20VC Why Passion Is Overrated When It Comes To Starting Companies, Why VC Is Overrated As A Financing Mechanism & Why You Should Never Sell Your Company with Waseem Daher, Founder & CEO @ Pilot



In a revealing conversation on "20 Minutes VC," host Harry Stebbings interviews Wasim Daher, the co-founder and CEO of Pilot, a company revolutionizing bookkeeping for businesses. Daher, who previously co-founded Ksplice and Zulip (acquired by Oracle and Dropbox, respectively), discusses his journey from MIT's computer club to serial entrepreneurship. He emphasizes the importance of organizational discipline over passion and the value of empathy and rigorous hiring processes in building a successful team culture. Daher also shares insights on venture capital, arguing it's not necessary for every business and highlighting the significance of choosing the right investors for long-term relationships. Reflecting on his growth as a CEO, Daher underscores the shift from hands-on tasks to strategic team building and decision-making. Finally, he envisions Pilot's potential to become a large, iconic company, given the vast market need for legally required bookkeeping services.

Summary Notes

Introduction to the Podcast and Guest

  • Harry Stebbings introduces the episode of "20 minutes vc" and highlights the anticipation for the interview with Waseem Daher.
  • Waseem Daher is the CEO of Pilot, which has raised over $58 million in funding.
  • Notable investors include Index, Stripe, and notable individuals such as Octa's Frederick Kerast, Gusto's Josh Reeves, and Stripe's Patrick and John Collison.
  • Waseem co-founded two other businesses before Pilot: K Splice and Zulip, with the latter being acquired by Dropbox.
  • Acknowledgment of Paul English and Jordan Angelos for their question suggestions.
  • Promotion of Wegift and Reich, emphasizing their search for product managers and their cloud-based work management tool, respectively.

"I had heard so many incredible things about this founder from, I think it would have been about six separate billion-dollar founders, and so I couldn't be more excited for this one."

This quote expresses Harry Stebbings' excitement about interviewing Waseem Daher due to the high praise he has received from other successful founders.

Waseem Daher's Startup Journey

  • Waseem Daher's entrepreneurial journey started at MIT with co-founders Jeff and Jessica.
  • They met in the computer club at MIT and decided to start a company based on Jeff's master's thesis called K Splice.
  • K Splice was bootstrapped and later acquired by Oracle.
  • After spending a year at Oracle, the team started Zulip, a group chat tool for businesses.
  • Zulip was acquired by Dropbox, leading the team to join Dropbox in San Francisco.
  • Waseem's experiences at previous companies and the pain of doing bookkeeping led to the founding of Pilot.

"We really want to do a company. And so we started a company based on Jeff's master's thesis. It was called Case Bliss."

The quote explains the origin of Waseem's first company with his co-founders, which was based on technological innovation and led to their initial startup experience.

The Aha Moment for Pilot

  • The idea for Pilot came from the founders' own experiences with bookkeeping in their previous companies.
  • They recognized that bookkeeping could be improved with software but also understood that business owners wanted the problem solved for them, not just another software tool.
  • Pilot was thus created to provide bookkeeping services powered by software tools to give their personnel 'superpowers'.

"It really feels like this bookkeeping stuff could be better done by software."

This quote captures the insight that led to the creation of Pilot, highlighting the potential for software to enhance the efficiency of bookkeeping tasks.

Serial Entrepreneurship

  • Waseem Daher acknowledges that there isn't one path to success in entrepreneurship and that multiple companies are not a prerequisite for success.
  • He values the learning experiences from each company and how they have influenced the operation of Pilot.

"I think my opinion on all of this stuff is there isn't one way to do it."

This quote reflects Waseem's perspective that there is no single formula for achieving success in entrepreneurship and that each journey is unique.

Impact of Previous Startups on Current Operations

  • Waseem discusses how his first company was a learning experience in the basics of running a company.
  • He highlights the importance of foundational knowledge in team performance and the operational aspects of a startup.
  • Observations and experiences from Oracle and Dropbox were instrumental in refining their approach to running Pilot.

"The first company was really about forcing us to learn these foundational things about how to run a startup."

The quote underscores the educational value of Waseem's first startup experience and its contribution to his development as an entrepreneur.

Founding Team Dynamics

  • Waseem emphasizes the importance of mutual trust, respect, and clarity of expectations in his relationship with co-founders Jeff and Jessica.
  • He notes that the predictability of each other's reactions contributes to a high-performing team dynamic and reduces the risk of founder drama.

"A strong degree of mutual trust and respect, and then also real clarity about expectations."

This quote highlights the key elements that Waseem believes are essential for a successful founding relationship, which have been cultivated over years of working together.## Founding Partners Relationship Dynamics

  • Having a long-term relationship with founding partners can lead to entrenched working styles.
  • Established relationships may not be as adaptive to new perspectives.
  • Shared history can sometimes bring up past issues that affect current dynamics.

Given the history, I think it's like, in many ways it's like an old married couple. It's like, oh well, twelve years ago you did XYZ.

