My Village Global Venture Stories Podcast Interview about Relationship Hero, Evaluating Startups, and Rationality

Erik Torenberg was kind enough to invite me on his popular podcast last week. He’s always great at efficiently getting the interesting content out of his guests.

Click here for an interactive audio+transcript combo. I’m also including the transcript here.

Erik: Hey, everybody. It’s Erik Torenberg, co-founder/partner of Village Global, a network-driven venture firm, and this is Venture Stories, a podcast covering topics relating to tech and business with world-leading experts.

Welcome to another episode of Village Global’s Venture Stories. I’m here today with a very special guest, portfolio CEO, Liron Shapira of Relationship Hero. Liron, welcome to the podcast.

Liron: Hey, my pleasure. I listen to all of the episodes. It’s cool to be on it.

I’m glad to hear. So, Liron, by way of introduction, why don’t you talk about what is Relationship Hero and what inspired you to start it?

So Relationship Hero is the startup I’ve been working on since 2017. We started in Y Combinator Summer 2017. The reason I started it is because I was looking around for a problem to work on. I love startups, and I’m like, “What problem do I actually know a lot about?” In my case, I had too much of a charmed life. I didn’t really have that many life problems, but I had a pretty terrible dating life, like I would be really awkward on dates. I wouldn’t know how to use dating apps. I get really frustrated, like they give me a blank white screen. I’m like, “What are the rules to this game? You can’t win this game.”

So I’d always be struggling with my dating, and I’d hit up my friend, Lior, who’s now my co-founder. I’d ask him a million questions, and he would be basically my personal dating and relationship coach. He’d be like coaching me on exactly what to write, and how to interpret the other person’s texts, and how to plan a date. So when I was thinking about what problem do I actually know about to start a company around, I’m like, “What if we could package up what my co-founder was giving me?” because that’s actually the one place where I needed a ton of help and I was getting a ton of value. So that was the initial spark for Relationship Hero.

That’s awesome, and talk about how the product has evolved since 2017 and based on what you’ve learned about how people use it.

Yeah, sure. So when it started, it was basically a chat room where people could upload their screenshots similar of how I would do with my friends like, “Hey, here’s a screenshot that I got from OkCupid, and we’re having this conversation. But now, I’m getting flaked on or I don’t know what to say.” Then, we would give them coaching. We started doing it for free, just as a minimum viable product, and then we’re like, “Okay. Let’s charge people for it. Let’s get more serious about making this a business. Let’s let them purchase credits.”

So we slowly started layering on all these features, and then we said, “Okay. Can we scale it to somebody else being the coach besides my co-founder?” So we really just took it one step at a time, right? Every time, we were trying to just validate a little bit more, bring a few more people in, make a little bit more money, and then finally, it started getting more serious, and it’s like, “Okay. What do the unit economics look like? What’s customer acquisition?” So basically, we took it one step at a time.

So what you guys are sort of doing is you’re creating a new category, right? Relationship coach. So relationship coaches at scale. Talk a bit about that and what you’ve learned about what that category is.

Sure. Yeah. So we have always believed this is a huge category, relationship coaching. It’s actually very interesting if you look at the market. At this point, everybody knows therapy is a huge market. You have BetterHelp, which is a multi-billion dollar company. Talkspace is actually doing a SPAC valued at a couple of billion. It’s about a $7 billion market, just therapy, and then you’ve got the dating app, the match therapists, the juggernaut there. So you’ve got these huge markets, and then you’ve got relationship coaching, which is people who help you with your relationships, give you practical advice on what to text. Should you get into a relationship? How do you communicate?

So this whole space, basically, this thing that everybody is talking with their friends about is a non-existent space. So Relationship Hero is actually number one in the relationship coaching space. There’s no other relationship coaching brand, and so our whole thesis is like, “Well, this should be a $10 billion space.” I mean, look at how everybody in their life is always hitting up their friends and getting very questionable relationship advice. So that was our initial thesis, and so far, we validated like less than 1% of that in terms of how much we’ve grown. We’ve grown to a few million dollars a year of revenue. So we think we’re just scratching the surface, but it’s good initial validation.

Yeah. What types of archetypes make great relationship coaching? Then, I want to ask, how do you train them?

Sure. So there’s not a super fixed archetype, and that’s part of our arbitrage is we don’t just go… We’re not a marketplace. So we don’t just tap into an existing pool of people who have an existing certification. We have to mix and match like, “Oh, okay. You have a psychology degree. Okay. Are you familiar with these subjects?” We have a very elaborate interview that’s entirely skills-based. So you put them through simulated coaching, a bunch of written questions. We actually do 160 hours of training that we don’t charge them for before we’re ready to say, “Okay. You can be a relationship coach on our platform,” and then we keep monitoring and training them even past that point.

