In this episode of "20 VC," host Harry Stebbings explores the intricacies of executive leadership, hiring practices, and company culture with Matteo Franceschetti, co-founder and CEO of Eight Sleep. Franceschetti emphasizes the importance of executives not seeking to be loved but rather to push their teams beyond their perceived limits, ensuring clarity on performance expectations. He also shares his rigorous personal regimen for peak performance, including his sleep, diet, and exercise routines, and his vision for Eight Sleep as a platform for preventative health and optimal sleep. Additionally, Franceschetti discusses the challenges of balancing work and personal life, especially with a spouse as a co-founder, and the impact of various factors like alcohol, diet, and exercise on sleep quality. The conversation also touches on the future of Eight Sleep, aiming to save lives through advanced health monitoring during sleep, and Franceschetti's admiration for iconic brands like Tesla and Nike for their customer-centric approaches.
"Your job as an executive is not to be loved. Your job is to help your people achieve more than what they believe it was possible."
This quote emphasizes the importance of leadership in fostering a team's growth and potential rather than seeking personal popularity.
"I will not take a meeting with anyone in the company if I don't get an agenda slash memo."
This quote highlights Speaker A's disciplined approach to meetings, ensuring they are purposeful and well-prepared.
"I run all the interviews with the same playbook."
Speaker A values consistency in the interview process to fairly assess candidates.
"Why Elon Musk is taking me to Mars, but I still spend a third of my life on a piece of dumb foam?"
Matteo Franceschetti questions why there hasn't been significant technological progress in the realm of sleep.
"We should use those 6 hours to scan your body and become the number one platform for health."
This quote reveals the ambitious vision to turn sleep time into an opportunity for health monitoring and potentially life-saving diagnostics.
"If I knew what we would have to go through, I don't think any human being would do that."
This quote reflects on the daunting challenges entrepreneurs face, which can often be underestimated at the outset.
"I'm flying to China... Once I have fixed it."
Matteo's recount of his decisive action to resolve manufacturing issues in China demonstrates the lengths entrepreneurs go to for their company.
"Hardware works. It's really, really hard to get there."
Matteo acknowledges the challenges of hardware startups but also their potential to build trillion-dollar businesses.
"If I knew what we would have to go through, I don't think any human being would do that."
This quote reflects the hindsight of the difficulties encountered in entrepreneurship, highlighting the importance of naivety and resilience.
"You almost need your PNL at the unit basis."
This quote underscores the need for a detailed understanding of profitability on a per-unit basis for hardware startups.
"From now on, we don't spend a penny about this CAC."
Matteo's firm decision on capping CAC demonstrates a disciplined approach to managing growth and profitability.
"You want to surround your customers and you want them to see your brand seven times before they pull the trigger."
This strategy aims to build brand recognition and trust before a customer makes a significant purchase.
"Our CAC is already so efficient, that is extremely hard to move it down."
Matteo highlights the efficiency of their current customer acquisition strategy and the challenge of further reducing costs.
"You don't want to get in a price war. Once you get in a price war, particularly with a physical good, you're in real trouble."
This quote advises against engaging in price competition, emphasizing the importance of maintaining a strong brand and product value.
"If you raise the price, the quality is higher than other competitors."
Matteo suggests that higher prices can enhance the perceived quality and aspiration of a product.
"Hundreds of people passed on us, but not these guys."
This quote highlights the importance of securing investors who believe in the company's vision and potential.
"You don't want to educate the investor when you're educating investors, it's too hard to sell."
Matteo emphasizes the difficulty in convincing investors who do not already understand or believe in the market potential of the product.## Investor Belief in Team
"Yeah. But I think some of the greatest investors, if they believe in you as a team, they know you will fix it. Fixing unit economics is possible. It's human hard work of operational excellence."
This quote emphasizes the importance of investor trust in a team's ability to overcome economic challenges through hard work and operational excellence.
"It's something I'm really obsessed about. First, the best way to develop clarity of thinking is writing."
Speaker A explains that writing is a key method for achieving clarity of thinking, which is a critical component of his approach to problem-solving and communication.
"For aspirational, you use images, right? And you try to position very premium, something that you really dream of. But in terms of worth and the value proposition and the benefit. You need to be very simple."
