On predicting success, angel investing, remote work, and more.
Born in Jerusalem, Daniel came to America when he was accepted into the Y Combinator program at 17, the youngest ever to be admitted. He co-founded social media search engine Cue and sold it to Apple where he led their machine learning department until joining Y Combinator as a partner in 2017.
In 2018 he created Pioneer, a company that searches out bright people with talent and ambition, but lack the opportunity to get their ideas into the world.
Daniel Gross
[TRANSCRIPT IS AUTO-GENERATED ]
[00:00:00] Alex: Born in Jerusalem, daniel Gross came to America when he was accepted into the Y Combinator program at 17, the youngest ever to be admitted at the time. He co-founded social media search engine Cue and sold it to apple, where he led their machine learning department until joining Y Combinator as a partner in 2017.
In 2018, he created pioneer, a company that searches out bright people with talent and ambition, but lack the opportunity to get their ideas into the world. Today, we talked about predicting success, angel investing, remote work, and more. Hope you enjoy.
[00:00:38] Alex: So you let's see, you grew up in, or was, were born in Israel, is that right?
[00:00:44] Daniel: Yeah, I was born in Jerusalem. That's pretty cool.
[00:00:48] Alex: And you know, being where you are now, I'm curious obviously we'll talk about the whole YC thing later and, and being so young and getting into a program like that.
What were you doing at such a young age that sort of started that path?
[00:01:06] Daniel: you know, it's an interesting question to answer because it kind of really depends on how deep you want to go. I, you know, I was, you know, using computers and toying with programming when I was very young you can ask, well, why were you doing that? And you know, maybe it was because I read fiction books.
You know dynamics for children have agency you know, like, like Ender's game or something, and you could ask her, why did you do that? And so, you know, it's kind of like finding his answer to explaining physics. At some point you do have to accept some, some base level of, you know, what got you into something.
Pragmatically speaking, you know, I got into programming and computers. Mostly because I really liked the idea that the only part of the world I felt like as a kid, you could really make something without really speaking to anyone or asking any authority for permission. And I, I thought that was a really interesting thing.
Like, you know, you have school in general, just, it's just a bunch of obligations you have to fill, you have video games, which are not part of real life sex. That's the whole. And then for most other things in life, you have to actually like get permission to do as a kid. And I'm pretty complicated. Like if you want to get physics or chemistry or even business but code, you could kind of just do on your own.
And I, along with, you know, some, some friends in high school, I think we all realized we really liked building things and, and, and having other people use them. And and so anyway, I fell into that. You know, one thing led to the next and started selling some websites. I've made some, I guess they weren't called the apps back then, you know, proper websites, products.
And then you know, that, that kind of started the snowball.
[00:02:53] Alex: And I mean, we'll get into all the cool stuff. You've felt in a second, but I'm curious, you know, coming from Jerusalem, was there anything in particular that motivated you to want to move to the U S in the first place? Or was it just, okay.
I'll throw in an application to YC. And like, if that, if anything comes with that, I'll go.
[00:03:14] Daniel: I was a pretty commercial oriented kind of child and person. I was really always interested in business that said, you know, I didn't really know what I wanted to do when I grew up. And I remember having some consternation, cause there was always, there were always kids in school in Israel. Everyone goes to the military and you could always tell, even in terms of where you want it to go in the military, there was like, there were kids that were focused on being fighter pilots from the moment they were 10 years old, that's all they wanted to do.
And and. You know, I remember not really knowing what I want to do and that alone made me feel like a bit of an outsider. I knew that I liked computers. I knew that I liked business. I didn't really know anything in between, and I didn't know that I would end up in Silicon valley at all. And you know, it's, I think a nice reminder for me that I think a lot about, which is the largest decisions in life.
You know I think tended to have a much smaller impact than these very small decisions that had a large impact. And the decision to go to Silicon valley for me was not a large decision. You know, it was a pretty short, you know, decision spend and spend three, four months in Silicon valley trying to build something, probably go back to Israel and lo and behold been living out of the same suitcase.
A decade, so maybe slightly longer now. So, you know, it's a little bit like, I think life in terms of how much time, one should think ahead. It's a little bit like rendering in video games and you can set how much of the world you want, how much of the horizon you want to render. And you'll note that the more of the future you want to render the more of the horizon you want to render the more computational power.
And so you actually want to limit that and good game engines will limit that and kind of compute just in time and you do want to render some horizons so that you can see the world. And I think that's somewhat true about live decisions to at least my very limited experience. It's helpful to think, you know, whatever it is in terms of months or maybe a year, not in terms of decades,
[00:05:14] Alex: that's a real, that's a really cool analog.
