Why experts writing AI evals is creating the fastest-growing companies in history | Brendan Foody
By Lenny's Podcast
Summary
## Key takeaways - **Evals are the new PRD for AI models**: The 'era of evals' signifies that if an AI model is the product, then evals serve as the product requirement document, guiding researchers on what to build and demonstrating model efficacy. [06:37], [08:36] - **AI creates new jobs, not just displacement**: While AI is often discussed in terms of job displacement, a new category of jobs is being created, transforming the economy into a potential reinforcement learning environment. [01:02], [01:07] - **Elastic demand jobs will thrive with AI**: Jobs with 'elastic demand' that can scale significantly with increased productivity, such as software development and product management, will remain valuable as AI advances. [20:49], [22:30] - **Mercor's rapid growth from expert sourcing**: Mercor achieved $400M revenue in 16 months by identifying the shift from crowdsourcing to sourcing and vetting high-caliber professionals for AI model evaluation and training. [11:30], [11:02] - **Focus on strengths, not weaknesses, in management**: Being dyslexic has taught me to focus on leveraging people's strengths rather than improving their weaknesses, a principle that has been crucial in building the company. [01:05:10], [01:05:30]
Topics Covered
- AI's bottleneck is measuring success, not data.
- AI is creating a new category of jobs.
- AI boosts elastic industries, not all jobs equally.
- AI will unify global labor markets, ending inefficiencies.
- Mercor found hypergrowth by following market pull.
Full Transcript
The wealthiest companies in the world are willing to spend whatever it takes to improve
model capabilities. We're entering the era of evals. We started working with all of the
top AI labs. What the labs need is a labor marketplace. They actually need extraordinary
professionals that can measure model capabilities. You found this pocket maybe the biggest business opportunity
in history. We grew from one to 400 million in revenue run rate in 16
months. Fastest ascent in history. Why is this so valuable? The market is
bound by the amount of things where humans can do something that models can't. The
lab's primary bottleneck to improve models is how they can effectively have some
way of measuring what success looks like for the model. There's this tweet that you
retweeted. If you really think about it, we were put on Earth to create reinforcement
learning training data for labs. It's highly likely that the entire economy will become an
RL environment machine, building out all of these worlds and contexts. And I think the
narrative in AI over the last three years has almost entirely been one of job
displacement, but very few companies and people have talked about this new category of jobs
that's being created. I talked to a lot of people about what should I be
studying? Where should I be getting better? How can they leverage this technology to do
so much more? We'll give people interviews where we say use whatever tools are available
to build a website and let's see what product you're able to build in an
hour. Today, my guest is Brendan Foodie, CEO and co-founder of Mercore.
Mercore is the fastest growing company in history to go from one to $500
million in revenue. They did this in 17 months, less than a year and a
half. Brendan is also the youngest unicorn founder ever. They just raised $100 million at
$2 billion valuation. Mercore, if you haven't heard of them, helps AI labs and AI
companies hire experts to help them train their models using AI. They've never had a
customer churn, their net retention is over 1600%, and they're on a nine-figure revenue run
rate. In our conversation, we talk about the increasing value and importance of evals, the
landscape of AI training companies like Mercore, and why they've become so important and valuable,
how Brennan discovered this opportunity, his insights on what product market fit looks like, the
core tenets he's instilled within his organization that have allowed him to build the fastest
growing company in history, what people writing evals for labs are actually doing day to
day, which skills and jobs are going to last the longest with the rise of
AI, why he doesn't think we'll see AGI or super intelligence anytime soon, and so
much more. This episode is incredible. You need to hear this. If you enjoy this
podcast, don't forget to subscribe and follow it in your favorite podcasting app or YouTube.
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Brendan, thank you so much for being here. Welcome to the podcast. Thank you so
much for having me, Lenny. I'm a huge fan and so excited to have a
conversation. I'm really excited to have this conversation as well. I'm a huge fan of
yours. I'm excited for more people to learn about you and what you're building. I
wanna start with a tweet that you have pinned at the top of your Twitter
feed right now. And here's the tweet, quote, we are now working with six out
of the magnificent seven, all of the top five AI labs, most of the AI
application layer companies. One trend is common across every customer. We're entering the era
of evals. reason this caught my attention is that's one of the most recurring trends
on this podcast. People talking about the increasing value of learning how to do evals
well and the value of evals for companies. It feels like still people don't know
what the hell this is, what we're talking about, why this is so important. Talk
about just what you think people are still missing, what they need to know, what
this era of evals means. If the model is the product, then the eval is
the product requirement document. And the way that researchers day to day looks is that
they'll run dozens of experiments where they'll make small improvements on an eval set. And
reinforcement learning is becoming so effective that once they have an eval, they can help
climate, right? If you look at just how fast people were able to saturate Olympiad
math once they focused on it, how fast we've been saturating Sweebench once we focus
on it. And so in many ways, the barrier to applying agents, the entire
economy to automate every workflow is how do we measure success? How do we eval
it? And write the PRDs for everything that we want agents to do, which Mercore
is obviously a huge part of doing. So people hearing this are like, okay, okay,
shit, I got to really pay attention to this eval stuff. Any advice about learning
how to do this well? What companies that are doing this well are doing differently?
Like help people get better at this thing. Yeah, I think that... For enterprises
especially, the core way to think about it is how can they build a
test or a systematic way to measure how well AI automates their core value chain?
So if it's an architecture firm that's producing, you know, these like architecture diagrams
of what they provide to their end customer, like how can they effectively measure that?
