How Hiring (And Firing) Can Make or Break Your Startup with Re

Summary of Episode

#72. Could your hiring and firing strategy be hurting your startup? This week on the Startup Savant podcast, Ethan is joined by Karn Saroya, founder of Re a blockchain-based reinsurance startup. The pair discuss Karn’s evolution as a leader from his first startup to now, how performance management and hiring (or firing) employees can make or break your startup, and the real value behind Y Combinator’s personalized growth metrics. 

About the Guest: 

Karn Saroya is a serial entrepreneur and founder of Re, a blockchain-based reinsurance startup. Karn previously founded several companies including Stylekick; which was acquired by Shopify.

Podcast Episode Notes

[00:05:30] Why build a reinsurance company on a blockchain?

[00:23:54] Can you share a story you have about making a poor executive hire?

[00:29:23] How do you get comfortable with firing employees? 

[00:32:22] How can small companies manage employee growth expectations? 

[00:34:30] How are you incentivizing great employee performance?

[00:36:24] How have you evolved as a leader between your first startup and now? 

[00:38:54] What is one of your startup war stories?

[00:42:03] What was the week-over-week metric established for you by Y Combinator? 

[00:43:45] What's your number one piece of advice for early-stage entrepreneurs?

Full Interview Transcript

Ethan Peyton: Hey everybody and welcome to the Startup Savant podcast. I'm your host, Ethan. And this is a show about the stories, challenges, and triumphs of fast-scaling startups and the founders who run them. Our guest on the show today is Karn Saroya. Karn is a multi-time founder, I guess some people call those a serial entrepreneur, I guess. 

Whose previous companies include StyleKick, which was acquired by Shopify, and Cover, a Y Combinator-backed insure tech startup. Today, Karn is here to talk about his new venture in the insurance space, RE, a blockchain-enabled reinsurance company. And before you turn your nose out there at the word blockchain, Re raised a $14 million seed round in late 2022. Today, Karna is here to talk about his new venture in the insurance space, Re, a blockchain-enabled reinsurance company. And before you turn your nose up at blockchain, Re raised a $14 million seed round in late 2022. And for those that aren't familiar with the crypto space, that was after the crypto bubble burst. 

So big deal. We've got a lot to talk about today, but before we jump in, I wanna ask y'all a quick favor. If you like what you're hearing, give the show a follow. Whether you're listening on Apple Podcasts or Spotify, or you're watching on YouTube, follow or subscribe, and that is the fastest and simplest way to support. the show and the founders that we interview. That's it, just subscribe to the show. All right, I can't wait any longer. Let's get into today's discussion with Karn Saroya of Re. Hey Karn, glad to have you on the show.

Karn Saroya: Thanks for having me, man. Appreciate it.

Ethan Peyton: All right, cool. And through the magic of audio, nobody had to hear me mess up that intro four times. So you're nice and warmed up. I'm warmed up. Let's get into this. Can you answer a very simple question? What is Re?

Karn Saroya: Sure.

Karn Saroya: Yeah, so you can think about RE as like a decentralized version of Lloyds of London. We work with, RE insurance resolves insurance for insurance companies. So we back other insurance companies and we specifically back real world risks. So the insurance companies we work with back hundreds of thousands of service workers for workers' compensation, tens of thousands of small businesses across America. planes taking into the skies, farmers farming and protecting agricultural property. Basically, anything you can think of as an insurable risk, we ultimately back. The nuance here is that every one of our transactions is moralized on a blockchain and the world can, investors, regulators can query exactly what's on risk at a given point in time, how much capital backs the insurance companies that were backing at a given point in time and builds. something akin to a capital transformer that allows crypto asset holders to supply capital that backs insurance companies around the world.

Ethan Peyton: All right, that was a lot of smart-sounding words.

Karn Saroya: Sure.

Ethan Peyton: Let's go back to reinsurance for just a second.

Karn Saroya: Yeah.

Ethan Peyton: You said insurance for insurance companies. I'm assuming that means that if farmers' insurance or state farm insurance is insuring my car, they are taking a risk, but their risk is a risk that is also insurable and that is what reinsurance covers. Is that anything close to correct?

