Kunal Shah on winning in India, second-order thinking, the philosophy of startups, and more

LENNY RACHITSKY (00:00:00):
Microsoft, Adobe, Alphabet, IBM, Palo Alto Networks, even Starbucks, the CEOs of these companies were all born in India and immigrated to the US.

KUNAL SHAH (00:00:08):
A lot of CEOs have done well because they follow the “dharma” of the founders quite well.

KUNAL SHAH (00:00:13):
“These are the principles that were given to me and I'm going to sustain this and make it even bigger.”

LENNY RACHITSKY (00:00:16):
I want to keep talking about India and how it's different and how to build products that are successful in India.

KUNAL SHAH (00:00:21):
No Indian has ever been paid an hourly salary in their entire life.

KUNAL SHAH (00:00:24):
The concept of time is not the same.

LENNY RACHITSKY (00:00:27):
What do you see as the biggest opportunity for Indian startups?

KUNAL SHAH (00:00:30):
India is changing because now, for the first time, we are seeing founders being respected and unicorns being celebrated.

KUNAL SHAH (00:00:36):
We have a National Startup Day, and probably the first generation that will have to prove ourselves to be very large profitable companies.

KUNAL SHAH (00:00:42):
I wouldn't want to be anywhere else building.

LENNY RACHITSKY (00:00:48):
Today my guest is Kunal Shah.

LENNY RACHITSKY (00:00:51):
Kunal is one of the most well-known and respected entrepreneurs and product leaders in India and around the world.

LENNY RACHITSKY (00:00:58):
He shares endless wisdom on Twitter and LinkedIn where he has over 1 million followers.

LENNY RACHITSKY (00:01:03):
He's the CEO and founder of CRED, a FinTech startup based in India, which was last valued at over $6 billion and as of couple years ago processed over 20% of all credit card bill payments in India.

LENNY RACHITSKY (00:01:16):
Prior to CRED, he founded three other startups including Freecharge, which he sold for over $400 million to Snapdeal.

LENNY RACHITSKY (00:01:23):
Kunal is a deep thinker, both about product and about life.

LENNY RACHITSKY (00:01:27):
His background is actually in philosophy, which comes across very clearly when you hear him share his advice.

LENNY RACHITSKY (00:01:34):
In our conversation, we get deep into what makes working and building in India different from the US markets and other markets, including why trust is so essential and why so many people are so much more risk-averse in India.

LENNY RACHITSKY (00:01:46):
We talk about the biggest challenges and opportunities within the India market, why there are so many successful Indian immigrants in CEO roles across tech, and what we can learn from that.

LENNY RACHITSKY (00:01:56):
Also, why companies in India can quickly grow DAUs but not ARPUs, and what that means for building products in India.

LENNY RACHITSKY (00:02:03):
We also talk about how to stay curious and open-minded and the power of second order thinking.

LENNY RACHITSKY (00:02:07):
Also, stories of failure, lots of contrarian takes and so much more.

LENNY RACHITSKY (00:02:13):
If you enjoy this podcast, don't forget to subscribe and follow this podcast on your favorite podcasting app or YouTube.

LENNY RACHITSKY (00:02:18):
It's the best way to avoid missing future episodes and it helps the podcast tremendously.

LENNY RACHITSKY (00:02:23):
A big thank you to Cyan, my ET, for making the connection to Kunal.

LENNY RACHITSKY (00:02:27):
With that, I bring you Kunal Shah after a short word from our sponsors.

LENNY RACHITSKY (00:02:33):
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LENNY RACHITSKY (00:02:36):
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LENNY RACHITSKY (00:04:25):
Kunal, thank you so much for being here and welcome to the podcast.

KUNAL SHAH (00:04:29):
Lenny, thank you so much for having me, and a huge fan of everything that you do.

KUNAL SHAH (00:04:35):
And like I said before, India is a huge beneficiary of what you do.

KUNAL SHAH (00:04:40):
We are all people who have learned the art of product by just figuring it out, and watching some content here and there and reading some stuff.

KUNAL SHAH (00:04:49):
So kudos to everything that you do.

KUNAL SHAH (00:04:51):
And like I said earlier, you do a fabulous job of taking the information asymmetry of the art of product and  making it accessible to many of us across the world.

KUNAL SHAH (00:05:02):
So thank you.

LENNY RACHITSKY (00:05:03):
Wow, I really appreciate that.

LENNY RACHITSKY (00:05:04):
This is already feeling great to me.

LENNY RACHITSKY (00:05:06):
I have a huge.. so it turns out this podcast has a huge audience in India, as do you.

LENNY RACHITSKY (00:05:12):
And so I feel like this conversation is going to be really special and really meaningful to a lot of people.

LENNY RACHITSKY (00:05:18):
I wanted to start with something very tactical.

LENNY RACHITSKY (00:05:21):
There's a product framework that you came up with that I absolutely love, and I've shared it with at least 30 founders over the last couple years. And this is actually how I discovered you initially; I heard about this thing, and I'm like, who's this guy Kunal Shah?

LENNY RACHITSKY (00:05:34):
And look at us now, chatting.

LENNY RACHITSKY (00:05:36):
Could you explain this framework briefly and then just how you've used it or how you recommend people apply it?

LENNY RACHITSKY (00:05:43):
Oh, and by the way, it's called Delta 4.

LENNY RACHITSKY (00:05:44):
I don't know if I even said the name.

KUNAL SHAH (00:05:46):
Yeah, it's called the Delta 4 framework, but I think it's actually quite simple.

KUNAL SHAH (00:05:51):
If you think about it, a lot of people say that your product has to be 10x better and it's not very measurable.

KUNAL SHAH (00:05:57):
You don't know if you are 10x better or not unless you're delusional.

KUNAL SHAH (00:06:01):
And the trigger for me was actually, I'm the unusual tech founder in India.

KUNAL SHAH (00:06:06):
I'm the only humanities/philosophy major founder in India who's got into tech.

KUNAL SHAH (00:06:12):
And I often wondered if most people who were my peers, or people who were ahead of me, were significantly smarter academically or otherwise.

KUNAL SHAH (00:06:21):
And why did I become successful with my first startup, Freecharge, which I exited in 2015 for nearly $450 million?

KUNAL SHAH (00:06:28):
And I was like, “What would make this happen?”

KUNAL SHAH (00:06:31):
Because I would not qualify into this super league of really top IIT rankers that exist in India.

KUNAL SHAH (00:06:38):
And that got me onto this philosophical quest to find out what makes things successful.

KUNAL SHAH (00:06:43):
So the simple framework is, an example I give often is that, imagine the old way of taking a cab ride and an Uber. And if I asked you to give me the score of efficiency on Uber and let's say getting the old cab, what would you say, Lenny?

KUNAL SHAH (00:06:58):
I'm curious.

KUNAL SHAH (00:06:59):
Out of 10?

LENNY RACHITSKY (00:07:00):
Yeah, give a cab three and then Uber like a nine.

LENNY RACHITSKY (00:07:04):
Yeah.

KUNAL SHAH (00:07:05):
So every time you see that the product efficiency delta is greater than or equal to four, three things happen.

KUNAL SHAH (00:07:14):
It is irreversible.

KUNAL SHAH (00:07:16):
Second is that you have a very high tolerance for it to fail.

KUNAL SHAH (00:07:21):
If Uber fails a little bit, will you say, “Oh my God, I'm going to really stop using it?”

KUNAL SHAH (00:07:30):
No.

KUNAL SHAH (00:07:31):
And the third thing is what I call the UBP, ‘Unique Brag-worthy Proposition.’

KUNAL SHAH (00:07:37):
Every time humans unlock a Delta 4 product or service, they cannot stop talking or sharing about it.

KUNAL SHAH (00:07:46):
And therefore all Delta 4 products will naturally have lower CAC or sometimes zero CAC because people, humans.. and think about it, Lenny, how you discovered Google, definitely not through an ad, definitely not through some performance marketing here and there.

KUNAL SHAH (00:07:57):
Somebody showed you the demo and you were like, “Oh my God, this is crazy.”

KUNAL SHAH (00:08:01):
And that's what I'm seeing right now, what's happening with everything on OpenAI and everything that is happening around LLM feels like magic and it's Delta 4 because the efficiency of doing things before and after is now showing that.

KUNAL SHAH (00:08:12):
But failure is the real problem.

KUNAL SHAH (00:08:15):
And making everything tech does not make things more efficient.

KUNAL SHAH (00:08:19):
Let's take an example.

KUNAL SHAH (00:08:21):
Buying a suit for yourself online versus offline, all tech, cool stuff, all the features built in.

KUNAL SHAH (00:08:30):
What would you say the efficiency of buying a suit online is versus, let's say, buying a suit offline?

LENNY RACHITSKY (00:08:35):
I've actually done that and it was a terrible fit. It did not fit at all.

LENNY RACHITSKY (00:08:39):
And so it's efficient, but the end result was not, it's probably often not great.

LENNY RACHITSKY (00:08:45):
So it's probably-

KUNAL SHAH (00:08:46):
Overall efficiency score, what would you give?

LENNY RACHITSKY (00:08:48):
Of buying a suit online?

KUNAL SHAH (00:08:50):
Yeah, versus offline.

LENNY RACHITSKY (00:08:53):
I'd probably give it five and five.

LENNY RACHITSKY (00:08:56):
Offline is actually probably a better experience.

LENNY RACHITSKY (00:08:58):
I give it a seven.

KUNAL SHAH (00:08:59):
That's crazy because you've broken the principle, this is a tech product, but the efficiency is better offline.

KUNAL SHAH (00:09:06):
And therefore when the delta is less than four, what you will discover is that it is reversible.

KUNAL SHAH (00:09:15):
You will not see people bragging about it and you have zero tolerance for it.

KUNAL SHAH (00:09:21):
So you're never going to buy a suit online. I can tell you that right now.

KUNAL SHAH (00:09:25):
So I think it's a simple framework.

KUNAL SHAH (00:09:28):
I believe that if many companies applied..  I know now many VCs in the US use this as part of the training program for analysts.

KUNAL SHAH (00:09:36):
Somebody in Sequoia mentioned this to me that they have this as part of the thing, but in India we are not still applying many of these things.

KUNAL SHAH (00:09:46):
I think it's a simple framework to at least know. You can apply this to features, you can apply this to products, you can apply that to business.

KUNAL SHAH (00:09:55):
And oftentimes this is a longer concept.

KUNAL SHAH (00:09:57):
We can talk about it in many ways because it's derived out of some study around entropy and evolutionary biology, which is the root of how I discovered and thought about Delta 4, that “When does a species get disrupted ” or “what is entropy and why does low entropy require growth of high entropy?”

KUNAL SHAH (00:10:18):
It's a day long podcast on its own.

KUNAL SHAH (00:10:19):
So some other time.

LENNY RACHITSKY (00:10:21):
Okay.

