On this episode of The Unlearn Podcast, listen in to Sam Jacobs of Pavilion share his thoughts on building valuable companies and communities with kindness in a dog eat dog world. In a free flowing conversation with Asher and Kelly, he also discusses his latest book, “Kind folks finish first” and shares interesting anecdotes from his career as a CRO at multiple companies.
[2:29] Sam talks about the reception for his latest book “Kind folks finish first”
[4:41] Starting from a place of giving without expecting something in return.
[10:12] On people never experiencing a downturn post 2010, and the need to reassess what’s important and how to measure and value success.
[13:48] The question of taking the pressure off to build valuable companies and focus on having fun as a core value.
[22:06] Navigating the dilemma - The path to take after raising too much money at too high of a valuation.
[27:06] The definition of value
[31:19] Revenue is what happens when you help people.
[36:22] Defining a Community
[49:12] The feeling of helping people is good and valuable
“When you put an idea out into the universe with enough force or emphasis, then there are people that it resonates with.”
Connect with Sam at sam@pavilion.com
Asher Mathew
00:17
To thrive in an era of digital transformation, you have to go to market differently. Let's find out how.
We're going to dive straight in; you know, like we're going to try to do the UN podcast; you know, there's no interest, we're just going to dive in.
Sam Jacobs
00:32
I'm ready. Work's done.
Asher Mathew
00:33
Well, this is going to be interesting because you have been somebody that I would say is one of the OG podcast hosts, and now you have to go out and podcast. How does that feel?
Sam Jacobs
00:43
It feels a lot better than having to host that, I can tell you that. So, if someone else has to do all the work, I enjoy it more.
Asher Mathew
00:53
It's like producing one of these things is the actual work; people make it look so easy, especially Chris Walker from Refine Labs. He's always extremely put together. They have this production thing, right? And I'm like, "Man, how many people do you have working on this thing?" I think they have six or seven people just working.
Sam Jacobs
01:14
In the video, that's his thing, like.
Asher Mathew
01:16
You and Gary V are probably alike, you know.
Sam Jacobs
01:22
I don't know about that. I'm happy to be here.
Asher Mathew
01:26
What is top of mind for you?
Sam Jacobs
01:26
You know, running my company's 2023 planning, and promoting my book which just came out; those are what I'm trying to be good at in my job. That's mainly what's on my mind.
Asher Mathew
01:38
You and 7,000 other executives.
Sam Jacobs
01:41
Exactly.
Kelly Sarabyn
01:44
How's the reception for your book? Well, first of all, we should say it's called "Kind Folks Finish First," and I have read the book and enjoyed it a lot. It's a great combination of a personal memoir and a business memoir, but also tactical business advice. So, I feel like it hit a nice combo there, and I saw it was a Wall Street Journal bestseller. But have you heard any feedback from the community? What are some of the more interesting things you've heard from people who read it?
Sam Jacobs
02:18
Well, I um, I mean, first, people are reading it, so that's like...
Kelly Sarabyn
02:23
Crazy.
Sam Jacobs
02:29
Mean honestly, it's just the fact that it resonates with people, you know? And it's people like I said, I mean honestly, it's one thing to sell books and to push a product and get it promoted and stuff like that.
But when people are texting pictures of the book on their dining room table or their coffee table, or when they're in personal moments of their lives, that's pretty cool. And, to your point, it is a combination of memoir, business book, self-help book, and kind of all of it wrapped into one. And I think for the people who have also struggled in their career, like me, I think it resonates.
It's just nice to know that it is connecting with some people, so I appreciate it.
Kelly Sarabyn
03:09
Congratulations. I think it's interesting for me to read about this coming from the partnerships world and the ethos you recommend here of starting from a place of giving without expecting something in return.
You have a sales background, and I don't think that's the ethos of a typical sales department, right? That's not how it is culturally.
Asher Mathew
03:38
You also offended all the salespeople listening.
Kelly Sarabyn
03:43
You have a sales background, too, Asher.
Asher Mathew
03:46
Too, you know, I'm like maybe second closest or distant closest, you know?
Sam Jacobs
03:51
Well, yeah, no, you're right. I mean, it's not common, I mean, that's sort of why I wrote it because a lot of things in my career started changing when I embraced these ideas.
I was doing them on the side, and I think there's probably a risk of when you call the book that and you start promoting it, there's a risk that people, I'm sure, are looking for the sides of me that are not kind, that don't follow those values and the purpose. And the point of the book isn't that I'm not perfect, nor am I a saint, nor am I immune from faults or flaws. The point of the book is that I'm riddled with them, but it's more than that.
Was just reading about my anagraham type and that's certainly part and parcel of my type, but the point is that, yeah, it's not a common idea espoused in sales, but it's the thing that people want and resonates with.
And I also think that there's a lot of what you think about like your unique selling proposition, your unique value proposition when you think about things on a personal basis that separates you from other people. It's also just a way to differentiate yourself.
