20VC How Founders Should Think Through Distribution and Customer Acquisition Today, The Challenges of the Digital Advertising Duopoly Currently & How To Structure Company Post Mortems Effectively with Gabriel Weinberg, Founder & CEO @ DuckDuckGo

Harry Stebbings hosts Gabriel Weinberg, CEO of DuckDuckGo, on The 20 Minute VC podcast. Weinberg shares his journey from a physics major to founding DuckDuckGo, a privacy-focused search engine with over 1.6 billion monthly searches, 83 remote employees, and profitability without significant venture capital reliance. They discuss the importance of traction in startups, the challenges of scaling a distributed team, and the need for regulation in tech to address data monopolies. Weinberg advocates for a Do Not Track legislation to combat the duopoly of digital advertising and emphasizes the significance of resonant frequency in team dynamics and the value of learning from every project through postmortems. DuckDuckGo's future vision is to be the go-to consumer privacy brand, simplifying privacy across all devices.

• Harry Stebings hosts the 20 Minutes VC and Founders Friday.
• Gabriel Weinberg is the founder and CEO of DuckDuckGo, an Internet privacy company.
• DuckDuckGo has scaled to over 1.6 billion searches per month with 83 remote employees.
• DuckDuckGo is profitable and has raised funding from USV.
• Weinberg has authored two books, "Traction" and "Super Thinking."

You are listening to the 20 Minutes VC and founders Friday with me, Harry Stebings and I always love your feedback on the show. And I respond to all messages on Instagram at H Stepbings 1996 with two b's. And it would be so great to see you there.

This quote introduces the podcast and the host, Harry Stebings, who encourages listener feedback on Instagram.

And so with that, I'm delighted to welcome Gabriel Weinberg, founder and CEO at Duckduck Go, the Internet privacy company that empowers you to seamlessly take control of your personal information without any tradeoffs.

Harry Stebings introduces Gabriel Weinberg, highlighting his role at DuckDuckGo and the company's focus on Internet privacy.

• Gabriel Weinberg was a physics major who chose startups over academia.
• His first startup was an educational software company that ultimately failed.
• Despite the failure, Weinberg remained in the startup industry.

Okay, super briefly, I was a physics major, didn't want to do academia, and thought basically on a whim that startups seem cool.

Weinberg explains his transition from physics to the startup world, driven by his perception of startups as a cool industry.

• Weinberg attempted to raise funds during the dot-com bust but was unsuccessful.
• He started his next company during the bust without seeking external funding.
• The experience influenced his approach to building DuckDuckGo, which he bootstrapped for four years.

Well, I tried to raise money right at the bust and that obviously failed, so I couldn't raise money, although that company didn't deserve probably to raise any money.

This quote reflects Weinberg's initial fundraising challenges during the dot-com bust and his candid assessment of his company at the time.

• Weinberg is risk-averse, especially with capital.
• He recognized DuckDuckGo's potential in privacy and search.
• Raising funds provided a buffer for growth and allowed the company to take bigger risks.

So I am, despite being my entire career doing startups and seemingly taking big bold risks, I'm relatively risk averse as a person, especially with capital.

Weinberg admits his risk-averse nature, which contrasts with the bold risks typically associated with startups.

• Weinberg's willingness to perform every job contributed to early profitability.
• DuckDuckGo operates in the lucrative search advertising market.
• The company maintained a break-even approach for a long time.

I think it's three things. One is I was really willing to do every single job and learn it.

This quote highlights Weinberg's hands-on approach to DuckDuckGo's operations, which helped the company reach profitability.

• DuckDuckGo did not need significant capital injections due to its profitability.
• The company could grow without constraints on team size and product investment.
• Weinberg is open to marketing investments but has not found channels requiring substantial capital.

I mean, at the end you're talking about converting capital into growth, right?

Weinberg discusses the relationship between capital and growth, emphasizing the need for efficient capital use.

• Weinberg does not generalize about the venture landscape, acknowledging the intelligence behind large funding decisions.
• He understands that large funding rounds may facilitate early employee and investor liquidity.