LENNY RACHITSKY (00:10:21):
We'll save that for a future follow-up, just diving in on the psychology of Delta 4. Just to kind of summarize this, because I think it's such a powerful framework and I find it useful to convince founders why their product isn't taking off.

LENNY RACHITSKY (00:10:32):
They may feel like this is better than. The classic example, is a better Excel.

LENNY RACHITSKY (00:10:36):
Look, this is so much better than Excel.

LENNY RACHITSKY (00:10:38):
It can do all these things.

LENNY RACHITSKY (00:10:39):
You don't have to learn all these formulas.

LENNY RACHITSKY (00:10:41):
But the trick here that I love is just what people rate the existing solution 1to 10, what would they rate your solution 1 to 10?

LENNY RACHITSKY (00:10:48):
It has to be four points higher, otherwise no one's going to pay attention.

LENNY RACHITSKY (00:10:52):
And I think it's pretty simple.

LENNY RACHITSKY (00:10:53):
People are busy, they have enough things to do, they have enough products and apps, they're not going to take the time to really dig into something if it's not that much better.

KUNAL SHAH (00:11:00):
Absolutely.

LENNY RACHITSKY (00:11:01):
Okay.

LENNY RACHITSKY (00:11:01):
I'm going to go in a totally different direction.

LENNY RACHITSKY (00:11:03):
I want to talk about Indian CEOs in the US.

LENNY RACHITSKY (00:11:06):
Okay.

LENNY RACHITSKY (00:11:07):
So today the CEOs of Microsoft, Alphabet, Adobe, which is a $250 billion company it turns out, IBM, which is a $170 billion company, Palo Alto Networks, which is a $100 billion company, even Starbucks, also a $100 billion company, I was looking that up.

LENNY RACHITSKY (00:11:25):
And then also Twitter before Elon took over Twitter. The CEOs of these companies were all born in India and immigrated to the US.

LENNY RACHITSKY (00:11:32):
And I might be wrong, but I think this is the largest ethnic group of CEOs of tech companies other than just white dudes in the US.

LENNY RACHITSKY (00:11:41):
Okay.

LENNY RACHITSKY (00:11:41):
So I'm curious why you think Indian immigrants are so successful in business and in tech in the US, especially in these very high positions.

LENNY RACHITSKY (00:11:50):
And I'm most curious, just what can we learn from that?

LENNY RACHITSKY (00:11:53):
What can we learn from their success?

KUNAL SHAH (00:11:55):
It's a great question.

KUNAL SHAH (00:11:56):
I often wonder about it and I have had the good fortune to meet a fair bunch of these individuals, and had a chance to really explore with them what really went on.

KUNAL SHAH (00:12:07):
So there are a few things that pop out.

KUNAL SHAH (00:12:10):
And again, these are all conjectures, which I can't prove in any way, but it's a thought experiment to talk about these things.

KUNAL SHAH (00:12:18):
First is in general, immigrants that get out of the country usually have a chip on their shoulder in a very different way.  And the struggle that they have to go through to just get out and be successful, and that hunger that got them there. There was no privilege.

KUNAL SHAH (00:12:37):
They came from very, very humble backgrounds and literally no money to start with.

KUNAL SHAH (00:12:42):
So I think that this force is real.

KUNAL SHAH (00:12:46):
You can say that for many immigrants in general as well. But appreciation for math in general, or logic which came to society in a big way, kind of gave. Let's say for example, lots of engineering graduates come from only a few countries because society was bent towards early exposure to mathematics.

KUNAL SHAH (00:13:04):
And I think that kind of helps create status that will get appreciated.

KUNAL SHAH (00:13:10):
For example, being an engineer, a doctor...  As a philosophy major, I was a write-off for society.

KUNAL SHAH (00:13:16):
So the reason I'm the rare commodity over here, because you are not considered to be very bright unless you break into these very hard exams and do very, very hard things.

KUNAL SHAH (00:13:25):
So the filtering criteria on its own is big.

KUNAL SHAH (00:13:28):
But there's another interesting framework altogether, which I have actually learned from this gentleman, Devdutt Patnaik. He applies Indian mythology and management principles together.

KUNAL SHAH (00:13:39):
And it's an interesting thing. There are three major Indian Gods.

KUNAL SHAH (00:13:43):
One is Brahma, the God of creation, Shiva the God of destruction.

KUNAL SHAH (00:13:49):
I'm  generalizing here, but that's the classification.

KUNAL SHAH (00:13:52):
And the third is Vishnu, the God of sustenance.

KUNAL SHAH (00:13:55):
And their avatars-the word “avatar” comes from Vishnu who keeps changing avatars.

KUNAL SHAH (00:13:59):
So we have Rama, Krishna, all these Gods are avatars of his.

KUNAL SHAH (00:14:04):
So what you notice is that if you take a two by two of people who are high on values and low on values, are high on obedience and low on obedience, you make an interesting two by two.

KUNAL SHAH (00:14:19):
Now, Lord Krishna, who is one of the very popular avatars, which suits the entrepreneurial category,  is high on values but very low on obedience. He was known to be the naughty God and he could actually create lots of things.

KUNAL SHAH (00:14:36):
And there is Rama, who is known to be the one who follows principles and is obedient.

KUNAL SHAH (00:14:41):
So they will follow ‘dharma’ and scale on that.

KUNAL SHAH (00:14:45):
And then there are these notorious characters, there is Ravana who is low on values, low on obedience, and there is Duryodhana which he says that he is high on obedience but low on values.

KUNAL SHAH (00:14:55):
So these are the people that you don't want to be.

KUNAL SHAH (00:14:57):
And what you notice is that a lot of CEOs have done well because they follow the ‘dharma’ of the founders quite well.

KUNAL SHAH (00:15:05):
They have not diluted the dharma of the founders who have started these companies, and managed to sustain that.

KUNAL SHAH (00:15:13):
And a lot of CEOs have this need to say, "Oh, I'm going to change the company forever and it'll be my identity and I will change the logo and I'll change the name and I will do all sorts of things."

KUNAL SHAH (00:15:25):
But maintaining ‘dharma’, where I will say that “These principles were given to me and I'm going to sustain this and make it even bigger," comes from the humility of saying that there is something that was built with some pure form factor, and I think therefore that character stays on.

KUNAL SHAH (00:15:41):
And therefore we have the characters of Brahma and Shiva, the founder and destroyer.

KUNAL SHAH (00:15:47):
That's the thing.

KUNAL SHAH (00:15:48):
But sustenance is the harder one.

KUNAL SHAH (00:15:51):
And therefore our avatars keep happening over time and different hurdles come and then different levels come.

KUNAL SHAH (00:15:57):
But when you think about the archetype of, at least the Indian CEOs, I've seen that they are fabulous at moving between Krishna and Rama all the time.

KUNAL SHAH (00:16:07):
They can play this consistently, and therefore they keep evolving and keep making these companies bigger and bigger.

KUNAL SHAH (00:16:14):
And I think we'll see a lot more of this in years to come, because now they have the role models of these individuals who have done well.

KUNAL SHAH (00:16:22):
But the key principle is that if you ask the founders, they will love these CEOs if they're around because they maintain the dharma.

KUNAL SHAH (00:16:32):
For example, what Tim is doing is maintaining the dharma of Steve Jobs because if he had tried to change the dharma of Steve Jobs and the values of the company, it's very hard to imagine it sustaining itself forever.

LENNY RACHITSKY (00:16:45):
Wow, what an answer.

LENNY RACHITSKY (00:16:47):
What I love about this is this combination of using a two by two and Indian mythology. It is like the microcosm of you, which is philosophy and tech.

LENNY RACHITSKY (00:16:58):
And so I love that and it makes a lot of sense that that's where your mind goes.

LENNY RACHITSKY (00:17:02):
Something else this makes me think about is, I read this book a long time ago, Jim Collins ‘Good to Great’ or one of his early books about leadership, and he talks about level five leadership I think. Here level five leaders are ones where it's not about them, it's about the business and they can disappear in the future and things will work great.

LENNY RACHITSKY (00:17:19):
Yes.

KUNAL SHAH (00:17:20):
And I feel it is very hard if you believe that your identity needs to have its own position and legacy, and therefore a lot of time chasing status causes disruption because you will say that “Oh, this doesn't have my signature in it.”

KUNAL SHAH (00:17:37):
And therefore accepting the religion and trying to be the Pope of it or the father of it is better than trying to say, "Oh, I need to have my variant of religion."

KUNAL SHAH (00:17:50):
And that's where the creative destruction starts happening.

LENNY RACHITSKY (00:17:54):
Interesting.

LENNY RACHITSKY (00:17:55):
Okay.

LENNY RACHITSKY (00:17:55):
So you said that there's this good balance between Krishna and Rama that happens.

LENNY RACHITSKY (00:17:59):
Can you just summarize where they are in that two by two?

KUNAL SHAH (00:18:02):
Rama is high on values and high on obedience, and Krishna is high on values and low on obedience, but they both are high on values, which means they'll follow dharma, and they'll change sides.

KUNAL SHAH (00:18:17):
For example, let's say Satya during the OpenAI crisis played Krishna and got things out, but he'll switch back to being Rama and continue to keep scaling it up.

LENNY RACHITSKY (00:18:29):
Amazing.

LENNY RACHITSKY (00:18:29):
And just to close the loop on here, is your sense that they're actually thinking about this and they're religious, or is this just in the ether of growing up in India and this is just part of the culture?

KUNAL SHAH (00:18:40):
It's a great question.

KUNAL SHAH (00:18:40):
I don't think they consciously think about it, but I think if they ever heard this, they would agree with it, because that's what they grew up with and value systems are much more long-term.

KUNAL SHAH (00:18:51):
For example, I believe all bad behavior in humans comes from being short-term, and being long-term is a big choice to make.

KUNAL SHAH (00:19:04):
And a lot of times a lot of people argue that we have a 95% arranged marriages and less than 1% divorce rate, comes from this whole long-term thinking that people are married through values versus attraction or lust and all of that stuff. They’re more long-term oriented and about building a family, building values.

KUNAL SHAH (00:19:31):
Or low divorce rate is about “we'll fix along the way” versus trying to say “I need to evolve” and “I need to move forward.”

KUNAL SHAH (00:19:38):
So I think being long-term about that mindset, and that's why some cultures last for thousands of years, because of this need for everybody to be more long-term versus short.

LENNY RACHITSKY (00:19:52):
The US could use a lot of that these days.

LENNY RACHITSKY (00:19:55):
You mentioned this interesting fact about how in India, most startups fail. You said, I think, the classic stat is 90%, and that the risk is a lot higher to start a company and then fail.

LENNY RACHITSKY (00:20:08):
Can you just talk about what impact that has?

LENNY RACHITSKY (00:20:11):
How do people try to avoid that?

LENNY RACHITSKY (00:20:12):
Because that'd be amazing if you can reduce the risk of starting a company or is it just that it happens and people get super in debt?