I was on a different podcast last week with a live session. People were nodding along and talking about how they believed in the ideas in the book. After the session, there was an after-party and a guy was talking about how he believed in the book and its ideas, but he charged people by the call when they sought help or assistance. It was hilarious because he completely contradicted himself.
That's the point. Well, I'll say, "Oh yeah, that's a great idea; great lessons. It's just that my time is so valuable that I can't possibly afford to do it without charging someone.”
So, you know, even though people may not agree, I don't think they're widely adopted or accepted views just yet. And I also think there's lots of judgment because even for me, I do run a company; the company is for-profit.
We do need to charge our customers something; there's judgment involved, as with all things.
All exceptional people have to use their experience and wisdom to make decisions with imperfect information. This is one of those situations where you are trying your best.
Sometimes, as a consultant, you do have to charge; there is only so much you can give away for free if that is your core business. If it is me, there is only so much I can give away for free when I ultimately need more people to sign up for Pavilion to build a growing business. Thus, these things are not ironclad.
You know, binary ideas; they're almost like anchors there, like magnetic poles that you can move towards or away from to help orient thinking in the right way, just like any other set of values.
Asher Mathew
06:34
It sounds like you have the chapter two folks kinder finish first.
Sam Jacobs
06:41
We were joking with the publishers, they and I were joking and I was like, "Who should play me in the movie?" Then Shannon, one of the publishers, said, "Mark Ruffalo, I've already been thinking about that, which would be...
Kelly Sarabyn
06:53
There is a resemblance, and he is an affable guy by nature.
Sam Jacobs
07:00
And he’s self-deprecating, but mainly she's like, "You know, let's get ready for a book.” My favorite part about the Amazon thing is like, it says 'First Edition', and I'm like, “Oh, that's great. Maybe there'll be a second edition. Who knows?”
Asher Mathew
07:13
To give you a little bit of context, right? So, we decided to do this podcast because we felt like there were certain things people needed to unlearn.
This is being driven by the macro world we're in or the macro world we're trying to come out of and now we find ourselves in a different situation. But there are certain things that we should think about unlearning so that we can create mental space to learn.
That's why we said, "Okay, let's bring some people onto the podcast who have a perspective that's a little bit similar to what we're trying to accomplish."
Revenue-backed companies have a very different journey from going and being a part of a venture-backed company. I prefer the revenue-backed, bootstrap world because there's not enough pressure on you and you can build things that are meant to last and have our focus on creating value.
That's how we got to this point, and so we figured we'd bring you on.
Like, tell us a little bit about since you launched the book, have there been multiple experiences that you have been a part of? What are some of the cool experiences that signal that there is more work that needs to be done on this topic, or that there are some pockets of hope that people are already on this path?
Path of like being kinder and building something that is more based on values, rather than just profits. Let's start the conversation here and see where it goes.
Sam Jacobs
08:43
Well, to your point, when you put an idea out into the universe with enough force or emphasis, then there are people that it resonates. We are all probably active on LinkedIn and you can see more people articulating different kinds of ideas about how to build businesses.
Even within Pavilion and the CEO community that I run, there are a lot of people focused on building, as you said, Asher, revenue-based businesses. It has been cool to see more and more people align around this idea; I don't think it's just me.
But I think you see people like Ryan Walsh, and you see, for example, Seamus at Carabiner Group, and my friend James Mackey at Secure Vision. They're all building companies that, for whatever reason, may not have a venture opportunity. Or at least, it's not clear.
It's not an opportunity to raise money on a revenue multiple. Maybe there's an opportunity to raise money on an EBITDA multiple.
But then you see Justin Walsh and Scott Leest talking about all kinds of different people talking about, hey, there's an opportunity to build your own business that aligns with your values that don't necessarily need to triple or quadruple every year. And I think that's particularly important right now because I think that we've talked to a lot of people about how.
If you graduated college any time after 2009 or 2010, then you have never experienced a downturn. All you have known is quantitative easing and low-interest rates, which have spurred a lot of growth since the financial crisis began 13 or 14 years ago.
My point is that many people have only ever seen things going up, and they have high expectations for the future profitability of their business, even though the reality of their business today is far from that.
And so I think we're entering a period that is probably going to be extended, but it is at least probably going to last 12 months, if not 24 months, where people have to reassess, to your point of the title of the podcast, what is important to them, what they stand for, how they measure and value success, and what their time horizon is for how long they're going to give themselves to achieve whatever it is they're going to achieve. It's a really important lesson, and even within my company, we didn't have quite the year that we wanted to have this year, just like I'm not.
This is not one of those things where I'm lecturing people about how they are flawed and imperfect and holding myself up as an example of someone perfect. My company didn't hit our growth targets or revenue goals this year, but we are a company of some size and are looking ahead to next year.
The decision I have made, with the support of my investors, is that we have an opportunity to be profitable. If we can be profitable, we can control our destiny. We are at a size and scale where profitability on $20 million in revenue is pretty good.