So our model is very much like a… You might call it a managed marketplace, but we think about it as… We’re not just creating the relationship coaching industry. We’re also creating the relationship coaching certification. We’re even creating the relationship coaching field of study, basically. Right? Like in college, you can’t really get a degree in relationship coaching, and yet, why not? Right? Like human courtship. It totally should be a subject. So, yeah. So a lot of our secret sauce is defining what a relationship coach is and which combination of factors makes them good.

Totally. Share some learnings about dating and relationships that you’ve learned from running Relationship Hero and having all those data and insight.

Definitely. Yeah. So one is just the breadth and the shared human experience of all these different problems, right? So we’re actually an international service. So we just get people in every country you can imagine as long as they’re English speaking and they’re coming in with very similar problems. Sure. Sometimes there’s cultural differences, like we’ve coached some people in Saudi Arabia. Obviously, the LGBT coaching we do is a little different given all the pressures there, but just like the swath of our market, you can’t really draw a circle around who’s coming in to use Relationship Hero besides like, okay, 18 and up. It’s half male, half female. It’s every possible demographic, and it’s the validation of the initial thesis of like I, personally, Liron, I’m not the only guy in the world who has a major or has had in the past major struggles with these dating issues.

People struggle with that and much more. We’ve segmented it down into about 50 different sub-categories, and we keep growing. So you have like, okay, issues when your spouse is in the military or issues when your spouse is on the ASD spectrum, or recovering from cheating, or the whole spectrum of breakups, like getting back together when you broke up 10 years ago, but now you just got a text. So even this thing that we call relationship coaching, not only is it a big market, but it has 50 pretty big markets within it.

That’s fascinating, and so if we’re imagining five years from now, or sooner, or later, you guys have created this field of study, and just like in any field of study, right, there… In economics, there’s like Keynesian economics, there’s Friedman economics, different schools of thought. If you were to imagine once this becomes a really legitimate academic field where different schools of thought could emerge, what comes to mind?

Yeah. So there are some variations in styles. So one of the styles we do is very tactical-focused, and that’s the one that I’m the most [inaudible 00:07:03]. So I’ve basically broken down dating into an algorithm or even like conversation skills like, “Oh, if you’re in this stage of the conversation, you should manufacture a line that meets this criteria.” Right? So it’s very tactical, but another one is it’s more inwardly-focused where it’s like, “How do you basically calibrate your emotions to be appropriate for the situation you’re in? How do you ride the elephant that is your subconscious, right, to be properly calibrated?”

Those kind of clients, they tend to fade into more like… It could be more of a life coaching experience. It could be like they could be using Relationship Hero for a year as their situation plays out, and they ease into the new mental state. Yeah. So that’s one of our key distinctions. There’s a lot of connections. So anxiety can play a big role to various degrees. So that brings in a separate area of study, and then there’s also… There’s a sub-school of narcissism and how that factors in. So, yeah. I mean, I think we should probably publish a breakdown.

Yeah, and there’s a lot that surround gender roles and gender… this whole, “Men are from Mars. Women are from Venus.” My understanding is that this subgroup was pretty controversial, but they were the pickup artist community. That was maybe foretelling or foreshadowing the idea that there would be a study of courtship. Maybe they will be seen as the Austrian economist or something, the first to market, so to speak, but someone discredited or… I’m curious how that will be viewed. But yeah, it’s interesting. There’s been a lot of sub-niches that have tried to do this, but you guys are really legitimizing it.

Yeah, and I got to say about pickup artists because I looked into the pickup community when I was struggling with dating, and they’re a pretty messed up community. They got a lot of things wrong, but they got one thing right, which is just the idea of like, “All right. Let’s have a bunch of people getting together and just trying to analyze courtship. Right? Let’s see what we can do,” because before that, nobody would even touch it. Everybody would just be like, “Well, love just happens. Right? Whoever is right for you, you’re going to meet them.” So they at least made it okay to be like, “Well, how do we just break it down and think analytically about it?” Now, the actual theories they came up with are like… Many of them are terrible, but they were on the cutting edge of actually giving it a shot.

Yeah. Totally. It’s interesting when someone could identify an interesting problem or an interesting way of perspective, and their solution is not great, but you could still take the method and try to propose a different solution. I see that a lot. Let’s transition to just more broadly… I mean, in a macro sort of gained perspective. It’s interesting because the last decade, couple decades is the first time we have mass scale data, right, on… OkCupid really revolutionized that with their initial blogs, and then of course, Tinder, and you guys are getting different kind of data. But we learned a lot about who’s attractive to who, a power law in dating, or just the inequalities there. What have been most interesting to you, if at all, what’s worth sharing around just the macro… how we think about dating and society?