KUNAL SHAH (00:20:20):
I think long-term societies are naturally more risk-averse. And not all great CEOs can become great founders for the same reason.

KUNAL SHAH (00:20:32):
In fact, I would say that it actually makes it very hard to be a founder if you've been a great CEO because you've turned into this sustainer versus destroyer or creator.

KUNAL SHAH (00:20:45):
The nuance I'm talking about is when you are thinking about risk appetite, India is changing, but now for the first time we are seeing founders being respected and talked about and these unicorns being celebrated and our Prime Minister talks about startups quite openly.

KUNAL SHAH (00:21:02):
We have a National Startup Day and so on and so forth.

KUNAL SHAH (00:21:04):
So I think there is a thing that has changed this, but let's understand the core human behavior.

KUNAL SHAH (00:21:11):
India still has a large number of arranged marriages.

KUNAL SHAH (00:21:16):
And if you are a founder and a failed founder, your chances of getting a person to marry is still hard to achieve.

KUNAL SHAH (00:21:26):
So if this is all true, then the appetite to take risk will be curtailed.

KUNAL SHAH (00:21:32):
Somebody gave me an interesting example that there's a very large, let's say CPG company in India, and let's say you do a zero to one over there and the CEO changes in four or five years and your zero to one fails, but you were the best person, that's why you were given the zero to one.

KUNAL SHAH (00:21:49):
The next CEO is like, “So what have you done in the last five years?”

KUNAL SHAH (00:21:52):
He's like, "Nothing.

KUNAL SHAH (00:21:53):
I just tried to launch it but failed."

KUNAL SHAH (00:21:55):
And you are neither given a promotion in the company, nor a new company will say, "Oh my God, I'm going to hire this talent."

KUNAL SHAH (00:22:00):
So the guy who stayed on this stable brand within the CPG company kept growing, but that has natural tailwinds.

KUNAL SHAH (00:22:07):
All he has to do is nothing in that brand.

KUNAL SHAH (00:22:10):
And then suddenly what you see is that he or she's managed to do well and this guy has done a zero to one has not done well.

KUNAL SHAH (00:22:16):
So we do not celebrate risk-takers as a country yet.

KUNAL SHAH (00:22:21):
And I think we'll change that.

KUNAL SHAH (00:22:23):
I think it's changing already, but we have a long way to go.

KUNAL SHAH (00:22:27):
One of the beautiful things I often talk about is that when I was in Portugal once and I saw, I don't know if you've ever been and seen this, but in the church normallyonly the Royalty are allowed to be buried or cremated. There is only one more category that is allowed-  the explorers.

KUNAL SHAH (00:22:47):
Vasco da Gama, all of these guys who explored the world and took risks and took the country forward, were given the same position as the royalty.

KUNAL SHAH (00:22:55):
So when we give the highest status to risk-takers, the country appreciates it because ultimately we're all looking for markers of social validation.

LENNY RACHITSKY (00:23:05):
Super interesting.

LENNY RACHITSKY (00:23:06):
I want to keep talking about India and how it's different and especially what may surprise people about the market, both building there and then how to build products that are successful in India.

LENNY RACHITSKY (00:23:15):
I saw in a different interview, you talk about how there's this big difference between DAUs and ARPUs. In India it's really easy to get DAUs, basically get lots of users, it's really hard to make revenue per user, and that changes the way you build products broadly.

LENNY RACHITSKY (00:23:30):
Could you just talk about why this is the case?

LENNY RACHITSKY (00:23:32):
Why is it so much easier to get DAUs versus ARPUs?

KUNAL SHAH (00:23:37):
I think ARPU is a function of per capita income of a country.

KUNAL SHAH (00:23:41):
You cannot make $100 per user from a country for a product when their income is let's say $2,500 per year as an average for the whole country.

KUNAL SHAH (00:23:52):
So what happens is many global companies love to come to India because we have the cheapest data, and very high smartphone penetration.

KUNAL SHAH (00:24:01):
So if you look at a lot of global giants, they'll have 500 million users from India, sometimes a billion users coming from Asia and they don't have huge ARPUs, but they help you show the user growth which helps you in your public market and therefore improves your valuations.

KUNAL SHAH (00:24:16):
For example, my guess is that, I don't know if this data is public or not to talk about, my guess is that Meta would not have more than $3 or $4 per user per year monetization in India.

KUNAL SHAH (00:24:28):
But if you look at the user growth in India, it is huge.

KUNAL SHAH (00:24:33):
So a lot of times for global companies, India becomes a great MAU farm but very low on ARPU. Therefore a lot of Indian founders who tried to copy the Western market saying, “I'm going to have a few hundred million users” make a terrible mistake because they will need to then go abroad to find their ARPUs to balance the act.

LENNY RACHITSKY (00:24:52):
You talk about how Netflix is a good example of that, where they launched in India, they got lots of users, but just couldn't make a lot of money.

KUNAL SHAH (00:24:58):
Yeah.

KUNAL SHAH (00:24:58):
Because forusers to find relevant content, pay for content, when we have tons of free data, tons of free content all over the place, like short videos that are competing with time, so much going on over here, people actually paying for that by design is going to be less.

KUNAL SHAH (00:25:17):
And I'm not saying that it'll not change in 10, 20 years, but the expectation that many global companies come over here saying that, “I'm going to have these tens of millions of users who start paying me as soon as I come”, for Spotify, for Netflix, or Amazon Prime for that matter has not panned out.

LENNY RACHITSKY (00:25:37):
So one of my takeaways here is just when you look at a startup as an investor especially, and you see “We've got 100 million users,” don't treat that the same as say 100 million users in the US or other markets.

KUNAL SHAH (00:25:49):
Absolutely.

KUNAL SHAH (00:25:50):
One more thing is the value of time as a concept.

KUNAL SHAH (00:25:53):
So one of the things you'll notice, Lenny, is that no Indian has ever been paid an hourly salary in their entire life.

KUNAL SHAH (00:26:00):
But let me ask you a question.

KUNAL SHAH (00:26:01):
What was your first ever job and how were you paid?

LENNY RACHITSKY (00:26:04):
My first ever job, I was tutoring women about computers and passing Microsoft certification tests.

LENNY RACHITSKY (00:26:10):
And I was paid, I'm pretty sure it was hourly.

KUNAL SHAH (00:26:10):
Now most likely you'll remember what the hour rate income was.

KUNAL SHAH (00:26:16):
And even though you've started making a lot more, you still have the concept of what the value of your one hour is.

KUNAL SHAH (00:26:23):
But if you ask most Indians, and if you ever come to India and do this exercise when you meet them, ask them “What's your income per day or income per hour?”

KUNAL SHAH (00:26:34):
Nobody will be able to answer, no matter what their job is.

KUNAL SHAH (00:26:36):
They could be staff, at the restaurant, to somebody who's doing really basic work, to anybody in any fancy job, because we've never ever been paid an hourly salary.

KUNAL SHAH (00:26:47):
So when you're not paid an hourly salary, the concept of time is not the same.

KUNAL SHAH (00:26:53):
And when the concept of time is not the same, paying for time is hard to do.

KUNAL SHAH (00:26:59):
And therefore you'll see a lot of Indians who make, let's say, I don't know, maybe $100 an hour, but still spend an hour to spend $10 on a flight ticket because that's what it is.

KUNAL SHAH (00:27:10):
And if you discuss that with many of the Indians in the West also you'll realize that this is a common joke that they will still fight for the $10 because the value of time is something that is harder to get used to unless from your childhood the unit of time was moved smaller and smaller.

LENNY RACHITSKY (00:27:29):
That is really interesting.

LENNY RACHITSKY (00:27:31):
And you're saying that comes from just the fact that people never get paid hourly?

LENNY RACHITSKY (00:27:34):
It's always a salary, and so people don't write down-

KUNAL SHAH (00:27:36):
The concept of valuing time.

KUNAL SHAH (00:27:40):
Many Indian languages do not have a word for “efficiency.”

LENNY RACHITSKY (00:27:44):
Wow.

KUNAL SHAH (00:27:45):
And that's true for many Asian languages, the word for “efficiency” does not exist.

KUNAL SHAH (00:27:50):
So then how do you value it if it's not in the vocabulary?

LENNY RACHITSKY (00:27:54):
Fascinating.

LENNY RACHITSKY (00:27:56):
There's something else along these lines of DAUs and ARPUs and efficiency that you talked about that I love, which is this idea that focus is a curse in Asian markets, that in the US there's often this advice.

LENNY RACHITSKY (00:28:09):
“Focus, build one thing that's amazing that everyone loves, try to make that work, scale that, and then, only then, build a new product or build something, build a new big feature.”

LENNY RACHITSKY (00:28:18):
And your advice is in India and Asian markets in general, it's the opposite.

LENNY RACHITSKY (00:28:22):
And I think it's because you make so little per user.

LENNY RACHITSKY (00:28:24):
Could you talk about that?

KUNAL SHAH (00:28:25):
Yeah.

KUNAL SHAH (00:28:26):
I think one is you make very little per user, so you have to do many things.

KUNAL SHAH (00:28:30):
But also all low trust markets, and let me define low trust markets as where consumers are a lot more wary of trying new things because there are no institutions that protect you against bad behavior done by a company.

KUNAL SHAH (00:28:44):
So for example, if I ever had a fall in a coffee shop in the US, I can think about suing them and making money off it.

KUNAL SHAH (00:28:51):
In India, you're only worried about “I'm going to pay for my thing.”

KUNAL SHAH (00:28:53):
You don't even think about suing the coffee shop or even hoping that you'll get any money for that.

KUNAL SHAH (00:28:57):
So what happens is in a low trust country, and all developing nations are low trust by design, because the institutions are not strong enough to really, really take care of many things.

KUNAL SHAH (00:29:09):
What happens is there is concentration of trust.

KUNAL SHAH (00:29:11):
So you will see that super apps, superstars, super companies all exist in low trust markets because the lack of trust creates concentration of trust, and therefore you will see one app can do 400 things.

KUNAL SHAH (00:29:24):
For example, we have a company like Tata that can do salt to car to jewelry to anything and people will buy it because it's a Tata brand, because it comes from a low trust society trusting the brand and not being, “Oh, I'm going to prefer this new brand.”

KUNAL SHAH (00:29:42):
The joy of trying new things is not so high in low trust nations.

LENNY RACHITSKY (00:29:47):
Wow, I'm learning a lot here.

LENNY RACHITSKY (00:29:48):
I didn't know all this.

LENNY RACHITSKY (00:29:49):
So essentially the brand is even more, exponentially more important in Indian markets.

KUNAL SHAH (00:29:55):
It's funny, but the oldest brand in the world is a brand called Chyavanprash.

KUNAL SHAH (00:30:00):
It's a guy named Chavan who built a “prash” which is a sort of paste that you can have for good health, and it was built in India many, many, many, many centuries ago.

KUNAL SHAH (00:30:14):
And lots of Indian businesses still have the name of the person behind it.

