20VC Why You Never Want To Fight A Fair Fit For Distribution, Why No Great Company Is Built with 1 Product and When To Release Your Second & What Founders Can Do To Extract The Most From Their Cap Table with Shoaib Makani, Founder & CEO @ KeepTruckin

In this 20 Minutes VC episode, host Harry Stebbings interviews Shoeib McCannie, co-founder and CEO of Keep Trucking, a fleet management platform aimed at improving safety and efficiency for drivers and fleets. McCannie shares his journey from Google and Admob to venture capital at Kosla Ventures, investing in startups like Instacart, before founding Keep Trucking. With a bottom-up adoption strategy, McCannie focused on solving driver problems, leading to natural expansion into fleet management. He emphasizes the importance of choosing the right investors, being transparent with the board, and leveraging them for talent acquisition. McCannie advocates for understanding regulations and engaging with regulators, and reveals ambitions to broaden Keep Trucking's reach beyond trucking into hardware and software solutions for various fleets.

• Harry Stebbings introduces the show and asks for listener feedback on Instagram.
• Harry welcomes Shoaib Makani, cofounder and CEO of Keep Trucking, a fleet management platform.
• Shoaib has raised significant funding from leading investors such as Index, GV, Green Oaks, IVP, and Scale Venture Partners.
• Prior to Keep Trucking, Shoaib was an investor at Khosla Ventures, with investments in companies like Instacart and Everlane.
• Shoaib's earlier roles included working at Google and AdMob.
• Harry thanks individuals from IVP, Scale, and Keep Trucking for their question suggestions.
• Harry promotes Carter, a product for managing equity, cap tables, and valuations, offering a discount to listeners.
• Harry also endorses Zoom for video conferencing and Torch for leadership coaching and development.

"This is the 20 minutes VC and founders Friday with me, Harry Stebings and I need your help to make the show better."

This quote introduces the podcast and the host, Harry Stebbings, while also inviting listeners to provide feedback to improve the show.

"But to the founder joining us in the hot seat today, and I'm thrilled to welcome Shoeib McCannie, cofounder and CEO at Keep Trucking..."

Harry introduces the guest, Shoaib Makani, highlighting his role and achievements with Keep Trucking and his background in venture capital and technology.

• Shoaib Makani chose to join Google instead of banking in 2006, working on the Google Checkout team.
• He learned about organizing and directing people around a common purpose at Google Checkout.
• After Google, Shoaib joined AdMob to experience hypergrowth and witnessed its acquisition by Google.
• Shoaib eventually joined Khosla Ventures to invest in early-stage technology companies.
• At Khosla, Shoaib focused on logistics and trucking due to its foundational role in the economy and lack of technological advancement.

"Yeah. So coming out of college I knew I wanted to build things..."

Shoaib discusses his decision to join Google over banking, indicating his desire to create and build rather than follow the traditional finance path.

"And it was really at KV that I got to go deep on my interest in logistics."

Shoaib explains how his time at Khosla Ventures allowed him to explore his interest in logistics and identify the underserved trucking industry as an opportunity.

• Shoaib recognized that to build an electronic marketplace for freight, drivers and trucks needed to be brought online.
• The key insight was that electronic logs, regulated by the hours a truck driver can work, could connect the supply side.
• Shoaib's confidence grew as he spent more time on the idea, believing in the potential impact of his insight.

"Eventually, I came across sort of the key insight that to build an electronic marketplace for freight, you had to first bring the drivers and trucks online."

Shoaib shares the foundational insight that led to the creation of Keep Trucking, highlighting the importance of connecting drivers and trucks to the digital infrastructure.

• Shoaib describes himself as risk-loving, driven by a fear of regret and a desire for high consequences if taking on risk.
• Venture capital experience made Shoaib a better founder and CEO by exposing him to a variety of businesses.
• This experience helped Shoaib develop a mental model for identifying businesses that could compound growth in a capital-efficient manner.
• Shoaib emphasizes that while venture experience does not guarantee entrepreneurial success, it helps avoid pursuing bad ideas.

"Generally throughout my life, I have been fairly risk loving..."

Shoaib reflects on his personal approach to risk, indicating that he is open to taking risks if the potential rewards are significant.

"Yeah, I think venture definitely has made me a better founder and CEO."

Shoaib acknowledges the benefits of his venture capital experience in his role as a founder and CEO, particularly in evaluating and selecting business opportunities.

• Shoaib agrees with Josh Kaufman's view that entrepreneurs should spend more time on idea selection.
• The origin of the company can influence the amount of time spent on idea identification.
• If an entrepreneur has a key insight from their career or life, they may have already invested time in identifying the idea.
• Without a key insight, it's important to look broadly at markets and opportunities, remaining agnostic about the problem to solve to avoid biases.

"Absolutely. And the reason being? Well, it actually depends on the origin of the company."

Shoaib concurs with the idea that the time spent on idea selection is crucial, and it varies depending on how the company's concept originated.

"But unless you have that key insight inherently, I think you have to sort of zoom out and look broadly for markets opportunities..."

