Keith Rabois & Eric Glyman: The Tools, Tips, Secrets and Process That Drive Efficiency | E1148

Intro (00:00:00)

• The second framework that Jack Dorsey taught Keith Rabois is the editing writing metaphor.
• As a CEO, one should avoid writing and instead focus on editing others' work.
• If you find yourself using a lot of red lines consistently in the same area of a company, it's a bad sign.
• Simplifying can be good, but constantly asking clarifying questions without getting to the root of the issue is a problem.

Founders Fund & Khosla Deals (00:00:54)

• Eric Glyman's co-founder, Kareem, met one of Keith Rabois' colleagues at Founders Fund while playing video games.
• Founders Fund was looking for an opportunity to reinvent finance and the finance of companies.
• Eric and Kareem flew to San Francisco the next day and presented their ideas to Keith Rabois off notes.
• Keith Rabois was impressed by Eric's vision and how it aligned with Founders Fund's beliefs.
• The notes from that first meeting still exist and are remarkably similar to the board meeting they just finished, except for the topic of AI.
• Keith Rabois had drinks with Eric in New York before he started Ramp, but he missed the opportunity to ask if Eric was working on something great.
• The latest deal with Khosla Ventures came about because of Ramp's high profile and the potential intersection of AI and finance.
• Khosla Ventures is interested in AI and recognized that Ramp has the secret sauce to successfully use AI in finance.
• They were excited to meet with Eric and Kareem, even if it didn't result in an investment, because they believed Ramp would be successful in AI as the future of finance.

Ramp's Secret Ingredients for Future Finance (00:03:09)

• Ramp is not just a money movement fintech company, but a productivity and workflow company.
• Ramp automates expenses, closes books, and suggests accounting categories.
• Ramp uses AI to analyze data and identify cost-saving opportunities.
• Ramp's AI automates workflow processes, saving companies time and money.
• Keith Rabois has a long history of working with Ramp.
• Rabois is excited about Ramp's potential to deliver more value and accelerate business growth.

Eric's Strengths & Weaknesses (00:05:28)

• Keith highlights Eric's focus on talent acquisition and marketing instincts as two key strengths that make him world-class.
• From the beginning, Eric prioritized building a talented team, recognizing that the team is the foundation of a successful company.
• Eric's marketing abilities allowed the company to cut through the clutter and effectively communicate its value proposition in a compelling way.

Keith’s World Class Brilliance (00:07:51)

• Eric praises Keith's ability to articulate business equations clearly, defining outputs and inputs, which creates focus and efficiency within the company.
• Keith's talk, "How to Operate," is recommended as a valuable resource for founders, emphasizing the importance of clarity of thought, operational excellence, and hiring great talent.

Eric’s Inputs & Outputs (00:09:10)

• Ramp's business equation had three basic variables: purchase volume, interchange rate, and funding cost.
• Purchase volume was the only variable that moved everything.
• Ramp focused on creating a product that people wanted to use deeply in their organization.
• Ramp's positioning was to be the last card a company needed, rather than the first.
• Ramp's business model was to make a percentage of purchase volume, which allowed them to be more surgical in their targeting.

Essential Advice for Founders on Speed Execution (00:12:13)

• Count the days to measure the passage of time.
• Conduct a calendar audit to identify high-impact activities and eliminate low-impact tasks.
• Focus time on activities that create leverage and competitive advantage.
• Move quickly, say yes, and launch and test things.
• Accept that mistakes will be made and learn from them quickly.
• Stay consistent in product focus and avoid changing directions too often.

Top Challenges Ahead in Growth (00:15:53)

• As companies grow, organizational design becomes more complex, requiring adjustments to decision-making and responsibilities.
• Scaling a business involves challenges such as building a nationally recognized brand and expanding beyond a single payment method.
• The "five turnovers" rule before going public may not be necessary, and internal promotions should be balanced with selective external hires.
• Leadership training should be tailored to the individual's task-relevant maturity and the project's consequences.
• The level of intervention or delegation should be determined based on a matrix of conviction level and potential consequences.
• Great companies focus on discussing both wins and misses during board meetings, promoting transparency and continuous improvement.

What Defines a Great CEO (00:24:08)

• Making many small decisions correctly is more important than making a few big decisions.
• Focus on activities and spending time in areas that matter most for company building.
• Creating momentum is crucial for startups by finding and doubling down on new ideas with explosive potential.
• Artificially manufacturing momentum is possible, but eventually, the startup will need to make its processes and systems more scalable and sustainable.
• Keith Rabois can often tell within the first three minutes of meeting someone if they are a good investment, but he has also missed out on some great investments.
• In early-stage investing, missing more investments than you hit is normal, and even as an executive, it's impossible to be right 40% of the time.
• A sales team can have up to 20-30% of its members underperforming even with competent individuals.
• One bad hire can significantly hinder an organization's momentum and progress.
• Mistakes in hiring can cause a company to lose a year of momentum, which may be difficult to regain.

Direction for Today's Entrepreneurs (00:29:17)

• Great businesses start by being curious about people's problems and solving them in a better way.
• Timeless businesses focus on solving enduring problems, such as helping people spend less and be more efficient.
• Technology can enable the creation of timeless businesses by solving problems in new and innovative ways.
• Be curious about people's problems and go deep to understand them.
• Focus on solving timeless problems that people will always care about.
• Invest in relationships, do right by people, and make your service better every month.
• Be diligent when people complain and listen to solve their problems.

Identifying Market Potential (00:31:52)

• Ramp started as an AI agent that helped users get refunds when prices dropped.
• They pivoted to helping users save money on credit card spending.
• Ramp noticed that customers were also interested in saving time on expense reports.
• They added a feature to help users save time on expense reports.
• Ramp is still focused on helping people save money and time.
• Even though Ramp is a multi-million dollar company, they are still less than 1% of the market.

Product to Platform Challenges (00:34:07)

• Challenges in transitioning from product to platform:
  • Knowing when to make the transition.
  • Maintaining focus on customer needs.
• Example of Ramp's platform expansion and its value propositions.
• Potential monopoly market in the finance industry.
• CFOs can benefit from using Ramp to increase efficiency and strategic impact.
• Ramp can act as a fiduciary agent, saving time and ensuring prudent resource allocation.
• Ramp can serve as a compliance agent, adhering to processes without overwhelming employees.
• These roles, combined with insightful strategy, require comprehensive data integration.

Quick-Fire Round (00:38:38)

• Keith Rabois and Eric Glyman co-founded Ramp 9 years ago to help companies become more profitable and efficient.
• Ramp saves companies an average of 5% on their card expenses, allowing them to make additional hires and have more time for creative endeavors.
• The company's mission is to improve efficiency in all ways that companies move money, benefiting both payers and payees.
• Ramp's last funding round valued the company at $7.6 billion.
• Keith Rabois underwrites investments based on a realistic vision and probability of success rather than detailed financial projections.