Karn Saroya: So think about it this way, you may be an insurance company, and there are many thousands of insurance companies globally that does a particular line of business. Maybe you're backing professional pilots taking this guy's, maybe they need liability insurance. Rather than hold the collateral to back the insurance policies that you sell, you'd work with a reinsurer, so Munich Re, a Swiss Re, a Re, to absolve yourself of the need to pay claims. And so you would go to a reinsurer and say, “Hey, I originated these tens of thousands of policies, this hundred million in premium. I would prefer that I operate in a defined economics business. Just pay me a commission for originating the business and you guys go on and settle the risks.” That's the basic premise. There are a variety of reasons to do this. Could be you're too concentrated in a particular geography or line of business. You're trying to optimize your balance sheet to do other things, but it is a massive, massive business. We're talking about nearly a trillion in reinsurance premiums that are generated annually.

Ethan Peyton: Okay, that makes more sense to me. So they are kind of offsetting some of their risk by essentially buying insurance from a reinsurance. So I'm bungling this a little bit, but basically they're going to pay less if a major claim happens, they will essentially be holding less risk. They're sharing some of that risk with you. They are kind of locking in their gains by sharing that risk with you. Is that close?

Karn Saroya: That's one of the motivations. Think of reinsurance as the ocean and insurance companies as boats on the ocean. So

Ethan Peyton: Okay.

Karn Saroya: you have this massive diversified capital layer that can absorb shocks from a variety of different diversified risks.

Ethan Peyton: Okay, that makes sense to me. All right, so then let's transfer to the next kind of non-standard, oh my God, why am I doing this today? We're gonna cut this out. Aspect, that's the word I was looking for. So let's move into the next kind of non-standard aspect of REE as a company, and that is that you are building this company. you know, using a blockchain or on a blockchain. Can you let us know what's the, why choose to build a reinsurance company on a blockchain when reinsurance companies have already existed and have existed for decades without the need for blockchain technology?

Karn Saroya: Yeah, look, the oldest, well, at least the one that I know as the oldest insurance or reinsurance market in the world is Lloyd's of London. It's been around for 350 years and has reinsured or insured just about everything that you can imagine. Right? You can think of it as perhaps even the closest thing to a global transaction layer for all insurable risks. Now, it is still a business that is largely conducted on handshakes, spreadsheets. Word documents moving from one intermediary to another. 

And if you step back a little bit and think about what insurance actually is, what's the product, there's no physical product. We sell trust, right? And the way that we enable that is through contractual flow between the policies that we are selling that back the risks that we back, all the way to the individuals or entities that are providing the capital to back those risks. Blockchain, set crypto aside. Blocktane technology from end to end is the perfect use case. This is the perfect use case for this. 

Now you have the ability to transform the contractual agreements between insurance companies and their policyholders and everybody downstream on chain in a super transparent way. Transparency begets trust. Trust begets liquidity. You now have the ability to bring in a whole new set of potential investors to provide the capital that backs insurance globally. To us, it was a very, very obvious way of turning something that memoralizes real-world economic activity in the real economics that are generated by those activities and transferring them to crypto asset holders. There are clearly a broad cross-section of other applications here. If you think about tokenization of real-world assets, anything that's scarce can be fractionalized. You can create secondary market liquidity off of things that would otherwise be a liquid, but I digress. At the core of this, it is contractual flow memorialized on chain in a very transparent way to the benefit of investors and regulators. It's like going open kimono on every transaction that you're party to.

Ethan Peyton: That actually, that was an answer that made more sense to me than I even thought it was going to, in that insurance is essentially the product is trust and that blockchain technologies, obviously, what they allow for is that pure transparency where everything is visible that is put on the chain and therefore, I've thought of blockchain technologies in the past as a way to kind of work without trust. But it looks like, or it sounds like this is more of a situation where you are using that transparency to increase the trust. So A, a really cool use of blockchain, and B, I think yeah, from what you're saying, it does add value to the kind of service or product that you are providing.

Karn Saroya: Yeah, look, I think most protocols and the ethos behind the development of most decentralized protocols is folks are actually arcing towards creating public utilities, right? Like these decentralized pieces of software that are observable, modifiable, you have an economic stake in. Insurance itself is a public utility. I think if you extract away most of the, call it like the puffery around it, it is... at the end of the day intended to support people, businesses, and governments against catastrophic events. Because insurance is not about the potential for profit, it's about protection. Something like a protocol where people can pool capital and back all of the world's insurance risks is something that's trackable and quite frankly I feel like inevitable given the new financial infrastructure that's coming into the fore over the course of the next couple of years.