Right. And each company has its own value chain. or maybe a handful of them
if it's a multi-product company. And just thinking about how they measure that
is the prerequisite to really effectively applying AI throughout their entire business. I saw you
talking about this on the No Priorish podcast with Sarah and Ilad. And I don't
know if it was after this or before this, but Sarah tweeted evals equals your
new marketing. What does that mean? What do you think she's saying there? Yeah, well,
it ties to what I said earlier about how if the model is the product,
evals are the PRD, but also subsequently the sales collateral, right? Because like evals are
what you give to researchers to show them what they should be building and going
on. But they're also the way that you demonstrate the efficacy of capabilities. And historically,
everyone's been pointing to these academic evals of PhD level reasoning with GPQA, humanities last
exam or Olympiad math. But now it's moving towards the capabilities that people practically care
about. of how do we get models to automate the way that we build a
software platform or automate the way that we do an investment banking analysis.
And I think labs will increasingly use, labs as well as application layer companies, will
increasingly use evals to demonstrate the capabilities of their models and their products. Okay.
So let's kind of build on this and zoom out a little bit and talk
about the landscape of the market that you're in. And I was just reflecting on
this as I was preparing for this conversation. If you think about the companies growing
faster than any company's ever grown in history, there's essentially three buckets. There's the foundational
model companies. There's Vibe Coding Apps, Cursor and Lovable and Bolt and Replit and all
these V0. And then there's data labeling data companies like you. So I've had the
CEO of Handshake on the podcast. I have the CEO of Scale coming on. There's
also Surge. There's you guys. Help us just understand the landscape of what this is
all about, because I think people don't really know what the hell is going on
and see all these companies growing like crazy. Yeah, I'll give a little bit of
the origin story and that and how it sort of frames the landscape. Because when
we started the company, I met my co-founders when we were 14 years old. We
started the company together when we were 19. Initially, in January of 2023, initially hiring
people internationally, matching them with our friends and automating all the processes of how we
did that. So similar to how a human would review a resume, conducted an interview
and decided to hire. We automated all of those processes with LLMs, bootstrapped the company
to a million dollar revenue run rate before we dropped out of college. And then
a handful of other things happened, but we met OpenAI and we saw that there
was this enormous transition in the human data market where it was moving
away from this crowdsourcing problem of how do you find low and medium skilled people
that can write barely grammatically correct sentences for early versions of LLMs and moving towards
this sourcing and vetting problem. How do we source and assess the best professionals, the
experienced Thang software engineers, the investment bankers and doctors and lawyers
that can actually help to evaluate and interpret all of the capabilities that
people want models to have. So from there, we started working with all of the
top AI labs. We grew from one to 400 million in revenue run rate in
16 months. And it's been an extraordinary journey and super exciting.
Okay. First of all, that is out of control. I don't know if people have
understood. I think this is the first time you're sharing that number. I know recording
this, you'll have announced it by now, but one to $400 million in revenue
in 16 months. Exactly. So fastest ascent in history,
which is an exciting statistic we're very proud of. Okay. So something big is happening
here. Why is this so valuable? What is going on here? So it's just to
try to summarize what you guys do simply is you help hire people for labs
to help them train their models. And you help them find not just generalist labor,
but experts helping them with very specific gaps in the model's knowledge. Yeah,
precisely. And so it really ties to your first question around the era of evals
that's framing all of this, which is that the lab's primary bottleneck to
being able to improve models is how they can effectively have some way of
measuring what success looks like for the model, both to use it as the eval
for the test that they're measuring their progress against, as well as the verifiers in
an RL environment to then reward the model, improve capabilities, et cetera. And
they need this across every domain for every capability that models don't know how to
use. And the wealthiest companies in the world are willing to spend whatever it takes
to improve model capabilities where Mercore is sitting at the forefront and sort of the
primary bottleneck. Okay, what are these people actually doing? What's an example of a kind
of person that is sought after and then what are they doing like sitting there
at the computer? Effectively, the market is bound by the amount of things where
humans can do something that models can't. So I'll make that very concrete. Say you
have a model that you want to write like a red line for a contract
in the way that a lawyer would. And it makes a handful of mistakes, misses
a bunch of key points in doing so. What you could do is have a
lawyer create a rubric. similar to how a professor might create a rubric to create
a deliverable for what are the things we want the model to be able to
do so it can effectively score that, right? Like, you know, plus however much of
it identifies this or, you know, XYZ key point. And that's really the
foundation to measuring what does progress look like for models? You know, is this model
achieving the capabilities that these professionals want, as well as how do we use this
as training data to reward and to reinforce a lot of the capabilities that
people want models to achieve. Okay, so they're essentially writing evals just to connect it
back to original conversation. Exactly. Well, that's an interesting thing is everyone talks about
RL environment. I feel like the two like hot button things are like RL environments
and evals. But one thing like Andre Carvathies tweeted out about a bunch is there's
not actually a nuance. It's in the data type. It's more just a different semantic
way of describing what it's being used for. But ultimately, it's just some stasis point
for like, how do you measure what good looks like? And you can use that
either as the benchmark to, you know, the sales collateral, as Sarah was saying, to
say, here is why our model is the best model in the world. And here's
the capabilities that we've been working towards. Or you can use it on the post
training side to reward certain model trajectories and achieve those capabilities. Okay,
so say this lawyer, so this person is writing, here's what a great red line
contract looks like, and here's the rubric of what excellent is. And then are they
also providing data, like actual examples of red line documents as a part of that?
They may. So the data landscape historically has included two kinds of data.
The first is supervised fine tuning data, which is input output. When people think about
like fine tuning in the historical sense, that's what it is. The second is RLHF.
where the model will generate a couple of examples, we'll choose, you know, which is
the most popular example. What everyone is generally moving towards is reinforcement
learning from AI feedback instead of human feedback, where you have instead the human
defined some sort of success criteria, some way to measure that. And examples in code,
it could be a unit test, right? We can scalably measure success in other domains.
It could be a rubric. And then you use that to incentivize model capabilities.