KUNAL SHAH (00:30:19):
Even the US is like that.

KUNAL SHAH (00:30:21):
JP Morgan, all these guys are not some fancy name.

KUNAL SHAH (00:30:23):
They're the names of people.

KUNAL SHAH (00:30:25):
And therefore in India, trust still comes from a lot of names of people who had a lot of trust behind them and reputation behind them.

LENNY RACHITSKY (00:30:33):
I want to zoom out a little bit before we go in a different direction.

LENNY RACHITSKY (00:30:36):
What do you see as either the most pressing challenges in India right now for tech and/or the biggest opportunity for Indian startups?

LENNY RACHITSKY (00:30:47):
And then just generally where do you think things will evolve in the next few years?

KUNAL SHAH (00:30:51):
Sometimes I wonder if the challenges and the opportunities are exactly the same.

KUNAL SHAH (00:30:56):
For example, one of the biggest challenges we have is, we have very low female participation of labor compared to many markets.

KUNAL SHAH (00:31:04):
But I also believe it's an opportunity because you can, let's say, use AI and create many new types of business and opportunities because now work from home is not an alien concept anymore.

KUNAL SHAH (00:31:13):
You can actually create very interesting businesses for that.

KUNAL SHAH (00:31:16):
Number two is we are low on per capita income.

KUNAL SHAH (00:31:23):
So what AI can do instead of taking our jobs away, is just make us brighter.

KUNAL SHAH (00:31:28):
Satya talks about how expertise is now available in the air. So you can actually just ride on that and really make the world very equal in many many ways.

KUNAL SHAH (00:31:40):
So that's a massive opportunity and also a challenge, because I often make this joke that the largest employer of the world is ‘inefficiency’, and if you take that away too quickly, we'll have a very, very jobless world.

KUNAL SHAH (00:31:52):
So the thing is that it can be an opportunity for a country like India and also potentially a threat because if we don't start becoming great at AI.

KUNAL SHAH (00:32:01):
I was actually just telling somebody today that maybe all of our interviews should be about giving a task that they can only perform if they are very good at AI.

KUNAL SHAH (00:32:11):
And no matter what the job is, you make that the minimum criteria that if they cannot use that, leverage that, they'll become a liability in 5 years anyways.

KUNAL SHAH (00:32:23):
And the last one is, we have a very young demographic, very well positioned with access to technology, access to smartphones and so on and so forth, a lot of hunger.

KUNAL SHAH (00:32:34):
But our challenge is that it's also the first generation that is truly learning what entrepreneurship is, what risk is, and we'll make all sorts of mistakes to get there.

KUNAL SHAH (00:32:43):
And I hope we don't go into a shell after having these large scale failures that we have not seen before.

KUNAL SHAH (00:32:50):
India is not used to layoffs.

KUNAL SHAH (00:32:53):
Like the startup world is used to layoffs, but in India, if startups do layoffs, it becomes the national news and all sorts of discussions happen over here.

KUNAL SHAH (00:33:01):
So we are not there yet.

KUNAL SHAH (00:33:03):
So we are stuck between being somewhat of a collectivist or somewhat of an individualistic society.

KUNAL SHAH (00:33:10):
We are somewhere.

KUNAL SHAH (00:33:12):
India is a great remix of everything.

LENNY RACHITSKY (00:33:15):
I love this line you just shared of “inefficiencies is the largest employer in the world”.

LENNY RACHITSKY (00:33:22):
I totally get that.

LENNY RACHITSKY (00:33:23):
Okay.

LENNY RACHITSKY (00:33:24):
So let's talk about CRED for a bit.

LENNY RACHITSKY (00:33:27):
So you had, I think three startups before CRED?

LENNY RACHITSKY (00:33:31):
Okay.

LENNY RACHITSKY (00:33:31):
And then you've been building CRED for about six years now.

LENNY RACHITSKY (00:33:34):
I'm curious just on this journey of CRED, what you've learned or changed your mind about, during this phase of your career versus previous phases.

KUNAL SHAH (00:33:45):
I think CRED's insight was actually quite simple.

KUNAL SHAH (00:33:47):
We realized that unfortunately the value of time and per capita income is concentrated with 25 million families and therefore focusing on them is important.

KUNAL SHAH (00:33:56):
And they are a lot more global in their approach versus the rest of India.

KUNAL SHAH (00:34:01):
So you have to build for them very differently.

KUNAL SHAH (00:34:05):
And I realized that the ability to focus on a customer set, which is not historically possible to do because every investor expected us to be the next China, and the only similarity of India and China was the population and nothing else was similar.

KUNAL SHAH (00:34:19):
So I think having that conviction that, “I'm going to build only for these folks and this large enough market.”

KUNAL SHAH (00:34:27):
Thankfully I had one success for somebody to bet.

KUNAL SHAH (00:34:30):
So our series A was $25 million.

KUNAL SHAH (00:34:32):
I would've not had that luxury if I had no success in the past because I had no product with any monetization to prove that I'm doing the right thing.

KUNAL SHAH (00:34:39):
It turned out okay, but I think I could get a lot of people to take a risk behind my insight or my thesis because I focused on the right customer category and built on it.

KUNAL SHAH (00:34:51):
But I think the few things I've learned differently is that companies that are very, very good at zero to one will not naturally become great at 10 to 100.

KUNAL SHAH (00:35:00):
There are lots of different lessons to learn.

KUNAL SHAH (00:35:01):
The founder has to evolve.

KUNAL SHAH (00:35:03):
That’s the biggest thing that has to happen.

KUNAL SHAH (00:35:05):
Most people at CRED are people who have not seen a bigger business than CRED, which comes with its benefits and costs.

KUNAL SHAH (00:35:12):
So you have to gentrify the org every now and then to make people understand the value of many of these reliable things.

KUNAL SHAH (00:35:19):
And I often tell people that entrepreneurs are uncertainty absorbers for everybody- for employees, for investors, for customers- and therefore they get rewarded for being those people who remove uncertainty from people's lives.

KUNAL SHAH (00:35:37):
But the kind of expectations keep changing at companies of scale.

KUNAL SHAH (00:35:41):
For example, if you have, let's say a seed stage investor, they are very used to very high uncertainty and they're happy with some absorption.

KUNAL SHAH (00:35:51):
But as you get a growth investor, and let's say you have sovereigns on your cap table, the amount of stability you need to provide is significantly more, and therefore you need to evolve very, very differently.

KUNAL SHAH (00:36:01):
So I think those are the few lessons that I've learned.

KUNAL SHAH (00:36:02):
Talent, you start realizing that not everybody can scale into everything.

KUNAL SHAH (00:36:07):
And you cannot expect that you can give up the 0 to 1 DNA just because you're building 10 to 100.

KUNAL SHAH (00:36:12):
So how do you kind of coexist with those things?

KUNAL SHAH (00:36:15):
How do you react to big changes in the market and not become this slow company?

KUNAL SHAH (00:36:19):
And every company goes through that.

KUNAL SHAH (00:36:21):
I mean if you look at what Zuck went through in the last three or four years was that.

KUNAL SHAH (00:36:27):
I often say that he had to play the Shiva, come and do a lot of destruction to become big again.

KUNAL SHAH (00:36:34):
So I think that's what founders can do, and it's not easy to do.

KUNAL SHAH (00:36:39):
One of the things I've learned is that profit pools of a country tell you a lot about what the country values.

KUNAL SHAH (00:36:48):
And trying to copy somebody else's profit pool to your country will not be a wise idea because the country's values are demonstrated in what profit pools exist.

KUNAL SHAH (00:36:57):
Let's take an example.

KUNAL SHAH (00:36:59):
In the thousand most profitable companies in India, the number of retailers would be probably two or three.

KUNAL SHAH (00:37:06):
But if you look at the Western market, you'll see a bunch of them because it's a consumption market, plus a very high divorce rate which means you're always peacocking again in the market, you're trying to be fit and be cool and all of that.

KUNAL SHAH (00:37:19):
India has a very low divorce rate, less than 1%, are arranged marriages.

KUNAL SHAH (00:37:24):
Fashion spends, and because we have a lower female participation of labor, India is probably the only market where female fashion spends is less than men's fashion spends.

KUNAL SHAH (00:37:33):
Everywhere else, it's probably five, 6x more for them.

KUNAL SHAH (00:37:36):
So what happens is you start appreciating what the country values.

KUNAL SHAH (00:37:40):
For example, I have noticed that many patriarchal societies have a very significant market cap in financial services versus consumption.

KUNAL SHAH (00:37:50):
And these broad patterns, you start thinking about very, very differently.

LENNY RACHITSKY (00:37:55):
So many lessons there.

LENNY RACHITSKY (00:37:56):
I love this idea of a founder being an uncertainty absorber.

LENNY RACHITSKY (00:38:00):
This other point you made about Zuck becoming the Shiva and destruction touches on something Brian Chesky and I chatted a bit about, how founders often start in control, very micromanaging, just driving the ship.

LENNY RACHITSKY (00:38:13):
And then as the company grows, they delegate and empower and then things start to slow down and then they come back, play the Shiva and take control again.

LENNY RACHITSKY (00:38:23):
Is there anything there that you've seen-

KUNAL SHAH (00:38:25):
Yeah, but that's the universe.

KUNAL SHAH (00:38:26):
The universe goes through the exact same phases.

KUNAL SHAH (00:38:28):
So if you study Indian mythology, you'll see that there's a Brahma, Vishnu, Mahesh cycles and every yugg As it’s called, goes through these three phases all the time.

LENNY RACHITSKY (00:38:38):
Beautiful.

LENNY RACHITSKY (00:38:39):
I see.

LENNY RACHITSKY (00:38:39):
So this is just inevitable.

LENNY RACHITSKY (00:38:41):
This is the circle of life.

LENNY RACHITSKY (00:38:42):
Absolutely.

LENNY RACHITSKY (00:38:43):
Amazing.

LENNY RACHITSKY (00:38:44):
I love how this all just ties back to your philosophy background.

LENNY RACHITSKY (00:38:47):
I love it.

LENNY RACHITSKY (00:38:47):
It's beautiful.

LENNY RACHITSKY (00:38:49):
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LENNY RACHITSKY (00:39:56):
Okay.

LENNY RACHITSKY (00:39:56):
So, on CRED.

LENNY RACHITSKY (00:39:57):
So here's a funny thing that happened.

LENNY RACHITSKY (00:39:58):
I asked people on Twitter what questions to ask you on this podcast, and one of the most common questions was “When do you think you'll become profitable?”

LENNY RACHITSKY (00:40:06):
Which is interesting because when I have other CEOs that are founding a company that is, and most companies aren't profitable, nobody's asking that question.

LENNY RACHITSKY (00:40:14):
So I'm just curious, why is that such a common question that comes up?

KUNAL SHAH (00:40:17):
It's fascinating.

KUNAL SHAH (00:40:19):
It's fascinating.