And so instead of saying, "Hey, next year we're going to get to 30 and double again," sometimes you get used to espousing these growth targets because you can hit them. You may think you have the best business and you are well-positioned and have one of those special companies, but sometimes it's just because you feel obligated to orient your business, people, and team towards an idea about the growth that may not be realistic and may stretch the bounds of what is achievable.
Fixing the grammar mistakes: What does the market support? And so we're in this moment right now when I think a lot of us are taking a look at, okay, well what if we don't grow 50%? What if we break the rule of 40 and we're no longer the special company as dictated to us by OpenView or Bessemer or anybody else that's providing indices?
Does that mean for my sense of self, what does that mean for how I think about my company and am I okay with it if we can still control our destiny and be unprofitable? So I think that's a long-winded and rambling quasi-answer to your question, I suppose. But that's sort of what's been on my mind recently.
Asher Mathew
12:59
That's it, I guess. Just a quick saying: nobody had a good year, right? Regardless of what people say, even those who had a good year were aiming for a great year, right? So, the whole thing is a fallacy, but I would hold on to one thing that you said. Especially this year, after a book and some of the other conversations going on, right?
You now have a world where 30- to 40-year-olds get funded well, right? And then they're focusing and chasing this two-to-three or maybe two-to-five daydream.
Sam Jacobs
13:36
Is that correct?
Asher Mathew
13:38
And it's almost like I realized that the hard way, but it's almost like you're missing something in yourself, so you're chasing something that somebody else is telling you will make you happy. You know, and every single instance where I've been in conversation with the founders and stuff, probably because of where I live in the area, right? Like, when you double-click on the solid founders, you can just see that they're complete humans and they are going to build something, whether it takes 30 years or 300 years, they're just on it. Right?
I think you can build some pretty valuable companies and focus on having fun as a core value because I don't see "fun" as a core value in many companies. I think it's a big thing that's missing, you know, but what do you say? Because you probably meet with a lot more CEOs that have to then deal with the brunt of the T2D3.
Sam Jacobs
14:32
I think you're making an excellent point, and it's exactly the right one. It's still hard because humans are humans, and we all want to feel. I mentioned the anagram thing because a friend of mine has been teaching me about it; I'm a Type Four, which is very moody and temperamental. It feels like something is missing inside them, so they need to prove to the world that they're special, partially as a protective mechanism to defend themselves against themselves, which is sort of weird.
You're right that there is a much bigger opportunity, and this is part of what the book is about. I wrote a post on LinkedIn about first-time versus experienced founders. If you extend the time horizon to indefinite, you can focus on the core operating mechanics of your company and live comfortably, without feeling desperate for things you don't have that you think you need to make you happy.
Then you can build something special. That's one of the big differentiators, and that's one of the points of the book: long-term thinking can be a competitive differentiator. If you're short-term thinking and feeling like you need to justify your evaluation because you didn't have a great year last year, then you need to justify it.
The fact that my company is special, and I was always telling myself that I was better than everybody else, last year I felt like I was. This year, I'm not so sure. To get back to feeling like I'm better than everybody else, I need to continue to lean in and drive massive growth, even if that means putting my company in jeopardy.
That's a good person to compete against because they are so clearly flawed and because they may be making difficult, risky, or existential decisions on behalf of their company.
So, I think you're right, Asher. The key question, though, is: Do you enjoy the moment right now? Do you know? And for me, it's funny because what that means is that you have to be good with money. What I mean by that is you have to be living below your means.
If you're living beyond your means, then yes, you'll need that company to exit or you'll need some kind of value; you'll need something. If you're not content with your life right now, then by definition you're probably pursuing something that needs to be altered. So that, perhaps, when that occurs, you'll be satisfied with your life. And the point of the book and my experience is that when I finally ceased pursuing that when the money came in the first place.
And so, I think you're right. If we can take a longer-term focus now, there are risks, as it is all interconnected. If we raise money from venture capitalists who are operating on power law dynamics, they need us to be chasing them, and the real fundamental question embedded in what we're talking about is: what determines [it]?
How, like, is outlier growth right? I would call it asymmetric growth, but I don't mean asymmetric. What are the things that determine outlier growth? If outlier growth is determined by access to capital, right?
As VCs imply, venture capital implies that your growth is a function of how much you invest, and if you can invest more, you can grow more. There is some truth to that, but it's probably not as universal as we want to imagine. So, is it true that outlier growth is determined by the market?
And there are lots of capital-efficient ways to achieve outlier growth. The point is, it doesn't make sense to chase outlier growth when the market doesn't support it; it's only a way to blow up your company. Whereas, if you are aligned with the market and you build something that the market is pulling forward, then you may not need capital to achieve outlier growth. That's not something I have frankly considered.
My instinct is that we overestimate the importance of capital to growth; an airtight opinion.
Kelly Sarabyn
18:42
That's 100% right because it's not one-size-fits-all. There are certain product categories where you need capital to build out the products efficiently, or there are network effects that require capital upfront. The product doesn't even work if you don't have enough people already using it for marketplaces, two-sided marketplaces.
