North Star Leaders Podcast

Lindsay Pedersen

The world needs what only your business can bring, and as a leader, it's your job to deliver. But where do you focus? Where do you direct your time, your team, your budget, and your emotional energy? We're learning this together on the North Star Leaders Podcast. In this podcast, I talk to purpose-driven leaders about the choices that they make to create audacious economic value while also realizing their distinctive purpose. I'm Lindsay Pedersen, brand strategist, author of Forging an Ironclad Brand, and host of the North Star Leaders Podcast. Let's get to it. Today, I am really happy to be joined by Greg Gottesman. Greg is co-founder and managing director of Pioneer Square Labs. He is an adjunct professor of entrepreneurship at University of Washington, and among the many, many companies he has helped build, one of them is Rover, where he was founding CEO. Greg, welcome to the show.

Greg Gottesman

Hi, thanks for having me. Pleasure to be here, and I've always enjoyed our conversations and learned something, so I'm looking forward to it.

Lindsay Pedersen

I have learned so much from you too. So glad to have you here. To start us off, what is your favorite thing about what you do?

Greg Gottesman

Every day is different. I'm a very curious person, and what I love about startups and specifically the studio business, but also the venture business that we're in, is that I get the opportunity just to explore really interesting areas. So right now, AI, of course, is such a hot topic and such an important topic, and I get just to dig in deep along so many different vectors of that. And that is super, frankly, I feel like if they didn't pay me to do this, I would pay to do it because it's really so much fun. I also get to work with incredible people, both at PSL, but then the entrepreneurs that come in and pitch you their ideas. These are folks that want to change the world, and they're the most interesting people in the world to talk with. So, I'm lucky that way, yeah.

Lindsay Pedersen

Well, you have been a co-creator and investor of a couple of companies whose leaders have been on the show, Xiao Wang of Boundless, Todd Owens of Kevala. And I've heard you say that companies that do well and do good are companies that you get the most satisfaction from, and that you also have found it can be easier to raise for companies that both do well and do good. Can you talk more about that? What is it about companies doing well and doing good that gives them that advantage?

Greg Gottesman

Well, so much of it's about people. And so if you're solving a problem that people really care about solving and that you really care about solving, then you're going to have an advantage because as a founder, for example, if it's a problem that's very personal to you, you're going to speak to that problem with a kind of passion and enthusiasm that you wouldn't speak to if you're talking about building a company that was just going to produce widgets. And that helps you recruit better. It helps you recruit investors better. It helps you hopefully recruit customers better when you're solving a problem that is very personal to you. And the chances are that a problem is very personal and important to you. It's likely important and personal to someone else as well. So, for example, you mentioned Boundless and you mentioned Kevala, both of whom have problems that I really care about. Other ones that we've started, you know, have been in the Evergreen, which is in the climate space. June, which focuses on teen mental health. And so those are the kinds of problems that I think, if you can come up with a great solution, are very appealing to, again, employees or potential employees to investors and, you know, to customers.

Lindsay Pedersen

So, is something like about our animal brain that like resonates when another animal near another person in front of one is really resonating? Is it like a, we can't help but get excited when the neurons are telling us that the person across from us is excited. Is it like that? Or like, would it translate to just if you took the person out of the equation, would it still happen? Do you think like to break through the noise?

Greg Gottesman

I'm not sure that if you took the person out, here's just a tactical tip. I think the best pitches, for example, when you're pitching a new company are personal. And so when someone comes in and they're pitching an idea to you and they talk to you about why this problem is important to them personally, why they encountered this problem personally, why they are desperate to solve this problem for very personal reasons, that is always more powerful, even if it's B2B and they've faced that problem, maybe in a business context, or if it's B2C, then it's in a more consumer context. But regardless, when you hear someone talk about this is a problem that they have encountered and struggled with, it's just a lot more powerful than when it's someone else's problem or a generic problem. Those are the kinds of pitches that always resonate more than impersonal ones.

Lindsay Pedersen

Yeah. Can you fake it? You know, given that there are advantages to raising, to recruiting, to getting customers when there is a purpose, something, can you contrive that? Or is that uncontrivable?

Greg Gottesman

I'm sure that if you're a really great actor, you can contrive it. I think, you know, one of the things, hopefully, that investors and potential employees and customers can smell pretty readily is authenticity. And I think if you come in and it's contrived, chances are the person on the other side of the table is going to feel that lack of authenticity. And so, could it be done and have people done it? Sure, of course. I think it's hard to pull off though.

