What I read and found interesting of late. For those curious abt the title, the word ‘Interleavings’ comes from publishing. Interleaved books are those sold with blank pages inserted between printed pages so as to facilitate note-taking. This was a common practice in the 16th and 17th century, but has disappeared now.  Thus my term ‘Interleavings’ for my notes and thoughts on the digital texts I enjoyed reading. Here are my interleavings from the past month.

The above is the result of the prompt “For these episode links (shared), can you extract their cover art and give me a creative image of their cover art or anything relevant to them ideally with their titles for use as a representative image or linkedin banner in a blogpost covering these. It needs to combine cover art for podcasts and articles of the links shared above. Don’t make up anything that is not true.”

Well, I think we are still safe for a while:)

Podcasts

1/ Nabeel Qureshi on how the best talent brands are polarising

Link to the Lenny Rachitsky Podcast episode.

Good podcast episode spurred by his recent piece on his experience at Palantir – it covers his time at Palantir as a Forward Deployment Engineer, his new startup, and some interesting book recommendations; Impro, which is one of Palantir’s recommended reads, gets a mention, as does Shakespeare’s Henriad(!) and Anna Karenina!

From the podcast episode, I thought this comment by him on how the best (recruitment) brands are polarising, was interesting. The best recruitment brands per Nabeel, push away some people as much as they pull forward certain people.

Nabeel S. Qureshi: “There was also the question of, I think it might have been Thiel who mentioned this, but he thinks that a lot of the best recruiters in the world or the companies that attract talent, they put out this distinctive bat signal and it has to turn some people off. That’s the key of a good, bat signal. 

So, I think in the present day, OpenAI and Anthropic, they’re both sucking up some of the best talent that you and I know. And I think one way they do that, and they are sincere in this, but they do really attract people who are almost messianic about the potential of artificial super intelligence and who really believe this is the only thing that matters and it is going to be the biggest thing in the world.

I think Palantir’s version of that was that they were quite focused on things like preserving the West. There was a slogan of Save the Shire, right? So, they were talking about military and defense and intelligence and the importance of that well before everybody else.”

2/ David Senra on Todd Graves’s Raising Cane’s, and focus

Link to Founders Podcast episode.

Todd Graves runs a fast-growing fast food chain with a limited menu focused around Chicken Fingers! David Senra mentions him as a living entrepreneur who he admires greatly. In this podcast episode, he covers why. I thought this passage (below) was particularly good.

“Charlie Munger has his great line, something to the effect that oftentimes in winning, the business system goes ridiculously far by minimizing or maximizing one or a few variables. And he used Costco as an example. And so the clip that I saw was Todd saying that he has this very simple menu, the same menu that he’s had since day one. He had all these people tell him, before he started the business in its early years, that, to this day, what you’re doing is not going to work.

Your menu is too simple. You need to follow the trends; you need to do what your competitors are doing. And he stubbornly believes in doing one thing and doing it the best you can. So he says, “I’ve always believed in doing one thing and doing it better than anybody else.”

If you do what you do well and consistently do it great, your customers will come back. And so, if I add different items to the menu, I wouldn’t be as quick in the drive-thru; if I overcomplicated things, my quality would go down, my speed would go down, and it wouldn’t be our concept. Adding different things and losing focus would make us less special. And so it’s not just that if I narrow the focus and perfect every single detail, I will create the greatest product in my category, but he also understands how everything he does relates to the entire system.

So this idea is like, if I have a simpler menu that makes my product better because I can really focus on it, right? But it means that people come through the drive-thru or into the store. And because they’re. You have four things.

You go into Raising Cane’s, right? You’re like, do you want three chicken fingers? Do you want four or do you want six? It makes you order faster.

And so why is that important? It may not make a difference when you have one or two stores if you save 15 or 30 seconds for each order. But it makes a hell of a difference, right, when you have 800 stores, like he does today. “

We see that

• Focus (limited SKUs) help you create a better product
• Limited SKUs / focus also helps the enabling support mechanisms or other interconnected mechanisms work better (like here fewer SKUs = faster ordering at the drive thru, and hence quicker turnaround)

The big Indian brands that exemplified this thus far have been DMart, Indigo (give me more examples, i collect these). This is also something that I frequently share with the founders I meet, but it is very very hard for me to get the message through:)

3/ Hunter Somerville, Stepstone, on How I Invest

Link to ‘How I Invest’ podcast episode.