But I feel like this has been extrapolated across the market so that everyone in tech feels like this is the route they have to go. This sets up all these negative incentives that you've been referencing, such as short-term thinking and the need to grow at all costs regardless of whether it is profitable.
You're hitting the product market fit in a way that benefits the customer. So I think something blocking the adoption of this mindset is structural; that is, as long as this continues to be the setup, C-suite executives are under pressure to make those targets, right?
Sam Jacobs
19:39
Yes.
Asher Mathew
19:40
It's thought of as cool, you know, like, some of the other things that happen in the marketplace, right? And what I mean by that is, like the VC world is maybe incredibly small, but like maybe seven or 10% of this category of a world called alternative investments. Like the alternative to just putting money in the stock market, bonds, or things that you see on CNBC.
And then, the VCs are trained professionals, or at least that's what we would like to think. But they're also operating under a formula. People who don't understand the formula can get involved in something they don't understand, and that's where you land in these situations. That's why my hypothesis of how this thing happens. What do you think?
Sam Jacobs
20:31
I think Kelly is right; I think you're right. I think there's no, I think this is capitalism at work to a certain extent and it's beautiful in its destructive and creative capabilities. I mean, one of the things I think, right, is like, hey, maybe Stewart Butterfield is just better than me. This is a weird way to frame it, you know, but like Slack.
Maybe Slack is just a better product than Pavilion. It just is, and that's okay.
Asher Mathew
20:57
Your business relies on Slack.
Sam Jacobs
21:02
Like, you know, maybe others are smarter than me. Maybe, you know, there's this thing about, and especially for me and a lot of other founders and CEOs, and even when I was a CFO, where you, it's just what is my place in the world and, and part of like the structural constraints are about human psychology and about the reality that like it's okay that Ruth Porat is just a better operator than I'm ever going to be.
And that doesn't mean that I don't have value and that maybe I don't even need to compare myself to other people in the first place because I can build something of value that helps other people and that has its place in the world.
There's a tension between accepting mediocrity and holding myself to the right standard for excellence and leaving my impact on the universe. That's a funny place where my mind goes when we're talking about all of this.
That I just hear time and again: You know, here's a fascinating anecdote: We had the CRO Summit after our CEO Summit, and I wrote about this on LinkedIn the other day. We gave this exercise to everybody in the room and we said, "Here's the story: Your company raised too much money at too high an evaluation.
And you can do two things: you can accept that you're not going to be years away in this current environment from growing into that valuation. Cut burn, give yourself as long as possible to stay alive, and go out to your employees and your team and accept that this idea that you're going to IPO next year is going away.
And you know, the beach house that you were going to buy based on the proceeds of your equity is probably not going to happen. That's one path.
Now, there's another path where you can say, "You know what, we signed up for this journey. This is a high-risk journey. We're going to shoot for the moon here. You know, and I'm going to go all-in if we're playing spades, you know, like...
I'm just going to take a chance, and we'll keep hiring and keep leaning in. Maybe something will have changed in the market by the time we get to where we are a year from now. Even though we will have burned our cash down to a scary balance for the company, maybe we will have grown into something that approximates the valuation we just raised.
And for me, as I share that with both of you, I'm like, "Well, that's an easy choice for me. I'm going with the first route, right? I want to preserve Pavilion's ability to exist, right? That's fundamental, first and foremost, because I don't want to give away my company to a bunch of other people. I don't want to sell it for pennies on the dollar. So, if it takes me 10 years, it takes me 10 years; I don't care. But I want to make sure that we are structured in the right way so that we are not jeopardizing our potential existence. The definition of the word 'existential.”'
And that was the minority opinion in the room. These are all operators; these are all the people who get fired all the time when they don't hit their targets. They were all like, "You don't have a chance.”
23:59
And I just thought that was wild. That was wild. And I think so. I don't know where that leaves me, but I will tell you that, for me, I mean personally meaning I just literally spent the majority of this week on an all-company on-site because we're a remote team. And then yesterday was a full-day executive team on-site and we chose option one.
We are choosing option one. I do not have enough proof points to justify burning capital and hope that I can raise money later. I know there is a much more profitable business inside the business that I am currently running, and I am determined to get smarter about running it.
Asher Mathew
24:35
I would hardly say that's the right way. Of course, I would be the option one in that category as well. Also, you know that. So, this is an interesting story, right? When I moved to the Bay Area, one of the first pieces of advice I got, which again you have to go through making some mistakes to become experienced, right, was like, "Well, you should go play VC roulette.”
If you go to one company, you know, stay there for 18 months, shake a bunch of trees, see if something happens, and if it doesn't work out, you go to the next company and then do six of these 18-month stints. One of them will get you there, right? And I'm thinking, well, if you have five opportunities, you know you have a close to 20% or 50% success rate. So, that's the same thing as enterprise sales in a way. So, you're going to technically just get lucky then, right? It had nothing to do with you; you either called the right person or something like that.
But having gone through building companies now, like to bootstrap, one was by chance, but the other one was intentional. I think bootstrapping depends; if you were trying to compete with South and Adela, then for sure you'd need $400 million in the bank to get close to them, right?