Ethan Peyton: So let's move one layer deeper into this blockchain conversation. And we're not gonna go too deep because I think that it's really easy to get lost in the sauce here. But I think that this is a reasonable question and your answer will go to show why you make the decisions that you make. So the question is, you built this product on the Avalanche blockchain, which for people that don't know out there, there are multiple different. and they all have different technology and different positives and negatives. Why did you choose to use the Avalanche blockchains instead of a more well-known and I guess, quote-unquote, widely accepted chain like Ethereum?

Karn Saroya: Yeah, look, the first thing that attracted to us about Avalanche is the potentially used subnets. So you can think of it as the ability to withhold certain data in a permissioned way. We have access to policyholder-level details. There are certain things that should never make their way onto a public blockchain, PI-related or exposure related. What's important is that the economics... of an insurance contractor, how, you know, the performance of what you put money down for should be very transparent. You should be able to back into how decisions were made to back particular insurance companies or insurance programs. The individual details are not necessarily as important, except on a permission basis to investors and to regulators. 

The other way to kind of unpack this is Avalanche and Ava Labs in particular, they're have made a concentrated bet that there's going to be a broad swath of use cases where you tokenize real-world assets and you're going to need significant compliance there. So if you look at Spruce or Evergreen subnets, you have KYC, KYB built in. There's a future here where DeFi use cases are no longer self-referential or predicated on Ponzi economics. You're now moving into an era. where folks are going to be building compliant products for real-world use cases where real returns are generated and find their way to crypto assets. And I think Avalanche and the Avalanche team is really at the forefront of that. And again, I'm not a degen, I'm here to build like a global reinsurance layer. I literally want to build the ocean that backs all insurance companies and all insurable risk on earth. The only way that I'm going to be able to do that successfully is if I'm compliant. And I've got... you know, the regulators and the capital providers, all on the same page with respect to what we're building and the future we're pushing forward.

Ethan Peyton: Yeah, it doesn't seem like you get regulators and investors to buy into something to the tune of $14 million on a seed level for someone who's a degen. 

Karn Saroya: Yeah.

Ethan Peyton: So yeah, you're not flipping monkey JPEGs, that's for sure.

Karn Saroya: Crazier things have happened, right? And it's not as if that just comes from scratch. Like I built a couple companies. I built an insurance company from scratch, having not known anything about insurance to start off with. And so there's a little bit of street cred there. But also, we kind of exist at the intersection of folks that know the insurance and reinsurance space intimately well, but also understand DeFi. And I think there are maybe like five to 10 people on Earth that could actually. you know, make that claim. So not that crazy, I bet.

Ethan Peyton: So you mentioned the prior companies that you started, and this is actually a really good segue into this next topic. I know that the companies that you've been involved with seem to be pretty successful, and not everyone can say that they move from one success to another success, and I'm sure that there have been less-than-perfect times and failures out there, but it really seems like on the whole, you've done a very good job at building success. 

So I want to try to get into, you know, get into your head a little bit and really try to pull out some of the methods and thinkings and strategies that have gotten you there. So the first area that I wanna jump into is kind of like hiring and management and company culture. And let me read a quote from your company profile and I tried to shorten this down like two or three times, but there's just nothing in this quote that can be left out. 

So first off, everybody should go read the company profile over at slash podcast, because the whole thing is gold. But let me stop talking and jump into this quote. “Once you get past the early startup killers, like founder conflict and not finding product market fit, most hard times stem from poor hiring and performance management discipline. It is incredible how much of company culture stems from who you hire, the systems you have in place to promote strong performers quickly, and inversely, to let people go.” 

So with that, there's kind of two main concepts that stick out to me, and you can say, no, there's this many, or these are the ones, but the two that I see are, again, hiring and performance management. So I wanna talk a little bit about both, but since I think that you are probably 12,000 times better at either of these things than I am. I'd like you to, you know, guide us into these topics and maybe pick which one of those two or a third that you saw that I didn't see that you'd like to talk about first.

Karn Saroya: Yeah, sure. So look, I can just go sequentially, right? Because I've built things zero to one, and I've also kind of built companies to some scale now. The zero to one, finding product market fit, the profiles of the individuals that you're working with, really, are these folks that are going to be adaptable, nimble enough, not going to get flustered by testing a hypothesis, seeing it fail repeatedly? But you know, using what they've learned to kind of arc to an answer and find a nugget of value that they're trying to deliver to whoever the customer is or whoever the user is that's a unique skill set and I think is not necessarily, you know as valued at scale. Or is as readily available at scaled companies or individuals who have worked at scaled companies. 