Speaker A discusses the balance between creating an aspirational brand that is also accessible, using simple communication of value and benefits.
"Because they didn't think enough. They believe they have a thought, but they didn't develop it properly and they don't have enough data to support it, so they're confused."
Speaker A identifies that mistakes in clarity of thought often stem from insufficient consideration and lack of supporting data, leading to confusion.
"Mine is like focus. I always tell people, write a list of the top three and then just start from one. And then also understand what success is in each."
Speaker C emphasizes the importance of focus and having clear success metrics to guide efforts and measure outcomes effectively.
"I suggest we do a. Doesn't matter if I'm in favor or against a. I never like to see one option. I want to see multiple options."
Speaker A stresses the importance of considering multiple options in decision-making to ensure the best course of action is chosen.
"For us, everything happens in writing async so we don't lose time."
Speaker A explains how asynchronous communication and decision-making contribute to the speed of execution without compromising the quality of work.
"We don't do anything at eight sleep. If there is not an opposite metric."
Speaker A highlights the practice of using opposing metrics to ensure balanced and effective operational excellence.
"The times it's probably connected to the opposite metrics. Like you want to ship quality of software."
Speaker A reflects on past mistakes in operational excellence, attributing them to an imbalance between opposing metrics.
"It is without compromising quality? So, yes, and then you said the opposite metrics of quality."
Speaker A confirms the significance of speed in execution, provided it does not compromise the essential quality of the product or service.
"I think it's literally part of the culture. We call it eight slip speed."
Speaker A describes how the concept of "eight slip speed" is ingrained in the company culture to promote rapid execution as a core value.
"I wrote a memo about this last Sunday to all my executives, and I say, I want to increase our pace by 30%."
Speaker A reveals the proactive approach taken when work does not meet expectations, which includes setting higher goals for pace and efficiency.
"It changes. You will never have 100% confidence when you ship a hardware that everything is perfect."
Speaker A discusses the different expectations for quality and perfection in hardware compared to software, acknowledging the inherent uncertainties in hardware production.
"I mean, I think one of the biggest lesson is you really need to pay attention with when you hire executives from big companies."
Speaker A shares lessons learned regarding the challenges of integrating executives from large corporations into a startup environment.
"The first thing is we accept to be slow at hiring and slow, not in terms of the process, in terms of the steps, but we have a bunch of steps."
Speaker A explains the thorough and deliberate approach to hiring, which includes a comprehensive evaluation process to ensure the right fit for the company.
"And sometimes I feel so bad as a CEO, but if I don't click culturally with the person, I still pass, and I'm close to 50% pass."
Speaker A expresses the weight of his role in hiring decisions and the importance of cultural fit, even if it means rejecting a candidate after a thorough process.## Ramp Time and Leaving Time
"If it was your former boss, that gives you the opportunity of a lifetime and you live after 18 months. I understand. Right. If there was a riff, fine."
This quote emphasizes the importance of context behind job switches, suggesting that a move prompted by a former boss's opportunity is understandable, while a reduction in force is also a reasonable explanation for leaving.
"Then what I start questioning is, how did you judge the company? Why did you pick this company?"
This quote highlights the significance of a candidate's ability to assess and choose their employers wisely, which is a key factor in their career progression.
"So usually it's bad. Some of the best people, they don't really care about title."
The speaker suggests that a strong focus on job titles can be a red flag, as the most capable employees are usually more concerned with their impact than their titles.
"I didn't have them since day one. I literally spent a lot of time studying on a weekly basis."
This quote reveals that the speaker did not start with a complete set of business frameworks but developed them through dedicated study and adaptation over time.
"So we do it every year for people. I don't think we are very sophisticated on this."
The speaker acknowledges that their approach to compensation may not be highly sophisticated but outlines a clear strategy for annual performance-based reviews.
"I will not take a meeting with anyone in the company if I don't get an agenda memo."
This quote underscores the speaker's strict policy on requiring detailed agendas before meetings, emphasizing the value of preparation and structured communication.
"Obsessed with writing at asleep."
The speaker expresses a strong emphasis on the importance of writing skills within their company, indicating its role in fostering clear and effective communication.
"I think the other thing which we experienced that, too, is no politics, no ego."