Yeah. So I think a lot of it is what I referenced there about… that originally started with the pickup artist of just this idea of like, “Look, human courtship is a game.” Right? Just like businesses becoming more of a game, right? So before, everything would have more rituals to it, right? More pomp and circumstance, or even think about like VCs and founders, right? Like the whole idea of a coffee meeting. You have to go get a coffee with a VC. It’s literally like dating, and that’s… You have to be ambiguous whether you’re raising money or not, right? Now, it’s like, “Okay. 30 minutes Zoom. All right. Are you in or out?” Right? So it’s becoming a little more transactional, but it’s just becoming more goal-oriented, right, and there’s less pomp and circumstance.

I think we’re definitely seeing that with dating, especially with COVID, where it’s like, “Look, this is what I want. This is what you want. Let’s skip some of the rituals, like we have to meet through a friend, and let’s also just analyze what’s going to optimize my life for the next 20 years. Are you the right match, and what’s my best algorithm for interacting with you?” So I’m not saying we have to swing the pendulum all the way and become like robots, but I definitely think that society is getting just more analytical in pretty much every subject. Especially with texting, right? Now, you have a record of your whole dating interaction. It’s spelled out. A computer can read a large part of it. It’s like an x-ray of your relationship. So that I think is a major trend.

Yeah, and one thing that I’m really excited about on the relationship coaching side is you can imagine… There are so many people who do this for their friends. As you mentioned, your friend and co-founder did, who are… Maybe right now, they’re customer experience or customer service reps, and they have to deal with complaining customers, but it’d be so much more interesting to them to hear people complaining about their relationships, right?

Right, and to some degree, we’re like the ombudsman or the customer service hotline for when your relationship is broken. Frankly, I mean, that’s what people are doing to their friends, right? Sometimes, their friends are like trapped, right? Their friends are spending hours per week, and so we should really be marketing to those friends. That’s really the value add is getting the friend out of that position.

Yeah. Totally. Zooming out a bit, where do you see Relationship Hero 5 to 10 years out?

So a lot of it is just scaling what we’ve done. So we think we’ve got a really nice microcosm, and I basically mentioned. If you look at our demographics now, we’ve helped over 50,000 clients. It’s not like we’ve saturated the market. It’s not like we found the world’s 50,000 people who want relationship coaching. We’ve basically just found a very random cross-section who likes our Facebook ad. So the next thing with us is like we want to be a serious player. We want to be like a Talkspace or a BetterHelp. These are very serious companies in the mental health space. A few million dollars a year, it’s not a serious proof that a market exists, and so our next step is like, “Can we do the same thing, but just a hundred X bigger?”

That makes a lot of sense. Let’s zoom out. So this is the company you worked on the last three years. You worked on a number of other companies before. Quixey being one of them. Let’s talk about VC. We both agree it’s getting unbundled. How do you see that playing out, or what does that mean to you?

Yeah, sure. So when I look at the VC community, like I mentioned, the idea of the coffee meeting. I just can’t help seeing there’s a lot of LARPing. There’s a lot of people who just seem to be like playing a role. There’s that account on Twitter, VCBrags, making fun of all the posturing and signaling on Twitter. I think the reason there’s so much posturing and signaling is just because the underlying dynamic is actually pretty simple. It’s a marketplace, right? You’ve got money chasing companies to hopefully make more money.

What’s interesting to me, the cognitive dissonance with VCs is like on one hand, you hear VCs say they love marketplaces, and they say stuff like, “I believe in the power of marketplaces to reshape outdated industries that leave billions of dollars of value on the table because buyers and sellers lack a matching mechanism,” which is fundamentally just information problem. Right? So they love marketplaces. Then, on the other hand, when it comes to their industry, they’re like, “Investing is all about access to deals.” Right? It sounds like a major contradiction there.

Yeah. So how do you see that being disrupted or playing out?

So I think that it has been slowly disrupted. It’s like 50% disrupted already because the market is getting more of a market. It’s getting more liquid. So the first salvo, the first a sledgehammer that really started disrupting fundraising was the SAFE note. So I’ve experienced this myself at Relationship Hero. With a SAFE note, you don’t even have to do the pomp and circumstances around. Right? You don’t have to be like, “Okay. Everybody is coming together raising money.” It’s literally like you find one person, you’re like, “Hey, how much do you think this company is worth? Okay. Do you want to give us $200K at the valuation? Okay, done.” Right? It’s a single transaction, which is almost identical to going on Robinhood. Right? “How much does the stock worth? Great.” One tap, you’ve got the stock. Right? So that was a huge blow.