It is magical. It is like the most fun part of building a startup and once you've got it then you really hit yourself… you’ve brought yourself into another set of decisions that could kill your company in other ways. The easiest way, and I think the last six, seven years have been kind of symptomatic of that, is you raise a lot of money, you hire a lot of people. Your actions with respect to business construction and individual function construction aren't linked to an economic outcome. There isn't a relevant revenue per head number. There isn't... The investment decisions are how you allocate capital into headcount or infrastructure don't necessarily have a reflected in your improvements in your gross margin. There's a whole bunch of stuff that kind of flows out of it that can kill your business simply because you consume too much cash. If you think about it, for software businesses, the biggest headcount piece is usually, sorry, the biggest line item piece is usually headcount.

Ethan Peyton: Mm-hmm.

Karn Saroya: And where I've seen it get out of control, and you kind of see it now with many companies paring back after excessive hiring, is the propensity of individuals who have not met a culture fit bar or a utility bar to continue to hire people like themselves and build fiefdoms around themselves. Like generally speaking, if you're a manager, and we're just talking about middle management, not necessarily even senior. The way that you think of success is, who have I hired? Can I show career progression through the ability to manage a team that I may not even need to accomplish the goals that I've set out for myself? So how do you avoid getting into situations like that? 

I think almost every company I've ever come across at some point or another deals with this. It starts with spending a significant amount of time hiring senior executives that percolate a culture of, hey, make quick decisions around culture fit and performance. If you feel like folks aren't working out, they're probably not working out, you need to get rid of them. If you feel like, it's not necessarily feel, because you quantify this in a number of ways. 

If there are clearly people that are outperforming and are delivering value over and above their peers. You need to find ways to accelerate them and make sure that the rest of the company sees that these are the behaviors that are intended to be rewarded. So we're talking specifically of performance management, how do you scale out your business? This is a thing that's killer.

You wouldn't believe how many executives I've come across that have never fired somebody in their entire career. So what exactly is being performance managed? If you've had tens to hundreds of people report to you over a course of a couple of decades, You've never actually pulled the trigger. And what does that say to the rest of the team around what it takes to succeed where you are or what it takes to just continue to be where you are? 

So performance management is pretty paramount. The cleanest way to get around it… because you as an individual, as a founder, you're going to scale certainly. But the way that you scale is by identifying individuals around you that do things that are better than you. and who you can delegate to and trust their general judgment. Typically speaking, they'll have some domain expertise that will take you a decade or so as an apprentice to pick up. So spend an incredible amount of time making senior executive hiring decisions. Really you need to feel like those people, you want to feel a little stupid talking to those people.

You want to feel like there's something to learn there, and you want to see that there's a track record of these individuals accelerating people that make sense, getting rid of people who don't make sense, to keep the company culture really, really healthy. And that's how you control the headcount cost. It's how you control headcount growth. And that's how you retain A players because A players know exactly who the other A players are. B players don't know, and they tend to attract other B players.

Ethan Peyton: So let's split this out a little bit.

Karn Saroya: Yeah.

Ethan Peyton: Let's just talk specifically about hiring. And I know that something that you said, and you mentioned this a little bit right here, but something that you said on a panel that I watched while I was doing research was that hiring changes, and especially on the executive level, hiring changes pretty drastically once you've hit product market fit. So what, I mean, what... I'm assuming is that just because now you have the cash flow to hire better people or is it literally a difference in the people you need that facilitates that massive difference?

Karn Saroya: So I'll start by saying that building a business is really hard and you don't want to invent everything, right? You don't necessarily want to reinvent management. There has been a lot of literature…

Ethan Peyton: Preach.

Karn Saroya: …and many, many experiments in the form of other companies that have been built that have iterated on management structure. Your job is to create value for your customers, right? That first and foremost. You know, everything else orients towards that. And if a shortcut is employing individuals that have a demonstrated history of being able to build out a function, whether it's finance, whether it's ops, whether it's product, whether it's growth, what have you, your job is now identifying those individuals, empowering them to make sure that they do that thing better than you could ever do if you were tasked with that solely. 

