Wisdom list
Apr 10, 2022

The Wisdom List: Leif Abraham

The co-CEO of investing unicorn Public shares his lessons on fundraising, hiring and finding focus.

Artwork by 
Marc Hill
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If you only have a couple of minutes to spare, here are the lessons investors, operators, and founders should know about building, according to Public co-CEO, Leif Abraham.

  • Understand your audience. You must know who, precisely, you are building for. Understanding this early on in your company life cycle can be especially powerful, as it allows you to prioritize acquisition efforts. The hope is to build an early user base that will drive you toward your end goal. 
  • Create an emotional connection with users. Some companies have users, others have fans. The difference is emotional connection and mission alignment. Building a true fanbase helps acquisition, product development, competitive differentiation and retention. 
  • Prepare for anomalies. Building a startup requires extraordinary adaptability. What seems fixed one day may be fluid the next. To capitalize on volatility, it’s worth preparing a playbook for low-probability, high-impact events. When the next Black Swan hits, your business will be ready. 
  • Focus until it hurts. Simply avoiding opportunities you aren’t interested in anyway is not a sign of focus. True focus involves sacrifice. That means turning away from opportunities you believe could be highly impactful, for the sake of something bigger. Succeeding in doing so is a superpower. 

What does it take to build a great business? 

Though much is written about the most successful businesses and entrepreneurs of our era, this question can remain frustratingly difficult to answer. So much valuable information remains concentrated in the heads of relatively few elite practitioners, the majority of whom may not have the inclination nor time to articulate that wisdom. And yet the tactics, mindsets, and techniques that have allowed these founders to scale businesses to a billion-dollar valuation and beyond could impact many other enterprises. 

The Wisdom List is an attempt to solve this problem and bring tangible founder experience into the light. This series from The Generalist asks great founders to share the lessons they wish they had known when they just started out. Some may be universal, others may be specific to an industry or sector. 

We’re kicking off this new series with an entrepreneur I know well: Leif Abraham. Today, Abraham is the co-CEO of Public, an investing platform used by millions and valued at over $1.2 billion. The company has quickly risen to become one of the most popular financial applications in the United States by blending stock trading, crypto investing, and community discussions. The recent acquisition of Otis suggests the company will enable fractional investing in assets like cars, art, and NFTs in short order. 

Before Abraham was co-CEO of Public, he was the founder of a business called AND CO, a SaaS platform for freelancers. For eighteen months, up until our acquisition by Fiverr, I served as his Chief of Staff, working by his side. That has given me a particularly detailed understanding of what makes him special. Not only did I have the chance to see his natural gifts, but I’ve watched as he’s further developed into an elite CEO, commanding a business with financial and cultural complexity. He is a tremendous operator and this is his hard-earned wisdom. 

Lesson 1: You become who you acquire

Your early customers play a huge role in the product you build. Their engagement and feedback influence big and little things, informing product flows, new features, and traction. For those reasons, I’ve found it’s worth being especially thoughtful about who you acquire as a customer.

For example, at Public, we explicitly want to build a mass-market investing product. To make that happen, we made the conscious choice of not acquiring groups like day traders in the early days. While these users might have seemed like low-hanging fruit, and valuable in the short term, the data and feedback we would have gotten from this group could have pushed us away from our ultimate goal. We would have been encouraged to build features for this user set rather than for the millions of new investors. We also would have ended up creating the same kind of “trader bro” community that exists on other platforms and is not necessarily inviting to a mass-consumer audience. 

Instead, we focused initial customer acquisition on cultural communities with a more diverse appeal. The result was an early cohort of users that better reflected the long-term base we were pursuing. The insights this group generated guided so much of what we’ve built and helped actualize a TAM expansion. 

Lesson 2: Build an MMP, not an MVP

Canonical advice for builders is to start by building an MVP or “Minimum Viable Product.” We try and get our teams to focus on a different first step, creating a “Minimum Marketable Product” or MMP. 

What’s the difference? A lot of the time, builders confuse MVPs with prototypes or focus solely on the feature set. MMPs get away from this framing by including several other factors in the process. When you’re building an MMP you have to incorporate factors like design, branding, and positioning. 

The result is that MMPs are actually sellable. They’re compelling enough to attract real customers. Moreover, because of the extra care that goes into an MMP, they create a good first impression. I believe it’s extremely hard to change someone’s opinion of a product after that first encounter. I see this with Public. If you asked most people how they’d describe the company, they’d probably refer to it as a social investing app. That’s true, but it’s really a fraction of our business now – one tab of many. But that’s where we started and so that’s the impression that has stuck.

There’s value in shipping a product, and you have to maintain velocity. But taking a little more time to be thoughtful here can make a big difference. We want our products to create a magical first impression that converts into revenue-generating customers. 

Lesson 3: Choose your stack wisely

Startup decisions can be described as two-way or one-way doors. Two-way door decisions are those that can be easily reversed; you walk through in one direction and if things don’t work, you can double back. You can and should make these decisions quickly and as your business scales, you’ll likely be making dozens every day. One-way door decisions are irreversible. Once you’ve made your choice, you can’t go back on it. These decisions have to be made slowly, with great care. 

Now, of course, there’s nuance. Some decisions are reversible, but only after considerable effort. Some doors that once seemed one-directional, may open up after a market or technological change.

On this spectrum, selecting a tech and product stack holds a special place. Why? Because it's the kind of decision that might look bi-direction but is actually, sneakily, one-way. For example, in the early days of Public we had to select things like a KYC provider (shoutout to Socure). Now, if we had a catastrophic problem we could change vendors, but the likelihood is extremely low. It’s a door that could only be opened with a lot of time and sweat. 