Now, don’t get me wrong. SAFE notes launched. A few years later, people are still doing plenty of rounds. They’re still raising big funds, but it was a big blow because it atomized the round. Then, one-two punch. What are we looking at now? You’ve got atomization of the investor side. So you’ve got more capital going to smaller individual funds. You’ve got rolling funds, right? This is a new thing. You’ve got syndicates that people start. The whole syndicate could be like less than a million dollars, and it could just be about one investment. So you don’t even have to have an investment firm. You can have the firm exist or like a SPAC is an example of that. Right? So everything is just getting atomized, right? So it’s slipping down the slippery slope, and at the end of the slippery slope, what you have is Robinhood, right? Just one tap where you trade a price for an asset.

Yeah. Yeah, it’s interesting. I mean, with new regulations emerging around just crowd funding, it will be really interesting to see. Is there anything else before we move on that you’d like to… that you think about as it relates to the future of VC or how you just see liquidity changing?

Totally. Yeah. So I think once you just have that perspective of like, “Oh, there’s always been fundamentally a marketplace, but there’s just been a lot of friction, and all the LARPing is like a result of the friction,” once you start seeing that perspective on things, you start to realize, “Okay. Long-term deal flow. Sure, that’s an advantage today. It’s not going to be an advantage long-term.” Just like in the public market. There’s no such thing as a public investor who has a deal flow advantage. That’s a meaningless concept, and it’s going to become more and more… It’s meaningful today, but it’s going to become meaningless. I don’t know when, but definitely like within a decade. Right? Similarly, access deals. Your brand as a VC. Right now, it’s like, “Oh, okay. I got Sequoia. That’s a very meaningful brand.” That’s going to matter less because they’re… For example, it doesn’t matter that much who invested in Tesla in the public market. It just matters what the valuation and who got in at what point for what price.

Now, the extra value add of the investor. It’s nice to have extra value add, but it’s going to be fully decoupled from the investment. This isn’t an original thought for me. Naval has been saying this since his blog like 10 years ago. Right? The idea that if an investor is going to give you value add, that’s great, but that’s a separate transaction. Them giving you value and getting advisory equity doesn’t have to be the same transaction as them putting money in the company. Now, sure, it’s related if they have a minimum check size, right? So there’s some barrier there, but still, the natural end game is to decouple.

Totally, and talk about Bloated MVP. What was this project, and how does it get you to think about product development?

Sure. Yeah. So bloatedmvp.com is a subject that I find myself talking about a lot because I talk with startup founders a lot. Right? I give them advice. I do a little angel investing, and I noticed that 80% of the time, the conversation just always goes the same way. Now, the 20% of the time it doesn’t, it’s great. But 80% of the time, the conversation is always me saying like, “Well, are you really actually creating value, or are you just talking about an abstract idea that’s not going to work?”

That’s pretty much where the conversation always goes, and so I coined term Bloated MVP to represent the fact that people think that they’re working on a minimum viable product. They think [inaudible 00:17:30]. They think they’re working on an MVP, but actually, they’re still not. They’re bloating it, they’re messing it up, and they’re wasting years of their life and millions of dollars, right? Sometimes, they’ll have 10 people working for two years. Right? So you just wasted 20 person years, and these are scarce engineer years, right? So you’ve wasted these precious IQ points.

So I find myself in a weird position with Bloated MVP because the lean startup came out 10 years ago. Right? Paul Graham was writing about how you have to… Your startup is just a vehicle for experimenting and validating. You should talk to customers. This is like the most cliche knowledge ever, right? So why do I have to write a blog telling people they’re only an MVP? But I’m just observing in practice, like 80% of people are still screwing it up, and so I made this analogy to the Great Filter.

It starts with looking at the Fermi Paradox and like, “Why does it seem like humans are the only life out there? It must be pretty hard for life to develop in the universe.” You’ve got the Drake equation that tries to multiply out how hard it is for life to form in other planets, and the Great Filter is just the idea of like, “Look, there’s got to be at least one step in the evolution of a galactic civilization. There’s got to be a least one step that’s really, really hard and rare, which explains why we don’t see any other civilizations.”

Now, maybe that step is behind us in history. Right? So maybe it’s like going from single cell to multicellular organisms. Maybe that was a really hard step, and on Earth, we got really lucky. But now that we’re already past it, we’re good to go. We’re past the Great Filter. Right? Or maybe the Great Filter is a step in our future. Maybe it’s like not destroying ourselves, or maybe it’s like we just can’t get technology to go that far into outer space, and then our sun is going to explode, and then we’re done. Right? So we don’t know where the Great Filter is, but there’s got to be some filter that killed off or never started all the other life forms in the visible universe.