Well, I generally don't like to generalize because I don't know their situation, and there's a lot of smart people involved in all these things.

This quote shows Weinberg's reluctance to make broad statements about the venture landscape, recognizing the complexity of each company's situation.

• Founders, including Gabriel Weinberg, often have a significant portion of their net worth tied up in their companies.
• Taking money off the table can be seen as a diversification strategy.
• This action can enable founders to take on more risks by securing their financial needs.

"And it makes sense from a diversification point of view to take some money off the table and it's a good deal for the other side because they can get in and see the rest of the growth."

The quote explains that selling a portion of one's stake in a company can be mutually beneficial for the founder and the investor, allowing for diversification and growth.

"But I think if you come from that attitude and you do that, then it kind of opens up your ability to take more risks because you've kind of put aside everything that you wanted to put aside."

This quote highlights the idea that by securing personal finances, founders can afford to take more business risks, potentially leading to greater innovation and growth.

• Gabriel Weinberg expresses concern over the strength of digital advertising monopolies.
• The book "Traction" suggests that there are many broad marketing channel categories beyond the digital duopoly.
• Creativity in marketing can lead to finding efficient and effective channels despite the competitive landscape.

"I am very concerned as to what's happening in there. But I also think there's still a lot of open space for brand building and marketing in kind of a creative way."

Weinberg acknowledges the challenges in the current marketing environment but also sees opportunities for creative brand building and marketing strategies.

• The digital advertising duopoly is powered by data monopolies, which require intervention.
• Weinberg drafted "do not track" legislation to address the data monopoly issue.
• The legislation aims to empower consumers to opt-out of tracking, potentially disrupting the duopoly's dominance.

"Unless something is done to kind of deconstruct that data monopoly then this will persist at an infernitum because of the network effects involved."

This quote emphasizes the need for action against data monopolies to prevent their indefinite persistence due to network effects.

"So consumers who opt in do this do not track setting would not be allowed to be tracked by third parties as they browse the web."

The quote describes a legislative proposal that would allow consumers to prevent third-party tracking, thereby challenging the data monopoly of the advertising duopoly.

• Weinberg advocates for experimentation to find a dominant marketing channel.
• Once a successful channel is identified, it is crucial to double down on it.
• However, constant measurement is necessary to detect diminishing returns and adapt accordingly.

"Usually there's a dominant strategy. And so my view is you do experimentation in all these different channels to kind of unlock that dominant strategy."

This quote suggests that while many marketing channels may be tested, typically one will emerge as the most effective, and focus should then shift to maximizing that channel's potential.

• Marketing channels can saturate, leading to lower effectiveness over time.
• It's important to continuously measure performance and be ready to experiment with new channels.
• Focusing too much on diversification can dilute efforts and reduce the impact of the most effective channels.

"It's constant measurement. Like, you can be looking at the first and second derivative of what you're doing and seeing if it's reaching, diminishing returns."

Weinberg speaks to the need for ongoing analysis of marketing channel performance to identify when returns begin to decline, signaling a need to explore new channels.

• The saturation of channels can vary, affecting the efficiency of marketing spend.
• Payback periods for marketing investments can increase with scale, but this is not a strict rule.

"There are some channels that are way above your scale, and so maybe you could put $100 million into it, but there are other channels that kind of max out at smaller scales."

The quote suggests that the scalability of marketing channels varies, and some can accommodate much larger investments than others without diminishing returns.

• Privacy concerns have increased broadly, creating a larger market for privacy-focused services like DuckDuckGo.
• DuckDuckGo aims to expand its user base beyond those who are already privacy-conscious or technologically inclined.

"The market right now is actually pretty large."

Weinberg indicates that the potential market for privacy-focused products is substantial, driven by widespread privacy concerns among the general population.

• DuckDuckGo has achieved significant market penetration, crossing the chasm point with approximately 30% market share in major markets.
• The company's vision is to raise the standard of trust online.
• DuckDuckGo aims to be the consumer privacy brand people turn to for online protection.

