Stop Innovating (On The Wrong Things) | Dalton & Michael Podcast

**Dalton Caldwell** (0:00)
Headline ripped from the news is people looking at the corporate structure of open AI, and being like, oh, this is an instruction manual.

**Michael Seibel** (0:09)
All right, welcome to Dalton Post Michael. Today, we're going to talk about how do you avoid innovating on the wrong things. So to set this up, right, we're in the innovation economy.

**Dalton Caldwell** (0:26)
Oh, definitely. This is definitely major innovation.

**Michael Seibel** (0:28)
It's right here, innovation economy.

**Dalton Caldwell** (0:30)
That's what's happening.

**Michael Seibel** (0:30)
We encounter a lot of founders who believe that they need to take what I call innovation juice and spread it across.
Innovation juice? What I'm trying to insult it, and they have to spread it across every freaking problem they encounter. And I think that there's only a limited amount of innovation energy that any company can have.

**Dalton Caldwell** (0:53)
There's only so much juice, is what you're saying.

**Michael Seibel** (0:55)
It's like I said that up. And we have maybe encountered some places where you should maybe just use the best practices.

**Dalton Caldwell** (1:07)
Yeah, here's what I think about this. Making a startup work is a miracle. And the fact that you got product market fit and made something people want, you literally performed a miracle to do that.
People would die to get where you got it. Now, the odds that you are going to be able to perform five miracles at once is much, much, much lower. And so you want to focus the miracle juice on the single miracle, which is making something people want and making a product, right?

**Michael Seibel** (1:44)
And so solving a real customer problem.

**Dalton Caldwell** (1:45)
And then all this other stuff, yeah, just do best practices. Please don't innovate.
Like you don't need to have a low likelihood of success miracle. Like you don't want to have to be right on these long shot bets in five different ways.

**Michael Seibel** (2:01)
And I think it's interesting because I think that I encounter some people who somehow are more religious about these side bets, right? It's like, well, I'll only do a startup if I can locate it in Bumblefuck Nowhere.
Or I'll only do a startup if I get to do this weird corporate governance thing. And I'm like, what you're really saying is like, I'll only serve my customer and help them with a really important problem in their life if I get this other random thing that the customer doesn't give two shits about, right?
And that always kind of blows my mind. It's like, in some ways, business is really about being selfless and like putting your customer first. But it's like, I'll only put my customer first if I get to like get this startup in New York. And I'm like, that's obviously putting yourself first.

**Dalton Caldwell** (2:52)
I think let's start with the most common anti-patterns we see, right? Like, what are the ones you see the most, man? What's offender number one of where people are trying to innovate where they probably shouldn't be?

**Michael Seibel** (3:06)
I would say one that I see on the YC application that I love is when it's like some kind of weird incorporation.

**Dalton Caldwell** (3:11)
Yes.

**Michael Seibel** (3:12)
So, you know, we incorporated it as a Wyoming LLC.
And I'm like, this was a voluntary red flag. Like, this is like, why would you do that? And like sometimes they'll even write, well, because like, da-da-da-da-da.

**Dalton Caldwell** (3:27)
And you're just like, well, I think my theory is there's a lot of smart people. Again, they want to innovate in different ways.
And they'll look at something like corporate law and the existence of the Delaware C Corp and be like, I, someone that knows nothing about this, can do better.

**Michael Seibel** (3:43)
Yes, yes, obviously so.

**Dalton Caldwell** (3:45)
And everyone else is doing Delaware C Corp's. That's not for me. I'm going to do a, and then crazy things happen, right? And so probably corporate governance is not the best place to innovate. One thing that's been funny, headline ripped from the news, is people looking at the corporate structure of open AI and being like, oh, this is an interesting innovation. This is an instruction manual.

**Michael Seibel** (4:10)
A nonprofit that owns a for-profit.

**Dalton Caldwell** (4:12)
Would not recommend that strategy, even the people that work in there. I mean, even Sam himself has suggested that that was perhaps not the wisest choice. And so again, the point here is the miracle of making something we want is the hard part.
But if you're just doing like a startup, Delaware C Corps are pretty good.