And it's far more scalable and data efficient. And so that's why a lot of,
you know, the broader trend in the market across the board is moving towards RLA-IF
to both eval models as well as improved capabilities. I had the one of the
co-founders of Anthropic on he said exactly the same thing. That's what they've done at
Anthropic is move towards AI driven reinforcement learning. So essentially, If I can understand this
correctly, I'm the layperson here trying to understand this on behalf of the audience. So
essentially a lawyer is like, here's what correct looks like for redlining. And then it's
AI is just on its own, almost just like, here's all the, I'm going to
try to get this. I'm going to try to improve on this. And I know
if I'm heading in the right direction based on this eval slash rubric I've been
given. Exactly. Applying all of the criteria of what good looks like, similar to how
the TA might apply the professor's criteria of does the student's response meet this criteria
or this criteria plus however many points, et cetera. Awesome. Okay. Let me shift to
talking about the broader labor market here. So there's kind of two parts to this
question as we talk about this. One is just how long will we need to
do this? Is there a point where we don't need? Like you guys grew so
incredibly fast. Is there a point in like, okay, we don't need humans or... We're
tapped out. So let's start there and then I'll ask a broader question. So the
key question is how long there's going to be things in the economy that humans
can do that AI can't do. And I think there's certainly a bucket of people
that say we're going to have super intelligence within three years and we, you know,
humans won't play a role in the economy. And that's one school of thought. Our
perspective is very different. Our perspective is that these models are extraordinary and automating a
lot of things very quickly, but there's a lot of things that they're horrible at.
Like even still, it can't schedule time on my calendar. It can't draft emails for
me. It can't use basic tools. And we need evals for everything. For everything that
the models can't do, we need evals for the tool use, evals for the long
horizon reasoning. Like imagine in 10 years when we want models to be able to
go out and build a startup for 30 days. Like we need evals for that
to effectively reward it. And I think that that road to improving models
will last for as long as there is anything in the economy that humans can
do, which models can't, and be a huge portion of what the future of work
looks like. And so our mission is creating the future of work. And I think
that this is a really exciting industry in giving us a glimpse into the direction
that everything is headed towards. There's this tweet that you retweeted that I want to
ask you about. If you really think about it, we were put on earth to
create reinforcement learning training data for labs. Yeah. What does that
mean to you? What is this person implying? And it's basically what you're saying is
we're just helping train models. It speaks to conversations I've had with a lot of
researchers and executives at top labs, which is that it's highly likely that the entire
economy will become an aural environment machine, building out all of these worlds
and contexts for us to then have rubrics or other kinds of verifiers.
And that is really exciting in so many ways. Because I think like, let's draw
analog to other revolutions where when we had the industrial revolution, revolution, everyone was freaking
out about losing their jobs. But there was this whole new class of jobs of
how do we build the machines? How do we have knowledge work? How do we
create everything new? And I think that the narrative in AI over the last three
years has almost entirely been one of job displacement, right? Sure, there's like ChatGPT is
growing fast and it's very cool and everyone loves using it. But from an economic
standpoint, people talking a lot about job displacement. But very few companies and people have
talked about this new category of jobs that's being created and what that's gonna mean
and how people can prepare and upskill for that. And I think that the most
exciting thing possible is creating that future of how do humans fit into the economy
and how will that evolve over time. I talk to a lot of people about
just like, what should I be studying? Where should I be getting better? People in
school right now are just like, what is even gonna be valuable in the future?
You're at the center of a lot of just what jobs are most in demand,
what how hiring is evolving. So let me just ask you a very concrete question.
What jobs do you think will remain in the future slash what skills are still
worth investing in for younger people, especially? In terms of jobs, I would respond with
a category of things that have very elastic demand are going to be super exciting
because when we make people 10 times more productive, we'll build 10 times, if not
100 times as much software, as an example. Right. And so I think the product
managers that can now do so much more are going to be extremely well positioned.
And so far as the skills, I think it's people that can leverage AI to
to do whatever their day to day workflows are like. I have had a couple
of conversations with teachers where they get my thoughts on how they should be assessing
their students because, you know, we originally started out curating all of these interviews and
assessments for people and have thought about this immensely. And what we realized is that
you don't want to fight against them using the models, right? It's sort of similar
to like when the calculator came out, you don't want to give people all of
this, this arithmetic homework of like, how do you, you get them to do it
and not use the calculator. You want to tell them, use the tools and let's
see what you can do. And so we'll give people interviews where we say, use
ChatGPT and codecs, use CloudCode, use whatever tool cursor and whatever tools are
available to build a website. and let's see what product you're able to build in
an hour. And so I think that I give that an example in so far
as talent assessment, because I think it pertains also to the skills that people should
be honing in on of how can they leverage this technology to do so much
more in whatever industry or vertical they're operating in. When you talk about elastic being
elastic, is it like generalists being good at just a bunch of different things or
what do you say? What do you mean when you think elastic? So I more
mean, how much capacity for demand there is in that industry. So I'll give a
couple of examples. Like in accounting, I think realistically, we only need so
much accounting in the world, right? Like maybe there's areas where we can do more
and that'll be good, but it doesn't feel like the world needs 100 times more
accounting. On the other hand, in software development, right? Like I think we can ship
100 times more features for our products, move 100 times faster, build so much more,
there's just, it feels like there's unlimited demand for the industry. And I think Marc
and Dresen tweeted about this recently, that software is the most elastic industry of all,
where when we increase productivity, there's so much more that will be built. And it's
definitely characteristic of a lot of other domains as well. And so I would, I
would focus on those domains where if we make everyone 10 times more productive, that'll
increase demand, not reduce it. Okay, so you're in the bucket of learn to code,
still useful as a skill. Take computer science, okay. And so in terms of elastic
categories of jobs, sounds like engineering, product management is in that bucket, great.