Lindsay Pedersen

Well, it's interesting because you mentioned like as an entrepreneur pitching, when you tell a personal story, there's something that lights up in the person that is listening to that story. And it reminds me of the research that when the human brain is scanned while listening to a story that you can see in oxytocin, there's literally a neurological reason that the person hearing it likes the person more, like that vulnerability. So, it's another way of storytelling, but it's also like a vulnerability. Vulnerable in a good way. It's being vulnerable as a founder. This is a personal story I have. And then we as humans want to connect with a person who has just given us this gift of being vulnerable with them in a way that it's like you can't if it's just math that you're showing.

Greg Gottesman

I think there's some real truth to that. I think if it's an authentic story and you're showing an area of vulnerability, yeah, that's how you feel. That's how you build a deeper connection. And remember, as a venture capitalist or investor, you're typically seeing at least a hundred ideas for every one that you invest in. And so, it's not good enough just to sort of have a problem and then have a decent solution and maybe have an interesting business model. There has to be in order to get someone to want to invest sort of a deeper connection. And so, if you can help establish that deeper connection to a problem through whether it's your own personal story or the vulnerability you show or whatever, I think that can be super helpful.

Lindsay Pedersen

It's also like when somebody tells a story, it turns off the debate mechanism in our brain. It's because like you're sharing your story, like there's nothing to debate. Like they're sharing their story. They're not making a claim or giving a thesis, which would kind of like invite you to debate it. But story, it sort of like circumvents those mechanisms. And yeah, I mean, especially if you're hearing a hundred pitches for every one you receive. But in general, even we're good at smelling that like this is coming from a really true, genuine place from a person. And then that further creates the bond and the resonance with whoever the audience is, whether you're pitching to investors or to potential employees or to customers. You're not in a moment of debate when you're talking about purpose. I like the way you frame that.

Greg Gottesman

I think that's true. And remember, all companies are really in terms of how they're thought of and valued as stories. So why does Microsoft have a higher multiple on it than say, you know, another software company or another company that does hardware? Why is, you know, why is Nvidia valued so highly? It's not based on just their current cash flows, although obviously that's helpful, but it's based on a story about why they're going to create future cash flows at certain growth rates and certain speeds. Every company and their valuation and how much we pay for their stock; those are just stories. They're stories we tell and they may or may not be true. So, every company, whether you're a startup or you're the largest company in the world, you tell a story and that story is the most important thing in many ways about how you determine the value of that company, whether someone will join it. So, it's probably the most underrated quality other than self-awareness, I think, of a leader is your ability to tell a story and to connect in that way because great leaders are great storytellers. Not everyone tells a story the same way. You can be a stand on a tabletop storyteller or you can be more of a tie to numbers, but great leaders tend to be great storytellers in their own authentic way. And that turns out to be something I look for when we're looking for leaders of these companies is can they tell an effective story? You mentioned Xiao and Todd, who you've had on your podcast. Both of them are excellent leaders, but they also are very different in the way that they tell stories. But they tell stories in ways that I think are very effective for them.

Lindsay Pedersen

It's not a mold. It's not like there's like a certain archetypal approach. It's coming from who the person actually is. And that creates that resonance and trust and belief in the future. I bring somebody along to imagine with you in the future what's going to happen in the story. There's something so captivating about bringing somebody in through a story. And yeah, every single person is going to have a different way of a different style and a different voice and a different they're bringing different life experience to it. You also mentioned self-awareness. And I've really underrated quality for an entrepreneur to have self-awareness. Why is that? How does self-awareness translate to leadership and being an entrepreneur who's successful and being ultimately a leader who's successful?

Greg Gottesman

Well, I think it's an all-important trait because people that are self-aware understand their strengths and weaknesses in a way that allows them to fill holes for themselves and to build better teams and ultimately build better companies because of that. It's so interesting. So many people come that I talk with and they're like, you know, I'm going to do this job because it really, I have the weakness here and I have this weakness here and I'm going to do this job because it helps to fill in that gap. And sometimes that can be helpful. I think that can be, depending on what kind of job you're interested in, may have some holes that you need to fill in. But I often think that I'd rather have someone that knows that they have a hole to fill and then fill it with someone who's much better at it than they are would be a better and to focus on their strengths would be a better way of building a team than someone who's sort of mediocre across every function, across every trait, you know, across every modality is in some ways less interesting than someone who has great strengths and then frankly hires people that have great strengths in other areas. To me, that's a great leader who has a very good sense of his or her ability to execute in certain areas. And then frankly, areas where he or she is less good at executing.