All right. So that’s the idea of the Great Filter for life. So it seems like there’s a Great Filter for startups, and the Great Filter for startups is, did you ever create value for one user? Really shift your perspective of how you see all startups because when you talk to a startup founder, you can just ask them that question, “Hey, did you ever create value for one user?” The reality is that 80%, the answer is going to be no. 20%, the answer is going to be yes. So if you’re a startup who’s ever created value for one user, you’re past the Great Filter. You might still fail, but if you do fail, it will be a really interesting way to fail because 80% of other startups have already failed before getting to that point.

Yeah. Say more about what you think are misconceptions people have around building MVPs or what they should launch. There was this… Notion and Superhuman put the idea in people’s minds that they should spend two years heads down building the perfect thing in a competitive space. How do you see that?

Right, right. Yeah. I mean, so there is… That is justifying, right? So there are these companies that got famous for, like you said, for working hard, and it’s like, “Well, how did they not do a lean MVP?” Look, sometimes you’re going to get lucky, right? Sometimes if you do have a good enough idea, you can work in it a long time, and you still have some shot. Right? There’s something to it, for sure. But I think what people don’t realize is when it looks like there’s a story like that, when it looks like their MVP was two years in the making, a lot of times, the real MVP actually came earlier. So for example, let’s take Stripe, right? They do payment processing. How do you do an MVP of payment processing? You have to write a ton of code to get that to work, right?

Well, actually, if you look back in time, the MVP of Stripe was they were doing it all manually. Right? So they would just have… Somebody would email them like, “Hey, I want to use Stripe,” and they would just go and fill out paperwork manually, and be like, “Okay. Your account is set up.” Right? So it’s actually surprisingly little code in the first version of Stripe, and people might think that Stripe launched like a year later and that was their MVP. But the actual definition of MVP is when was the first value transaction, right? When did the first user get some value out of it? Now, I can’t speak for Notion. Right? I don’t know what their real MVP was, but I’ve definitely noticed that in almost every case, when people think the MVP was really big, it was actually much smaller.

Yeah. No. Yeah. My complaint to that is like, if you are innovating on something that demand is obvious, like email or note-taking, then you do have to have a much better product. Sometimes you have to get people to switch, and sometimes that just takes a long time, but for… If you’re doing something new, you’re not going to know whether people would want it in the first place, and so you’d spend two years on it, spend… easily.

Right, right. So Superhuman and Hey.com, right? Those actually are good challenges to the whole Bloated MVP thesis, which is like, “Look, if you’re replacing an email client, every operation has to be a hundred milliseconds. So how can you possibly launch an MVP without a couple years with like a team of 10 working? How are you going to get every operation to a hundred milliseconds?” So I’m sure you can have MVPs of Superhuman, and they could just look like this. It could just be like… One of the things I like about Superhuman is how I can quickly archive stuff, and it’s just like this… I like that that operation is a hundred milliseconds. Just that one operation of looking at my emails, opening them, archiving them.

So even if the actual reply still lived in Gmail, just being able to do that, I personally would probably do that, especially if I work at Superhuman. Right? So I would at least dog food that, right? I would start using that every day, and I wouldn’t… There are some founders who don’t even get to the point of dogfooding. Actually, most founders. Right? So I honestly believe that I can start dogfooding Superhuman within only a few weeks of building just that one feature.

Yeah. Definitely, and so beyond what we’ve just spoken about, what’s one or two other things that you want people to take from your Bloated MVP, your series on Medium?

So there’s this, what I call the Value Prop Story Test, and I think people don’t realize this. It’s a test that just uses pure logic, and it can disqualify some ideas just by using pure logic. So you never even have to get off your couch. You never have to build anything. You never have to raise money. You can just sit on your couch and logically think if the idea has any potential whatsoever using the Value Prop Story Test. The way the test works is you just have to get really specific about telling a story of one specific user, and how your product gets inserted into their lives, right, and how they go out of their way to use your product, and exactly how it makes their day better. So it’s like a very specific before and after story.

Funny enough, there’s a lot of companies that I see in the wild who have gotten really far without passing the Value Prop Story Test. If you go to my blog, I catalog a number of them where you can see like they’ve raised millions of dollars. A lot of them have even launched in public beta, which is funny. I mean, when you have a public beta, that implies having dozens of users or whatever. But my whole point is they don’t have one user. They’ve never created value for one user, and yet, they’re like… They’re doing all these other steps and what they think is the flow chart of startups. So they can’t tell a single story of like, “Show me one person who is going out of their way to use your product.” You might ask, “Well, how are they making such an obvious mistake? Don’t they want to not fail in an obvious way?”