A lot of people listening to those are PMs. What else, like design, user research,
I don't know, what else do you feel is in that bucket from what you've
seen? Yeah, I think that there's a lot of things for the whole value chain
of building companies is a lot of these like variable costs. even large portions of
like operations or consulting, right? Like imagine if we could have
10 times as many McKinsey consultants, what would be possible insofar as the research we
could do, the analysis, et cetera. But I think the companies and people that are
gonna succeed are those that lean into this narrative of abundance of how do we
do so much more rather than fighting back against it of how do we try
to stop displacement. So along those lines, I think about your second bucket, which is,
the people that will be most successful. It's not like a specific skill, but it's
being good with AI, using AI to become more, become better at what you're already
doing. This reminds me of Elon's whole thing with Neuralink, which if, I don't know
if this is how he put it, but the way I've always heard it is
he wanted to build Neuralink because in the future, when AGI and super intelligence is
around, we need a way to compete. And the best way to compete is plug
our brains into a super intelligence so we have a chance. And it feels like
that's what AI is like getting good at AI tools is essentially is having the
super, superpower. Figuring out how to leverage them and incorporate it will definitely be
of paramount importance. Yeah, it just comes back to this almost cliche quote now. It's
AI won't replace you. People that are really good with AI will replace you. I
think it's totally spot on. And I've definitely seen this at the enterprise level as
well, where there are certain enterprises we talk to that are almost like fearful, not
wanting to engage, not wanting to you know, eval their businesses because that'll provide the
evidence that their value chain is being automated. And there's others that I mean, literally,
like, you know, some of the most recognized sophisticated Fortune 500 businesses that that have
this mentality. And there's others that are leaning into it of if we have the
ability to do 10 or 100 times more, what will that mean? And how do
we lean into that future? Because there's so many things that going to change over
the next 10 years. And I think those are the kinds of businesses that are
going to be successful. Let's talk about labor markets more broadly. You guys, so it's
interesting though, you started not feeding people to AI labs, not training models.
It was just like help people find jobs, help companies hire. And then you're like,
oh wow, this whole opportunity. You have this really interesting view on the future of
just labor markets and hiring. Talk about that. Yeah, it's interesting. I remember
When we started the company, as I mentioned, we were 19 and just had this
like gut intuition that it felt so wildly inefficient that labor markets are so
disaggregated. And what I mean by that is when we would hire someone internationally, they
would apply to a dozen jobs. When we as a company in the Bay Area
were considering candidates, we would consider a fraction of a percent of candidates that were
available in the market. And the reason for that is that there is this matching
problem that everyone's solving manually where they'll manually review resumes, they'll manually conduct interviews
and manually decide who to hire. But when we're able to automate that matching problem
at the cost of software, it makes way for this global unified labor market that
every candidate applies to and every company hires from facilitating a perfect flow of information
in the economy. And I think that that future is undoubtedly what we're heading towards.
But what we've realized over time is that the nature of work is also changing
dramatically. And part of building that future over a 10 year time horizon is like
creating that future of work. And all of the more tactical things we do and
building these incredible data sets across evals and RL environments for our customers.
What I've seen in how hiring has changed, I'm doing research on this with a
partner, Noam, It's so much easier to apply for companies that everyone's just applying now
to hundreds of companies. AI is just making it easy to adjust their resumes and
cover letters and make it feel like, oh, I applied to more of course very
specifically, but it was one of a hundred places. And then on the flip side,
hiring managers are getting flooded with applications. And so now they need AI to filter.
So even if we didn't want to get to this place, we're almost being pushed
into this direction of so much volume on both sides. We need something really smart.
at filtering and helping us hire and selectiveness is exactly what you guys have been
building for a long time. Precisely. Yeah. And the fascinating thing, like a lot of
people ask, are we, do we think about ourselves as a labor marketplace or do
we think about ourselves as a data company? And I think that the reason it's
an interesting question is our realization on the, from what the
labs need is that they actually need a labor marketplace. They actually need these exceptionally
high caliber people. And of course, well, you know, layer on some project management and
some software platform associated with it. But the really core thing that they want is
how do they find these extraordinary professionals across all of these different domains that can
measure model capabilities and work to build that future work together? This
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R P R E T.com slash Lenny. Going back to just how this all works
and what you guys do for models. I was talking to a friend who had
an ankle sprain or his foot was hurting and he got an x-ray and he
fed the x-ray into Chachapiti and then asked him like, give me this specific x-ray.
And he's like, okay, sure. And then he gave him, here's what you have. And
he was talking to me. He's like, how did, what is out there on the
internet that trained this model to know this stuff? And I was like, no, it's
actually somebody sitting there helping the model understand this once they recognize it doesn't
fully understand this. Like humans are actually helping them learn these things. Exactly. Well, so
the way it works, at least what most people's understanding is, there's a lot of
complexity in how the models work, is that pre-training gets a lot of the knowledge
into the model of what are all the different things that sort of see it
in the world. And then post-training and reinforcement learning is for all the reasoning of
what are the pieces of knowledge that are accurate, what are inaccurate, and what to
prioritize at any given time to make a decision. And so behind that, there would
have been radiologists that worked on the post-training data set to create some stasis point
for here's the diagnosis and rewards and penalties associated with it. And it's really the
quality of those people that went into the quality of the decision and recommendation that
ChatGPT ultimately made. So let's actually follow that through, because that's really interesting, and I
don't know how many people understand it. I sort of understand it. So the work
that you do and these experts do is post-training. It's not feeding data into the
model that it's trained on. It's we have this model GPT-5. Now here's all the
things it's missing. Let's add to it. Exactly. Yeah. It's really unlocking,
allowing the model to focus on all the right tokens from pre-training all the right
things in model context, upweighing the effective reasoning chains to... enable the
models to reason better in a more generalized way. What's the scale of people just
working on the stuff is like thousands, tens of thousands, hundreds of thousands? Tens of
thousands at any given time, hundreds of thousands more generally. I mean, it's huge. And
the most exciting thing is that it's growing really quickly. I mean, I think that
to your question also about the competitive landscape, historically, there are were all these crowdsourcing
companies that would get these super high volumes of low skilled people. I think like
Scale and Surge were the primary companies that pioneered that industry. And then in this
transition to higher skilled labor, what people realized is that actually you can go a
lot further with just getting higher caliber people, even in smaller amounts
initially. And now subsequently scaling that back up once they're able to meet the quality
bar. And I think that There's a bunch of companies that after our success and
very rapid revenue growth that sort of started early last year have chased after that,
which makes sense, right? And seeing that the market was changing very quickly, we were
taking off and trying to pursue a similar thesis on the market. It's interesting. There's
always been these companies, AlphaSites and GLG, that like sort of did this before AI
or is like paid to connect to an expert and ask them questions about stuff.