And again, you need to be in a position to, or at least you need to feel like you're learning something from them. Because part of this is being educated. You raise a lot of money, you build a business, it's like expensive tuition for, I don't know, ultra 100x MBA, or whatever you want to call it. So yes. I think that… 

We talked about zero-to-one people being different from scale people. There are a lot more scale people. And identifying the scale people, elevating them quickly, or getting rid of them really quickly. Like a senior executive, if they're not working out, you should get rid of them right away. There's just no question. The damage that they will cause is not just at the decision-making level, the C-suite or whatnot. It's going to manifest in everybody they hire, the attributes and behaviors of everyone that they have hired. 

So the potential impact on your business can be absolutely devastating if you make the decision wrong at that level. But again, you should not endeavor to try to do everything. And you should not endeavor to try to reinvent management. We've arrived at kind of a steady state of things at work. Just focus on making sure you deliver value to your customer.

Ethan Peyton: I feel like some of this advice might be coming from a learned experience. Do you have any stories that you're willing to share about maybe making a poor executive hire or something along those lines?

Karn Saroya: Yeah, I mean, I've certainly done that and I've certainly hired really well. You know, one of my regrets with cover, when we were building an insurance company, was not hiring a chief insurance officer, somebody who had built up an insurance practice prior. Cause again, I had to build an insurance company. I practically knew nothing about insurance, but I found myself doing things like pulling together, you know, state filings. for individual products and becoming an insurance product manager. Picking up insurance licenses and doing some basic actuarial work. It's not stuff that helps me scale the business. Certainly gratifying from an educational perspective, but there are other people that can do that stuff. 

So one of my regrets is actually not hiring for that earlier. When we did hire, it took me a year and a half to hire for culture fit, for prior experience and we ended up hiring folks that had run publicly-traded insurance companies in the past and I felt really good about that. 

One of the stories that I like to tell, you know, when we were at Shopify, and I don't know how much of this is in the public domain or not, but I'll keep it as sanitized as possible. One of the things that Toby and the VP, you know, the CPO Craig Miller did really well when they were scaling, we're talking about, this is pretty early days. 

They brought in a fair number of founders that had found some scale and treated them like the product management layer. And that worked really well, kind of, at the scale that we were at. And at some point or another, during my relatively short tenure there, there was an attempt at professionalizing that product organization. And somebody from a FAANG company who had managed a massive product with an SVP title was brought in. 

But without the experience of actually having delivered anything or built anything from scratch in the past. And to Toby's credit, he looked at that situation when it was very clear that this very elevated product person was in a role that they were kind of out of their depth for. After making a very big show of, hey, it was a bit of a coup to get this person, in two weeks terminated that person and sent out an email to the broad company. and explaining exactly why. And I thought that was one of the rare examples of bravery that are absolutely needed if your gut is telling you that something is not working. 

There are lots of reasons to be scared about not pulling a trigger on getting rid of somebody who's not working. What is the company going to think? What is the public going to think? Are people going to be spooked? But at the end of the day, I guarantee you that Toby felt way better about it after than he did during the two weeks of that individual's tenure. And I can guarantee you, I can tell you that when I pull the trigger on making sure that we're protecting company culture and performance, I feel better every single time. It's like pulling off a bandaid and seeing fresh skin.

Ethan Peyton: So let's jump out of the what and kind of get a little bit into the how. I mean, firing people, and there's words that make it sound better, letting people go layoffs. But when it comes down to it, somebody is losing their job, we can just call it firing for the simplicity of this conversation. 

It's hard, you know? And there's such, you talk about these possible external invalidators that are coming at you that are giving you this pressure but there's also tons of internal you know distaste and you don't want to do that and you feel like you're ruining someone's life and you know I was actually in a situation the other day where I was talking to a guy and he was I mean this guy was a tiger he was like I'm gonna you know to do this and that and he and he was smart and he was gonna do everything in this company and he had all these great ideas and it sounded a lot like it was like everything was going to work out. 

But his big ask of the kind of group we were in was like, how do I bring this person on? Kind of like how do I hire? And once that question was answered for him, one piece of, I don't know if I want to call it advice, but one set of, I guess, advice that I gave him was, you know, this... I think you probably need to get comfortable with letting people go as well because what it sounds to me like is you're so worried about bringing on this one person because you think it is going to be like a permanent fixture of your company. Whereas truly, if you bring someone on and they aren't the right fit, you have to be comfortable in letting that person go, and this tiger turned into a kitty cat. You know, he shrunk into himself, and he... everything about his tenor just really changed. And so I can see how this affects extremely strong people just talking about it, just talking about the theory of doing it.