The thing that’s messed up in the human brain that lets so many people not notice that they’re not passing the Value Prop Story Test is that it’s really tempting to just reason in abstractions. So their entire pitch, the entire thing that they’re selling to themselves and their employees is entirely abstract. I have some examples. There was a startup called AlphaSheets that was building like a better spreadsheet. Why? Because they had fancy formulas, and it was legitimately better software.

Eventually, they got acquired by Google, and they didn’t get any actual market traction, but they built the product over years, and they made it really good. It was a really high-quality spreadsheet product that could do fancier things, but I would always talk to the founders. I check in every few months, and I’d be like, “Hey, have you nailed down that first use case,? Right? Are you actually getting traction? Are you getting into a user’s day?” They’re like, “Well, not yet, but we talked to some people, and they said we need to build this.” Right? So they repeat the cycle for years, and the sustaining thing that’s driving them is like, “Surely, the world needs a better spreadsheet because Excel is so messed up.” Right? So they’re stuck on an abstraction.

Totally, and I think one of the… You have a number of reviews there. One of them was Golden. I believe you said it was a compelling product, but didn’t have a great value prop story. Is that right?

Yeah, exactly. So Golden is actually a company that fundraised recently. So they’ve raised millions of dollars from Andreessen Horowitz. Right? So I think that I’m sticking my neck out with this claim, right, because I’m just directly contradicting Andreessen. They obviously think this is a promising startup. Whereas, I believe that the first line of code should never have been written.

Now, obviously, the team is very smart. Maybe they know something that I don’t know. Right? But compare the abstract pitch from Golden with a specific pitch. The abstract pitch sounds amazing. Right? What are they doing? They’re like a smart knowledge engine, right? Doesn’t the world need a knowledge engine? If you look at Wikipedia, it’s cool, but it’s just a bunch of articles. Right? Wikipedia hasn’t woken up. It’s not intelligent. I wouldn’t call Wikipedia a knowledge engine. I need a knowledge engine. Right? You can snipe out Wikipedia.

I know they’ve pointed out like, “Well, Wikipedia is incomprehensive.” Right? Sometimes they have a political process that doesn’t let you post an article. Right? So they point out some flaws in Wikipedia, and they make a leap, and they say like, “Well, we need to make a more comprehensive encyclopedia that uses AI to help write the articles and yeah, analogy to be better organized.” So that’s the abstract vision. It sounds compelling, but then I’ve just been trying to find, like I’m browsing the website, and I’m like, “Okay. So what’s one specific example of an actual user who just wants to get some knowledge from a knowledge engine?” Right? They can’t just search Google to get the same knowledge.

The only examples I’m finding are basically just individual articles that they wrote like, “Hey, here’s an article about how this company is working on this vaccine, and Wikipedia doesn’t cover it.” It’s like, “Okay, so you wrote the article. You definitely created value by writing the article. I’ll give you that, but why couldn’t you just post that on Medium?” Right? Like where did the attention added value? I haven’t found an example yet.

Yeah. Disrupting Wikipedia is such a fun startup idea. How else might you even try to do it?

How else would you disrupt Wikipedia? So I do think that they have a good point, that Wikipedia is too politics-heavy, and so you have this experiment. Every pedia is basically like Wikipedia with fewer restrictions. So I don’t know how successful they are. I think they probably do make some money from SEO. Right? They do use some arbitrage, but I don’t think that they’re wildly successful. I think Wikipedia’s key advantage is that they’ve hit some critical mass on getting this community of people. It’s like a smaller community than you think, right? But it’s probably like thousands of people, right, out of the billions of readers. There’s thousands of people that are like hardcore dedicated to editing Wikipedia, and so you’d have to overcome like a chicken and egg problem to build up those equally passionate thousand people to produce content for you instead.

Totally. Speaking of new ideas, you had a post on a few different dating app ideas based on your experience. What are some that are worth mentioning, that are interesting?

Awesome. Dating app ideas. So I think that post is mostly a joke. One was like, “You don’t want to date somebody with bad breath, so they should have to mail you a jar of their breath [inaudible 00:28:13] and see if you’re compatible.”

Yeah, that’s amazing. I mean, do you think that the future of dating is Tinder, like as in the incumbents, or will we see new major players?

Yeah, it’s a good question. I always get surprised by which a social media thing gets popular. So I don’t feel like I can see the future very well there. I do think that things are going to be more… They’re just going to be better at getting you what you want. Right? So Tinder was revolutionary because suddenly, you have this big database that everybody is on, and the fact that Tinder was so casual, that’s what made normal people get on it. Right? So there’s all these people on Tinder who are like the cool kids who would be way too cool to use OkCupid, but Tinder was so casual. They’re like, “Oh, yeah, I’m not really gay. I’m just browsing. I’m just browsing. This is just fun for me.” Right? So they have all this possible deniability. So then, they can enter the marketplace. Right? They can get matched in the database.