And essentially, okay, it turns out this is really useful for models. We don't need
the person in the middle. Exactly. Yeah. Well, but one core difference is that alpha
sites would generally be a one-off call versus a lot of our work is really
hiring people for projects, right? Of how do they work on something for a longer
period of time? And so that's, I think, one of the reasons that some of
the traditional expert networks have struggled to get into this. And also, how do you
retain those people and think about all the incentives where it actually looks more similar
in some ways to one of the traditional labor marketplaces of an Uber or DoorDash,
just with much higher skilled talent that's treated exceptionally well. It's such a good opportunity
for me to learn so much about this. So I'm just going to ask questions.
Yeah, so interesting to me. How much of the experts are focused on
specific concrete knowledge versus personality? and like softer skills? How much of it is like,
here's how you do an exam, here's how you do an x-ray? It depends on
the lab. It's a lot of both. I think that previously it might have been
more softer skills, but now a lot of the labs are focused on their business
models of what are the economically valuable capabilities that drive revenue and leaning a lot
into these professional domains. But I think the creative side is also still really important
to everyone. And so we're seeing a meaningful amount of both. Like we hired all
the people from the Harvard Lampoon a couple of months ago, their comedy club to
help with making models funnier. And so do all sorts of stuff like that, hiring
Emmy award-winning screenwriters and everything across the board on creative capabilities that you'd look for.
That is amazing. What a cool story. Yeah. I'm excited for this to kick in.
How fast do these things turn around? Like say you hired this team, like how
fast are we going to see the impact potential? Is it like months? Is it
years? Well, so it depends because some models or some labs will release iteratively
where they'll just improve the model behind the scenes sort of every. Without announcing a
new model. Exactly. As for every couple of weeks versus others do these big releases.
And so it depends a lot. We're behind all of them. But I mean, we
move really fast. It would be a customer gives us a request of we need
these, you know, award winning screenwriters. And within 24 hours, we'll turn around
the experts. And there's also this really interesting dynamic where in a set of 100
people that we hire, oftentimes the top 10% of people will drive majority of the
model improvement. It's sort of like a company, right? If you have a 100% company,
oftentimes the top 10% of the company will drive majority of the impact.
And what that means is that when we're able to build proprietary advantages and identifying
who are those top 10% of people, both insofar as how do we have them
on our platform, but also identify and match them effectively, it creates so much value
for customers that it's difficult to compete against. And so it really does tie back
to the founding thesis of the company, which is, Like, you know, how do we
find these extraordinary people and identify them so that we can reliably deliver these
top 10% or top 10x experiences for our customers? So on that, so
is the idea you hire Jane, she's incredible at coding, and she now works for
Anthropic, and that's her full time job doing this? Or is this like a part
time thing? Is this a project thing mostly? It would sometimes be part-time, sometimes it
would be full-time. I would say most often it's part-time where it's like, you know,
someone might work at a fan company where they're underemployed, maybe one of the ones
that's moving slower where they have an extra 20 hours a week and then they're
able to do this on the side or, you know, whatever the equivalent is sort
of across a bunch of different industries. But we also do a lot of, you
know, 40 hour a week roles as well. And how much are they making? Is
it meaningful enough for a FANG engineer to spend time on this? Yeah, very meaningful.
I mean, so our median pay rate in the marketplace is $95 an hour, but
it can flex up well up into like $500 an hour based on the depth
of someone's expertise. And one thing that highlights this difference relative to a lot of
the crowdsourcing companies is if you look at the economics of the crowdsourcing companies, oftentimes
they would pay like $30 an hour to town as sort of the average. And
so think about the, you know, people that you can hire, the undergrads for $30
an hour versus the, you know, Goldman bankers, the McKinsey analysts, the
FANG software engineers. And ultimately it comes down to what are the capabilities that
labs want their models to have? And it much more falls in the latter bucket
than the former one. I know there's only so much you can talk about with
this stuff, but So Anthropoclawed has been so good at coding so much better
historically than other models. I also use it for writing, giving feedback on writing.
What is it that allowed them to get so good at this and continue to
be so good at this? Well, I can't go too much into detail about customer
work, but I think that it's this trend of reinforcement learning and
being very thoughtful about defining the right rewards that we're really seeing across the board.
and how we can mitigate reward hacking, set up the right rewards, that's super
impactful. EVALS, again, EVALS is all you need. Back to EVALS. One of my favorite
quotes from customers is that models are only as good as their EVALS, which has
always held true. I think Greg Brockman tweeted this once, EVALS are all you need.
Yeah, no, truly. Let's talk about Mercor a little bit more. One of the maybe,
not even maybe, I believe, The data tells us it's the fastest growing company in
history. Yeah. I want to understand what you did to make this happen. So
let me just ask, what do you think are some of the core tenets of
how you built Mercord that most contributed to being this successful? I think the most
important thing is looking at the leading indicators in fast moving markets.
