the podcast as a way of help spreading ideas, I think, are really valuable for society. You know, and those, that's everything from how to think about doing good, more effectively, to epistemic norms about how to better understand what's true, and what's false, and how to understand evidence, really, really just quite a lot of quite a lot of ideas that seem like they're not widely disseminated as they should be. And also ideas that help people improve their own personal life as well. So that was one major motivation. Another is I realized that there was a way to do the podcast, there was both low risk, and actually a lot of fun. And so I was really lucky to be able to team up with my collaborator, Josh Castle, who was excited about being editor and producer on it. So suddenly, like a whole big chunk of the work that was not the work that I wanted to be doing was he was willing to take on. So I got to focus on what I think is the fun part, which is finding the people who I really want to have conversations with, and then trying to have really interesting conversations with them, where we'll pick four or five ideas that they're excited to discuss per episode and really try to analyze them together, not an interview and not a debate really trying to build on what the other person is saying to kind of produce. The best version of that is that we can show you if anyone's interested. It's called Clearer Thinking with Spencer Greenberg. So we'd love to have you check it out.

Miles

And I've been enjoying it. I've been listening to it and I should in an upcoming episode, so people can tell

Spencer

you will be. Oh, yeah, I'm excited to release that.

Miles

I'm curious, how is your mission at spark wave helped you as a business?

Spencer

Well, I think that being mission oriented has a ton of advantages. And it's funny because I was just talking to some entrepreneurs two days ago, and I was like, giving them that basically this exact pitch, which is like, Look, you guys seem like you really care about helping the world. Like, I can tell that right? When I talk to these guys, I could tell that they really care helping the world. And yet, the ideas you're talking to me about, like, are probably not gonna help the world, they're probably going to be like, kind of useless, even if you succeed, you might make money, but like, they're not actually gonna help anything. And so what I was, one thing I was saying to them is not only just focusing on like doing something that's deeply meaningful, just make your life a lot better, because like, you have a reason to wake up in the morning, you're not just like doing your crazy startup just to make money, which is, you know, ultimately, you know, Okay, great, it might be great to make money. But ultimately, that doesn't give you a reason to wake up in the morning. But in addition, there are actually all these auxiliary side benefits. So one of them is it's easier to recruit, because you could say that you can actually get people legitimately excited about the mission. It's also easier to get positive press, because journalists, like will tend to recognize Oh, yeah, these people are actually trying to do good in the world. They're not just like out for themselves, right. There's also it can help with getting investors because, well, you know, every investor wants to make money that, you know, I think that there are quite a lot of investors that also care about doing good in their lives, you know, a lot of them have, have already made a lot of money, and they want to give back to and so they they say, Oh, wait, you're actually trying to improve the world. And I, like I care about the good you're trying to do, that can be helpful, too. So I just think there are all these residual benefits from having a mission. there even just on the level of just like making it easier to do the things you need to do as a business.

Miles

And what have been some of the challenges either with the mission, part of it, or more generally, in business?

Spencer

I mean, you know, you're, you're someone who's been a three time entrepreneurs who you know this very well, but I just feel like startups, it's just a never ending series of difficulties. Like, basically, every few months, there's just a new challenge, a new difficulty, something new you haven't faced before. And it's just, I tell whenever, when I'm talking about people about whether like, is being a CEO really the right role for you. I, you know, at first I want to tell them, like, okay, here's some good things about it. But then I want to also make sure they understand what they're getting themselves into, and like what a difficult challenges is, and so one thing I like to say, is like, Okay, look, entrepreneurship is basically the world punching you in the face between 10 and 100 times, and the vast majority people would give up after a few punches, right? So you have to be honest with yourself, are you the sort of person that's willing to just get punched in the face over and over again, not knowing how many times it's gonna happen, and every time just rolling with it, and, you know, continuing on. So, to get a little bit more concrete, you know, sort of like, every few months, every six months, I think there's a new challenge in what we're doing. A lot of them we've overcome, yet, they're sort of this endless stream of them ahead of us as well, you know, so really early on, it was like, Well, can we even, like, come up with good ideas for products? And then it was like, Okay, I think we have ideas, I think are really strong. Can we actually build a first version of them, that's actually a plausible way of actually unlocking the value here. And then it's like, okay, we seem to be doing a pretty good job with that, can we recruit high quality CEOs and so on, and every step people will tell you that you're gonna fail, they'll tell you, it's impossible, except your friends who will lie to you and tell you that it's great, and it's gonna be wonderful. And now, I'm being a little bit facetious, but like, you know, you'll get a combination of people being like, optimistic just to support you, but they don't really believe it. And people who are like, yeah, that's impossible, you're gonna fail, and, you know, just soldier on and try to make it through.