KUNAL SHAH (00:40:21):
As a country, most businesses were of trading, you buy something at low cost, sell at a higher price and you make profit.

KUNAL SHAH (00:40:30):
Most of our businesses, most of our family businesses were trading.

KUNAL SHAH (00:40:35):
But building a CapEx heavy distribution, monetizing it later on, focusing on high revenue growth rate versus trying to get profitability first, is not known to us.

KUNAL SHAH (00:40:47):
So when they see these large numbers of losses, there's a shock. “Why would somebody give you this kind of money?”

KUNAL SHAH (00:40:56):
And  by the way, my own dad wouldn't respect me till I was building a profitable company.

KUNAL SHAH (00:41:01):
So it's not surprising that people in India have these comments, but it also comes from not understanding how businesses are built in the internet world, where VCs are giving you the capital to build distribution, unique product edge, brand, all of that stuff, and then monetize later on and monetize big and then have very large profit pools to go after.

KUNAL SHAH (00:41:23):
But a lot of times this comes from not understanding this business, and I feel it'll change because many internet companies are now getting very profitable and public listed.

KUNAL SHAH (00:41:36):
So we'll have a decade.

KUNAL SHAH (00:41:39):
Let's understand one thing.

KUNAL SHAH (00:41:40):
In the US, maybe 27-30% of the US market cap is now tech companies.

KUNAL SHAH (00:41:46):
In India tech companies would probably make less than 2- 3% of the market cap.

KUNAL SHAH (00:41:51):
So we are mostly, and I'm not saying India has this fabulous history of building very, very profitable tech companies.

KUNAL SHAH (00:41:57):
We are probably the first generation that will have to prove ourselves to be very large profitable companies.

KUNAL SHAH (00:42:02):
But we are still figuring out what this means.

KUNAL SHAH (00:42:05):
And the fact that this question, by the way, I can tell you one thing that, I have been asked this question by people on Twitter way more than any of my investors have ever asked me this question. This also creates an arbitrage for entrepreneurs who can actually build businesses and have the ability to raise capital and prove their business model with very high revenue growth rate and build large brands and so on and so forth.

KUNAL SHAH (00:42:29):
But I find it fascinating as well.

KUNAL SHAH (00:42:32):
Also, one thing we see fascinating in India is that there is an immense amount of trolling and doubt that will come in your comments no matter what you do.

KUNAL SHAH (00:42:42):
So if you see any founder in India, they'll post something about the thing, the comments will rarely have appreciation.

KUNAL SHAH (00:42:50):
So it feels sad because, when you see global companies do stuff, Indians will lose their shit on Apple Vision Pro and all this stuff and Twitter will go gaga over it.

KUNAL SHAH (00:43:01):
But I think when it comes to...and I believe envy is hyperlocal.

KUNAL SHAH (00:43:08):
We do not envy Elon Musk for all the stuff he does because he's so far away.

KUNAL SHAH (00:43:13):
But we envy our own because they were just like us not many years ago.

KUNAL SHAH (00:43:19):
And therefore envy is like wifi.

KUNAL SHAH (00:43:23):
It's like a hyperlocal service.

LENNY RACHITSKY (00:43:25):
How do you stay positive and focused and not let that stuff bring you down?

LENNY RACHITSKY (00:43:31):
And do you have advice for founders in India that are dealing with the same sort of feedback?

KUNAL SHAH (00:43:35):
It's funny the number of calls I've got from founders who start getting hate. I’m the go-to person to get these call because they've seen me get it for many more years.

KUNAL SHAH (00:43:45):
And I tell people that we couldn't have made it this far if we cared about criticism of everybody versus people who've done better than us.

KUNAL SHAH (00:43:58):
If somebody who's done anything better than me gives me any amount of criticism, I will absolutely flip and make all the changes and evolve.

KUNAL SHAH (00:44:08):
And I seek feedback all the time from people.

KUNAL SHAH (00:44:12):
But if I start taking feedback from everybody who does not understand the nuance and empathize with what I'm doing, I'm not saying that we should not take customer feedback, that's very different.

KUNAL SHAH (00:44:19):
But let's say somebody commenting about your business, who does not understand the nuance of it, you can't be reacting to everything.

KUNAL SHAH (00:44:27):
And I often tell people that there's a reason elements with lower valencies are called noble gases because they're hardest to get reactions from.

LENNY RACHITSKY (00:44:38):
That's over my head, but I love it anyway.

LENNY RACHITSKY (00:44:42):
It's so interesting.

LENNY RACHITSKY (00:44:43):
I love all these elements you're pointing out of how different building in India is. I think people in the US have no idea about it.

LENNY RACHITSKY (00:44:49):
And so I appreciate you getting into all these little elements.

LENNY RACHITSKY (00:44:53):
Is there anything else around the Indian market that may surprise people before we go in a different direction about building a startup there?

KUNAL SHAH (00:44:59):
For all the challenges, India remains the most promising market that one can be building for right now because everything is going our way.

KUNAL SHAH (00:45:07):
We have all sorts of digital public infrastructure, government support, all these great people doing extraordinary things, apart from the Twitter noise.

KUNAL SHAH (00:45:17):
And Twitter is designed for outrage getting likes.

KUNAL SHAH (00:45:21):
So I wouldn't read too much into it.

KUNAL SHAH (00:45:23):
But I think all of us are doing well because we have an audience set, an evolved ecosystem that is fully supporting us and really taking it forward.

KUNAL SHAH (00:45:34):
So I think I wouldn't want to be anywhere else in building because of this extremely vibrant, crazy opportunity that one can learn from.

KUNAL SHAH (00:45:43):
However, I often wish that I could get a one month internship with Brian and learn how to do things.

KUNAL SHAH (00:45:51):
And I've never had the luxury.

KUNAL SHAH (00:45:53):
I can only watch his podcast with you to learn a few things, but what if I got a chance to be there?

KUNAL SHAH (00:45:58):
And I miss that part where I've never been really trained by these extraordinary product brains or even observed them make decisions.

KUNAL SHAH (00:46:08):
So I recently posted one thing that the word ‘operation theater’ comes because operating used to be a public process and people used to pay money to watch surgeries and see all the bloody gory stuff and even before anesthesia was born.

KUNAL SHAH (00:46:21):
And there's so much joy in seeing somebody do their action.

KUNAL SHAH (00:46:26):
And I wish there was a theater for Brian taking a product decision, Zuck taking a hard call on killing a product or seeing Tim rejecting all the ideas that they have before the GTM of a product.

KUNAL SHAH (00:46:42):
I think we could benefit so much from that.

KUNAL SHAH (00:46:45):
And unfortunately it remains in very small circles.

KUNAL SHAH (00:46:47):
And like I said, the reason I said you do a fabulous job of removing some of the information asymmetry and kind of making it more democratic.

KUNAL SHAH (00:46:54):
But there is so much more that we all could learn.

KUNAL SHAH (00:46:57):
And I feel extremely envious of many people who have the opportunity to work with the best of the best because, many of us from India never had the luxury. We had to figure out everything on our own.

LENNY RACHITSKY (00:47:10):
Wow.

LENNY RACHITSKY (00:47:10):
How cool would that be just to have a camera in some of those meetings just as a learning experience, because very few people are in those rooms and there's so much to learn.

LENNY RACHITSKY (00:47:21):
I think though people will find, “Holy shit, one, this is how decisions are made, what is going on?”

LENNY RACHITSKY (00:47:26):
And two is , “I don't want to work for this person.

LENNY RACHITSKY (00:47:29):
This sounds very difficult and stressful.”

LENNY RACHITSKY (00:47:33):
Those are probably some takeaways that will emerge.

LENNY RACHITSKY (00:47:36):
Kind of along these lines, something that comes up a lot in your talks and work is curiosity.

LENNY RACHITSKY (00:47:43):
You have a show called CRED curious.

LENNY RACHITSKY (00:47:46):
You often talk about the power of curiosity.

LENNY RACHITSKY (00:47:48):
I'm just curious, why is curiosity so important to you and why is it important for other people to always stay curious and what value is there?

KUNAL SHAH (00:47:57):
I think a curious person is somebody who is constantly demonstrating that they are not proud of their expertise, and they will demonstrate extraordinary amounts of excitement when they face a problem which they have no clue how to solve.

KUNAL SHAH (00:48:17):
And therefore a lot of people stop growing because they want to constantly demonstrate their expertise versus demonstrating their curiosity.

KUNAL SHAH (00:48:27):
Because, curiosity should come from security because imagine- I'm the founder, CEO of this company and this group of 60 people on WhatsApp, somebody posts something and asks a dumb question, “What does this word mean?”

KUNAL SHAH (00:48:41):
You need to have the security to feel okay with it, but a lot of people out off insecurity try to demonstrate expertise and do it or Google to not ask these people.

KUNAL SHAH (00:48:52):
And I think that slows down the compounding growth and I think it keeps you from being very good at adapting.

KUNAL SHAH (00:49:02):
So it's funny, I was recently. GPT is my favorite thing to keep asking random questions because now I don't need to really worry about Google having those questions answered around because I can ask the GPT.

KUNAL SHAH (00:49:12):
So I recently asked the question: which species or animals have survived for more than 100 million years without changing too much and what is common in all of them?

KUNAL SHAH (00:49:22):
So GPT came up with an interesting answer which says that sharks, horseshoe crabs, crocodiles, and all of these animals have survived to do this thing.

KUNAL SHAH (00:49:34):
So three distinct traits were, one, ability to reduce metabolism at will.

KUNAL SHAH (00:49:43):
It's fascinating.

KUNAL SHAH (00:49:45):
I can bring down my metabolism by 1:20 or a crazy, crazy scale that they can bring the metabolism down.

KUNAL SHAH (00:49:54):
By the way, ancient yogis have demonstrated this as well.

KUNAL SHAH (00:50:00):
It comes from the same yogic practice.

KUNAL SHAH (00:50:02):
The second thing is about, and if you think about companies, the context is the same.

KUNAL SHAH (00:50:06):
If COVID came, you could slow down your metabolism and survive, right?

KUNAL SHAH (00:50:12):
Or you burned your way out and disappeared.

KUNAL SHAH (00:50:16):
The second thing that was interesting was the very high conversion rate on every attempt to secure food.

KUNAL SHAH (00:50:25):
They don't go around chasing randomly and doing things.

KUNAL SHAH (00:50:27):
They have a very high conversion rate, which means high judgment and the deadliest bite.

KUNAL SHAH (00:50:35):
So they'll not chase many options, but if they chase something, they will have the biggest bite and they'll convert it.

KUNAL SHAH (00:50:41):
And the third thing that was more interesting was that they have survived all sorts of crazy environmental changes, just adapting. And adaptation comes from curiosity.

KUNAL SHAH (00:50:56):
And you could see those people.

KUNAL SHAH (00:50:57):
In COVID, there were two sets of people, who were completely gone into a shell and there were those who were curious.