The quote reflects the speaker's belief in maintaining a culture free of politics and ego, focusing instead on performance and support within the team.
"But I think for you and I, or at least for me, I come from a culture. I'm italian, right. I come from a culture where in Italy is almost. You don't fire."
This quote reveals the speaker's cultural background and how it initially influenced their perspective on firing, contrasting with their current approach to direct feedback and performance management.## Passion vs. Obsession
"David Goggins says the difference between passion, obsession is passion is when everyone's like, yeah, you're passionate about it. Well done, Mateo, and obsession. People are like, oh, you need to stop that. And it's this interesting difference. And obsession is actually where you want to be."
The quote highlights the distinction David Goggins makes between passion, which is widely supported, and obsession, which can be criticized despite potentially being the more desired state for achieving extraordinary results.
"The two basic things are really how much you sleep, which is pretty basic, and consistency because you really train your biological clock to fall asleep at that time and to wake up at that time, your circadian cycle can substantially be trained."
This quote outlines the fundamental aspects of sleep health, focusing on the quantity of sleep and maintaining a regular sleep schedule to support the body's natural rhythms.
"It depends. So usually as you get older, they're just harder for you to sleep. Eight, 9 hours. A rule of thumb is between seven and 9 hours for everyone, except very, very few people that have a genetic modification and can sleep only three, 4 hours."
The quote provides a general guideline for sleep duration across different age groups and acknowledges exceptions due to genetic variations.
"One thing is usually playing outside eight sleep. But playing with your own body temperature before bed is really impactful."
Speaker A advises on the effectiveness of using body temperature manipulation as a method to enhance sleep readiness, which can be done through various means like saunas or hot baths.
"The thing there, which is a typical mistake, is you hear a lot of people say, oh, you should sleep at 68 degrees. That is wrong."
This quote challenges the common advice on room temperature for sleeping, explaining that a fixed temperature does not account for the body's natural temperature variations during the night.
"So there is a sleep fitness workup that is just inside the company. And so we compete with the sleep score every day. And this guy is always in the top three, four, five."
The quote illustrates how even with the demanding responsibility of caring for children, it is possible to prioritize and manage sleep effectively, as demonstrated by an executive's ability to maintain high sleep scores.
"Alcohol is massively going to disrupt your sleep. Massively. You feel that you are probably more relaxed mentally, and you think, oh, I will have a great night of sleep. But in reality, all your biometrics, heart rate will accelerate, HRV will drop, and in general, your sleep architecture."
Speaker A explains the paradox of alcohol consumption before sleep, highlighting the discrepancy between perceived relaxation and the actual detrimental effects on sleep biometrics and architecture.
"Yeah, it's very subjective. In general, the rule of thumb is you shouldn't because it takes around 8 hours for the coffee to really leave your body."
The quote acknowledges the variability in individuals' tolerance to caffeine and suggests adhering to a general guideline to avoid it several hours before sleep.
"So first depends when you exercise. I stop exercising after 05:00 p.m. I will never exercise, but I exercise every morning."
This quote emphasizes the importance of scheduling exercise at a time that does not interfere with the body's natural progression towards sleep.
"But what you want is the consistency. It's less about cheating one day or another day. But if you zoom out and you look at how you manage your things, are you consistently enough in all these different dimensions?"
Speaker A conveys the significance of maintaining a consistent routine in various aspects of life, suggesting that occasional lapses are less impactful when viewed in the broader context of long-term habits.
"So you can't bother me all the time. And so you can't talk about work."
This quote reflects the need to establish clear distinctions between work and personal life, especially when business partners are also life partners.
"Your bed will become the most powerful preventative health platform in the future and will save your life."
The quote expresses Speaker A's belief in the transformative potential of sleep technology to serve as a critical tool for health monitoring and intervention.
"But how long do it is before you are having preventive body scans in your sleep? Three years, five years, ten years, no less."
Speaker A provides a timeline for the integration of advanced health monitoring into sleep technology, suggesting a near-future scenario where comprehensive health data can be collected during sleep.
"In ten years, we have saved a million lives and improved millions of lives right between sleep and preventative health."
This quote outlines Speaker A's long-term vision for Eight Sleep, highlighting a commitment to health and wellness on a global scale, with an emphasis on the company's legacy and customer impact.