Miles

Wow. And why do it then?

Spencer

It's pretty harrowing. I mean, for what I would say is that I'm not optimizing for my own personal happiness in life. That is part of what I that is part of what I optimize for. Right? I do want to be happy. But I would be a happier person. If I wasn't an entrepreneur, however, I live a much more deeply meaningful life than I would if I if I wasn't. In other words, I part of what I'm missing, if a part of what I'm optimizing for is having a huge impact on the world. I want the world to be simply better than it would have been if I hadn't existed. And so I put myself through, you know, high degree of stress and difficulty, but for those goals that are deeply meaningful for me.

Miles

Well said, What What advice would you give to an aspiring founder?

Spencer

Oh, my gosh, so many things. Which domain? Okay, here, I'll go Yeah, I can, I can spit up a few things. One thing is that there are a lot of ways to come up with business ideas. And I often will encounter founders that seem like pretty uncertain about what they want to work on. They're like really excited to do entrepreneurship. But they kind of haven't like picked the thing yet. And, and I actually think that VCs often have this kind of like, misleading view where they when by the time they meet the founder, the founder is telling them the story like this was the only thing I could ever work on. And it's like the manifestation of everything I've ever done before. But I honestly think it's, it's really generally not true that like our lives are just not linear in that way. And a lot of times, that's just like a story, they tell because they know they need to tell it that way. But in reality, if you'd like met that person a year before, they would have really wanted to share it, but I'm not sure what to work on, I've got these ideas, but none of them are good enough. So to me, I find that that's like a time when entrepreneurs can use a lot of advice. And just one piece of advice there is, you're going to, if you go start a company, you're going to just spend a ridiculous amount of time executing on your idea. Whereas the actual ideation phase, where you kind of come up with the idea, your original idea, ends up being a very small fraction of the total time you spend working on it, maybe it's like just, you know, 2%, or something of the total time. So I think even doubling that time to go from 2% to 4%, actually could be pretty wise to pick an idea that not only is a potentially better idea, but an idea that you like, deeply care about. And actually, if you succeed, you'll actually add real value in the world instead of just doing something that makes you rich, but you know, doesn't actually provide you with meaning. So that's one of my, I think, best piece of advice for entrepreneurs.

Miles

Yeah, I like that. So spend more time generating more ideas, and be more selective on the one you choose. Yet realizing that this is sort of a false standard of it having to somehow be deeply meaningful to you from the time you were two, or something like that.

Spencer

Yeah, it's just a, it's just not gonna be a linear like others, you have to think about what are my passions? What are my skills, like, what can that can bring to bear, but there's still gonna be like 50 or 100 ideas you got, you know, it's like even selecting for that, right? You know, you occasionally get like an Elon Musk, who, you know, allegedly, like came up with an idea for Tesla and in college or something. I don't even know if that's true. But like, that's the story people say. But you know, I think that's the standard thing.

Miles

Yeah. And he wasn't the original founder, either. He joined later. But yeah, I think these stories do get changed, polished, the founder myth, the story of how companies get started, I think is often misleading. I agree with you about this. And

Spencer

I think I had a very weird experience around that, actually.

Miles

Yeah, I think it's very common for people to decide that they want to start a business first and go in search of ideas. And I don't think I mean, yeah, go ahead.

Spencer

I once asked my research assistant to go investigate how many of the large tech startups were ended up doing the original idea that they were going to work on, right? Like they came up with an idea. Was that what they stuck with? Or did they pivot? Right? I was I was curious about how common pivots were among the top companies. And she did a bunch of research. And she showed me the results. And I was like, I know that this research is wrong. Because I happen to know details about some of the founding stories, and I knew something was wrong. And I was like, this is really strange. Where did you get this information? And it turns out, she'd use Wikipedia for a lot of it. A whole bunch of the Wikipedia pages for companies were had really misleading stories about their foundation, they basically had been whitewashed and changed in the Wikipedia article relative to the true founding story.