KUNAL SHAH (00:51:03):
“Okay, so what do I do with this?”

KUNAL SHAH (00:51:05):
“What happens now?”

KUNAL SHAH (00:51:06):
“Do I need to change something?”

KUNAL SHAH (00:51:07):
“Do I need to tweak something?”

KUNAL SHAH (00:51:09):
So the ability to change very quickly.

KUNAL SHAH (00:51:13):
I often feel that curiosity is that demonstration of the ability to adapt and learn, and you only create more information asymmetry.

KUNAL SHAH (00:51:25):
To me, wealth is nothing but information asymmetry.

KUNAL SHAH (00:51:27):
All the best companies in the world have unfair information asymmetry.

KUNAL SHAH (00:51:33):
And that comes from curiosity. Because you're constantly collecting dots, connecting dots, collecting dots, connecting dots, and end up creating this unique edge for yourself and information asymmetry for yourself.

KUNAL SHAH (00:51:48):
And if you assume that “I have collected enough,” no human life is going to be enough to connect and connect all the dots.

KUNAL SHAH (00:51:56):
We'll never be able to get..

KUNAL SHAH (00:51:58):
And sometimes I envy the stuff that you do because you are efficiently connecting and collecting dots by having the luxury of all these people to talk to, and you are making more dots getting connected.

KUNAL SHAH (00:52:12):
So your information asymmetry is growing.

LENNY RACHITSKY (00:52:14):
Wait until you IPO, and then someday maybe leave CRED and then you could start this podcast with everyone like this and connect all the dots.

LENNY RACHITSKY (00:52:22):
And I think that's a reference to Danny Meyer who's the founder of all these fancy restaurants and big on hospitality and has this phrase “Always be collecting dots”, I think ABCD, I’ll link to that.

LENNY RACHITSKY (00:52:33):
Yeah.

LENNY RACHITSKY (00:52:35):
Okay.

LENNY RACHITSKY (00:52:35):
Wait, this is really interesting, this list of what are the common traits of the most long-lasting animals?

LENNY RACHITSKY (00:52:41):
They can lower their metabolism at will, they have a high conversion rate to get food, and they've survived many types of environments.

LENNY RACHITSKY (00:52:49):
And I think there's a lot you can transform as you've done, to startups and leaders.

LENNY RACHITSKY (00:52:54):
This could be its own…

LENNY RACHITSKY (00:52:55):
if you haven't written about this, this would be a cool blog post.

LENNY RACHITSKY (00:52:59):
I'm curious who you look up to in business, either in India and outside India.

LENNY RACHITSKY (00:53:05):
Who comes to mind where you're like, I really inspired, I'm inspired by these folks?

KUNAL SHAH (00:53:10):
I often tell people that I hate the word ‘favorite’ because it tells me to become limited in my mind.

KUNAL SHAH (00:53:16):
So I stay away from ‘favorite’, but I learn all the time from everybody.

KUNAL SHAH (00:53:22):
And there are so many people to learn from across the world and in history, in the recent past and every time you'll discover fascinating, extraordinary things about them.

KUNAL SHAH (00:53:35):
So I don't think I have a person.

KUNAL SHAH (00:53:38):
I am this person who thinks about about: ”How did they solve this hard problem.”

KUNAL SHAH (00:53:42):
So one of the things that we started doing recently and not very ritualistic about it so far is, I ask myself and my key reportees every month, we go around the table and ask ourselves, ”What are the hardest problems we solved last month?”

KUNAL SHAH (00:54:00):
And it's very hard to come up with an answer.

KUNAL SHAH (00:54:04):
And if you do this to the product leaders, just go around and ask, “What are the hard problems you solved last month?”

KUNAL SHAH (00:54:11):
You'll realize that we all stay very busy and displacement is hard.

KUNAL SHAH (00:54:15):
But if you notice extraordinarily successful people, they'll have a lot more content to talk about every month, every quarter because they're obsessed with making that big displacement and it does not come by being busy.

KUNAL SHAH (00:54:35):
And that's another thing that you cannot chase the big thing.

KUNAL SHAH (00:54:37):
You don't see a crocodile being busy.

KUNAL SHAH (00:54:40):
You see a crocodile just waiting patiently at the watering hole for that best meal and have the deadliest bite for that.

KUNAL SHAH (00:54:49):
So the beautiful definition of predators I read was “one who burns the least amount of calories to earn the most amount of calories.”

KUNAL SHAH (00:54:59):
So how do you become that?

KUNAL SHAH (00:55:00):
And I think when I meet people who are extraordinary at that, and it comes in all shapes and forms, I learn something from them.

LENNY RACHITSKY (00:55:07):
So in these meetings you have, are you judging people's success based on how many hard problems they solve?

LENNY RACHITSKY (00:55:13):
Now that they've heard this, they're going to be like, I need more.

KUNAL SHAH (00:55:17):
Because if you're a senior, what is the role of a senior person?

KUNAL SHAH (00:55:21):
You have to be the chief problem solver.

LENNY RACHITSKY (00:55:24):
I love that.

LENNY RACHITSKY (00:55:24):
I often think of leaders as professional firefighters who have just endless fires to put out.

LENNY RACHITSKY (00:55:31):
Kind of along the lines of people and where you learn from, are there any sources of content?

LENNY RACHITSKY (00:55:36):
This is actually an audience question on Twitter.

LENNY RACHITSKY (00:55:38):
Anurag Verma asks this, “What are your favorite sources of content to learn from in terms of what's happening in the world and what to pay attention to?”

KUNAL SHAH (00:55:47):
I wish I could think of an answer.

KUNAL SHAH (00:55:50):
My method of collecting information is mostly about, I come up with conjectures in my head and then I go all over the place to find out if there is proof if what I'm saying is true or not.

KUNAL SHAH (00:56:04):
For example, I recently came up with a conjecture that everybody who has been successful in the history of business of vices, historically has done a lot of philanthropy to create a good image for themselves, and therefore is being treated as a respected citizen versus being treated as a person who did vices to make wealth.

KUNAL SHAH (00:56:24):
And then I asked GPT to come up with 50 people who did that and what were their vices?

KUNAL SHAH (00:56:30):
How did they change the reputation by doing lots of philanthropy and all of that stuff?

KUNAL SHAH (00:56:36):
Then a thing happens.

KUNAL SHAH (00:56:37):
And then I research in all sorts of directions. And I have no boundaries if I go to chemistry or physics or human behavior to discover some universal principles.

KUNAL SHAH (00:56:48):
So my method of learning is to constantly come up with conjectures from the dots that you have connected and then absolutely work hard to find proof of it and then use that to connect to the next dot.

KUNAL SHAH (00:57:01):
So I often tell people that every book you read makes your brain poorer to read the next book.

KUNAL SHAH (00:57:10):
That's the purpose of books, but that's true for every single thing we learn.

KUNAL SHAH (00:57:13):
It makes our brain poorerfor the next thing that we are supposed to learn.

LENNY RACHITSKY (00:57:17):
Is there a recent example of that where you got super sucked into some topic?

KUNAL SHAH (00:57:20):
Well, it's my daily life.

KUNAL SHAH (00:57:22):
I get sucked into topics every now and then.

KUNAL SHAH (00:57:26):
For example, I've been thinking about second order effects of AI and what happens to countries and jobs and how to expect some of these things to change, not change, rate of change, rate of skill change.

KUNAL SHAH (00:57:39):
I got recently obsessed with what happens to lab grown diamonds if they become big?

KUNAL SHAH (00:57:44):
Does it kill diamonds?

KUNAL SHAH (00:57:44):
Does it make diamonds bigger?

KUNAL SHAH (00:57:46):
And then I looked at parallels.

KUNAL SHAH (00:57:48):
So, the pearl industry was very big before culture.

KUNAL SHAH (00:57:53):
Cultured pearls  came and the high status of pearls disappeared because everybody could have pearls.

KUNAL SHAH (00:57:59):
But not too long ago, pearls were a very royal thing . Every prince and princess used to have pearls around them, but as soon as it was easy to manufacture in a lab, it lost its value.

KUNAL SHAH (00:58:13):
So then  I think should I be shorting or going long on diamonds thinking about what happens?

KUNAL SHAH (00:58:19):
But there'll be a temporary period of making a lot of money on lab grown diamonds, which will kill... it'll become parasitic on the status of diamonds and destroy all of the profit pools.

LENNY RACHITSKY (00:58:31):
You heard it here first, time to buy some diamond futures.

LENNY RACHITSKY (00:58:35):
I feel like there's no one in the world ChatGPT impacted more than you considering how much you want to spend digging into random topics.

KUNAL SHAH (00:58:43):
I often wonder, Lenny, that if you took the most serious people and made their GPT searches public, a lot of people will learn because the problem of GPT is now it'll make the people with great questions do well, versus people who are looking for basic answers.

KUNAL SHAH (00:59:00):
So I think the world is going to be unfair to people who will ask great questions.

LENNY RACHITSKY (00:59:05):
Interesting.

LENNY RACHITSKY (00:59:06):
Okay.

LENNY RACHITSKY (00:59:06):
Well, I got to ask you, is there any advice you have for asking great questions that has helped you in your work and career and life?

KUNAL SHAH (00:59:14):
Whenever somebody has many choices and they make the right choice in whatever domain they have.

KUNAL SHAH (00:59:21):
For example, let's say you could hire anybody but you hired great people, or let's say you could have married anybody, but you married a great person and so on and so forth. Everybody has many choices to make.

KUNAL SHAH (00:59:32):
How do they make choices for that domain of expertise?

KUNAL SHAH (00:59:38):
And I think that is the most, and many times they're not going to be able to explain how they make great choices.

KUNAL SHAH (00:59:43):
They'll have to really go into that because they don't really have their mental models figured out.

KUNAL SHAH (00:59:49):
They cannot articulate, they cannot coach, they cannot explain.

KUNAL SHAH (00:59:51):
But if you can figure out how they make great decisions in general, in whatever domain of work they're doing, you'll find many interesting insights coming over there.

KUNAL SHAH (01:00:01):
The other good question to ask is about second order thinking.

KUNAL SHAH (01:00:06):
What do they think will happen to the world and why did they come to that conclusion?

KUNAL SHAH (01:00:11):
And you see that full chain of thoughts is very powerful.

KUNAL SHAH (01:00:15):
For example, second order thinking is known to be the most powerful trait to predict the success of somebody.

KUNAL SHAH (01:00:22):
But I often wonder what happened in the childhood of people who became great at second order thinking.

KUNAL SHAH (01:00:30):
And that question is not fully discovered or discussed yet.

KUNAL SHAH (01:00:34):
And I've found some loose examples such as if you played strategy games or only physical games as a strong correlation to building

KUNAL SHAH (01:00:42):
So rigor came from physical games, but second order thinking came from playing strategy games as a kid.

KUNAL SHAH (01:00:48):
And if you had both, you could do really well in general because you have discipline and second order thinking together.