Sam Jacobs
25:48
There was a company that raised $100 million.
Kelly Sarabyn
25:50
Yeah, we're talking about what they were supposed to do; they had a model and they were supposed to make it smaller and smaller so it could be used more easily, but they never did it. It was hundreds of millions of dollars that they raised.
Sam Jacobs
26:06
Yes,
Kelly Sarabyn
26:08
I don't know if they even went to the revenue; it was tiny. But you see this all the time, right? Like, that company last year that spent tons of money on marketing and had raised multiple tens of millions, if not hundreds of millions. And then it turned out their revenue was like $650,000 a year. It was crazy.
Sam Jacobs
26:27
There's this woman who was a VC and negotiated to be a co-founder; that's another pet peeve of mine when you come in after the fact and negotiate for a co-founder title. But I follow her on Strava; she's an amazing runner.
What's crazy is that these companies seem like they've figured it out, and then this year you're like, "Whoa, are they even going to survive?" That is just, I mean, putting FTX aside, I'm not even talking about fraud; I'm just talking about companies that have this impossible momentum and you're like, "Well, they're going to make it. I don't know who the winner is, but I know they're going to be one of them.” And then, all of a sudden, within months, you know, evaporation.
Kelly Sarabyn
27:06
It's fascinating, and I think it goes to what you talked about here, as well as in your book a lot, which is the definition of value, right? This idea that making money is all one needs to think about is value versus the actual sustainable, real value that's being provided to the customer, right? And being in tune with that. I think a lot of your advice in the book was very insightful.
Work for companies where the value is there. Because that's what's going to be sustainable and lasting. Just hearing that, oh, we raised 120 million and we've only been around six months, which is what you see a lot of these hit companies that everyone's trying to rush to go work for, but there's not necessarily any value there.
That's where you get on this impossible chase of not being able to win, it's almost like a Ponzi scheme, but it's not actual fraud, to your point. It's just chasing these impossible numbers. So, I do think it's a mindset shift that is needed to have this be adopted more broadly. It is to get a tighter focus on what's providing real value and recognize that it's not necessarily a numbers game.
Even just scalability, and certainly not just the fact that money has exchanged hands.
Sam Jacobs
28:27
Yeah, I'm, and now the whole point of the book is, by the way, it's funny because I wrote this book, I'm lecturing people and then I realized I need to reread my book.
Kelly Sarabyn
28:38
Sometimes he forgot what he had said.
Sam Jacobs
28:44
Trapped in the same mindset, I get trapped. You know, like me, you know, I say it's not about making money.
A revenue model for a Pavilion that gets us to some arbitrarily high number and isn't about our customers; this is not me being perfect lecturing.
These are things that I come back to personally so that I can stay on the true path, which is about other people. That's the fundamental point of the book: value is about somebody else. It's not about you, or what you need, it's about how can you help other people?
Companies that create something of value are the companies that are obsessed with other people, rather than themselves.
Do you know? And that's especially going to be true in a recession, right? Because every business, including ours, needs to be outwardly focused. Just like we need time to do this, we need time to do that. The more you can look outwards and ask, "How do I help my customers? What do they need? How can I put myself in their shoes? What are they suffering from? What are their customers telling them that we can help with to help offset?”
Whatever is happening there, those are the companies that are ultimately going to win-the ones that stay focused on their customers through good times and bad times, understanding that you still need to do your diligence. You still need to structure the business in a way that drives execution.
Unit economic profitability, right? You still need to design the system smartly and elegantly. It doesn't mean giving everything away for free, but it does mean your emphasis needs to be on how does this help my customer? How can I?
I point to a contrast in my career and in the book between companies that had disdain for their customers and those that had love and appreciation for the engineers that worked inside the four walls of their company. The engineers were celebrated as gods, while the customers were deemed too stupid to understand how to use the technology. I'm not even kidding.
Kelly Sarabyn
30:39
I've seen that in tech as well. We have non-technical users, especially in a vertical-specific context. I've seen that exact thing.
Sam Jacobs
30:49
And those are the company and you know, in the Pavilion today and I worked there for over four years ago, I left four years ago and they were bigger than us and mostly bootstrapped. They raised, you know, $130 million and it's because they didn't, you know, maybe they figured it out now, you know, because people can change and people can learn, I believe that about people.
But the bottom line is you have to be focused; the output revenue is a lagging indicator. Revenue is what happens after you help people, so how do we make sure that we help people? That is probably the very first thing you need to come back to when figuring it out.
Kelly Sarabyn
31:27
I agree. I think you know one thing that I would love to get your take on is the community because right now, Asher and I are both in Pavilion and I've been in for a while.
Asher Mathew
31:38
I would say I was one of the earliest people.
Sam Jacobs
31:40
Yeah, I remember Asher.
Asher Mathew
31:42
If I go look at my Slack thread, the beautiful part of it is like, that family pays for Slack, right? And there are a few companies that also pay for Slack, right? So you can see all your message threads.