Miles

Now, that doesn't surprise me. I also think that people have the wrong impression about how you get early customers. I was just reading an article last night about how some of the largest consumer tech companies got their first 1000 customers. And there's a lot of stuff that sometimes talks about it doesn't scale. It's not some repeatable process. That is, you know, seems magical. It's a lot of just one at a time reaching out to people, one at a time, handing them flyers or emailing them. People.

Spencer

I love Paul Graham's essay, do things that don't scale. If you've read that one.

Miles

Yeah, that's part of what I was referring to.

Spencer

That's really nice. I would just add to that, I think that there can be there's on the one hand, this misleading view that like, Oh, well, your method of acquiring customers has to be scalable right off the bat. And that's not true. Right. And that's what that's thing that essay "Do Things That Don't Scale", like points out really nicely. On the other hand, I think there can be another failure mode, which is like, Oh, I just need to go get people to use my thing. But that I think is not right, either. The way I think about it is, step one is build something people love, step two is scale. And so the point of doing things that don't scale is so that you can learn from your your first customers so you can build something they love, right? If you're recruiting them, but then you're not making a product they love then it's like well, okay, you're just you. The fact that doesn't scale is actually just going to mean you neither grow nor do you make a great product. So it's really I think of it as really a data loop. The getting customers side is a a non-scalable data loop to learn what you need to learn about the product. And a lot of times, just having 10 users, if they're willing to give you tons of feedback, that could be a great data loop, you don't necessarily 1000 users right away.

Miles

So how do you tell if you've made a product that people love?

Spencer

Well, there, there are many things you can look at. I mean, customer interviews are just indispensable, right? That being said, there are a lot of challenges with them, there are people will bullshit you and you have to learn how to get to have a conversation with a customer. So you're getting really, truly honest information. One of my favorite ways to do that, is to flip the conversation from because in normal social norms, you you help a person by being nice, right? You tell them what they're doing is good, and everything's great, etc. That's like the normal standard thing. So what I want to do in a customer interview is flip the norm on its head and say that, look, we're trying to figure out why this product is not as good as it could be and how to make it better. We really need your help figure out what's wrong with it, and how to improve it so that you'll love it. And then now you flip the social norms, and now they're helping you not by telling you it's great and being nice, they're helping you by telling you that sucks and why. Right. So that that's, to me, one of the key components. Another is, of course, just looking at how people are using it. When you get to the point that people love it, you should be able to start seeing that in the data in the retention numbers and usage, tracking very carefully how people are using it. You know, what kind of benefit? Are they coming back, and so on.

Miles

I'd be curious, given your math background, for your perspective on two metrics, which are popular these days, one is net promoter score. And two is the dissatisfaction you know how, what percentage of people would be very upset if they didn't have the product anymore?

Spencer

Yeah, so Net Promoter Score. I feel like it's a somewhat random statistic. You know, if I was designing a way to measure how people felt about the product, I don't think I would design Net Promoter Score. But what is useful about it is it's pretty standardized. So I think for that purpose for as a benchmarking thing, it's a great metric, because you can compare it against other products in your industry, or other industries, if you like. So just for that purpose, I think it's useful. But it's a bit of a bit, it's a bit of a weird metric, it's hard to even explain how it's calculated, I think a lot of people just get confused about it. In terms of that, one more thing about Net Promoter Score, I think, is really important to note, it depends a lot on what point in your funnel, or what point your product, you ask people, because let's say someone use your product for five minutes, and you try to collect the net promoter score, you're gonna get a very different number most likely than if you only ask it after someone's used your product for like 10 days. And they've kept coming back again and again. So I think it's very important to think about when you're trying to measure these things, like who you actually whose opinion you actually care about, you care about the person who's just been here for 10 minutes? Or do you only care about the person who's been there? 10 days? Or? Or what? Because there is no such thing as a net promoter score, it like completely depends on what group of people you're asking it of. And of course, yeah, and of course, with any product, a lot of people are going to try it and drop out. And that's not necessarily a problem, right? You asked about another statistic, which is, could you say exactly what it was again,

Miles

Yeah, I think it's been advocated for by the CEO and founder of Superhuman.

Spencer

And I've read that article. It's a great blog post. Yeah, I love that blog post. Yeah.