"And so it's already crossed that chasm point. And now we're really focused on really helping people. Our vision is broad. It's raise the standard of trust online."

This quote emphasizes DuckDuckGo's current market status and its broad vision of enhancing online trust, indicating a strategic shift from just gaining market share to focusing on consumer protection and privacy.

• Traction is crucial for attracting investors and is often more convincing than narrative alone.
• Metrics for traction depend on the business, but highly engaged users and a business model generally attract investment.
• Even with less effective storytelling, strong numbers can draw investor interest.

"If you have the most amazing numbers in the world, you can be almost a crappy storyteller and people might piece it together for you and come after you."

The quote suggests that compelling metrics can compensate for weaker storytelling in fundraising, as investors are drawn to tangible signs of business success.

• Marketing is limited without underlying product-market fit.
• Balancing marketing efforts with product retention is critical to avoid growth stagnation.
• A countermetric of retention versus the inbound funnel is essential.

"You have to be constantly having a countermetric of retention versus inbound funnel."

This quote highlights the importance of balancing user acquisition with retention to ensure sustainable growth and prevent user churn.

• DuckDuckGo initially focused on the number of searches as a guiding metric.
• The company's broader vision now includes apps and extensions, leading to a shift towards Monthly Active Users (MAUs) as a metric.
• Due to DuckDuckGo's privacy policy, they have limited ability to track standard user metrics.

"And so when we think about those, we think of more around Maus because not everybody searches every day."

This quote reflects DuckDuckGo's pivot in success metrics from daily searches to monthly active users to accommodate their expanded product offerings while adhering to privacy standards.

• Asynchronous communication and keeping everyone on the same page are key to remote team success.
• Processes for effective distributed team management should be developed early.
• Organizing work effectively and keeping objectives clear are crucial for scaling.

"I think the key has been asynchronous communication and keeping everybody on the same page and the processes involved to do that."

The quote emphasizes the significance of asynchronous communication and aligned processes in managing a remote team effectively.

• Organizing tasks and clarifying what employees should work on were significant growing pains.
• Adopting a system of clear objectives, as suggested by the book "The Advantage," helped align the team.
• Writing down objectives explicitly and focusing on them is crucial for team alignment.

"But I think once we nailed that and how to get everyone on the same page as to what to work on, it scaled pretty nicely."

This quote indicates that clearly defining and aligning on work objectives was a turning point for effectively scaling the organization.

• Founders should organize remote teams effectively from the beginning.
• Having a centralized place for objectives and tasks, like Asana, is beneficial.
• Assigning a single owner to each task and area of responsibility is crucial for success.

"So everything has an owner from the top objective down to the little task."

This quote stresses the importance of having a single responsible individual for each task to ensure accountability and progress within a remote team structure.

• DuckDuckGo uses the concept of resonant frequency to align team members with roles they are passionate about.
• The goal is to create teams that are highly motivated and produce exceptional results.
• Unconventional team structures can contribute to achieving resonant frequency and maximizing team output.

"So what I found is for that to work, that's really dep"

Although the quote is incomplete, it suggests that the speaker has identified key factors that enable unconventional team structures to thrive, potentially offering insights into optimizing team performance.

• Gabriel Weinberg discusses the importance of team fluidity in achieving objectives and matching skill sets.
• Breaking down and building up teams helps them reach resonant frequencies.
• A strict hierarchy can make employees feel stuck, leading to dissatisfaction with their manager or team.
• Splitting leadership roles allows for more movement within the company, helping employees find roles where they can excel.

"we want to constantly be moving people around a little fluidly to break down and build up teams so that they can hit resonant frequencies."

This quote emphasizes the dynamic approach to team management where employees are moved around to align with objectives and utilize their skills effectively.

"if you have a hierarchy and kind of a strict set of team and role responsibilities, then you're much more likely to get people stuck in situations where they don't like their manager or they don't like the team that they're working on."