KUNAL SHAH (01:00:55):
Then did you ever have an exercise of looking at history?

KUNAL SHAH (01:01:01):
For example, one of the things I recommend for parents to do with their kids, I call it the ‘Whyfi school’, is ask them  one ‘why’ question every meal and let them come back with answers the next day.

KUNAL SHAH (01:01:15):
For example, “Why do humans wear jewelry” and ”Why is something a certain way?”

KUNAL SHAH (01:01:23):
And let them go into the full depth of history and find out.

KUNAL SHAH (01:01:29):
Why is it so expensive to advertise in the Super Bowl?

KUNAL SHAH (01:01:32):
And so on and so forth.

KUNAL SHAH (01:01:33):
You just take one question.

KUNAL SHAH (01:01:34):
And if you train them on why, they evolve at a very different rate because how, what are the questions which do not evolve at a much higher rate, because ‘why’ is the deep question and it breaks a lot of things in your head.

KUNAL SHAH (01:01:48):
Or another question about origin stories that “How did elevators come into being?” and "what made your phones happen?”

KUNAL SHAH (01:01:54):
“What made microphones happen and why is it called microphone and why is it called a phone?”

KUNAL SHAH (01:01:59):
And if you just want to go into this depth, you'll see people build second order thinking automatically because either you go into history and see second order thinking coming along with that, or you play games that train your brain for second order thinking with the spectrum.

KUNAL SHAH (01:02:13):
But that's a broad range of things that I think people should be asking.

LENNY RACHITSKY (01:02:17):
I'm looking forward to Kunal’s children's raising book, like a book to help you raise kids.

LENNY RACHITSKY (01:02:23):
This could be your future.

KUNAL SHAH (01:02:24):
I don't have kids so I can run experiments on everybody else's kids.

KUNAL SHAH (01:02:27):
So it's a great thing to do.

LENNY RACHITSKY (01:02:29):
I feel like with these questions, I think the rule has to be you can't just ask ChatGPT for the answer if the block it-

KUNAL SHAH (01:02:34):
Actually it's not bad.

KUNAL SHAH (01:02:36):
I think you should encourage it because we have to assume that we are going to be all co-pilots of AI now.

KUNAL SHAH (01:02:42):
What you have to do is derive the second order insight that, “Okay, this is true.

KUNAL SHAH (01:02:46):
Where is the similarity of this in somewhere else?”

KUNAL SHAH (01:02:49):
Give me an example of this found somewhere else, and so on and so forth.

LENNY RACHITSKY (01:02:54):
Amazing.

LENNY RACHITSKY (01:02:55):
Okay.

LENNY RACHITSKY (01:02:56):
I have just a couple more questions before we get to our very exciting lightning round.

LENNY RACHITSKY (01:03:00):
First, let's visit the contrarian corner.

LENNY RACHITSKY (01:03:03):
I'm curious. What's something that you believe that very few other people would agree with you on and why do you hold that belief?

KUNAL SHAH (01:03:12):
Our understanding of wealth and what wealth is, is flawed.

KUNAL SHAH (01:03:16):
To me, wealth is nothing but storage of energy.

KUNAL SHAH (01:03:20):
And therefore the reason wealth is not zero sum is because energy is, and we are just finding  ways to convert energy to our advantage.

KUNAL SHAH (01:03:28):
We are the only species that has managed to convert all forms of energy to our advantage.

KUNAL SHAH (01:03:32):
Kinetic energy and fuel and sound and solar.

KUNAL SHAH (01:03:35):
No other species has done this.

KUNAL SHAH (01:03:37):
And therefore, since the industrial revolution, our wealth has gone like this and continues to be like that.

KUNAL SHAH (01:03:42):
AI and nuclear fission and all this stuff will kind of take us right there.

KUNAL SHAH (01:03:47):
So I have a strong view that we will never, never have equality of wealth.

KUNAL SHAH (01:03:55):
In fact, chasing that is actually a bad idea.

KUNAL SHAH (01:03:58):
But if you let people do well and chase wealth, they have enough wealth for everybody else and we could help a lot of people out.

KUNAL SHAH (01:04:06):
And I think it's complicated because we can have all these democratic arguments that wealth is concentrated and all that, but that's the physics of wealth.

KUNAL SHAH (01:04:16):
It'll always be concentrated.

KUNAL SHAH (01:04:18):
You change these mediums, companies, countries.

KUNAL SHAH (01:04:23):
To me, wealth is nothing but an entropic complexity that'll keep changing its form and shape.

KUNAL SHAH (01:04:29):
You can keep fighting it or accept its physics and reap the benefit of that physics.

LENNY RACHITSKY (01:04:34):
I think Elon had this interesting point that wealth is just a database where everyone's wealth I guess is just a row in the database and here's how much everyone has and you're just transferring numbers around and that's the whole economy.

KUNAL SHAH (01:04:49):
No, but the nuance that is important is that you can actually increase the database size infinitely.

LENNY RACHITSKY (01:04:54):
That's true.

KUNAL SHAH (01:04:55):
And therefore his vision of the sun's energy, if you really convert all the energy to our advantage, the amount of wealth we will create for humans is disproportionate.

KUNAL SHAH (01:05:04):
And all the species that are managed to collaborate and cooperate to create wealth, for example, let's define wealth as biomass.

KUNAL SHAH (01:05:12):
So let's say ants and bacteria and humans are the only few things that have the largest biomass on this planet because we figured out how to make energy work to our advantage.

LENNY RACHITSKY (01:05:23):
Wow.

LENNY RACHITSKY (01:05:24):
I love all the directions we've gone.

LENNY RACHITSKY (01:05:27):
Probably the last question, is there a story of failure in your career that would be interesting to share?

LENNY RACHITSKY (01:05:34):
Something that taught you an important lesson?

KUNAL SHAH (01:05:36):
It's a series of failures.

KUNAL SHAH (01:05:39):
I think there is no escape for anybody who's done anything in life, not failed a lot, like every day, every thing.

KUNAL SHAH (01:05:46):
But I would say that many initiatives, many products, companies that I've built have absolutely failed, hirings that have failed, trust broken, betrayals.

KUNAL SHAH (01:06:01):
So I think there is no end to it.

KUNAL SHAH (01:06:04):
But I think entrepreneurs have this weird ability to forget about failures and almost turn that into a lesson that you hold, and you forget the story.

KUNAL SHAH (01:06:21):
For example, COVID has literally no memory for me.

KUNAL SHAH (01:06:24):
I just don't remember what was COVID.

KUNAL SHAH (01:06:27):
It's just a blank in my head right now.

KUNAL SHAH (01:06:30):
And I think that humans are great at forgetting the memory of failure, but remember the lesson from failure.

KUNAL SHAH (01:06:36):
But I think I'm constantly learning, and I often believe that life is too short to make all our mistakes ourselves.

KUNAL SHAH (01:06:43):
So we should be learning from other people's failures as well.

KUNAL SHAH (01:06:46):
And a lot of times we don't do that because we believe that we are special, nothing like that will happen to us, but as humans, we should be learning.

KUNAL SHAH (01:06:55):
I would say that my life started from a failure.

KUNAL SHAH (01:06:58):
My family went through a severe financial crisis.

KUNAL SHAH (01:07:01):
I had to start working from age 15 and I feel till date, I'm just trying to escape that failure that happened in the family.

KUNAL SHAH (01:07:10):
So I think many of us are just fighting that initial large failure that we've had and don't want to be anywhere near that.

KUNAL SHAH (01:07:21):
And although we are significantly far away from that, the feeling is exactly that.

LENNY RACHITSKY (01:07:27):
Circles back to one of our first few questions about the chips on shoulders driving a lot of motivation.

LENNY RACHITSKY (01:07:33):
There's this phrase, ”Chips on shoulders drive chips in pockets.”

KUNAL SHAH (01:07:39):
That's interesting.

LENNY RACHITSKY (01:07:40):
Yeah.

LENNY RACHITSKY (01:07:40):
Is there anything more you want to share about that early challenge you ran into or is that something you've shared often?

KUNAL SHAH (01:07:46):
No, I mean I've shared that enough, but I used to not talk about it before because I used to think that I would get some sympathy for that.

KUNAL SHAH (01:07:54):
And only in the recent past did I speak about it because I want people to realize that I was not some gifted kid who had some rich parents who made me extraordinarily bright and put me in great schools and colleges and I made my way through that.

KUNAL SHAH (01:08:12):
I used to not talk  about it earlier because there's a lot of tendency to give sympathy to those people who say, "Oh, this guy had struggled."

KUNAL SHAH (01:08:17):
And I don't want to be given any credit for playing that poverty card or this card or struggling for food card.

KUNAL SHAH (01:08:29):
That's not an excuse.

KUNAL SHAH (01:08:32):
There are so many people in the world who've done extraordinarily well because they had the gift of struggle.

KUNAL SHAH (01:08:37):
And I often tell people that this is the biggest curse of successful parents, that that's the only gift they'll not be able to give to their kids, the gift of struggle that they had.

LENNY RACHITSKY (01:08:46):
Wow.

LENNY RACHITSKY (01:08:47):
I think about that a lot.

LENNY RACHITSKY (01:08:47):
We have a kid, he's eight months now, and so I'm trying to figure out the balance of struggle versus making life easy and great, a new challenge for me to figure out.

LENNY RACHITSKY (01:08:57):
Before we get to a very exciting lightning round, is there anything else, Kunal, you wanted to share or leave listeners with?

LENNY RACHITSKY (01:09:02):
Anything?

LENNY RACHITSKY (01:09:02):
Any last nuggets of thoughts?

KUNAL SHAH (01:09:04):
Well, I would love for the listeners from different fields of product to share what you're learning without being fearful of the judgment of your peers, because there are many, many people who are learning only because you share your evolution and your thoughts.

KUNAL SHAH (01:09:22):
And I believe that a lot more could be contributing.

KUNAL SHAH (01:09:25):
And a lot of your listeners are really bright people.

KUNAL SHAH (01:09:28):
If they all shared, many people from many places in the world would learn and achieve some amount of success.

KUNAL SHAH (01:09:38):
Thanks to your sharing.

KUNAL SHAH (01:09:39):
Amazing.

LENNY RACHITSKY (01:09:40):
With that, we've reached our very exciting lightning round.

LENNY RACHITSKY (01:09:43):
Are you ready?

KUNAL SHAH (01:09:45):
All set.

LENNY RACHITSKY (01:09:46):
Let's do it.

LENNY RACHITSKY (01:09:47):
First question, what are two or three books that you've recommended most to other people?

KUNAL SHAH (01:09:53):
It keeps changing a lot, but my books are usually around understanding human behavior.

KUNAL SHAH (01:09:58):
And I keep changing based on the person, but I think it's the biggest subject.

KUNAL SHAH (01:10:03):
All our customers, all our investors, all our employees, all our relationships are all humans.