This passage from Hunter Somerville of Stepstone, a leading fund of funds in the venture world, on how they track potential emerging managers was fascinating to me. This is exactly how a GP / fund would use Harmonic et al to track potential founders.

Hunter Somerville: When you see someone leave an established brand and start a new organization that has done all of that, sophisticated LPs that are active in venture move pretty quickly and those fund raises happen in very short time frames. Where I think emerging managers are in more jeopardy are when it’s someone that’s a mid level person that’s never run an organization that has a body of work that maybe they sourced but they didn’t cover, they didn’t sit on the board of, or operators that have never invested before, don’t have an investment track record, or have done very tiny angel checks that are just not indicative of their ability to execute as a lead or a number two in seed rounds going forward.

…

Hunter Somerville: You can’t fully anticipate spinouts. You can look at organizations and know where there’s dysfunction or where you think that it’s going to get worse, where you know economics aren’t being distributed appropriately or where there are people that are hanging on too long.

Hunter Somerville: We know those firms, we know where we think it will happen. And there we dig in even further on people’s bodies of work and track records in case it does happen. But as an organization within our venture group, we are tracking attribution and performance for every individual within the funds that we’re in. And the fortunate position we find ourselves in, we are in over 300 venture and growth managers to begin with.

Hunter Somerville: And that allows us to get the data on what each individual partner is doing, the roles they’ve served in sourcing and coverage, in value add post investment. And we compile all of that and go through it as a venture team on a quarterly basis where we look at the rising performers, who’s doing well within those organizations, who we may have not appreciated just from like a diligence effort when you’re spending time with the manager and who’s had really good follow on activity in the investments that they’ve made. And we start building narratives among our team, both as we assess that manager and as we consider whether there’s spin out potential from specific individuals within that manager. And that creates the prepared mind that I was talking about in case something does happen and becomes catalyzed and we then try to move pretty quickly.

Because not only would we like to be active in backing those groups, but we’re very happy to be an anchor and the first group to commit. We don’t need social proof. We don’t really care about that. And we want to be part of the journey with those managers from the very beginning and help them think through building a great organization and picking the right LP partners, which as I mentioned before, is a huge intrinsic risk if you don’t do it.

The episode is a good listen for any aspiring GP / fund manager. Link to excerpts from the podcast I found particularly interesting here.

4/ David Senra on Les Schwab, on the second order effect of incentives

Link to Founders Podcast episode.

Senra: Charlie says over and over again, never ever think about something else when you should be thinking about the power of incentives. Multiple times in Poor Charlie’s Almanack, you see ideas just like that. Incentives rule everything around you.

Never ever think about something else when you should be thinking about the power of incentives. The most important rule in management is get the incentives right.

…

Les Schwab: “This is how more on how we set up the corporation at the very beginning. Each store operates as a separate entity and each store operates as a separate business. The store employees share only in the profits of the store they work in.”

Senra: Let’s go back to the fact that incentives drive behavior. One benefit, one unexpected benefit of sharing profits with employees, less theft from within. Again, never ever think about something else when you should be thinking about the power of incentives. He’s talking about the fact that they will expand.

I think at this point, they have 163 stores and people would analyze this company like where are all your controls? And he’s like, “Well, we don’t have any controls.” Why? Because the incentives are controlling behavior. “We didn’t have many controls. So the thing that held it together was that we ran each store as a separate entity. As long as we made sure that every tyre was billed to them, as long as they made sure that every tyre they sold was billed to the customer, we would come out all right.

5/ Bill Shufelt, Athletic Brewing, on doing things that don’t scale

Link to The Logan Bartlett Podcast episode.

A bit late to this enjoyable episode where Bill Shufelt, hedge fund operator turned cofounder of non-alcoholic beer co, Athletic Brewing, speaks to Logan Bartlett. What I found interesting was how the rising use of wearables, and the increased awareness that comes with it of key markers in the body and how they react to sleep / drinking, creates a forcing function almost against liquor. That was one, and the other was interestingly around doing things that don’t scale in the early days, and how it compounds.