You just drew. I want to like jump ahead for a second to pioneer. And just start, like, with like the really, really basic question of where did the idea come from in the first place? You know, you've obviously done, done Q at that point and you'd done worked at YC for awhile, but this practice of like centralizing talent and ambition is I think something that's sort of been steadfast throughout your career.
It seems.
[00:05:42] Daniel: I don't know, you know, the origin of ideas is always a great interesting form of witchcraft to be able to understand that. Cause it's really hard to tell, like actually what created an idea, but that said, you know, it's been clear to me for a long time. The intersection of kind of software machine learning and venture finance is greatly under invested in.
And I became really interested in kind of exploring that Really forever and pioneer really has two main goals. Its first goal is to be able to kind of detect interesting talent around the world. And you know, I, I hopefully like fund them which is good, both for them and for us before we before like the market discovers them.
But the more interesting and the more important thing the kind of thought experiment that is pioneer is to try. Propel more people in to startups, because I do think like there should be more successful startups on the planet. It was a bit of a wild thing to say, and, you know, the current day and age where it feels like every single person starting a company, but I actually don't think we're anywhere near the saturation point.
And it was certainly not near the saturation point of successful businesses. So at one could ask the question and abstract, like why aren't there more breaks? Why aren't there people that are starting companies, why aren't there companies more successful? And what, you know, I think a lot of the answer is that before you have product market fit, it's really not clear what to work on, which means that people don't really work on things half hearted attempts.
And, you know, I, I really believe the largest graveyard of startups are half finished to get hub repose, give it a go a couple of months, and then you fold up shop. Once we have product market fit. Once you have seen a significant revenue, seven figures or something, it's actually much clearer what to do every single day, grow that number.
But before that, you just don't know what to do. And so capitalism has a cold start problem, and we are trying to fix it by giving people, metrics, numbers, ideas, things to work on every day, pre revenue, really that hopefully propel them in the right door. And I think just like, you know, Strava makes people run the extra mile or Peloton gets people to exercise more.
I think we can get people to work on their companies, you know, a little bit more intelligently, a little bit more seriously. And that's really the, the, I think that the real moonshot goal of pioneer is, you know, if we find out after this is all over in the, you know, the, the we can see the kind of real numbers in reality in the Gaza.
That we were merely a kind of early rent seeker with no counterfactual significance, I would say, well, you know, at least we did a job of like doing something, right. But it wouldn't be as satisfying as what I really hope we're doing, which is creating, generating companies, not merely accelerating them. And, and I felt like no one in the world was doing that and I really wanted to do that.
And and that's, and that's kind of what we work on every day. Really creating a compelling community and app product, whatever you want to call it. That, that is kind of like Strava for founders. And we'll see, we're still in the early innings of it. These types of businesses take much longer to validate than a normal company because we've invested in hundreds of companies you know, kind of around the planet.
But we won't know for a while, if they're any good. Yeah. It's a it's it's, but you know, for us, you know, it provides meaning and purpose in life. We, you know, we really think we are working on probably the most important problem in the world which is creating more people that solve important problems in the world.
Admittedly, if everyone works on what we're working on, no one works on real problems. So there's like a limited amount of people you'd want doing that, but we don't think there's enough. And this is our little contribution to the planet, you know, we'll see where it goes. Our tombstones will be the judge of us,
[00:09:16] Alex: I guess.
So I, you know, I'm, I'm curious and I'm interested in just the process behind that. You know, you talk a lot, you were using Strava as an example, you talk a lot about the gamification of you know, a process like there's the gamification of work. What about that is beneficial to you? Cause I know you might use the, the example of like the leaderboard that you guys have with pioneer.
What w what were the intentions behind that? Like, what was the
[00:09:41] Daniel: thought process? Well, I think, you know, for us, it's, gamification is a bit of a odd word for us because it's not a game. I mean, we, we expect people to be taking it seriously, and we want people to be taking it seriously. You know, I think there are things games do that we try to do.
There are things the stock market does that we try to do. Namely, we try to put numbers on things. We try to have those numbers reflect actual meaning, and then we let the magic that is. The desire to improve a number really do its own thing. And by the way, some people in pioneer want to win the leaderboard.
Some people in pioneer want to just improve themselves every single day. And I think both modalities work single or multiplayer. I think, you know, every single person wants to get better at what they're doing. And the issue is that working on a startup pre-product market fit today. Offers you it's like running without a sense of time.
You have no clue how you're doing. And so we're really trying to build times for companies.
[00:10:40] Alex: Got it. Shifting gears again, still sort of in the same vein here, you know, having, having seen lots and lots of people start companies now by seeing a pioneer, what are some big predictors of, of success you've observed in people, I guess, to start.