Karn Saroya: Yeah.

Ethan Peyton: So all that being said, how do you do it?

Karn Saroya: Well, look, I think you need to protect the company. You need to protect the other employees. You need to protect the shareholders. And it is a rational economic decision to do so, in the way that I've kind of described. But yes, there's a human element to it. 

I like to think about the person and how they're spending their time. I think we've all been in a position where we've been in a most of us have been in a position where we've been in a job where it's clearly not working out. We feel like we're not fully utilized. Maybe we're struggling for a variety of reasons. And quite frankly, we all have one life, probably. Wouldn't you want to be optimizing the way that you spend your time following your highest value purpose, growing as quickly as you can, scaling as quickly as you can into something you genuinely care about? 

And that's the lens that I look at it through. Because if that's not the person that's in the role, that's super important, that protects the jobs of ostensibly hundreds of other people, then that person needs to find their next best use, right? And that's an introspective process that they need to go through whether or not you continue to employ them. And so it is tough. It does feel unnatural. It is an incredibly important skill to have. And conversely, you have to be able to... The other side of the coin here is there are people that scale incredibly well, and you need to reward and support them. Right? Like, that is equally important to culling a performance that is not necessarily meeting your standard. 

Because it is a lot about these optics internally. Like, hey, if people are really pulling their weight, that's not just obvious to you. That's obvious to the rest of the team. And they want to see that positive reinforcement, that positive feedback loop. As much as they want to see folks that are acting as kind of an anchor against the company kind of out the door.

Ethan Peyton: So then let's jump into that. Let's talk about that other side. And people, I think there have been lots of surveys out there that say employees want to feel growth. They want to feel like there is a path forward for them in their career with whatever job they're doing at the time. 

And I think that when you think of a large company, maybe going back to one of those FAANG companies, there are positions with the titles of SVP and VP. and senior manager and manager and junior, the layers can go very deep. But when you're talking about a company with three, 10, maybe even 15 people, the amount of layers usually is either pretty flat or maybe two, possibly three layers at that point. So how do you manage people's... kind of growth expectations when you can't necessarily give them a quote-unquote better title or, God forbid, more money.

Karn Saroya: Sure. Look, you sign up to join an early-stage company for a couple of reasons. And they may be economically rational or not. I will say that the type of people to join early-stage companies are the ones, especially the ones that join businesses that are compounded quickly, end up being some of the highest leveraged people that you get to meet right like these are just people that scale into a broad variety of disciplines. They're able to tackle unstructured problems in a manner that you know typical FAANG employee probably wouldn't be able to do candidly right?

So you know it is what is it you want to do with your time you know how does it that you want to be rewarded is it on the upside is it is it more of a stability thing, you know? For personal growth I mean that's a that's a question for the individual right like what is it that they actually want to accomplish? Like 10, 20 years down the line, what are the stories that you want to be able to tell? Do you want to talk about the three or four companies that you worked in the Bay Area that became unicorns and your experiences through that? Do you want to talk about being part of the Apple Vision Pro team, thousands of folks that brought something new into the world?


It's a really deeply personal thing, and it should be calibrated to kind of like how you want to live your life. Because early-stage startups are not for everybody, candidly. And quite frankly, starting a company is not for everyone. It's in many ways a deeply irrational economic decision, predicated on somebody really believing that there's optionality and value you're going to lock down the road. And that's hard to quantify because you're still kind of coming up with stuff as you go.

Ethan Peyton: So is this something as an executive, are you kind of on the ground, are you talking to these people and understanding what their personal growth goals are, or is this something that you have other people do? What's the kind of like on a tactical level, how are you making sure that people that are performing extremely well want to continue performing extremely well for you?

Karn Saroya: Yeah, so I mean a lot of my more recent hiring has been the senior executive level and that's a bit more defined, right? Like people know what they're signing up for and usually it's the top job or kind of near the top job. If you're an IC transitioning into a senior IC or an IC transitioning to a manager, usually it is, hey, like a candid conversation with your manager who has a couple of reports that they're working through. to set out what your career goals and what you hope to achieve are over the course of the next year or two. Right? 