“Logan: As I reflect on like health trends have been moving in a good direction for a long time. And there’s probably. Some element of like the increased wearables. I’ve two on my hands right now. And it becoming self, I mean, listen, these things are such snitches. If you have like a drink the night before, it’s like they know, and they yell at you. And my bed yells at me. I get yelled at every direction. So I have to assume that was like one of the things as well. 

Bill: I mean, the nice thing is like when I showed up in my physical this fall, like an annual physical, I was showing up with not only data from my watch and wearables, but like my pre Nuva scan. And like, I was like, this is all the factual information about what’s going on in my body. And like, That just didn’t exist 15 years ago.”

*

“Bill: I don’t know what the customer acquisition cost of spending 10 minutes talking to someone at a booth that I’ve driven six hours to be at is,

Logan: Probably high.

Bill: it’s not great, but like I can’t tell you how many events I’ve done and I’ve gone back to like three years later, like a trail half marathon that I haven’t been at since 2018 people have been like, I met you in 2018 and my fridge has been full of your beer ever since, or like, and in my head I’m like, that’s easily a thousand LTV customer. And um, so I think like you said, scalable before, and I’m a big fan of these like unscalable activities if we do enough of them over and over again, like those scalable activities all of a sudden you turn around and you’re like, Oh wow, we activated 3 – 500 events.”

Link to excerpts from the podcast I found particularly interesting here.

6 – 9 / Podcasts I liked but haven’t written excerpted or written notes on

Howard Schultz, Starbucks, on the Acquired Podcast. Late to this terrific podcast episode featuring Howard Schultz, the founder of Starbucks talking through the early, and more recent, history of Starbucks, including the decisions around going Global, expanding the menu etc.

Victor Shih on the Dwarkesh Podcast. Victor Shih, China watcher at UC San Diego; gives a good rundown / view into the internal machinations underlying Chinese political structure, and how policy gets made.

Anton Howes, historian, on the Ideas of India podcast. Fascinating podcast episode, covering how salt taxes and policies around that by the East India Company led to the death of hundreds of thousands of Bengalis and also led to malnutrition and long-term economic malaise (fascinating to read about the great hedge of India, a customs barrier that covered the length of India from Punjab to Bengal to ensure salt wasn’t smuggled). I also did not anticipate that several European conflicts were really salt wars.

Chris Arnade, urban walker, on Conversations with Tyler. Particle-physicist turned Hedge Fund operator, turned walker of cities, Chris Arnade, walks cities, and blogs on them. Through these walks and in the subsequent essays he posts on his substack, he explores urban life, culture, sociology etc. This episode was really interesting.

Articles

10 / The ultimate cold email / cold outbound handbook

Link to article.

This looong piece by @MattRedler on setting up a cold email / cold outbound strategy is excellent; easily amongst the best pieces of writing on this topic. It is also amongst the best examples of content marketing I have seen.  Lots of detail on subtopics such as setting up adjacent domains, how many domains to buy, setting up SPF / DMARC / DKIM, warming your inboxes, who to send to, how to write emails etc., like here

“Most great cold emails do have the following elements in them, not necessarily in this order:

• Personalization

• Strong claim

• Evidence for that claim

• A clear next step

• Shorter than ~200 words

Include all of these in your email and you are, probably, Golden.

The most important piece to clarify here is “Personalization”: lots of people have the idea that this means opening your email with a line like, “Hey, I loved your post on LinkedIn last week!”

And while sometimes personalization might mean a cheesy line about LinkedIn, what’s important is that there is something in your email that makes it feel 1:1. People, more these days than ever, have their mental spam filter on when they get an email from a stranger. If there’s nothing in your email that indicates it’s personal and not a template sent to 1000s of people, you’re probably getting sent straight to trash and possibly marked as spam.”

Here are excerpts from the handbook / article I found interesting. Link.

11/ How consumer brand startups Arata, Fashor, Atomberg scale capital-efficiently

My colleague Rohit Kaul spoke to the founders of Arata, Fashor, and a founding team member at Atomberg – 3 companies across different points of scale to extract learnings.

Link to article.