Here, Gabriel highlights the downside of rigid hierarchies which can trap employees in unfavorable situations, potentially leading to job dissatisfaction and turnover.

• The company culture emphasizes trust, validation of direction, and questioning assumptions.
• An experimental mindset is encouraged, where failed experiments are seen as valuable learning opportunities.
• Accountability is tied to the process of conducting experiments and learning from them, not solely on results.
• Post mortem analysis is conducted for every project to learn and improve, regardless of the project's outcome.

"a failed experiment is a good experiment as long as they've had a good hypothesis and good data at the end."

Gabriel explains that the value of an experiment lies in the quality of the hypothesis and the data collected, not just the success of the outcome.

"We hold people accountable for running good experiments, running good projects, running a good post mortem process, which we have for every project."

Accountability within the company is based on the integrity of the processes employees follow, rather than just the end results they achieve.

• Post mortems are conducted for every project, successful or not, to prevent stigma and encourage open discussion.
• The process includes a structured template with sections for timeline, what went well, what didn't, and action items.
• The goal is to foster a learning environment and continuous improvement.

"post mortems for good projects are often better than bad projects, because on a good project there's no even tension about blame or anything like that."

Gabriel suggests that post mortems for successful projects can be more productive as they are free from blame and allow for a focus on further improvement.

"we have relatively evolved post mortem and other templates that we use and we run that through."

The use of structured templates in post mortem analysis ensures consistency and thoroughness in evaluating projects.

• Gabriel Weinberg has transitioned from performing every role to leading a complex organization.
• His focus has shifted to setting clear objectives and repeatedly communicating them to the team.
• Effective leadership involves strategic thinking and understanding various mental models.

"I think the biggest has been really just a focus on getting the objectives right and communicating them over and over again."

This quote highlights the importance of clarity in objectives and consistent communication as a leader.

• Gabriel's strength lies in embracing and learning mental models from various disciplines to enhance strategic thinking.
• His weakness is a lack of enthusiasm for dealing with personnel issues, which he mitigates by recruiting a capable people ops team.

"the biggest strength is definitely just embracing and trying to learn these mental models."

Gabriel credits his ability to apply mental models from different fields as a key strength in leadership and company building.

"I'm a very intellectual and even killed person. And as you get more and more people, you get more and more drama of one form or another."

Here, Gabriel acknowledges his preference for intellectual tasks over managing interpersonal drama, which can be a challenge as the company grows.

• Gabriel considers his own investment of time and no salary as the first check.
• The first external investor was Scott Bannister, who was a user of DuckDuckGo and reached out to offer support.

"I think the first check has to count as my own check for having no salary for four years or so."

Gabriel views his initial personal sacrifices as the foundational investment in the company.

"Scott Bannister from Ironport and other fame. And he was just a user and he was following us."

The first external investment came from a supporter who believed in the product and wanted to be involved.

• Gabriel Weinberg sees a need for more effective regulation in tech, such as the "do not track" bill DuckDuckGo drafted.
• He hopes to contribute to creating effective regulatory frameworks.

"I really think there needs to be more of a regulatory framework in a lot of areas."

Gabriel advocates for increased regulation in the tech industry to address various issues.

• Being distributed allows a company to access a global talent pool, which can outweigh the advantages of being in a tech hub.
• Openness to different time zones and remote work can significantly expand hiring options.

"Not if you're a distributed company, for sure."

Gabriel argues that the limitations of not being in a tech hub are mitigated by embracing a distributed company model.

• DuckDuckGo's vision is to raise the standard of trust online and simplify privacy for consumers.
• Success would mean becoming the go-to consumer privacy brand.

"Our product vision is privacy simplified."

The company's goal is to make it easy for users to protect their privacy across devices.

• Gabriel's approach to building DuckDuckGo has been structured and focused on creating a transparent and learning-oriented culture.
• He emphasizes the importance of mental models and strategic thinking in leadership.

"I just love the way that he's built the company over the last twelve years."

Harry Stebings expresses admiration for Gabriel's methodical and thoughtful approach to company building.