And then you put a plan in place as to what projects you need to be staffed on to be able to accomplish that, what skills you need to pick up to be able to accomplish that, what are the strengths that you can lean into to get to where you need to be, what are the things that need work to get to where you need to be. And hopefully, the business moves in a direction that is able to support that over time. Right? But it is, again, you know. As much as this is about support internally, you're still playing somewhat of a single-player game. You need to chart out what you are doing and what you hope to be doing in the future and connect the two and the actions that you need to take to be able to connect the two. So there is agency here on the part of the individual to get to where they need to go.

Ethan Peyton: That makes sense to me. So let's jump from external to internal. And something that really shows through your writing and some of the other media that I've seen that you've done is that you really seem to be dedicated to evolving yourself as a founder and a leader. So through all these companies that you've created from nothing and built into what they are, what do you feel like the biggest change is between your time at Stylekick versus now?

Karn Saroya: So I'd like to say that everything's fertilizer. Like when I started my first business, I didn't know how to code, I hadn't built a product before, had never acquired a user, had never generated a dollar of revenue on the internet. And pure survival instinct and adrenaline and a need to not disappoint my parents gets you to solving those particular things and getting into a mindset that gets you to product market fit in finding that negative value. It's fertilizer because the first time accelerates the second time, accelerates the third time. 

And so into the second business, now you have head counting of the hundreds. You have run rates in the many tens of millions of dollars. You've gone from a toy into something that is much more substantial and meaningful. And now you are laser focused on making sure you build the house, the scaffolding, that's kind of necessary to make sure that you build a sustainable business. Whether you build a sustainable business or not is a separate question from actually building a scaffolding. 

And then, you know, the third time it just feels like everything goes a lot faster, right? So you make fewer mistakes, you get to answer as much quicker, you've already got a baseline set of skills that are necessary to like avoid the traps that will kill you. You know early on and if it doesn't come from you you've now got a network of other founders who have Equivalent war stories, maybe not mapping one-to-one, but they're very clearly instructive with respect to how not to screw up. You know building something out. 

So yeah, I mean that's kind of how I think about it. It's not It's not like flip a switch right there's quite a bit of adverse. It's quite a bit of adversity here And you're living dog years, you know living multiple people's careers, kind of in a couple of years and trying to absorb as much of it as you can. But you know, you have the incentive to do so. You have the opportunity and quite frankly the privilege of being able to wake up every day, think things up, make them real, right? That is not necessarily something that is afforded to everyone. And I think you've got to step back a little bit and accept that you should be grateful about that and work hard to kind of fulfill your promise.

Ethan Peyton: Do you have any war stories that you'd like to share with young founders that's like, all right, young buck, this is really gonna teach you?

Karn Saroya: Hey, okay, I've had a lot of, through the course of the years, raised many tens of millions of dollars, had to deal with bad actors that have stolen from us, I've had to deal with exceptional employees that I find ways to elevate, I've had to deal with bad actors and employees internally. There's a whole slew of stuff. I think you just got to roll with the punches. Take things as they are. 

Address problems as quickly as you can, don't let things fester, keep very focused on why you're doing what you're doing, and don't get caught up in the periphery which is very commonly distracting, going to parties, going to conferences, going on world tour, just deliver value for your customers. War stories-wise, it's like... I actually do find that still, even like seven years out of doing YC, a lot of stuff still maps to what they try to impress upon you, which is like don't spend money too quickly. Understand how to get the default alive under all circumstances, meaning that you need to know your numbers cold and understand the levers of your business that you need to pull to be profitable. 

That is, exist outside of... this environment where you're on a venture-funded drip or something to that effect. Don't hire too quickly. Be decisive and make decisions. Identify the problems that you're facing that are in the way of growth and solve them. Make sure you solve them week to week and don't let things fester. So I actually do find myself reflecting on how nice and easy YC made it. It's just like. Hey, here are dumb things that you should not do that don't seem dumb on the outward face of it, but in a couple of years will seem really stupid. So I generally do, even if you don't do YC, I kind of think that going through some of the basic tenets of how to build a business in the YC way is a good exercise.

Ethan Peyton: Yeah, definitely I've heard a ton of really interesting things, not like the face-value things that most people sort of think of when they think Y Combinator. But I've heard, we've had so many Y Combinator startups on this show and I hear something slightly different from each of them every time. And I know that before we started this episode, I was asking you a question and you mentioned that the best piece of advice that you got while you were in Y Combinator was to find that one metric to focus on and focus on that. Don't do anything else, just grow that one metric and make sure that you're measuring in a week-over-week fashion and seeing, what was it, like a 7% week over week that was kind of their target that they set for you?