KUNAL SHAH (01:10:08):
And the subject that we are weakest on is human behavior.

KUNAL SHAH (01:10:11):
And how do we live this life?

KUNAL SHAH (01:10:13):
We are playing life on extremely hard mode if you don't learn human behavior.

KUNAL SHAH (01:10:17):
So I would say that's one thing.

KUNAL SHAH (01:10:19):
The second thing, evolutionary biology, teaches a lot about how species evolve and how they make decisions and what are the core motivations that drive everybody.

KUNAL SHAH (01:10:28):
So that's another one I would recommend.

KUNAL SHAH (01:10:30):
And I don't want to make a recommendation because I can barely finish a book to be honest.

KUNAL SHAH (01:10:36):
So I believe in drifting and getting deeper into topics.

KUNAL SHAH (01:10:39):
So understanding the topics versus trying to say, give me these three books and I'm going to be good.

KUNAL SHAH (01:10:43):
And the last one I would say, is that anything that can make you learn something about their journey versus their success.

KUNAL SHAH (01:10:53):
So sometimes autobiographies are too celebratory in some ways, but if you can just kind of understand how… any book that can teach you about how people recover from a setback in great detail is a great book to learn from.

LENNY RACHITSKY (01:11:11):
An audience member on Twitter actually asked a similar question along these lines, if there's one book that you could read over and over and over, what would that be?

LENNY RACHITSKY (01:11:20):
Is there one?

KUNAL SHAH (01:11:21):
I absolutely don't believe in reading over and over because I believe that we are evolving.

KUNAL SHAH (01:11:29):
You might discover the same stuff coming from different books and you would say, "Oh, I can categorize this in my brain again and again."

KUNAL SHAH (01:11:34):
But I think we tend to become believers, and it becomes too religious if you repeat.

LENNY RACHITSKY (01:11:47):
Yeah.

LENNY RACHITSKY (01:11:49):
Next question, do you have a favorite recent movie or TV show that you've really enjoyed?

KUNAL SHAH (01:11:54):
I love Oppenheimer because of the struggles and Nolan's craft of making the movies, but nothing in the recent past that I feel is right up there.

LENNY RACHITSKY (01:12:05):
Do you have a favorite interview question that you like to ask candidates that you're interviewing?

KUNAL SHAH (01:12:11):
I like to ask a hypothetical second order thinking question.

KUNAL SHAH (01:12:15):
For example, if everybody who has taken a COVID vaccine dies tonight, what happens in 12 months from now?

KUNAL SHAH (01:12:23):
Can you explain the world- from what happens to money, what happens to law?

KUNAL SHAH (01:12:28):
What happens to countries?

KUNAL SHAH (01:12:29):
What happens to the military?

KUNAL SHAH (01:12:30):
What happens to the stock market?

KUNAL SHAH (01:12:32):
What happens to the order of things?

KUNAL SHAH (01:12:35):
And I would say less than 10% of really smart people can have really good answers.

KUNAL SHAH (01:12:43):
So it tells you how good they are at second order thinking.

KUNAL SHAH (01:12:48):
But the questions can keep changing.

KUNAL SHAH (01:12:49):
For example, if you said that, what if arranged marriages were banned in India, and you got capital punishment for doing arranged marriages?

KUNAL SHAH (01:12:57):
What happens to the country?

KUNAL SHAH (01:12:59):
How do we change from there?

KUNAL SHAH (01:13:01):
Like some absurd scenarios, but then what happens after that?

LENNY RACHITSKY (01:13:05):
Not to give away your secret sauce, but what do you look for in an answer that gives you a sense there?

KUNAL SHAH (01:13:09):
The range of things that they could go into and think about-  if this happens, B happens and then C happens.

KUNAL SHAH (01:13:18):
The leaps they could make.

LENNY RACHITSKY (01:13:20):
And just so people understand, when you're talking about second order thinking, what's the simplest way to describe that concept?

KUNAL SHAH (01:13:26):
I think the simplest way to think about this is being able to correctly judge the butterfly effect of an event as close as possible.

KUNAL SHAH (01:13:37):
For example, a lot of people in the stock market use that to say how stocks will go up and down.

KUNAL SHAH (01:13:44):
There's something that has happened in the market.

KUNAL SHAH (01:13:46):
“Oh, there is a war now with Russia, then what happens to the market?”

KUNAL SHAH (01:13:52):
Can you be good at predicting that?

KUNAL SHAH (01:13:54):
But in everything in life, if this happens, a lot of people hate this because it's very taxing to the brain.

KUNAL SHAH (01:14:02):
The brain absolutely hates second order thinking unless you've trained your brain with second order thinking all the time that it looks forward to it.

KUNAL SHAH (01:14:10):
So you convert this into a hate versus a reward cycle, and that comes with probably doing it early on in your life.

KUNAL SHAH (01:14:19):
Later on, people hate doing second order thinking.

LENNY RACHITSKY (01:14:22):
It is.

LENNY RACHITSKY (01:14:23):
Yes.

LENNY RACHITSKY (01:14:23):
That sounds like a lot of work for the brain.

LENNY RACHITSKY (01:14:26):
Okay.

LENNY RACHITSKY (01:14:26):
Just a few more questions.

LENNY RACHITSKY (01:14:27):
Do you have a favorite product that you've recently discovered and that you really love?

KUNAL SHAH (01:14:32):
I'm looking forward to my Vision Pro coming soon.

LENNY RACHITSKY (01:14:37):
It's a future favorite product.

LENNY RACHITSKY (01:14:39):
We have actually Boz from Meta coming on as the next guest in my recording.

LENNY RACHITSKY (01:14:43):
I'm not sure when they come out in sequence, but we're going to talk about his thoughts.

KUNAL SHAH (01:14:48):
The most fascinating thing that I saw was Zuck talking about the utility of Meta being better than Vision Pro and their product.

KUNAL SHAH (01:14:59):
And that's exactly going to work well for Apple because when you try to make the product more utilitarian, it loses status.

KUNAL SHAH (01:15:08):
And if you study animals, you realize that the one which gets the highest mating success is the one which can demonstrate the ability to waste resources and not be very efficient with resources.

KUNAL SHAH (01:15:20):
And therefore people who are known to buy a product that is wasteful will actually own higher status.

KUNAL SHAH (01:15:26):
And I think Zuck made it actually quite easy for Apple to demonstrate their superior positioning by saying that, "Oh, we are not as efficient, we are not as cheap.

KUNAL SHAH (01:15:35):
We are not for everybody."

LENNY RACHITSKY (01:15:37):
Wow.

LENNY RACHITSKY (01:15:37):
Just continue to blow minds even on our lightning round.

LENNY RACHITSKY (01:15:42):
Do you have a favorite life motto that you often come back to share with friends and family, find useful in work or in life?

KUNAL SHAH (01:15:50):
It's not a favorite motto, but I think we truly are transient and we are very lucky to have this life that we have and we have to make the most out of it.

KUNAL SHAH (01:16:01):
And all these struggles will mean nothing.

KUNAL SHAH (01:16:05):
I often tell people that you should wish for your life to be so great that you have collected the highest amount of content when you are old, and you have no end to the stories that you can talk about.

LENNY RACHITSKY (01:16:16):
That reminds me of a book I once read that really had an impact on me where somebody was trying to make a movie of their life and the producer was like, "There's nothing.

LENNY RACHITSKY (01:16:24):
There's no good movie here.

LENNY RACHITSKY (01:16:25):
You have not done enough interesting things."

KUNAL SHAH (01:16:27):
I love it.

LENNY RACHITSKY (01:16:29):
And so he turned his lens of what to do in life, by thinking what would make a great story.

LENNY RACHITSKY (01:16:36):
And so he just started to do a a great story, something where you overcome challenges and achieve something you wanted.

LENNY RACHITSKY (01:16:41):
And so that became his life motto.

LENNY RACHITSKY (01:16:43):
“I'm going to try hard things and overcome them.

LENNY RACHITSKY (01:16:45):
And that's going to be my life.”

KUNAL SHAH (01:16:47):
I love it.

KUNAL SHAH (01:16:47):
I love it.

KUNAL SHAH (01:16:47):
I love it.

LENNY RACHITSKY (01:16:48):
I'll link to that book in the show notes.

LENNY RACHITSKY (01:16:51):
Final question, do you have this series on Twitter that you call Monday Motivations?

LENNY RACHITSKY (01:16:56):
I'm curious what's motivating you these days?

KUNAL SHAH (01:16:58):
I find the internet is filled with all these people trying to give fake motivation and make money off that stuff.

KUNAL SHAH (01:17:04):
And it's almost like a drug for people to feel, ”Oh my God, there's motivation, I'm going to do well.”

KUNAL SHAH (01:17:11):
I just wanted to remind people that all success comes from an extraordinary amount of pain and struggle and hard work, and there is no shortcut to anything material coming in life.

KUNAL SHAH (01:17:22):
And so the Monday  motivation post comes as the anti-motivation post because the world is filled with... I believe that the biggest profit making scheme that I've seen in recent times is to tell people to love themselves and they'll pay you money for saying that.

KUNAL SHAH (01:17:40):
And I think the best way to love yourself is to keep evolving.

KUNAL SHAH (01:17:44):
So my motivation comes from evolution, connecting dots, solving harder problems than I've solved in the past.

KUNAL SHAH (01:17:51):
And I think life is ultimately a game where you want to feel that your levels have changed and your skills have changed constantly.

LENNY RACHITSKY (01:17:59):
Kunal, you are wonderful.

LENNY RACHITSKY (01:18:01):
Thank you so much for being here.

LENNY RACHITSKY (01:18:03):
Two final questions.

LENNY RACHITSKY (01:18:03):
Where can folks find you online if they want to reach out and follow up on some of this stuff?

LENNY RACHITSKY (01:18:07):
And how can listeners be useful to you?

KUNAL SHAH (01:18:09):
You can find me on social media.

KUNAL SHAH (01:18:10):
Look for Kunal Shah, you'll find me everywhere.

KUNAL SHAH (01:18:13):
I usually have a different personality on each social media.

KUNAL SHAH (01:18:16):
And in terms of being helpful, keep tagging me on interesting things that you discover that gave you that moment of, ”Oh my God, I did not know this.”

KUNAL SHAH (01:18:25):
I would love that.

LENNY RACHITSKY (01:18:27):
Amazing.

LENNY RACHITSKY (01:18:28):
Kunal, again, thank you so much for being here.

KUNAL SHAH (01:18:31):
Thank you so much for having me.

LENNY RACHITSKY (01:18:32):
Bye everyone.

LENNY RACHITSKY (01:18:32):
78:34Thank you so much for listening.

LENNY RACHITSKY (01:18:35):
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LENNY RACHITSKY (01:18:42):
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LENNY RACHITSKY (01:18:48):
You can find all past episodes or learn more about the show at lennyspodcast.com.

LENNY RACHITSKY (01:18:54):
See you in the next episode.