Lindsay Pedersen

That's interesting career advice too that, and it varies depending on where one is in one's career and so on, but by focusing on enhancing your strengths as opposed to mitigating your downside, that strength, it's almost like there's no ceiling to how powerful it can be. But weaknesses and mitigating a weakness can really only take you so far. But if there's somebody who has a superpower in an area where you have a weakness, then you get that no ceiling upside from that other person instead of just mitigating downside.

Greg Gottesman

Right. So long as the person's aware that they have that weakness, you know, again, most leaders, most people just aren't aware of their weaknesses and don't feel comfortable with them. And so, they frankly hire people with the similar superpowers as they and are nervous about hiring someone who may have a superpower in an area where they're less strong. And what you need is to have someone who has strengths and weaknesses and is totally fine with it and realizes that part of being a leader is filling those holes. Now, I do think, I don't want to suggest that, let's say you're going to do this business at work that I'm in, which is, you know, venture capital or finance or entrepreneurship, and you never, or you don't know how to read an income statement or a balance sheet. Well, it probably would be helpful to at least be able to look at one of those things or a cash flow statement and be able to say, OK, this is what that does. But do you need to be excellent at that? Or let's say you're reading a term sheet. And do you need to have the excellence that, say, a real detail-oriented lawyer needs to have? No, you don't need that. There may be a baseline that you should be at. But for most skills, you can hire for that. And you can, again, focus on the things that you're uniquely suited and that you love and that you're good at once you have sort of a baseline skill on sort of the key things that you need to have them.

Lindsay Pedersen

Right. There are limits to this. If you're going to go into corporate finance, you probably have to be strong at reading financial statements.

Greg Gottesman

And I'm a great storyteller. Yeah, that wouldn't work. But you don't if you're going to go into corporate finance, you don't necessarily need to have expertise, let's say, in certain areas of marketing or something. I mean, it's not that it's bad, but again, you could fill holes for that if you need to. Or most of the time, if you're a CEO of a startup, there are a whole bunch of things to do. And you're going to do some of those things really well. And then other things, you can fill those holes. And I also think this applies in the personality side. In addition, we've been more talking about the functional side of it. So, like I'm a person that is so, for example, here at PSL, I'm not a very process focused person. That's not that I hate all processes. Just like I feel like I only want to use the least amount of process to get me to where I need to get. And there's another person here named T.A. McCann, who's fantastic, and he loves process. And it helps him to sort of move more quickly when he has a very defined, specific set of steps and things. And to me, that's not the way my mind works. I don't sort of work super well with a lot of process, and he doesn't work well with the lack of process that I like. And so, the combination of us can be quite useful because probably somewhere in between is where a company should be centered, right? Which is, yeah, you need to have some process, but not too much process. Or personality-wise, like if you have everyone who is super intense, and you don't have anyone who, if you have a bunch of A-types and no one who actually wants to do the actual work, like that's not good either. So, I think self-awareness applies across a lot of different spectra, if you will.

Lindsay Pedersen

It seems like it's kind of a foundational condition for almost all good things that happen in a company. It's almost like a literacy. It's hard to do a lot of things in, I don't know, college or even in high school if you don't have literacy. So, it's like with self-awareness, you can become better at being a leader because you have this ability to reflect honestly. In your own career, I know that you wrote a book when you were in college. And in fact, I gave a copy of your college survival guide to my son when he went to college. Was that your first foray into entrepreneurship when you became an author and wrote about college survival?

Greg Gottesman

Yeah, gosh, that was a long time ago. Listen, I had lemonade stands and I'd worked on side businesses. But in terms of real entrepreneurship, probably writing a book in my sophomore year of college, and then it was probably my first real entrepreneurial thing. And then I went out and marketed that book. It became the best-selling college survival guide ever and helped to pay for graduate school. And so, it turned out to be...And then I wrote two additional books. By the way, I feel bad for your son because that book is now... Gosh, it was published in 1991. So, I don't think the internet was even around.

Lindsay Pedersen

Well, it was reprinted in 2004, I believe.

Greg Gottesman

Yeah, it had seven or eight editions or something. But yeah, even then, I think the internet was still not in any sort of...