[00:10:58] Daniel: Hm. Well, this is the trillion dollar question. Surely if you had a detector for greatness then you know, I'm thinking about this lot right now, there's what's is 60 700,000 Afghan refugees. And, you know, suppose you were able to find an excellent place for all of them to work. Fantastic. Suppose you only had a hundred open slots.
Boy, it would be amazing if you could just find the hundred best people. Oh, I guess in turn wants they're successful would go back and help the rest of their community. And so being able to do. Greatness is I think, you know, incredibly important and you know, this is my life at the end of the day. And I do think it's a bit more of an art than a science and, you know, I continue to try and work on it every day.
I I'll leave you with an answer that's actually useful. In terms of kind of how a steep rate, you know that's pretty kind of obvious in hindsight, but like all things you really have to focus on it for it to work, you know, how do you find out if someone's. And how do you find out in particular, if the 19 20, 20 old will blossom into, you know, a 35 year old, 45 year old Frank Slootman, whatnot.
And that is simply energy. And, and I, and I, and I think you can tell us pretty quickly when you meet someone, just the level of energy that they have level of life force, whatever you want to call it, prana the speed at which they speak. I think that that matters a lot. As an interviewer. I think you have to be careful about like the level of energy you give off, because, you know, I think people will kind of respond to that, but assuming you're the same across the board you know, in general, if you find someone that is, you know, just you get the sense when you walk away, you think, wow, they're energetic.
They'll do pretty well. They may not do well this company, and it may take two or three tries for them to find something good. They may become a great employee somewhere, but they will do well as well. And I do, I think that is a really how would you say common substrate across all people and, and I think it's actually much more important than intellect.
Do you need a baseline of IQ or intellect think to be able to do things and solve kind of complex problem spaces. But I think people focus on that too much because it's like, that's a thing you could measure. But hard, no, one's created very good energy tests. Although I think that would be an interesting thing too.
And I think that's kind of the, the, you know, the, the really important, higher order bit.
[00:13:06] Alex: Gotcha. In the same vein, you know, talking about general predictors of, of success, how much of personal success do you think is happenstance just love to
[00:13:18] Daniel: love to share? Well, that's a question that is the correct answer is the one you want to believe, not the one that is correct.
And I would like to believe that I've agency in the. Because it's much better for me to live with the belief that I have agency. So, you know you can pontificate. And certainly there are many, as I think about my personal investment history, I'm, I'm really surprised by the investments I've made that have changed.
My life would have been hard to predict, but, and so maybe it all is luck, but I kind of ignore that and believe in agency because you know everything, if you go too quickly down that rabbit hole, I mean, life becomes, you know, a very fragile. Now to the extent, one wants to believe in luck. I do think you can have agency over luck which may sound like an oxymoron, but it's very true.
You can set yourself up to be lucky. You'd luck requires two things requires having high precision and high recall a high recall, meaning you have to be in a situation where you can get lucky. And so that means you have to interact with a lot of other, maybe interesting opportunities or people in a lucrative.
And so like, I think that your odds of getting lucky if you're working on say a transformer models and the deep learning world today are very high because it's like a very vibrant area. Your odds of getting lucky. If you're running a restaurant in the middle of the country are probably lower.
And so that's the recall problem? The precision problem is I think actually the one that trips people up the most, which is once you identify a lucky opportunity, you must really. And I don't think people, especially young people realize this enough opportunism is really a goal. If you see something great, just sees it and go for it and don't overthink it.
The mind, I think from an evolutionary standpoint, I imagine that it's probably helpful for the mind to be much better at imagining downside than upside. This makes sense. Like if you cross the street in a crowded road, the mind imagines you getting killed, so you don't do it. But at the end of the day, A lot, none of these scenarios, or many of them are not catastrophic in terms of the downside.
And so even if you can imagine the downside say, you know, you have a job offer to be an intern at some type of company. And it seems interesting, but you're wondering, well, like maybe the company will go broke and so I'll take the boring internship. No, I would take the risky one. So I do think you can increase, you know, your odds to the extent you want to believe in happenstance, you can increase the, the, the, the chances of positive happenstance.
[00:15:34] Alex: You know, it's curious when you mentioned luck, you were talking a lot about investments you've made, which I guess go hand in hand in some sense, but of course, besides being a successful startup founder, you've, you've also invested a lot of startups. I'm curious. What do you think makes someone a good angel investor?
[00:15:58] Daniel: Okay, so what makes a good angel investor? I think in, look, this is still an art learning. Some of the things that you may want to be thinking about if you're going to invest in companies are well, gosh, first you need to think, I would say maybe three things first. You need to think about a selection of.