Shoaib advises that without a clear insight, entrepreneurs should take a broad view to identify markets and opportunities, ensuring they do not limit their potential by holding onto biases.## Validating Market Opportunity Before Building

• Validating the market is crucial before fully committing resources to a new opportunity.
• It's difficult to redirect a team if you start in the wrong place.
• Pivoting on the margins is possible, but a complete reset can result in losing team members and progress.
• Wait for market feedback to confirm if the direction is correct.

"It is important, I think, to really spend time validating up front rather than just diving in and building."

This quote emphasizes the importance of market validation before fully investing in product development to avoid costly redirections later on.

• Personal growth as a CEO is tied to the transition from focusing on product details to building the company.
• Recognizing that the company itself is the product marks a significant shift in a CEO's approach.
• This shift leads to rapid personal growth and increased impact on the company.
• A solid foundation allows for exploring adjacent opportunities and setting clear goals and visions.

"The inflection point happened when I realized that my responsibility was not to build the product, but to build the company, or that the company was the product."

Shoaib Makani reflects on his personal development as a CEO, highlighting a pivotal realization that the focus should be on building the company as a whole, not just the product.

• Pursuing adjacencies is necessary for growth but must be done with focus.
• Adjacencies should be accessible and connected to the core product offering.
• The timing of expanding into adjacencies is critical to maintain focus on the first product.
• Confidence in the first product's market share and organic growth can indicate readiness to explore additional products.

"The adjacencies really have to be accessible. You can't build things that just happen to be relevant to that audience, but in fact are not connected to your core product offering in any way."

Shoaib Makani discusses the importance of strategic connections between a company's core product and its adjacent markets or products to ensure successful expansion.

• Defining the market is key to understanding potential market share.
• Narrowly defining the initial target market helps to achieve and track product-market fit.
• Investors should believe in a team's ability to logically and thoughtfully expand its addressable market over time.

"I think it's important to really narrowly define the market. You want to serve initially, but also as an investor, believe that that team can expand its addressable market over time in a logical and thoughtful way."

Shoaib Makani advises on the importance of a focused initial market definition to establish market share and the potential for future expansion.

• Choosing the right investors is crucial for effective board management.
• Board members should share the founder's values and vision and understand the business.
• Transparency with the board is key, but ultimately, the board advises and the operators execute.

"It is really important to align going in. Do they share your values? Do they respect your vision for the company? Do they really understand your business?"

Shoaib Makani stresses the importance of alignment between founders and board members on values, vision, and business understanding for successful board management.

• Founders should understand the biases and experiences of their advisors.
• Recognize that each company and market is unique, which affects the applicability of advice.
• Founders need to weigh the broader perspective of board members against their own detailed understanding of the company.

"It is really, I think, hard to recognize how different situations are. No company is the same, no market is the same."

Shoaib Makani acknowledges the challenge in discerning which advice from board members to adopt, given the uniqueness of every company and market situation.## Company Building and Individual Context

• Company building lessons are common but need to be filtered based on individual context.
• Founders must discern what advice to apply and what to ignore based on their unique situation.
• Understanding one's own bias and the unique aspects of their company is crucial.

"are definitely common lessons to be had in company building, but you have to be able to apply that filter yourself. What is their bias and what is unique about my context, what should I apply that they suggest, and what should I ignore?"

This quote emphasizes the importance of founders applying a personal filter to advice received, considering their own bias and the uniqueness of their company's context to determine what advice to follow or disregard.

• Effective communication with investors involves acknowledging their input while explaining your own stance.
• Written communication is favored for clarity and reference.
• Regular updates on the company's state, including strategic thoughts, help investors accumulate context.
• Transparency and constant communication build credibility, which can justify ignoring advice at times.

"I think it's not just like a thanks, but no thanks, it's here, I've heard you, I understand where you're coming from, but here's where I depart. Here's why I believe differently."

This quote outlines a respectful approach to disagreeing with investors, involving acknowledgment of their perspective and clear communication of one's own reasoning.

• Initially, founders may not leverage investors effectively, focusing on solving problems internally.
• As a company stabilizes, the primary constraint becomes recruiting quality people.
• Founders should lean on investors for help with executive searches and closing candidates.
• Board members are particularly valuable in attracting and closing top talent.

"But once I knew that we were through that existential period, that the company would be something and that really the primary constraint would be the quality of the people we recruited, I started leaning on our investors much harder, and particularly to help them."

This quote reflects the shift in a founder's approach to leveraging investors from a self-reliant stance to actively seeking their assistance, especially in talent recruitment, once the company has passed the existential stage.

• Early investment in talent acquisition, both internal and external, is crucial.
• Executive search firms are specialists with market knowledge and can help avoid limited candidate pools.
• Founders should seek the best firms for specific roles, as not all firms are equal.
• Internal recruitment may not match the specialization and expertise of external executive search firms.

"And so when it comes to executive recruiting, you could argue that the consequence to both success and failure there is compounded because these individuals are directing others."

