Ravi Gupta - Focus

Key Takeaways:

• Ravi Gupta, a partner at Sequoia, emphasizes the importance of "keeping the main thing the main thing" in building and investing in great businesses.
• He believes that it is crucial to prioritize and focus on one main goal, as having multiple goals can lead to middling progress and lack of progress on the most important task.
• Ravi learned the importance of this concept through his experience as CFO and COO at Instacart and realizes that it applies to both his professional and personal life.
• He recommends the book "How Will You Measure Your Life?" by Clay Christensen, which argues that people fail to live the lives they want for the same reason that companies fail: they focus on the short-term at the expense of the long-term.
• Ravi Gupta talks about the difficulty in implementing the "keeping the main thing the main thing" philosophy in business, particularly during his time at Instacart when they were losing money on every order and had an existential risk.
• He mentions that it was hard to get everyone focused on one thing without scaring them, especially when they didn't have the same level of knowledge about the risk.
• Even though it was a difficult time, it was a formative one for the company and that focusing on one thing builds shared purpose, pride and lifelong relationships.
• “Ultimately, what you should be able to do is your business should either have excellent metrics, and they can be input or output, excellent metrics (e.g. Rule of 40) and/ or the best people in the world that want to come work there.”
• Ravi talks about the importance of understanding intrinsic motivation when it comes to leadership and setting a main thing. He recounts a conversation he had with Mike Moritz, a board member at Sequoia, during an interview for Instacart. Mike spent an hour and a half asking Ravi about his family background, relationships, and feelings towards them. Ravi later asked Mike why he asked those questions and Mike replied that the only thing that endures is intrinsic motivation and understanding the source of that is critical.
• The best leaders are able to balance being tough but supportive in each moment, and are able to give honest feedback while still being there for their team members when they need it.
• Examples of leaders who embody this approach include Frank Slootman and Greg Kovacs, who are known for being demanding but also have the support and respect of those they lead.
• The first thing I'd say about Sequoia is I think Sequoia has a pretty strong belief that yesterday doesn't matter.
• “And great input metrics should show up as excellent financials. It's been on the input metrics, but soon, they should show up as excellent financial metrics. And of boring things like sequential operating leverage, and boring things like really doing well on rule of 40, and boring things like net dollar retention, being consistent and strong, I really believe, ultimately, businesses are going to be judged on their financials. The further that we get away from that, the more that we're lying to ourselves”
• Importance of retention being the single biggest thing. “Look, do they come back? Cut through everything else. Do they come back? And do they use it more and more?”
• Ravi joined Instacart on September 28th, 2015 and at his first board meeting on November 10th, the financials revealed that the company was losing $14 on every order, burning $12 million a month, and had less than a year of cash. Initially feeling fear and considering leaving the company, Ravi ultimately decided to stay and address the problem. They needed to focus on making money on every order.
• They did this by:
• Reducing the delivery fee: "We made the decision to lower our delivery fee and started to experiment with different pricing models. We knew that if we could lower the delivery fee, we could increase order volume and ultimately make more money."
• Optimizing the delivery routes: "We also focused on optimizing our delivery routes, making sure that our drivers were taking the most efficient routes and not wasting time or fuel."
• Cutting costs: They also focused on cutting costs in areas such as marketing and advertising, which allowed them to make more money on each order.
• Focusing on the most profitable markets: "We also made the decision to focus on the most profitable markets for us, such as the Bay Area and New York City, where we could make more money on each order."
• Increasing the prices of certain items: "We also increased the prices of certain items that we knew we could charge more for, such as fresh produce and organic products."
• Ravi emphasizes the importance of focus and mentions that pain is a sign that the exercise of focusing is being done correctly.

Transcript