And so, you know, if you have some type of brand or identity, then you may not have negative selection effects. If you try to go after the hottest deals. But otherwise you might and so you end up the deals that you're going to win. If they're super sought after you might worry, well, like why isn't anyone else in the market doing them?
So you want to have a good story to yourself about why that is the case. And so often, you know, what you want to do is go after very early or very late stage businesses. So you can be buying secondary and a company, which has a lot of liquidity and. And that way you can at least add that to your resume, learn a little bit about the business, or you can try to and go super early.
And so one is kind of understanding at the stage of the cap table that you can plan. And I think a lot of investors screw this up and this leads to a pretty unhappy life and negative selection. Second is, you know, assessing talent.
I think is a pretty, an assessing a company and talent. This is a very different skill set and occasionally antithetical. Assess to do kind of a psychometric makeup of a great founder, because the degree of optimism you need to have as a founder is effectively unbounded. The degree of optimism you need to have as an investor is somewhat bounded.
And I've seen a lot of people who are actually incredible at just absolutely. World-class at running businesses. And when they invest, they make this funny mistake where they assume that the business that they'll be investing is in is the business as if they were running it. And so they invest because they're so optimistic about how good it could be, but of course, you know, it, it it's, it's not being run by them.
And so I would say kind of, you know, delicately balancing optimism is maybe a second thing to think about. Then the third thing to think about, I just think is like general disagreeableness or financial discipline or cool headedness. I don't think it is a good idea to angel invest money. If you're you have.
Early stage startup equity is I think the most, one of the most, if not the most dangerous asset classes or riskiest asset classes on the planet, I think it'd be better off buying sovereign debt from a bankrupt country before you'd invested in early stage business. And so you have to really be okay with losing it.
And it's something that's easy to say and hard to do. And for me, you know, losing money has definitely made untradeable. Like startup investments aside has been extremely educational and helpful. And so it's usually someone who's seen both, they've gotten a big paycheck and they've gotten a big tax deduction.
That becomes a pretty good investor. You know, I definitely think that that that market is really overcrowded. Now, generally the cooler something becomes the more negative. Selection effects are, or the more weak this selection effects are. So you tend to lose quality.
[00:18:49] Alex: That makes sense. Makes sense.
And, you know, I guess speaking a bit more broadly now in terms of new companies and a lot of macro trends I'm sure you get to see a bit in, in working on pioneer, what are some trends you see as far as physical location goes for up and coming founders and companies? I mean, I know there's as of late, especially, it's been a lot of talk on the state of San Francisco and it seems like, at least from my perspective, the less and less people want to move there in the first place.
[00:19:20] Daniel: Yeah. I dunno. I think the demise of San Francisco, you know, has been talked about for maybe three or four years now, even prior to COVID. I don't think that it's going to go anywhere. I think on the mark, then you may have an increase in hubs. And so, you know, if previously San Francisco had, you know, almost perfect market share, which it didn't, but like lots of imagined for the theoretical sake of it, it had a hundred percent market share.
Maybe that goes down, you know, 10, 15, 20%. And it spreads to other places. But I do think fundamentally we're going to end up in a world where there's just basically going to be two corporate realities. There's going to be the large company, corporate reality, which I think will be remote for an extremely long period of time.
I think people are just not ready to digest this, but you're going to have this issue where the optics of opening up the office and forcing people to come into work with. You just have a statistical number game. If you have 200,000 employees, one of them is going to die from something that is related to COVID that they may have gotten at the office.
The optics of that are just so wild in this day and age that no employer is going to do that anytime soon. So I like it. I think large companies are going to be heavily remote, if not entirely remote for. Forever. And then I think you have the second cohort of young startups that don't mind meeting in person that do want to meet in person.
In fact, if you're pre product market fit, I'd argue, you'd probably have to be in person to succeed. You know, maybe open source projects. So the one exception to this, but, you know, for the most part, it really helps. And those people will be in person and there'll be in like a little hot. The big thing that I would be tracking if as I was trying to predict this world is really not where the venture capitalists are.
I don't think that matters that much now where the founders are. They're almost never starting out in the bay area. They're always immigrating here, some notable exceptions to that, but for the most part, it's not like 99%. You know, not born in Silicon valley. I'd be looking to where the executive talent is.
Cause I think that's going to matter quite a bit. Because historically the network effect of Silicon valley has not been venture capitalists. It's been that if you want to get a VP of engineering, marketing, finance, Silicon valley was literally the only place to go because these trades are not taught in school.