Lindsay Pedersen

I think it survives. There are certainly details that are different now. You pay for laundry electronically, not with quarters. But the principles are actually pretty consistent. So, I'm going to give you props for that.

Greg Gottesman

People are still people.

Lindsay Pedersen

People are still people. Isn't that the truth? So, here's a question for you. What is a career risk that you have made that, at the time, it didn't seem obvious, but that you're really glad now that you have made, that you made at the time?

Greg Gottesman

I think leaving Madrona was the biggest career... Well, I mean, at that point, I had already established myself as a venture capitalist. And so, I don't want to give myself too much credit. But I was one of the three initial managing directors of this incredible firm, Madrona. And it built that into an incredible place, or helped to build it, to give credit to all the other folks that were my partners and colleagues that are incredible. I had worked on this company called Rover that you mentioned. And I realized that I loved investing, but I also loved starting companies. And I felt like I wanted to go explore whether I could do that in sort of a more full-time capacity, start a studio that really, we could scale and make really special. And so that's why I left Madrona to start PSL or Pioneer Square Labs. And going back to self-awareness, I think I just discovered in myself this real desire and passion for wanting to, as opposed to just invest, for wanting to try to build, and a love for that, and a desire to see if I could not only build companies, but maybe build another firm again. But that was a real risk and a little crazy because Madrona was and is so successful and it's such a great firm. And I will be honest, there are days and many times where I look back and go, what was I thinking? And anytime you take a career risk, I think you're going to have that. You're going to wonder if you're human, gosh, was that, why did I do that? Was that a, should I have done that? Was that wise? But in retrospect, you know, especially as PSL has grown and become successful in its own right, I'm just so thankful that I listened to what I really wanted to do. It took me though many years to find sort of the courage and then also to figure out that self-awareness piece of what I really wanted to be spending my life doing.

Lindsay Pedersen

Yes.

Greg Gottesman

Yes.

Lindsay Pedersen

What are you really excited about right now with PSL?

Greg Gottesman

I think anyone who's in the technology space is excited about what AI is going to do over the next 20, 30 years. Excited, scared at the same time. You know, we're at about the 30-year anniversary. I think it's maybe it's this week or next or some for Mosaic, you know, the launch of the original browser. So, 30 years ago, almost to this day, like the internet launched the common conception of what the internet is. And we'd look back and think, my goodness, like how much things have changed. There was a McKinsey friend who told me that the internet was really about giving people access to information, broad access to information. Everyone has access to information. And the AI revolution, if you can call it that, or because I think it will be, is about giving everyone access to intelligence. And the power of that is almost, I'm not sure we can completely understand how it's all going to impact, but the way it affects PSL specifically, because everyone's talking, it's going to affect everything, the way we work, live. But the way it affects PSL specifically is, well, let's take Xiao as an example, you know, came to us 2015 or 16. I had been meeting with him. We were both Stanford grads. So, we met at an alumni event and we'd been talking about different ideas. And he came to us after I had said, hey, we're looking at this immigration space. And I think it might be interesting. He's like, oh, that's an area that I might be interested in. Very early, he came and took a week off of Amazon and really led the charge and never went back and built an incredible company.

And the value proposition to Xiao at that time was, hey, we've got people for you that can help you build a company. And that was compelling to him. Like we had built companies before, we had had some success. We had, you know, engineers and designers and digital marketers and recruiters. And that was appealing to him. Fast forward to today, we just spun out another company, got him Ford Davidson, fantastic entrepreneur. The value proposition to Ford for that company was, hey, we've got all these same people that Xiao, we have all these same resources, but now we have a piece of AI, a tool that can build software for you and get you to market twice as fast. And so that's what it did. Jacob, the software tool that we built and are using, wrote about 60% of the code of Ford's company. And we have a product management tool. We've got other kinds of AI tools. So in addition to people, we can now offer you a set of intelligence that can move you to market faster at less cost. Now you fast forward five years from now, what I want people to be able to do is come here and say, hey, click this button, your finance, your ops, your first 20 customers, your, you know, all those things that can all be automated in a way through this intelligence that we can move you to market at a fraction of the cost and order magnitude faster. I mean, that to me is interesting. And I think that's going to be the way it is for a lot of businesses. So that's what excites me is just thinking about company building, you know, and how AI is going to affect that when every team is composed of a combination of humans and machines, and they're both being used to their optimal capacity.