Like I remember when I used to think everyone in venture talks about the why
now. And I used to think about the why now of how from a product
standpoint, less from a market standpoint of like now we can automate the way that
we review resumes or the way that we conduct interviews, et cetera. But ultimately, like
there is this legacy market that's, you know, has all these incumbents and it's relatively
stagnant. What matters a ton is actually figuring out what are the new markets, the
new pockets of demand that are changing very quickly where, you The wealthiest
customers in the world are willing to pay whatever it takes to improve model capabilities.
And how do we focus on the leading indicators of those markets to make sure
that we have the best solution for the flagship customers, you know, in the
market and optimize everything around that. And that's what I found has been most impactful
in building the business. I think that's maybe that's one thing is like leading indicators
and markets. If I had to choose another, it's customer obsession.
We're starting to have a couple of product managers
help out with go to market, but for the last year and a half of
the business, we've had no one in sales and marketing. And so we're sort of
immature from a sales and marketing standpoint because we focused 100% of company resources on
how do we build great products and experiences for our customers. You know, just getting
word of mouth that the people that have worked with us at other businesses want
to keep working with us and leaning into creating those great experiences. And so that's
where I spend all my time. And I think that some founders can get caught
up in like, how do they get really good at marketing before they've figured out
the thing that really drives a lot of customer love and creates the six
star experiences that you're used to building. I want to go back to that first
point, which is like, okay, you found this pocket, maybe the biggest business opportunity in
history. How did you first find, what was that moment of like, wait, this could
be, this could be really big. So there's some crazy stories here. I remember we
started the company, as I mentioned, in January, 2023. And then in August, 2023, when
I was still in college, one of our customers introduced us to the co-founders of
XAI over a Zoom call. saying how we had these really smart Indian software engineers
that were great at math and coding. So we met them and we explained how
the software engineers we had were really good at math and coding because they weren't
distracted by all the humanities. They didn't have to study history and English and all
these other things. And they loved it, right? So they had us in two days
later to the Tesla office. And we met the entire XAI co-founding team, except for
Elon, while I was still a college student. Right. And actually, I was just getting
started at that point. And they were super excited about our focus on the quality
of the experts. And so while they were still doing pre-training, they weren't ready for
human data at the time. And we didn't start working with them at that point.
We just knew from that point forward before we even dropped out that the market
was about to change radically and we needed to be at the frontier of that.
And so then fast forward a few months. one of the crowdsourcing players came to
us and actually used our platform to hire over a thousand people, where this is
very interesting experience because we started getting flooded with support tickets about how those people
weren't getting paid. And we obviously felt horrible because we had referred them to this
opportunity. It was this like reputable company. And we realized
that a lot of the incumbents were resting on their laurels with respect
to what was needed and the experiences they were creating for talent in their
marketplaces to help improve models. And there was this opportunity to work directly with the
labs in a way that kept the dignity of the experts in the marketplace,
paid them extremely well and sort of cut out the middlemen. And so we started
doing that in May of last year. And then the rest is
history. Wow. Hundreds of millions of dollars in revenue since. So what I'm hearing
here is you were very open to looking for pull. You saw some pull, you
explored it. And then once you saw that there was something really meaningful there, you
just went deep on making that an incredible experience as amazing as possible. Exactly. I
think like if I had to distill it into advice for founders, one thing I've
realized is that I spent a lot of time trying to like force product market
fit. And in some ways, you should be persistent. You should have these theses that
you have conviction about how the world will change. But sometimes you just need to
hear it from the market and know that it's there, the pull, to know the
right places to focus. Because if it's difficult to sell, if it's extremely difficult to
sell the marginal customer, you're not going to be able to grow a huge business.
What you actually need to find is the customer that's surprisingly easy to sell into
is where you're going to be able to grow with them. You know that it's
a large pain point. And so it's some combination of being stubborn with respect to
your thesis around how the world will change, but also very open-minded with respect to
exactly what form that takes and how the market's developing and how your company will
fit into it. That's an amazing insight. In the moments you described, it felt like
it was a combination of this XAI meeting, feeling like, oh, wow, they really, really
want this thing that we sort of have. We're not doing an amazing job at
it. And then it's a thousand people higher in the platform. Was it those two
moments that are like, wow. Exactly. And those happened, keep in mind, while we were
a seed company, right? Well, so the first one was before we even raised any
seed funding, we were totally bootstrapped because we bootstrapped the company to a million dollar
revenue run rate and have always remained super capital efficient. Like we've never burned money.
We were lifetime profitable. And then we raised our seed round in
September from General Catalyst. And it was the other experience after we raised our seed
round where we really knew that there was an enormous amount of demand in this
market where we saw the volume, right? And we saw that the incumbents were sort
of sleeping with respect to how the market was changing and the kinds of people
that were needed to make that change happen. It's one thing to see this opportunity
and start to execute on it. It's another to actually succeed at this scale and
consistently win. You guys have very specific values within the business. Talk about those. It
feels like that's a big part of your success too. It totally is. So I'll
give the three and maybe a brief story associated with each of them. So the
first one is having a can-do attitude, which everyone gives me a little bit of
a hard time for because it's sort of a funny saying, but we've always set
these ridiculously ambitious goals and somehow the trajectory of the
company forms around those goals. Where I remember when we were talking to Benchmark, before
they led our Series A, we were at 1.5 million in run rate. And I
said we'd be at 50 million in run rate by the end of the year.