Sam Jacobs
31:55
Know why I first started paying for it by the way?
The reason has nothing to do with search or anything like that. The reason was that I wanted to change other people's display names so that there was consistency; I didn't want there to be named like "Jobe1425az", you know? I wanted it to be like the broken windows theory, where if everything looks more hygienic, it would be a better garden in which to play.
Asher Mathew
32:23
Yeah, totally. At Partnership Leaders, we started panicking because messages started disappearing and we were like, "What is going on over here?" But then I looked back at some of the initial conversations you and I had, and they were all there. I'm like, "This is the best part of Slack!" Anyways, I digress.
Sam Jacobs
32:51
Let me take this opportunity to discuss business planning for 2023. Please do not cancel your pavilion membership.
Kelly Sarabyn
32:59
I'm not canceling.
Asher Mathew
33:01
Actually, on that note, I'll just make this point. Anybody who is in a free community, I think over the last few years, I have been in around 32 of them.
My wife was like, "What are all these icons?" I said, "They're all the communities." She asked, "Which one of these do you go to?"
I replied, "Just Partnership Leaders and Pavilion.”
“Why do you go there?"
I said, "Because when they started, the quality of content and engagement is better. Plus, it's where I started because Kathleen, who is Sam's head of marketing, is there. Now, they taught me how to do a podcast, and Stephanie, who eventually became the CEO of our company, is there. I still have our chats, and I remember asking them in the beginning, "Hey, where do you want to go?" Stephanie replied, "I want to be the CEO, and I am becoming the CEO."
Sam Jacobs
34:04
I loved her very much.
Asher Mathew
34:04
And so it's like where you start for one is kind of like where you need to stick around and you need to be active in the community, right? But then the second part is like if you're not paying for it, I don't think you're actually going to use it at all and it's just going to be a nuisance. And so I was going to go and delete all the free communities at the end of the year.
And then I asked myself, "Why am I waiting until then? Let me just do it now and see what happens in the next couple of days." If you miss them, right? So I thought this is like a lot of people who do their annual cleaning; they just drop a whole bunch of their free commitments because they're not even participating.
Kelly Sarabyn
34:47
The usage rate, I'm sure, is low. And I think, you know, this is part of the question I was asking: I do think communities are trending in general. Like I work at HubSpot, and at INBOUND, we announced that community growth is a key go-to-market strategy.
But I think Mind the Product was acquired by Amplitude. Companies are starting to see communities as important in the buying cycle and a potential vehicle that they can own these communities. But I think what's interesting about communities is scale, right?
How do you have a community where people are engaged and feel that real sense of connection to the community?
I think it's a significant challenge, how to keep that feeling of having a personal connection as you grow out. I would love to hear your take, as you have already walked down this journey. Based on what you said in your book, you intend to walk down further, potentially having a pavilion with a million members, right?
It sounded like you were close to 10,000 now. But yeah, I love to hear your thoughts because I think, you know, for all the communities out there, a core challenge is how to scale while keeping it as high quality as when it was smaller.
Sam Jacobs
36:05
Well, I work on this problem every day and I'm not particularly good at it. Even though we're at 10,000, I think there are a couple of things that you've seen in our evolution this year.
The first thing I think is that the community is too ambiguous to categorize. So I think until bigger companies like Yamani, Brian, Darmesh, Kip, etc. define the product set and the feature set of what exactly community is, we don't know. Let's define that first.
So one thing is that community is an amorphous and ambiguous category. And so, if you want people to pay for it, there needs to be a clear return on investment and a clear, more discreet value.
We can all understand the value because we feel that sense of belonging and because maybe we're more extroverted or maybe we've just been indoctrinated to believe that you need to appear, you know, you need to go further when you go with other people and so you need that group of people around you to support you, but there are a lot of people who don't know that.
And so, what we've been doing this year is trying to distill community down to core products. As of today, we have three core products associated with the community.
The first is Learning through Civilian University. We said that a webinar is not useful, but a webinar led by either of you with a certificate at the end of it, and maybe a little test, is of course valuable. People value courses because they help credential their professional development and document it to themselves, the outside world, their teams, and their bosses.
That they are progressing in their career. And so we built Pavilion University as a way of distilling the community down to an understandable product. And we've had success there. We've had over 12,000 total enrollments this year and 6,000 unique students, which means half of the community, as you're right, it's about 10,000 people, have taken at least one course and the people that have taken it have tended to take more than one.
These are live, cohort-based courses where you get to know other people in the context of what you're learning. Therefore, you are almost subversively indoctrinated into a community. Like if you join to take a class and you learn something, you do learn something. But in the process, you meet other people in the same way that you might meet them when you go to college or university.
The second product is in-person events.
Because, especially for executives, people still need to be with other people for the emotional and psychological connection associated with human-to-human connection, which is still more powerful than just being virtual. And I know, Asher, you all had that event in Miami a while ago, and I think it was called Catalyst if I'm not mistaken. And all I heard is that it was the best conference anyone had ever been to. Of course, that made me both jealous and excited.