This quote highlights the amplified impact of executive hiring decisions, as these roles have a significant influence on the company's direction and success.

• The distribution model is a fundamental innovation and not accidental.
• Bottoms-up adoption from truck drivers was seen as a way to gain an unfair advantage over incumbents.
• The strategy involved providing a free compliance application to drivers, leading to broader fleet management opportunities.
• Success in distribution relies on creating a product that customers will advocate for and organically promote.

"I'd say one of our fundamental innovations is our distribution model, actually, and that was not accidental."

This quote stresses the deliberate choice of a distribution-centric approach as a key innovation in the company's strategy.

• Curiosity about the problem, obsession with the customer, and understanding of the market and competition are key traits for founders.
• Learning from the successes and failures of others can improve a founder's approach.
• Founders should seek an unfair advantage in distribution to reduce cost of acquisition.
• Owning lines of distribution is essential for reaching the audience and compelling product trial.

"I always look for those who are fundamentally curious about the problem they're solving and really obsessed about the customer they serve, the market they're in, and the competition that they're surrounded by."

This quote outlines the qualities a founder should possess, focusing on a deep understanding of the problem, customer, market, and competition to achieve a unique distribution advantage.## VC Reactions to Hardware in Startups

• Venture capitalists often have a negative reaction to hardware components in startups.
• Hardware can add complexity and is traditionally seen as less attractive compared to pure software businesses.
• Shoaib Makani initially omitted the hardware aspect from his seed deck to avoid complications.

"We'd both been vcs, we've both seen them puke when the hardware is integrated."

This quote reflects the general aversion venture capitalists have towards integrating hardware into startups, due to the complexities and challenges it introduces.

"I actually just left the hardware piece out of our seed deck."

Shoaib Makani explains his strategy to avoid immediate VC rejection by not mentioning the hardware component in the initial funding stage.

• KeepTrucking developed a hardware component that was critical for their mission to connect trucks.
• By building hardware, they achieved deeper connectivity and created a revenue stream.
• The company focused on building the right team and demonstrating the value of their hardware to support their SaaS and marketplace business model.

"And along the way, of course we built hardware that was absolutely critical."

Shoaib Makani emphasizes the importance of the hardware they developed, which was essential to their business even though it was not initially disclosed to VCs.

"We got the right people and we demonstrated that if we got this right, it would lead to a very good high retention net expansion business."

The quote highlights the company's strategic approach to building a hardware competency that complemented their SaaS business and led to customer retention and expansion.

• Hardware installation indicates the solution of a significant problem for the customer.
• High threshold for winning accounts but results in better retention compared to optional software.
• KeepTrucking designed their business to ensure successful trials, leading to high retention and expansion rates.

"If you get them over the hurdle of deploying your hardware, almost certainly you're solving a meaningful problem."

Shoaib Makani points out that hardware installation is a strong indicator of value delivery, leading to better customer retention.

"We've really architected our business around that put a lot of emphasis on trials."

The focus on trials demonstrates the company's confidence in their product's ability to retain customers once they experience its benefits.

• Customer success is crucial for retaining and upselling customers.
• KeepTrucking's customer success team is tasked with retention and expansion goals.
• They are instrumental in identifying product gaps and opportunities for account growth.

"That team has done an absolutely phenomenal job of serving our customers, both retaining them, but then also driving upsell."

Shoaib Makani acknowledges the significant role of the customer success team in not just retaining customers but also in driving additional sales.

"They generate csqls, which then get handed over to our sales team close."

The quote explains how the customer success team contributes to the sales process by identifying qualified leads for the sales team to pursue.

• Shoaib Makani's favorite book of 2019 is "Presidents of War."

"Presidents of War. It's a really good book, sort of documents specific presidents in American history that were faced with conflict."

Shoaib Makani explains that the book provides insights into the impact individuals can have on history, which he finds intriguing.

• Shoaib Makani suggests that more people should be allowed into Silicon Valley to foster higher growth rates.

"Let more people in this place can and should compound at much higher rates."

This quote indicates Shoaib Makani's belief that Silicon Valley has the potential for greater growth if it becomes more inclusive.

• Aaron Shalcrout is highlighted as an underrated individual in Silicon Valley due to his exceptional advisory skills.

"Aaron, to me, really stands out."

Shoaib Makani praises Aaron Shalcrout for his ability to provide clear and candid advice to entrepreneurs.

• Founders should deeply understand both current and proposed regulations.
• Engaging with regulators is crucial to anticipate changes.

"Stay close to the people who ultimately make the rules that impact your business."

Shoaib Makani advises founders to maintain a close relationship with regulators to better navigate the regulatory landscape.

• KeepTrucking aims to grow within the trucking industry and expand its services to other fleets and use cases.
• The company sees its future in solving problems at the intersection of hardware and software.

"We have an ambitious vision to both grow within trucking, but also to expand the scope of who we serve."

Shoaib Makani outlines the company's growth strategy, which includes leveraging their hardware and software platform for broader applications.