This quote illustrates the comparison of a long-term business relationship to an old married couple, suggesting that past actions can sometimes resurface, affecting the dynamic of the partnership.

Founder Market Fit and Passion

  • Assessing founder market fit is crucial when looking at opportunities.
  • Passion for the specific market or product may not be initially present for founders.
  • Founders develop passion through engagement with the problem and customers.
  • Building the company and the craft itself can be a source of joy, beyond the mission.

Passion is overrated in starting companies.

Waseem Daher challenges the common belief that passion is essential for starting a company, suggesting that passion can develop over time as founders engage with their business.

The Role of Organizational Discipline

  • Organizational discipline can be more important than passion for a company's success.
  • Founder market fit requires some interest or alignment with the business area.
  • Success comes from strategic, disciplined, and tactical progression rather than passion alone.

Organizational discipline is far more important.

Waseem Daher agrees with Matilde Colin that organizational discipline is crucial, emphasizing the importance of a strategic approach to company growth over mere passion for the mission.

Lean Startup and MVP Approach

  • The lean startup methodology supports testing assumptions through experiments.
  • It's important to verify preconceptions about the market or product.
  • Pilot adopted an MVP approach, starting with basic services and incrementally adding improvements.

I'm positive, if I'm 100% sure about something, that makes me nervous, because nothing in the world is that cut or dry.

Waseem Daher explains his support for the lean startup methodology, emphasizing the importance of questioning one's certainty and validating assumptions through experiments.

Venture Capital Considerations

  • Venture capital (VC) is not suitable for every business.
  • Some businesses can succeed and provide founder wealth without VC.
  • The industry may overemphasize the necessity of VC, leading to a narrow view of success.

VC is potentially overrated.

Waseem Daher discusses the misconception that venture capital is the only path to success for startups, highlighting that not all businesses require VC to be successful.

Investor Selection

  • Choosing investors is a long-term decision that affects the company's future.
  • Founders should consider the relationship and trust with potential investors, not just the terms.
  • A good investor-founder relationship involves regular communication and mutual support.

You are signing up for a long-term partnership and relationship.

Waseem Daher stresses the importance of viewing investor selection as a long-term partnership, advising founders to prioritize trust and conviction over purely financial terms.## Investor-Founder Relationship Compression

  • The compressed timelines in venture capital make it difficult for founders and investors to get to know each other well.
  • Founders often rely on pre-existing relationships with investors.
  • Waseem Daher mentions his personal experience with investor Mark Goldberg, highlighting the advantage of working with known individuals.

"Our investors were all people that we had already known. In other words, the lead investor from Index, Mark Goldberg, we worked together, Dropbox. So I already knew he was a known quantity to me."

This quote emphasizes the importance of pre-existing relationships in the venture capital process, suggesting that having a history with investors can be advantageous for founders.

Assessing Resilience in Founders and Team Members

  • Resilience is considered a key trait in founders, but it is challenging to assess.
  • Looking at track records and references can provide insight, but they are backward-looking.
  • Ultimately, assessing resilience involves a subjective decision about whether to take a bet on a person.

"It's impossible to know kind of how it will look going forward."

Waseem Daher points out the difficulty of predicting future resilience based on past performance, indicating that investment decisions often involve a degree of uncertainty and risk-taking.

Acquisition and Exit Strategy

  • Founders should be wary of focusing solely on financial terms during an acquisition.
  • It's crucial to consider the post-deal scenario, including the role at the acquiring company and the alignment with personal and product goals.
  • The day-to-day experience post-acquisition is just as important as the financial outcome.

"The deal for either a financing or for an acquisition is just the beginning. It's the beginning of a much larger relationship you're going to have with the company."

Waseem Daher suggests that founders should view deals as the start of a longer relationship, implying that the future work environment and personal fulfillment are critical considerations during an acquisition.

Questions to Ask When Assessing an Acquirer

  • Founders should evaluate whether an acquirer will provide a good outcome for their team.
  • It's important to assess the alignment between the founder's vision and the acquirer's intentions.
  • Honest self-assessment is necessary to determine if the acquirer's interest aligns with the founder's goals.

"Is this an acquisition where the product or the company or the technology are going to live on in some way, or is this an acquisition that is purely for the talents?"

The quote highlights the need for founders to understand the acquirer's motives and to ensure that these motives are compatible with their own aspirations for the product or company.

Evolution of the CEO Role with Company Growth

  • The CEO's role shifts from doing tasks to building a company capable of executing those tasks.
  • As a company grows, the CEO should focus on strategic leadership rather than hands-on work.
  • The CEO's main responsibilities include attracting and retaining talent, funding initiatives, and ensuring company growth.

"And then increasingly, as the company grows, your job as CEO is less about doing the thing and more about building a company that can execute well on the things that need to be done."

Waseem Daher reflects on how the CEO's role evolves from direct action to overseeing and enabling the company's broader execution capabilities.

Transitioning from Doer to Leader

  • The transition from hands-on work to strategic leadership is challenging.
  • CEOs may struggle with feeling productive when not directly contributing to tangible outcomes.
  • The impact of strategic leadership is often more significant than individual contributions.