In-person experiences are things people understand; they get it right. We started selling tickets to our conferences this year; we had never done that before, and now we're selling thousands of dollars worth of tickets. It's because people understand how to put a value on discrete products more clearly.
The final product is what we call, and is the answer to your question, Kelly: we call them core groups, but it's a way of making a big group small.
If you can make a big group small. You know, if you're in YPO, you're in one of these YPO forums and you meet with an EO or investor with a group of 8-10 people every month. Now, there are 40,000 people in YPO, but you're not aware of that every day.
You're aware of that when you go to a different country and meet somebody else from YPO. Isn't that great? And you do the secret handshake. Most of the time, you are in a smaller group of people.
That you can get to know and form deeper relationships and feel supported by the structure and framework that is tried, tested, and true at YPO. A week ago, we put all of our executive members into core groups, which are regional groups of about 100 to 150 - way bigger than 8 to 10. This is because we want to solve people not showing up every day, without charging as much as we would have.
They're going to have a monthly call in their private Slack channel. We're getting most people out of every topical channel. Right? So, you're not going to have to figure out where to ask a question. You're going to ask the question in one place, which is the same group of cross-functional executives across 100-250 people that generally live nearby. You're going to have a monthly call, and then over time, you'll schedule other in-person stuff just within your core group.
That's a way of saying, "How do you scale community?"
First of all, it takes a lot of hard work. Second, it's not inexpensive; we pay the people that moderate these core verbs; they're called Envoys, and we're paying them anywhere from $1000 to $1500 a month.
The real, fundamental answer to your question is, as you get bigger, you need to create subgroups. That's the fundamental answer. You need to keep making it smaller, and then you create mechanisms for people to feel part of the big thing, but they don't always feel like they're part of the big thing most of the time. They feel like they're in their little ecosystem, which is part of a much bigger thing.
Kelly Sarabyn
41:39
Yeah, you guys have done a great job of that. I think you guys have the chapter heads, which sound somewhat similar to this role, but at least all the ones that I've had interactions with really represent the values that you've found in the book, which I think is key to having those smaller groups, right? It's having enough people who embody the culture and can execute it for you, which, you know, you've done a good job so far. So, knock on wood, will continue with these core groups.
Asher Mathew
42:06
Feel like we didn't invite Sam back again, just to have a podcast and do some community-building because there are lessons that we've all learned. There's a whole bunch of other friends who are building these, and there's a model that we can take and deploy. But the first part of this topic is how to get started. I think I can get to over a million because I think they're putting the operator hat on after four or five hundred.
Millions of people are in sales and marketing who can leverage Pavilion, and one million would be just a small fraction of that.
Sam Jacobs
42:43
Yeah, no, you're right, and that's, well, we'll see what happens. I guess that's the way I would say it.
Asher Mathew
42:51
Kelly, do you want to ask some controversial questions? Because Kelly has never chatted with you before. She said, "Hey, I read the book. Did you read the book?" I replied, "No, I just saw Sam build this thing. So, from a distance, I just saw the change that he made, right?" By the way, thank you for the conference mention. I'm going to write a book called "The Kind Conference is Finished First."
Sam Jacobs
43:11
It works for me, my friend.
Kelly Sarabyn
43:12
You get a forward from Sam.
Asher Mathew
43:19
So most people who have made it always become kind, right? And it has happened over and over again; everybody I've seen, so many founders go through it. Whether they made a bunch of money through secondary, which is very popular now, or they earned it all the way through, they become super kind after that, right?
But like, how does one internalize all this stuff on the journey? What are some of the top tips we can give to people to get on this path: do X, Y, or Z?
Sam Jacobs
44:01
The point of the book is that you know, I made money through secondaries, but I made it after I embraced this path. So I think, and it happened frankly sooner than I thought it would, which is part of the point.
What are some of the things people can do? Well, the book is pretty straightforward about that, especially if you're early in your career. One of the points that I make, and this is why to be clear again, just the origin, is I pitched the book to Wylie.
They said, "Well, maybe it should be called the Kindness Principle because it's not really about finishing first, right? It's about how money is not the only means of measuring success, and you should sleep better at night and all this other stuff."
And I said, "No, no, no. The point is that these are mechanisms to compete. This is a competition framework, right? This is a mechanism to win this race, whatever the race is.”
So, what do I mean by that? One of the points I make in the book is the more you help others without asking for anything in return, the more you become someone who can help others, right? And that's what a mob boss is like, you know, funny and cynical at times.
But you know, Don Corleone at the beginning of The Godfather, right? Everyone is in line because it's his daughter's wedding and everyone is in line to ask him for help because he can't refuse a favor at his daughter's wedding, right? And the point is that Don Corleone does, as you see in The Godfather too, right?
He came to America from Sicily and he didn't have anything at all. Now, yes, he murdered the boss. But beyond that, he did favors for people. His famous thing was, "I'm gonna do you a favor and you know what, I don't worry, you don't have to do anything for me now, but there may be a day when I call upon you and when I call upon you, you gotta say yes." And that's not to say I'm embracing the mafia.