Karn Saroya: Yeah, yeah. I mean, it's more about keeping yourself honest than it is about anything else, right? Like, the 7% or 10% metric is just about, hey, does this thing actually have legs? It's a clear indicator…

Ethan Peyton: Mm-hmm.

Karn Saroya: …as to whether or not you have product market fit or not. But if you're not measuring, you can't improve, right? And so, hey, like, it's easy to let months and years go by kidding yourself. To be frank, to do this, you need to be positively self-deluded. You need to, in your mind, shard away the real risks and focus in on your general desire to bring something new into the world. As part of that process, a lot of times, entrepreneurs shard away the fact that they still need to be building a real business that is compounding. Your job is to build a little black box. where you put in a little bit of money and you get more money out the end. At its core, abstract away a mission, abstract away everything else. You can't be a self-sustaining business. You can't support a mission if the machinery of your business doesn't work, right? And that's, you know, in a euphemistic way, targeting a number, growing it, keeping yourself honest is kind of speaking to that.

Ethan Peyton: All right, so we've covered a lot of different advice. We've mentioned advice for people that are pre-product market fit. We've mentioned advice for people that are post-product market fit. We've talked about what not to do. And so I feel like we've really covered it, but one question that I really love to ask at the end of every episode is, what's your number one piece of advice for early-stage entrepreneurs? So... Have you already answered that question? And if so, give it to us in a nice, tidy, with a bow.

Karn Saroya: Yeah, so look, I think this is more of a personal thing than anything else, but this is an ultra marathon. It's going to take a long time, right? You're going to dedicate a decade of your life to doing whatever you're doing. Stay healthy, right? Talk to your parents, go to the gym, drink water, wear moisturizer and sunscreen. Don't forget that you're not a martyr and that you've got a life to live and take care of yourself because there's really nothing else that's kind of more important. And I think having done this a couple of times and felt like I was a little bit of a martyr the first couple of times, you know, at the end of the day, it's just, it's on you, man. Just keep yourself healthy and happy to the extent that you can and good things will come from that.

Ethan Peyton: Well, I'm glad I asked that question, dang. Thank you for sharing that because now I feel validated in that I want to be a healthy guy. All right, but enough about me. Let's go back to Re. What's next? What are we gonna see here in the next few months from Re?

Karn Saroya: Yeah, man, it's been a quick start. We put on 35 million premium, just seven people, for this business. There's a lot of operating leverage in the business. I think we can get to hundreds of millions in top line with less than 10 people. It's a unique kind of opportunity to build something new into a massive space that is very unsexy, to the point where I need to explain that it's insurance for insurance. 

And with that, with a unique set of individuals that have been building product with me for about a decade. So I feel good about it. I feel like a lot of the basic tenets of, hey, is this thing survivable? Those boxes have been checked for me. I have a very good idea of the underlying economics of this business, what I need to make happen. I'm very excited about the prospect of the scale of this business and how transformative it can be for something that... I think of it as kind of a little bit of a substrate for capitalism. You can't really do anything without insurance or reinsurance. You can't drive your car. You can't build a building. You can't take to the skies. You can't have a doctor or a surgeon perform an operation. So I really do like how impactful the work is, even in a direct second or third-link type of way.

Ethan Peyton: That's an amazing answer. Every time you give an answer that's just like 300% better than what I think, it just makes me feel better about insurance. I used to be involved in insurance, and yes, definitely unsexy. You're like insurance squared since it's reinsurance, and every time you talk about it, I'm like, dang, I'm a bigger fan of reinsurance than I thought. All right. Last question, where can people connect with you online and how can our listeners support Re?

Karn Saroya: Yeah, so you can follow us at reprotocol. I'm trying to get at re as Twitter handle. So if somebody can help me with that, that'd be great. Or at Karn Soroya, or just email me at Karn. So Karn at

Ethan Peyton: All right, help this man out, he needs the re-handle. Somebody get this man the re-handle. We're gonna put everything that you just said, all the links, everything else that everyone heard today in the show notes over at slash podcast. But that is gonna be it for this episode. Karne, thanks for joining us. Really appreciated having you on.

Karn Saroya: Thanks for having me, Ethan. Appreciate it.

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