I think we’re going to see more of that dynamic, but sometimes I get surprised. Bumble came out, and I’m like, “Bumble is just another Tinder.” Their whole value prop is that they help women by letting the women message first. But in practice, the women just say, “Hey.” So isn’t saying, “Hey,” equivalent to a swipe? So I’m clearly not good at analyzing this because when Bumble came out, I’m like, “Besides the marketing message that you’re for women, you have the exact same dynamic.”

Yeah. Totally. Would you ever match people who are struggling in relationships to each other?

Yeah. I mean, funny enough, we are poking around at that idea. I mean, I think that it’s always a big problem of building a big database. Right? That’s why matchmaking businesses, most of them are just like… I wouldn’t recommend using a matchmaker in most cases just because their database of clients is so much smaller than the dating apps. So we don’t want to go down that same road. But once we have sufficiently many clients, doing mixers is definitely something to test.

Yeah. That makes a lot of sense. So going back to Bloated MVP for a second, how does blockchain fit into that narrative? Then, what about DeFi as well?

Yeah, sure. So blockchain, it’s a candidate. I’m starting to suspect that blockchain might be the ultimate bloated MVP. So that’s the connection there. It’s funny coming from me because I was actually pretty early to Bitcoin. I was buying Bitcoin in 2011, angel investing in Coinbase. So back in the day… and I still am pretty bullish on Bitcoin. I think everybody should have a little Bitcoin in their portfolio, but I think that blockchain at large, like remember in 2017 and the ICO craze, everybody was like, “It’s not about Bitcoin. It’s about blockchain.” Right? They were pitching all these white papers, all these different protocols, and a lot of that has gone out of the mainstream. Right? It’s people who have more consolidated on like Bitcoin, Ethereum, and dapps. Right? I don’t know anybody who’s using a dapp.

So I started to suspect like, “Is blockchain…” Blockchain is not just like, “Okay. You got Andreessen to give you a few million dollars.” Blockchain is like you got millions of people to give you billions of dollars, right? The ultimate bloated MVP. I started looking at all these projects, and I do think that the vast majority are bloated MVPs, but the vast majority of startups are already bloated MVPs. So instead of 80% being boated MVPs, it’s like 90% bloated MVPs. So I did a bunch of digging, and I did manage to find a couple that I actually think are pretty interesting.

So for example, Augur, the prediction market. One of the things that they’re actually doing that’s interesting blockchain, the settlement of how the prediction turned out. Right? Let’s say you think that somebody is going to hit a home run and it’s… I don’t know how a home run can be ambiguous. Right? But maybe it was on the foul line or whatever. Right? So the crowd can settle whether or not it legitimately counts as a home run. That sounds like a contrived example, but look at what happened in November, right? We had some prediction markets to go out of the saddle whether Biden actually won the election or not. So the crowd has a consensus protocol using their stake in the Augur blockchain. They basically vote, and they give up reputation if they end up disagreeing with the crowd. So that is legitimately an interesting blockchain protocol. So I got to hand it to them, and I hope that they succeed.

Now, most of the other use cases that I look at are very dubious and potentially bloated MVPs. For example, Filecoin. It sounds great, right? On the abstract level, it sounds great. Right? It’s like everybody stores files together by reputation. You don’t have to centralize your file storage. But it’s pretty hard to imagine that file storage is an actual pain point, right? If you look at Bitcoin, Bitcoin helps the unbanked. Right? But there’s not really an unstorage, right? Is there anybody who’s really hard up for storage right now on the internet at significant scale and can’t get a little money from AdSense or community donations to fund a little bit of storage? I’m pretty skeptical that anybody needs peer-to-peer storage.

That makes a lot of sense. Going forward within crypto or blockchain, where are you most excited?

Let’s see. So I’m excited in the few applications that actually seem to have coherent use cases. So it’s weird to me. Most of the blockchain use cases, they seem to be falling into the hole of like they’re not really blockchain. They’re just Bitcoin, and the only thing that’s good about them is that you can transact in payments easily, which is like, “Yeah, right. That’s what Bitcoin lets you do, transact in payments easily.” This other blockchain company, they’re just benefiting from the fact that payments are easy. They’re not doing anything extra special.

So where I am bullish though, DeFi in theory sounds great, right, because the financial system is so old, right, in the US and it’s so annoying to use. For example, just like putting money in savings and getting a reasonable interest rate. Right? Like, “How can I put money in savings right now? But instead of earning 0.1%, earn 4%?” Right? Like, “Is there any way to do that?” DeFi promises that there will be, but the problem is you’re taking on some risk of some trust somewhere else in the chain. So could we theoretically do that? Could you put Bitcoin somewhere and have a smart contract where your Bitcoin gives you back more Bitcoin? Theoretically, that makes perfect sense, but I’m just… I haven’t seen the architecture of how that could possibly work if ever.