And they said we were absolutely insane, right? As anyone would. And plus, there might
be two weeks we hit it, right? And then we've now well blown past, you
know, the tracking to 500 million in run rate, which was initially our goal for
this year. So setting these incredibly ambitious goals with respect to The revenue scale of
the business, the caliber of experiences for talent, all those dimensions are super important to
first have a can-do attitude. The second thing is really high standards, which is who
we hire and what we expect of them. Like we have an incredibly high hiring
bar where we hire tons of former founders, people that have incredible experiences. We just
hired or partnered with Sandeep Jain, who joined us as president. He was previously the
chief product officer and chief technology officer at Uber. and joined our small,
relatively small in the grand scheme of things company to help scale up all the
processes where Uber is, of course, the largest labor marketplace in the world. So super
high standards is of paramount importance. And then the third one that we really lean
on significantly is intensity. And that if you look at the early cultures of
businesses, of the legendary companies, thinking of Meta or Google, they have these
incredible, intense early stage cultures of people just moving heaven and earth and doing whatever
it takes to push the frontier of model capabilities. And so still very much output
oriented of what do people achieve rather than input oriented of the specific hours they
work, but recognizing that it takes a lot to build a legendary
business. And that's ultimately what we're optimizing for. I could see why this works. Can
do attitude plus high standards plus intensity. Uh, I could see how that leads to
success. There's a lot of talk these days about this 699 culture working six days
a week, 9 a.m. to 9 p.m. You know, a lot of people are like,
why? That's terrible. Why would you make people do that? But at the same time,
I'm just constantly hearing this from the most successful AI companies. This is just the
way it is to be successful. Things are moving so fast. This is an opportunity
you'll never see again. Just talk about your thoughts on that. Yeah, well, to clarify,
we've never mandated hours. It's more of a byproduct of people that care a lot,
where we care a lot about the trajectory of the business. And so a lot
of people come into the office and stay late. But, you know, if they need
to leave early and get dinner with their kids or, you know, travel on the
weekend, of course, that's totally fine. And for us, it's much more about finding people
have a lot of ownership and are really bought in. less so about the specific
hours in the office, even though we found that oftentimes it's the people that are
most bought it, not always, but oftentimes it's the people that are most bought it
and that, you know, sort of burn the midnight oil with us. When you say
high standards, is there something you could share that gives us an example of what
you mean there? Because a lot of people think they have high standards and they
don't. If you are very patient, there's always some trade-off between speed
and quality when hiring. And I remember, especially for our first 10 people, we
were just so patient and disciplined about finding some of the best people in the
world. Like, you know, half of them are for our second employee, Sid, as an
example. Our second employee in the in the US, Sid, was previously the head of
growth at scale, you know, who joined us when we were a seed stage company.
Daniel, who joined us, was previously scaled to consumer apps to over 100,000
users. And all sorts of just like extraordinary backgrounds of our
first 10 hires. And I think that that initial talent density shaped so much of
what the rest of the org looks like as you scale it out. I know
you also have this perspective that people talk about waiting to hire timely
slowly, but it's actually not necessarily the right advice. Talk about that. It's painful because
it's a double-edged sword. Like on one hand, I'm thrilled that our first 10 people
are like so phenomenal. And I think that that has paid dividends for the business.
But on the other hand, I think that companies do get to the point where
you just need to hire really fast. And there are some things where you need
a lot of people to do them. And you need to recognize that there's gonna
be some variance associated with hiring, but moving quickly is the priority. And I think
that in some ways we move too slowly with how we scaled out the team.
And so the benefit is that everyone is extraordinary. We have this super high bar
and we want to maintain that over time. But I think the downside is that,
you know, while the company has grown incredibly quickly, we likely could have grown even
faster if we had moved a little bit more quickly with especially
ramping from call it like 10 to 100 people. OK, I was going to ask,
so it sounds like the first 10, be very careful, take your time. 10 to
100, maybe speed up a bit. Yes, though I wouldn't say it's necessarily 10. It's
determined by the point where you know it's really working. And I know that's still
not like a bright line, but it's like once you know that there is so
much more demand than you can handle, that's when you want to step on the
gas and optimize for speed in a lot of ways. But I think especially until
then, it's important to be patient, be disciplined, get the best people is always
important. But speed becomes more important once you find the
market opportunity, the market vacuum. I know you've started a couple of companies in the
past, much smaller scale. In this new role as CEO of this massive hyper
growth company, what surprised you most about where you spend the time most or just
what the role involves? Because a lot of people want to start companies, dream about
being in your shoes. What are they maybe not understanding about where a lot of
your time goes? Yeah, it's actually not too surprising. Like the top two buckets are
always working on hiring and time with customers. How do I really
deeply understand what customers need and how we can support them? And then how do
I build the team and a lot of the processes around that? Of course, there's
all of the ad hoc things I didn't expect of dealing with the people
questions of how do we set up our levels and our comp bands and all
of that, which you sort of learn as you scale a business. But I think
that the core places that I spend my time are in line with
what I expected as well as what I love doing, which is very fortunate.
So these two companies you've started in the past, maybe share what they were, because
they're fun. And then how do they help you be successful in this? Like what's
something that they taught you that helped you in your current role? Yeah, so there's
been like a dozen, but I'll choose my favorite too. So when I was in
eighth grade, I started Donut Dynasty, where I saw that Safeway donuts were selling for
$5 a dozen. And I was amazed, because I felt like as an eighth grader,
this was such an incredible deal. And so I started to bike down to Safeway,
buy Safeway donuts for $5 a dozen, and then go back to my middle school
and then sell them for $2 each, running really good. Margins, of course. It sold
out super quickly, and so then I need to scale up. So I would pay
my mom $20 to drive me in her minivan down to Safeway, buy 10 dozen
donuts, go to my middle school, sell them all out. And then the school tried
to shut me down. And so because I was selling like food on school campus,
which they didn't like, so they had me in the principal's office asking me to
not do that. And then I moved my donut stand over 50 feet. So it
was off school campus saying that they could no longer, you know, police me. I
remember we had competitors pop up where the competitors were charging. They bought these Chuck's
donuts, which if anyone in the Bay Area knows are you know, higher end donuts
than Safeway donuts, but they have a higher cost basis. They cost a dollar per.
And so I dropped my prices to $1 for two weeks to run them out
of business before I knew what anti-competitive practices were. And I'd hire all my
friends, paying my friends in donuts because, you know, they perceived the donuts as $2
each where they could sell them throughout the school and I could have a lower
cost basis on them. So I had all of these like fun experiences in selling.