"It's super hard because the first thing feels like you're doing productive work."

This quote acknowledges the difficulty CEOs face in adjusting to a leadership role that is less about direct action and more about enabling others to contribute effectively.

Building and Scaling Company Culture

  • Creating a positive work environment is critical for attracting and retaining top talent.
  • Hiring decisions should be made with a high bar, only bringing on people who inspire excitement.
  • A diverse and inclusive culture is essential to attract the best talent from various backgrounds.

"And then I think, importantly, building a culture that recognizes that the best people don't necessarily look or act or sound or come from the same backgrounds or experiences that you did."

Waseem Daher emphasizes the importance of fostering a company culture that values diversity and inclusivity, which is integral to creating a successful and dynamic team.## Interviewing Process Rigor

  • Waseem Daher stresses the importance of having a rigorous process for interviewing, rather than relying on a favorite interview question.
  • Before interviewing, a company should have clear role requirements and an interview day structured to test the necessary skills.
  • A well-structured interview allows good candidates to shine by giving them the opportunity to demonstrate their strengths.
  • Mediocre interviews only filter out unsuitable candidates without highlighting the capabilities of the good ones.

"The best interview gives you a signal as to where the candidate spikes. A mediocre interview will let you say no for candidates that are bad but don't really let good candidates really shine."

The quote emphasizes that a well-designed interview process is crucial for identifying the unique strengths and potential of each candidate, rather than just screening out unsuitable applicants.

Importance of Work-Life Balance

  • Waseem Daher reflects on the importance of founders and company operators taking time for themselves, aside from their work.
  • He recommends reading something escapist, like the Harry Potter series, to maintain balance and passion for work.
  • Daher shares his past experience of a work-intensive lifestyle in his first company, which he found neither happy nor productive.

"I think it's very, very important for founders in particular, but for anyone operating a company to be passionate about their work, but also to take time for themselves and something that is just like escapist and totally unrelated to startups for me, definitely my favorite book that I've read recently is kind of working through the Harry Potter series."

This quote underscores the importance of maintaining a balance between work and personal life, suggesting that engaging in leisure reading can provide a valuable escape and contribute to overall well-being.

Company Building Superpower

  • Waseem Daher believes his superpower in company building is empathy.
  • He has a diverse background in various roles, which now informs his approach to attracting and retaining talented employees.
  • Daher understands that recognizing employees as individuals with their own goals and desires is essential for successful company building.

"My job now is attracting and retaining the best people to do those things better than I can do. And so I think just like being human and understanding that you are also a person and you have goals and dreams and desires, and let's figure out how to scratch those itches while also having you contribute here at pilot, what."

The quote reveals Daher's perspective on leadership, where he values empathy and the ability to understand and support the personal aspirations of his team members, which in turn contributes to the company's success.

Sacrifices in Entrepreneurship

  • Time is the biggest sacrifice Waseem Daher mentions, particularly in the context of his first company.
  • He learned from this experience and aimed for a more balanced approach in subsequent ventures.
  • Pursuing interests and spending time with family and friends are important aspects of life outside of work.

"I think it's kind of back to that first point, which is time, which is in the first company in particular. I think it was a grind in a way that I think we learned a valuable lesson from it."

This quote reflects on the significant time commitment and the intense work environment of Daher's first company, which led to valuable lessons about the importance of balance for future endeavors.

Operational Weakness

  • Waseem Daher identifies decisiveness as an area of struggle for him operationally.
  • As a founder and executive, he acknowledges the need for clear and consistent decision-making.
  • Indecision can be toxic for an organization as it creates uncertainty and hinders progress.

"The most toxic thing you can do, or kind of the most challenging thing you can do is really waffle, because then people don't know, are we doing this thing? Are we not doing this thing?"

The quote highlights the negative impact that indecisiveness can have on a team, as it causes confusion and can prevent the company from moving forward effectively.

Advice for Emerging Graduates

  • Waseem Daher advises recent graduates that it is okay to be uncertain about the future.
  • He encourages having a sense of what makes one happy and what one is excited to spend time on, without needing a detailed long-term plan.
  • Daher shares his own experience of not having a clear path post-graduation but following his interests and working with friends.

"I think it's fine to not know. In other words, right when we graduated school, I did not picture the path that led to exactly here."

This quote offers reassurance to recent graduates, suggesting that it is normal to not have a precise career path planned out and that one can find fulfillment by pursuing their interests and passions.

Future of Pilot and the Bookkeeping Market

  • Waseem Daher is optimistic about the future of his company, Pilot, due to the large market opportunity.
  • Every company needs bookkeeping, which is not only a legal requirement but also a significant market.
  • Daher estimates the SMB bookkeeping and accounting market in the US to be worth around $60 billion annually.
  • He aims to grow Pilot into a large, iconic, and enduring public company.

"I'm very, very excited about this company because I think the opportunity is so large, which is for every company, and you must do this all the time. For every company. I ask, look, how big is the market and how much pain is there here?"

The quote expresses Daher's excitement and confidence in the growth potential of Pilot, based on the essential nature of bookkeeping services and the vast market size.

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