They're only taught in growth companies that only then existed in Silicon valley. And so that's really the big question. And if you have a lot of those folks that are ex-pats, you know, I'm a German head of operations that are, or a VP of marketing, and I'm just going to head back to Germany now and be with my family.
You know, you may see a bit more of a diaspora startup and maybe that person that gets employed by some German company and, you know, instead of by an American one, that'd be the case for it. You know, net, net, I think like things decrease like five to 10%, but not, you know, 150. And I think at the end of the day, LA Silicon valley will continue to be the college town of startups.
And it's going to be a place you're going to go to get network, get, meet people, get funded. You may go somewhere else afterwards, but people will always.
[00:22:07] Alex: What do you think are the stages of development for that sort of fully remote future you're talking about in a more corporate environment. Do you think that starts with, with w how does that progress in your mind?
Okay,
[00:22:22] Daniel: well, I don't think we know today really as a society, how to work remotely. And I think, I think society fools itself thinking that it's kind of figured it out with slack and zoom, but I imagine if you put someone in a room 10 years from now with the tech tech technology tools we have today, it's going to look as an antiquated as dialing a rotary phone.
So I think we really have no clue what to do. And we're blessed. We're blessed that this pandemic hit this century and not last century where we literally would be stuck dialing rotary phones to each other. And we're blessed that, you know, as a result, the economy has been facing. It's been great, actually, if you believe the, you know, you know, X interest rates, I guess.
So you know, I don't think we know how to do it. And I think there's a lot of people that, you know, our, our work, I think there's a real worker productivity tax for some people. And I think there's a real worker productivity boost for some people being remote. I think it's somewhat, depending on your psychometrics, you know, I, for me, it actually happens to be neutral to good, but I think for a lot of people, you know, who are extrinsically motivated by what other folks around them are doing?
It's, it's a real headwind because come two or three or 4:00 PM, like you're just not working as much as you were. And you're not moving as much as you were. And and maybe you're not as happy. You know, I think, I think that that's a real issue that people have been built and it's a huge opportunity for startups to build good products around all the companies I've seen building products around this are really trying to solve like the five to 10% team problem, which I don't think is an issue.
I think what you want to solve as a thousand person problem that cause the five person teams are just meeting up in person and thought thousand person problems, you know, a real issue. You know, if you look at an open office plan as a model, if you imagine you're a thousand person company, so you have five stories, every one of them is an open office.
And so, well, maybe five, six stories. And so, you know, maybe you have, you know, at, at your media, not at peak, but at your media and you have, I don't know what, 80, 90 people on a floor. And so that you need software that can kind of handle and mimic that reality. And then you think you may ask, well, okay, what does that thing do?
And I think it's really simple. When you're in the real world, there's two things going on that are fundamentally different from zoom. One is you're ingesting much more information about the counterparty, like just a fidelity that I would be seeing you, if this was in the real world is very big and all that information goes into our minds.
You know, how shaved does that person is? What is the fabric of the clothing that they're where all of that information is processed back propagated into an index and is used to like update really important priors about that. The fact that you want to go the extra mile for them, the part of your tribe, that type of thing.
The second thing is very simple. It's just friction. Like if I'm in an office I can glance at you and you will notice that like I've turned my head and you might turn your head to, and frictionlessly we're having a conversation. You know, it was now we have to set up a zoom call or, you know, even with the flock integration, it's just incredibly friction-free if you.
Compare the amount of milliseconds in difference. You just make a chart, like the amount of milliseconds required for human interaction. It's, it's probably, I don't know what maybe two orders of magnitude larger. The one final thing that's in into one bonus topic is I think in lieu of having good voice to communicate through audio and video, we have started to get fat on the high fructose corn syrup, or maybe a better metaphor of you started to get fat on the aspartame, those slack, which I think is a synthetic form of bonding.
That doesn't mean. Unless you really know the people well in the first place, doesn't really create any form of, you know, kind of oxytocin or, or, or excitement or engagement. And if anything, in the reverse it creates riots. And, you know, if you look at Twitter, it's just like not a great thing in the world.
So I actually think that, you know, I don't know if I was running a five, 10000% remote company, I would probably balance. And then I would just push people to use some type of thing we would build to communicate through through the way humans communicate through video and voice much more. And and I think this will be built out over the next few years and the company to figure this out.
I, you know, I think there'll be phenomenally successful. I actually think the roadmap, the product roadmap is exceedingly clear. And I think, I think it will be really important. Otherwise I think we're going to end up with, with a huge productivity tax that, you know, I don't think as accounted for, you know, in, in the market right now, it's going to be
[00:26:30] Alex: interesting to see how it develops, but.
I guess, I guess time will tell, thank you again. Bye. Bye. Bye.