E994: All Turtles CEO Phil Libin shares his state machine that answers all growth questions; Future of Early-Stage VC w/Pete Flint (NFX), Rebecca Lynn (Canvas Ventures), Dave Samuel (Freestyle Capital); plus LAUNCH Scale Partner Talk w/Lever CTO Nate Sm

**SPEAKER_1** (0:01)
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**Jason Calacanis** (1:03)
This next talk was workshopped at the Launch Angel Summit. We do this 70 angel investor boondoggle up in Napa.
We've done it for four years, I think. This will be the fifth year. My good friend Phil Libin from All Turtles has been working on a theory.
He calls it The State Machine that Answers All Startup Growth Questions. It was the highest rated talk this summer, or top two, I think. I think it was tied for top two, along with the other Phil's talk for energy. I asked Phil, and EMIO Watering Producer Jackie asked Phil if he would formalize it and then share it with the scale audience. Please welcome my good friend, Phil Libin.

**Phil Libin** (1:50)
Thank you. My name is Phil Libin. I'm the CEO of All Turtles.
I kept having the same problem happen over and over and over again in my career, which is that people are quoting way too many numbers and ratios to me. I don't know what actually makes sense.
Before All Turtles and at All Turtles, we build multiple projects, so we have this issue all the time. We build multiple simultaneous products. We're a multi-threaded startup. Before that, I was a VC. I was at the General Catalyst and heard thousands of pitches and had this problem. Before that, I was running Evernote and just got all sorts of numbers. So how are we doing? Well, various ratios, various rules of thumb. You heard a bunch of them just now on this stage, right? There's just so much advice about numbers and ratios that you're supposed to listen to as founders or as investors. We got the rule of 72, we got the triple, triple, double, double with cheese, animal style.
I was confused. There was too much stuff. I didn't know what was real and what wasn't real. And finally, I decided, fuck it, I'll solve it with math with a state machine. I thought the answer wasn't to make things simpler. I thought maybe the answer was to actually make it a little bit more complicated, but more complicated in an actually mathematically rigorous way that made sense, rather than just a collection of kind of received tribal knowledge about what magical ratios existed and didn't exist. So we started working on this and we came up with, as Jason said, the amazing state machine that answers all startup growth questions.
And here it is. So first thing is, what's a state machine? The short answer is it's math.
A state machine is a type of graph that basically represents all of the states that are possible in your, kind of, of your audience and then all of the transitions between the states. So the circles are states, like any of your people or components or whatever it is you're modeling can be in one of those circles. And the arrows are how people or elements or components travel from state to state. So that's it. That's the state machine. So we're going to make a state machine for startup products, for products, for companies, for whatever you want to measure. And we really refined this at Evernote and I think it works really well for most types of products that I've seen. I've actually seen very few that it doesn't work for. We originally created it for this Evernote which was this B2B slash B2C, you know, heavy engagement application, but we've modeled it just as well for, you know, completely B2B products, for hardware, for software, for all sorts of stuff. So it probably doesn't work for everything, but it works for a lot of things. So it starts like this. So let's make a graph of every living person and let's try to categorize, let's take everyone on the planet and try to, like, figure out what circles they're in. So there's one circle which are the people who have never used your product. And that circle has roughly 7.5 billion people in it for just about every product.