Lindsay Pedersen

Yeah. I, when you paint the picture that way, I'm excited too. That's pretty cool.

Greg Gottesman

I will say though, I, you know, the thing that makes me nervous about all this is, so we talked about the internet being 30 years old and there's no question that the internet has broadly helped people. I think most, if not all ships have risen, certainly some, but there's no question also that some ships have risen a lot higher than others, that the rich have gotten a lot richer, that we have far more wealth stratification and disparity. We have more haves and have-nots than we did 30 years ago, or at least we still have them and the gap between them has widened. I think left to its own devices; I think AI will do that. Still, the rich are more likely than those who have less to be able to take advantage of this new technology to benefit from it. And I think we have to be, I'm more frightened about that than I am about AI taking over and starting.

I'm much more worried about what the human, and when we have job displacement, people are going to feel in certain parts of this country and the world like, wow, I see everyone benefiting from this thing. I see our country getting more productive, but I'm not participating. I'm not a part of this. And I think that's going to happen. It's going to happen slower and faster than people think. In other words, 10 years ago, wow, it happened really fast, but it's going to be incremental in a way. That's the thing that concerns me the most about this is that we are really intentional in thinking about how this technology affects society broadly, because I think the genie's out of the bottle. We're not going to go back, but how do we make sure everyone, for example, if you have personalized education where everyone gets a chance to have their own AI tutor, certainly that shouldn't be available just to the rich. We can't afford it. We've got to figure out how to make everyone, give everyone access to that so they can get better and compete It's going to be really hard for us as a society.

Lindsay Pedersen

It's like the excitement is tempered. Well, there's this excitement and then there's this like equal and opposite concern for what that unleashes. And it's not like the exotic, you know, AI is going to become, you know, is going to take over the human race. It's less that, like that kind of catastrophic result and more the thing that's actually kind of mundane because we've already seen it happen with the internet, but this is just turbocharged. That resonates for me as a fear as well. Thank you. Well, gosh, I have these rapid-fire questions that are kind of like fun and light after that. So, are you ready for some light rapid-fire questions? Okay.

Greg Gottesman

I'm ready. I'm ready for sure.

Lindsay Pedersen

Fun and light. What is your favorite meal?

Greg Gottesman

M&M's.

Lindsay Pedersen

Okay.

Greg Gottesman

You're forcing a meal on me.

Lindsay Pedersen

Okay. Great. Peanut M&M's or regular M&M's?

Greg Gottesman

I think peanut. I'm a peanut.

Lindsay Pedersen

The yellow bag.

Greg Gottesman

The yellow ones are good too, but I think given the choice, I would choose peanut.

Lindsay Pedersen

Yeah. Okay. Good. Peanut M&M's are your favorite meal. Okay. Are you an introvert or an extrovert?

Greg Gottesman

I am, I lean extrovert.

Lindsay Pedersen

If your dog could talk, what would they say about you?

Greg Gottesman

My dog can talk. And Jordi would say that she would like me to take her on walks more often.

Lindsay Pedersen

Yeah. That's a fair point. What time do you usually wake up in the morning?

Greg Gottesman

Seven.

Lindsay Pedersen

What is your favorite way to work out?

Greg Gottesman

Peloton.

Lindsay Pedersen

Do you have a favorite instructor?

Greg Gottesman

Probably Emma Lovewell.

Lindsay Pedersen

Yeah. Emma. Awesome. This has been so great, Greg. Thank you so much for joining me today. If folks want to learn more about PSL or about you, how should they connect with you online?

Greg Gottesman

I'm just Greg at PSL. Feel free to reach out. Greg at PSL.com. Again, thank you so much for spending the time. And I do feel lucky just to be here at this time now and being able to build companies and see how all this fun new technology is going to play out. It'll be at least as interesting over the next 10 years as it has been for the last 30 plus years. So, this is going to be really interesting time to just be alive. I think things are going to change in some really interesting ways.

Lindsay Pedersen

I love it. Thank you so much for that. Thanks for listening to this episode of North Star Leaders. Make sure you don't miss an episode by subscribing on your favorite podcast app. If you know of a North Star Leader whose insights would be valuable for this community, please message me on ironcladbrandstrategy.com. Also on that website are show notes, transcripts and a way to sign up for our monthly newsletter. I hope you join us again for another episode of North Star Leaders.