Given my early stage focus, the lessons from Arata and Fashor resonated a bit more. Three that stood out to me – Arata founders on de-aggregating product performance by channel and aligning marketing comms per channel basis what is working, and how they use the Reason to Believe framework to create their performance ads, and Fashor’s founder on how they tease apart blended CAC to new user CAC and repeat user CAC and how that informs their customer acquisition strategy.

One of Arata’s most important discoveries was that product performance varies dramatically across channels. Bhasin explains, “My top products on quick commerce aren’t the same as on Amazon. Amazon’s top products aren’t my website’s top ones. There’s an overlap, but a visible top product difference across channels.”

This insight led them to analyze data more granularly and link it to custom messaging on different channels. Instead of pushing the same messaging across all platforms, they optimize marketing for each product’s best-performing channel.

“Say a shampoo is my top seller at the aggregate, business level but it may not be the top seller on quick commerce,” notes Bhasin. “But if your marketing spends and overall share of voice or brand voice, is targeted towards that shampoo, you won’t be able to optimize and make most of that specific channel.”

*

Their performance marketing is based on the Reasons to Believe framework.

“There’s a Reasons to Believe (RTB) sheet. What is the product? What is its USP? What are the ingredients? What are the benefits? How do the ingredients support those benefits and USP? What is the visual representation? What is the sensorial representation?”

Based on this RTB framework, Arata has developed a scientific approach to performance ads. “We’ve broken performance ads down to a science—what to appear in the first three seconds, in six seconds, eight seconds, all the way to 15 seconds,” explains Bhasin. Each segment serves a specific purpose: the first three seconds need a strong hook “to get the consumer to stay, stop scrolling, and watch the ad.”

“The core message will remain the same, but each platform needs specific adaptations,” Bhasin explains. “Amazon requires wide backgrounds, while Flipkart and Myntra allow strips calling out product benefits. The A-plus content (product page) remains similar across channels, just adapted for different specs and sizes.”

Once they know what’s working, they double down using the “double diamond strategy.” As Bhasin explains, “You find what’s working — which creative, which campaign, which tagline. Then you create two more underneath it and again test. So you continuously keep building on what’s working and keep shifting out what’s not working.”

*

Underpinning Fashor’s capital efficiency is a sophisticated approach to metrics tracking, focusing on data that directly informs profitability:

Segmented CAC: “We split our new customer CAC and repeat customer CAC on an everyday basis. You have to split. Don’t just look at blended CAC.”

This separation is critical for managing unit economics. “On repeat customers, you need to make a profit. You know your gross margin and variable costs… So you have to ensure your performance marketing cost generates a profit for you.”

New customer acquisition requires investment: “On new customers, initially there will be a burn, because new customer CAC is higher.”

The investment decision is strictly based on expected returns. “We accept the burn because we know over 40% of our customers repeat, and we know their frequency and lifetime value. As long as the LTV to CAC ratio is above 6x, we’re happy to invest in acquiring new customers.”

12 / Reducto’s Path to PMF

Link to article.

This is another of the Path to PMF series that First Round Review (an online site from storied seed fund First Round Capital) puts out. Each post takes the reader through the journey of a company and how they found PMF or Product Market Fit. I found this piece particularly interesting as it is a great example of how lukewarm reaction to their initial product (a long-term memory solution for language models) persuaded the founders to rethink their initial approach, and take up a new approach (making it easy to extract data in the right manner from PDFs), one which came from carefully listening to what their potential customers were asking. If you have read Mom’s Test or heard of the importance of problem validation, well, there is no better example. TLDR: It is either hell yes, or no.

“Hundreds of folks asked to be onboarded to the product, then called Remembrall (“Harry Potter” fanatics will notice a pattern with these company names), but early onboarding calls hinted that they were a bit too early to the space.

They had conversations with enthusiasts who would maybe try adding it to their AI application. “It was never the case where people were saying, ‘I’ve noticed that customers get angry at my product because X, Y, and Z and Remembrall can fix it.’ That was the first signal. The second signal was that people were maybe willing to pay $10-20 a month because they found the idea interesting. But no one’s product team needed it,” he says.

We set up demo calls with everyone who expressed interest and we asked what their use case was and what problems the product would solve for them. And we would very rarely get a real answer. It was more of a ‘This seems cool’ curiosity.”