As you scale, issues with your stack can have big ripple effects across your entire business. What might just be a half-day downtime on one vendor can create a two-week-long backlog for your customer experience team and even push your roadmap back by several weeks.

With that in mind, be thoughtful when you pick your stack and vendors. Don’t just select based on price – be clear about what you're optimizing for and what you’re sacrificing in return. For example, time to market could have a bigger impact on the business in the short term than the quality of service. Just know that the debt will have to be paid eventually and often it’s hard to predict when the debt comes due. 

Lesson 4: Build fans not just users

Having users is great but having fans is better. The difference between the two is that a fan doesn’t just use your product, they rally behind your company, taking up its cause as their own. These fans are extraordinarily valuable for several reasons: they acquire new customers through their enthusiasm, help you identify areas of opportunity, and create a differentiated community. Even more critically, they stay with you. That's because fans have what I’d call “emotional retention” – they stick with your product not just because of particular features, but because of the emotional bond they have with the company. That’s hard to compete against.

A lot of times in fintech, companies differentiate on transactional utility. A certain product might claim to be cheaper or faster or provide cashback or points. Unless there’s a structural advantage, these are easily emulatable. One competitor introduces it and then another follows suit. Everyone can build features; few can build a company that people are fans of. 

Think about it this way: Two people sit in a bar, let’s call them Sam and Timmy. Sam is a fan of Public, Timmy uses a certain Green Competitor. Once Timmy mentions what product they use, how does Sam react? Will they say, “I like Public better, it’s cleaner”? No. Sam will go on a rant and start advocating for why Timmy should switch to Public – armed with arguments that are bigger than just product features. 

Though the benefits are clear, it’s not simple to foster fans. To do so, you have to find ways to prove your values and what you stand for. The big opportunity for us came during the GameStop run-up in January 2021. During that time, we decided to permanently stop monetizing via Payment for Order Flow (PFOF), a model used by many of our competitors. We recognized it was not in the best interests of the consumer and didn’t align with the type of business we set out to build. By taking this step, we attracted people that shared our mission and wanted us to win. They are fans who rally behind us as a company, not just use our features.

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Lesson 5: Create a Black Swan playbook

We’ve found that fortune favors the prepared. When you’re building a startup there are always a million responsibilities vying for your attention. But I think it’s worth taking the time to plan for low-probability-high-impact events, effectively Black Swan episodes for your particular market or business model. These might account for economic disruption, political chaos, a technological breakdown, a shift in the news cycle, or a competitive misstep. The point is to lay out a plan of attack so that when chaos descends, you can spring into action. 

We knew that one of our well-known competitors would stumble at some point. It had happened before and though we weren’t sure when it would occur again, we wanted to be ready. So, we prepared a detailed playbook of how we would react. That included processes for our customer service and communications teams, alongside a set of pre-approved advertisements prompting customers to “Transfer to Public.” This way they could go live within seconds versus hours.

In January 2021, that Black Swan occurred. As the domestic market leader in our space struggled, we set our plan into motion. Not only did we weather the economic volatility and grow rapidly, but we also succeeded in permanently entering the conversation in our space. Suddenly, millions of new investors knew Public existed and was taking a fundamentally different approach. The momentum we generated during that period steepened the trajectory of the entire business and because we prepared, we got the most out of it. 

Lesson 6: Raise on opportunity not necessity

Founders don’t always have this luxury, but I recommend raising on opportunity rather than necessity when possible. Specifically, use lessons, momentum, and new potential as a catalyst for financing rather than basing it on your burn rate and expected cash-out date. 

So far at Public, we’ve been lucky to do this for every one of our fundraises. Perhaps the best example occurred around the same Black Swan event mentioned earlier. We raised a $65 million Series C in December of 2020 but after the momentum of GameStop, we decided to take on a Series D at the end of January. At that point, we hadn’t touched our Series C funds but it became clear that we had the ability to add firepower, and accelerate our growth even further. We could raise from a position of strength. We wrapped a $220 million round within two weeks and used the funding to steepen our trajectory.

Lesson 7: Hire managers who love the craft

We have a rule at Public: every manager must also be an individual contributor. That might mean they’re building product, writing code, or working on the latest financial report. No one’s job is just to oversee others, not even the C-Suite. My co-CEO, Jannick, and I model this ourselves – we both spend time with our teams deep in Figma, docs, and spreadsheets. 

We prioritize leaders that are also craftspeople because we believe it leads to better outcomes. Not only do we want a culture where no one is afraid to get into the weeds, we want to make sure that managers have a detailed understanding of what their teams are working on, and earn the trust of their team through the love of the craft. Without being in the flow of building themselves, that’s hard to do. 

Because of that, we’ve found that it's pretty hard to hire from big tech. Managers coming out of these environments often haven’t had to serve as individual contributors for some time and can struggle to adapt to our culture. 

Lesson 8: Focus is sacrifice

Not long ago, I came across a video where Jony Ive talks about what he learned from Steve Jobs. The number one thing he mentions is focus. According to Ive, Jobs was the most singularly focused person he ever met.

(Another Jobs reference, I know. But stick with me here :)) 

What I like most about the clip is the definition of focus that Ive gives. Through Jobs, he learned that focus doesn’t mean saying no to things that you don’t want to do anyway. Instead, it’s saying no to things that you’re sure are great ideas and would be valuable for the business. It’s a sacrifice, more than anything else. 

I think about this definition a lot because I’m definitely someone that can get excited by some new, cool idea. If I’m honest with myself, some features we’ve built were a distraction. Though useful, we could have deployed our resources in a more targeted manner. True focus requires sacrifice. 

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The Generalist’s work is provided for informational purposes only and should not be construed as legal, business, investment, or tax advice. You should always do your own research and consult advisors on these subjects. Our work may feature entities in which Generalist Capital, LLC or the author has invested.