Yeah, that makes sense. I want to zoom out and talk about a different topic as we headed towards close here, which is the rationality community. So my understanding is that you’ve been involved or perfectly involved, and LessWrong was such an interesting intellectual movement. I guess I’m curious how you see how that community has evolved. Where is the rationality movement or community today, and what does it splintered into? Technically, what is LessWrong equivalent today? Where are the interesting intellectual movements? So those are a few questions, but why don’t you expound a bit?

Yeah, yeah. I’m glad you asked because I always think that the rationality community should just get more exposure because I feel like they’re steadily getting more, but people don’t really know about them. So here’s my chance to do a little publicizing. So the rationality community, it’s like all those books you read, all those popular books that say like, “Oh, we’re so biased. Our brain is so messed up. Humans are such fallible creatures.” They start there, and then they’re like, “Okay, but how do you fix it?” Right? How do you take your brain and just make it think as well as possible given the limitations you have? Right?

They take the next step, and the reason they’re so interested in that, one big reason is because they also want to do that with AI. Right? They want to have some pathway that when you have to type code into a computer, and then it starts thinking on its own, you really want to make sure you’ve programmed the right stuff and you haven’t just used your own biases and made magnified versions of those in AI because then there’s the whole AI risk factor of like you might not get a chance to… You might not get a do-over if you don’t get it right the first time. So the stakes are high to really understand how to think properly.

Totally. How should we think about the rationality and post-rat community?

Well, I haven’t really dug in to post-rat, and I think that we should just focus on regular rationality. I don’t think we’re ready to move to post-rat yet just because I think that the bread and butter of regular rationality, it’s just starting to seep into the mainstream. So the idea of Bayesian probability or just probability way to judgment or expected value. It’s slowly becoming more and more common to be like, “Okay. Give me a probability estimate.” Right? There’s a famous example, like the book Superforecasters by Philip Tetlock. That’s a big rationality community book, and it’s slowly seeping into the mainstream a little bit more every year.

For example, if you would read… The book points out that like… When they’re talking about like Iraq and weapons of mass destruction, they would just use words in their reports to the president, like the intelligence reports. They’d be like, “Quite likely,” or like, “Significant chance,” and they use these vague English words. Then, later, it turned out that those words, they could mean anything from 10% to 90%. Right? So they were sacrificing the ability to communicate about belief states, and it turns out that that’s a really useful concept. Today, it’s just so much more common to be like, “Can you give me odds? Can you give me an expected value calculation?”

It turns out that using your brain to get a little more precise like that is totally worth it, and it’s a good skill to develop to try to get things down to as tight of a probability range as you can. Famously, his Superforecasters, they’re a group of people that just consistently predict stuff really well. It’s like in Minority Report, right? Like those predictors, except it’s actual people who exist, right, and they’re just really good at the mental habits that make you good at predicting the future. Right? So for example, they don’t even need to be an expert on the topic. They just have to pay attention to the statistics, the baseline statistics, and then go and do a little research, and make a few adjustments. They’ll do better than an expert that has a theory that they’re attached to. They have the skill of prediction.

Yeah. So if we’re reflecting back 30 years from now on the biggest contribution that the rationality community has created, what would you say to this to intellectual culture at large?

Let’s see. So you can really go down the list of greatest hits, and probably each of those has made… like it made its own wave. So definitely, yeah. I got to hit on the stuff. I just said the superforcasting, the probability estimates, expected value. That’s a huge one, and then another one is cataloging biases and making those mainstream, so like anchoring bias. Right? It’s becoming more mainstream, the idea of like, “Hey, if I just…” If the first thing I tell you is some estimate, some random estimate like, “Hey, how many Jewish people live in the United States? Do you think it’s greater than or less than 5 million?” I’m going to get a very different answer from you if I then asked you to estimate compared to if I said, “Hey, do you think it’s greater than or less than a hundred thousand?” Right? Whatever answer you give me is suddenly going to be very modified by just the random number that I chose to tell you in the question I asked.

Liron, it’s been a fascinating conversation. For people who want to learn more about Relationship Hero, about Bloated MVP, about the rationality community, and some of the thoughts we were just talking about, where can you point them?

Yeah, so go to relationshiphero.com/vs. It’s a special code for Venture Stories. I’ll give you $50 off or just check me out on Twitter. It’s just my name, liron.

Awesome. I highly recommend doing both of those things. Liron, thanks so much for coming on the show. It’s been a great episode.

Thanks, Erik. I enjoyed it.

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Founder/CEO of Relationship Hero