…

“One of the most common feature requests for Remembrall was, ‘Hey, you’re managing my user’s chat history, can you manage the files that they’re uploading as well?” Abraham says. “We went into our projects expecting to help teams with fun ML problems, but very quickly learned that one of the biggest bottlenecks across most pipelines was actually well before retrieval or generation.”

So the co-founders built a very simple solution — they would upload the docs, parse them using an external parsing solution, and then chunk the information for you. “It’s embarrassing to look back on it now, it was a very ugly Streamlit app with a super simple document segmentation tool. It would do nothing other than split your documents into little boxes of content. I can’t stress this enough — it was literally a weekend project that we threw together,” says Abraham.

But they posted it on YC’s forum anyway, and the response was immediate and overwhelming. “We started getting replies, ‘This is better than what I’m getting from Textract. Is this a hosted API? Where’s the Stripe link?’ The pull was much stronger than everything else we had worked on,” he says.

…

Unlike the “seems cool!” enthusiasm for extended LLM memory, there was a distinct need and a massive pain point. “These companies are not trying to spend many hours of engineering time on PDF processing, but it’s the bottleneck that’s stopping them from building the things that actually matter. If we can be that ingestion team for our customers and take that problem off their plate, that’s clearly very valuable,” he says. 

We had spent enough time exploring things that were not resonating. In comparison, it felt like we were getting punched in the face by this new idea — it was something people cared about an order of magnitude more.”

13/ Your ICP (Ideal Customer Persona) should be uncomfortably narrow

Link to article.

Good read with a lot of examples on how the likes of Vanta, Clay (see below), Webflow etc., all iterated towards their ideal customer persona or ICP; essentially the specific target persona the product is aimed at. The core mantra is that early on, your ICP should be uncomfortably narrow. As the article puts it: “It should be so narrow that when you describe what you’re building to friends and who it’s for, they think you’re slightly crazy for trying to do something so niche.” Subsequently as you hit product market fit and raise more funds, and you can widen the ICP aperture, and expand your feature set to cater to the wider ICP. But early on, keep it uncomfortably narrow!

“Clay is a tool for connecting APIs to your spreadsheets to enrich your data, and everyone wanted a piece of it. Recruiters told founder Kareem Amin how useful the product was for finding candidates. Salespeople wanted to use the platform for their inbound and outbound leads. Front-end engineers could use the spreadsheet as a low-code backend.

All this interest might sound great, but five years in, revenue was still hovering near zero. The warning signs were there when the initial spark died off quickly. “People would feel excited by the possibilities the product opened. But they weren’t always going back and using it the next day,” Amin told us. “So actually we had a lot of, ‘Wow, this is so powerful!’ and then no usage, or inconsistent usage.”

The Clay team accidentally cast too wide a net by building features every prospect wanted. As Amin explains it: “When you’re an early startup team, one of your strengths is that you’re malleable. A prospect can say, ‘Oh, could you guys do this?’ or ‘Are you guys this?’ And then you can become that, quite easily. What I’ve learned is that you have to know when to be malleable,” he says. “You can’t be changing the value prop or even the product itself from meeting to meeting. When you narrow the scope, it feels claustrophobic. Why are we doing something that’s smaller when we could be doing something bigger? Eventually, we realized that by narrowing down our scope, we were actually increasing our value.”

Finally, to escape the everything-to-everyone trap, Amin called a bold play: pick one specific ICP and go all in. They started with outbound sales teams.

“It wasn’t so much that I was 100% sure that outbound was the right call, although it was a faster starting point because all companies need it, versus typically only bigger companies needing inbound support, ” says Amin. “It was more that I realized we need to pick one thing at a time, test it out clearly and get feedback that we can react to quickly. That’s when we’d earn the right to execute on the more expansive parts of our mission.”

14 – 16 / The story of Founders Fund

Link to the story series page (paywalled).

Mario Gabriele’s three pieces on Founders Fund is utterly riveting. This is a four-part series, and the fourth is awaited. He covers how it was founded, its distinctive philosophy (polarising is the right word, and Palantir – scroll above – was incubated in Founders Fund), and how it is set up for selective but all in bets such as Palantir, Anduril, SpaceX, Ramp etc. There isn’t a fund like this, and perhaps never will be.