Miles

It's, it's, you know, asking your customers, how would you feel if this product went away? You couldn't use it anymore? And would you be very dissatisfied, somewhat dissatisfied, indifferent, something like this?

Spencer

I think that's a great metric of kind of long term users. Right. So it's like, you know, if you have a lot of people who said, they'd be really unhappy, if your product went away, you're probably going to get to keep them for a long time. And they probably if you, let's say, it's a subscription, they're probably unsubscribed for a long time. So I think it's a really good metric for looking at that side of the business. Of course, it doesn't capture everything, because you also want to make sure that a new user has a good experience, right? You want to make sure that like you're converting enough of the new users, they understand the value proposition, they find it easy to use, they can get started, etc. So I guess my general attitude, the thing that you truly care about, if you really distill it down is never going to be something you can measure. There's no one metric that will ever measure it. So my preferred way to look at this is not in terms of a key performance indicator where you have like one or two numbers that are like the thing that you're trying to do. What you have in your mind is the truth and you're trying to optimize for the true goal you have whatever that is, might even be multiple goals. And then all of your metrics, they're just kind of rough estimates pointing at those things, right? So none of them are ever going to be perfect. I like to measure a lot of them because they each give you a little bit of a different angle. And I think of metrics is coming into two groups. One group of metrics are what I call smoke alarms, where basically normally there's not much to say about them, they're kind of like okay, you know, whatever, but every once in a while if one of them change You're like, oh, what the heck's going on? Like something weird is happening? We need to understand that. So the smoke alarm metrics, they, they're just going to check periodically to make sure there's not something weird happening, like, why did this prices suddenly go up a lot, you know, our acquisition cost, or why did usage time used in the app, just go way down, that's really weird, whatever. Then the other kind of metric are things that are trying to point out what you truly care about. But they're all imperfect. And so you have the whole cluster of them each with like, it's like you're really trying to measure x, but what you really have is just a bunch of noisy approximations of x. And so these kind of give you a little bit of different information.

Miles

I agree with that. I also think that you can only be misled by having the wrong metric, or too few that are pointing towards that x that you really care about. But also, the incentives can push towards a perverse optimization of one metric that doesn't really achieve what you want.

Spencer

Oh, yeah, there's a horror story, I think it was Bing search engine, where they made a change to that product. And they found that number of searches went significantly up. And they're like, awesome, that's fantastic number of searches up, that's what we want, we get to serve more ads, it turned out what they've done is broken the search engine. And so people were searching over and over again, because they're so frustrated, because they weren't finding anything they wanted. So really, any one metric if you try to optimize too hard, you're gonna get some perverse result.

Miles

That's why when I think about designing KPI systems or metrics that you're looking at, I think about what is the pathological case? And then can you design another metric that would check that one catch that pathology in the in the first one?

Spencer

That's a great idea? Yeah.

Miles

And a common way to do that is to frame it as if you have a quantity metric. Think about a quality metric that somehow talks about the same subject area.

Spencer

Yeah, I like that. And it also suggests the high value of qualitative information, like, for example, just talking to customers, because what can happen is like, let's say you have some metrics, and the metrics are good. But then you're actually talking to your customers. And you hear this complaint again and again, right? And you're like, Huh, there's something wrong with our product. And it's not appearing the metric because we didn't even know to look for it, because we never thought of it before, right. And so these conversations with customers are really great for like the unknown, unknown, then surfacing them.

Miles

This has been a great conversation, I think we should start to wrap up. Two more questions for you. One is, which book or article would you recommend to aspiring founders?

Spencer

Right. So I think the Startup Owners Manual is a really nice book. And it's maybe not as read as often it should be. I mean, it's pretty popular. But I think it's a really, it gives you a really nicely laid out framework for thinking about what is this thing I'm doing as a startup founder. So I like that, reading Paul Graham's essays, that's, you know, fantastic. So many good essays that are so can't really go wrong with that.

Miles

Great recommendations. And then in closing, where can people follow you online?

Spencer

Yeah, so I'm on Twitter @Spencer Greenberg. I think it's SPENCR with missing a letter couldn't fit it all. And then I recommend you can check out our website, which is sparkwave.tech. So it's dot Tech. And if you were interested, any of those clear thinking programs like our intrinsic values, tests, you can find that clearerthinking.org

Miles

Wonderful. Thanks so much for coming on.

Spencer

Thanks so much Miles, really appreciate it.