Accumulating karmic points by helping other people is not just something that you do to feel good; it's because you accumulate power and influence. If you are somebody that can help other people, then that is somebody powerful. Isn't that one of the definitions of power?
People start coming to you because you are perceived to be somebody that can help other people, and then other opportunities come to you. The more sophisticated opportunities you realize you can assist because of the early work that you've done over the years helping other people.
My point is that, and that's part of what I mean by kindness. That's why it says "kind folks finish first." It's because it's a framework for professional advancement. It's not just that, like, "Oh, you'll feel better, and don't worry, one day something amazing will land in your lap." The point of the book is that these are tools that also align with not being an asshole, which is a great thing.
But they align with your professional advancement. So, what can you do, even if you're not already wealthy or haven't achieved the outcomes that you want? We'll do what it says in the book since the whole point of it was that my life started to change when I wasn't wealthy and hadn't achieved any of this stuff. And the main thing I decided to do was to live differently than what other people were telling me to do.
And I decided I wasn't going to just get back on this carousel; I was going to start my own thing and generate my revenue. I wasn't going to raise venture capital for it, probably because I didn't even believe it was possible, but I was going to start helping other people and charging a nominal amount, setting modest, attainable goals. I was honestly the happiest I had ever been in my life.
And I don't mean this for anybody who has lost a loved one or suffered terribly from COVID. But the happiest moments in my life were during COVID when I was in my living room with my dogs, especially one dog who is no longer with us, but he was in his orange bed right next to my chair. I don't have an ergonomic chair; it's like some West Elm chair, not designed for office work, on this old desk with a laptop that was six years old. Just working on Pavilion.
And like finding ways to help people and creating the support group that we have called "The Bench" was all I needed to pay rent because suddenly it was a job I couldn't be fired from, right? I didn't need it to be anything other than something that could help me to live my life, then that was all I needed from it. You feel when you are living within your means and when you are happy.
Within your means, things become infinitely possible when you come at things from a sense of desperation, need, urgency, and the thought that "if this thing doesn't work out in the next three weeks, I'm screwed." That's never been when things have worked out for me.
Kelly Sarabyn
48:36
Super interesting, that came through in your book. Just a psychology question about it: when you're talking about it, it seems like you get yourself in the mindset where you're helping people because that's intrinsically good from your perspective and you get satisfaction out of it.
But you're also taking a step back and saying, "This is utilitarian, right? This way of being is going to make people more successful." Is that your advice to people: to take that step out and say, "This is going to make you successful"? But then when you do it in your day-to-day life and live it, give in to the fact that the feeling of helping people in and of itself is good and valuable?
Sam Jacobs
49:17
Yeah, that's the message. That's exactly the message. Is that feeling good and valuable? You're not doing anything wrong, you're not being weak, and you're not competing. It is a different way of competing. And I will also say, you know, there's some privilege in the book, right? And not just because I'm white and grew up, you know, upper middle class and had a lot of benefits accruing to me.
And live honestly, because I just read this book about the history of the Medici in Italy. You know, these warring city-states in the 1400s, 1500s, and 1600s; if this book came out, I wouldn't advise adopting the principles in it because it was a bloodthirsty, dog-eat-dog kind of time. I don't think you could trust that doing the right thing would redound to your benefit. So, there's a reality, which is why I pointed it out.
We live in a specific Western-regulated capitalism that has many flaws, but this is one of its benefits. I'm not extremely progressive, so I don't see that Exxon and BP are naturally evil, but I could say that bad things are happening and monopolistic abuses occur within this system. Generally speaking, regulated capitalism emphasizes companies that build things that people like, and so the way to succeed is to build things that people value and enjoy.
That's a pretty humane approach. I don't know if this approach would have worked so well 500 years ago, but it works pretty well today.
Asher Mathew
50:54
I feel like we can keep going on. I get it. This is the point of these podcasts because I think they can just keep going on and on and on. It's almost like a recorded phone call; but just to be respectful of Sam's time and Kelly's as well, are there any closing thoughts that you have that will bring us back on the show?
I think that the more we learn, or rather, the more we unlearn, the more opportunities to bring people back are there. Any closing thoughts from you?
Sam Jacobs
51:19
I appreciate the conversation and I'm grateful. I didn't probably, for some reason, I didn't realize Kelly worked at HubSpot, but I'm a huge fan of HubSpot and I feel like, as a large multibillion-dollar organization, there are a few companies that embody the principles in the book. So, yeah, I'm just grateful to be here and enjoyed the conversation. Asher, I can't wait to see you in Miami in few weeks.
And you know, if anyone needs me, they can reach me at sam@jointpavilion.com. Thanks to everyone who read the book, and if you're a Pavilion member, I urge you not to cancel your membership right now. We're working on reducing churn. And, otherwise, feel free to sign up.
Asher Mathew
52:01
Super all right, folks, see you at the next show.
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