And then I could talk more about my high school business as well, which was
a more significant scale. But I think the takeaway from that was just like, you
can just do things like so many people have ideas, but the barrier to more
companies being built, I think is just initiative and taking the steps to build the
product or experience that customers want and investing the time and the
ambition to scale that up. And so I think it was really getting reps of
that that enabled me to realize that I should do it later on
at a much larger scale. Amazing story. I love how wholesome that is versus like
drugs. Then my mom was very worried. She was like, oh, is there any pot
of these donuts? I was like, no, mom, I assure you, these are pure donuts.
I love that you paid your mom $20 to drive. She was adamant. It couldn't
be a handout that she was taking her time to drive these. So she needed
to make a little bit of money off of it. We haggled over her title
where she Eventually she wanted to be head of global operations, which we thought very
entertaining. I hope that's on her LinkedIn. Not yet. Maybe she'll have to add it.
So you said that you've started a dozen companies. Yeah. Wow. OK. Well, a dozen
projects, but I think it was that and then my AWS company were the two
that that I sort of scaled up. What's the story behind Mercor as the name?
Mercore means marketplace in Latin or to buy, sell, trade. And we want to build
the largest marketplace in the world, the marketplace for how everyone finds jobs. And
that was really the draw to it. Okay. Maybe a last question. This is going
back to earlier in discussion because it's something I've been thinking about as we're talking.
There's been this shift from data as kind of the fuel for models, and now
it's experts. Do you think there's a next step or is this just like, we'll
take us to AGI superintelligence? I don't think it's necessarily changing from data to
experts. It's more just the paradigm of realizing that labs need this
close collaboration with experts to help understand what are the
evals that they're building and how can they push the frontier. But I think it's
very clear that evals are evergreen, that So long as we want to improve models,
we'll need experts to create evals for them and to create the post-training data for
them to learn those capabilities. And of course, there might be changes in the exact
way that people do training with RL or otherwise, but they will always need an
eval to measure what does success look like across every domain that they want to
build. Okay, so then building on that, a question that comes up a lot these
days is, and I know we're talking about fun stuff, but I'm getting to serious
stuff again. scaling laws and just like progression of model intelligence. A lot of people
are feeling like, I don't know, it's slowing down. We're not going to really get
to super intelligence at this rate. What is your sense? I totally agree with that.
Like, I don't think it's, I know there's been some executives at big labs that
say we'll have super intelligence in three years, but I think the truth is that
it's a longer road. And that's not to diminish from how extraordinary the models are.
Like, I think we'll be able to automate a majority of knowledge work tasks in
the next 10 years for sure. But that long road is paved with all of
the evals that help to make those capabilities possible. And it's not going to
be 10x more pre-training data that gets those capabilities. It's much more going to be
all of the host training data sets that are far more data efficient and thoughtful
that help us get there. David Sacks tweeted this interesting point that Like the situation
we're in now is almost the best case scenario where AI is not in this
fast takeoff to super intelligence. There's a lot of competitors kind of keeping each other
in check. Models are already very valuable and only getting valuable, more valuable. But there's
not just this like winner super intelligence taking over the world situation. Yeah, I think
that's true. I think a lot of the super intelligence fear mongering is
probably overrated. But at the same time, a lot of people's framing around that is
even if there is a 5 to 10% chance of this P-Doom, then we should
be careful, which seems logical. But I think that it's going to be an
extraordinary 10 years for all of Silicon Valley and all of the world as this
technology is able to create abundance and giving everyone better medical
treatment, the best access to legal recommendations and the ability to build great
products more than we've ever seen before. And education feels like is transforming. Absolutely. Right.
Like I even have felt bits of this over the last 10 years where like
I remember ever my parents would give me a hard time for not going to
classes in college. And I'd be like, well, there's way better lectures on YouTube. Why
not just listen there? But I can only imagine as the models get
extremely good at conveying information, better than the best professor, what that'll mean,
right? And access to all sorts of information to better forward
humanity and upskill everyone. So I'll use that as a segue to a final question.
I'm going to take us to AI Corner, which is a recurring segment on the
podcast. What's some way that you personally use AI to do better work, to help
you in life? Well, let's see, I use it a lot to write documents, as
you would expect. also talk to it to get advice on problems. Like I find
it helpful to just reason through almost as a thought partner. Because, yeah, I don't
know. I find I think better sometimes when I'm talking something through, but I can't
talk through everything with colleagues or people around me. And so this is like chat
GPT voice mode mostly or something else? Yeah, I like chat GPT voice mode a
lot. There's definitely room for improvement, but I am very excited about the future of
voice. Let me show you something I built, actually. I wasn't planning to talk about
this, but There's this guy, Eric Antoneau, who's been recommended by a lot of people
to get him on this podcast. He's this creative product person that's kind of under
the radar now. He's on Facebook for a long time. He built this project called
Parrot GPT, which is you basically put JetGPT into a stuffed animal to talk to.
So built a little wise owl. I don't have it on right now. But basically,
you sew in a little speaker right here, and you put a little magnet underneath.
And you can put it on your shoulder and then just talk to it. Wow.
I love it. I'll have to get one of those. Because I have some of
the voice assistants in my apartment, but I really want a ChatGPT voice assistant. And
so I'm excited for that. I was just thinking of that. Like, yeah, just come
on. Why can't we have a ChatGPT voice just sitting around listening to us all
the time? And you can on your phone because it goes to sleep and it's
like, hello, what? Exactly. Yeah. Yeah. So it's kind of what this is trying to
be. Well, there's a Kickstarter. He started that we'll link to that you can help.
There we go. It's really easy. Brendan, is there anything else that you wanted to
share or touch on or maybe leave listeners with before we get to our very
exciting lightning round? Tying to the point around initiative and that you can just do
things, I encourage everyone, especially with AI and it being so much easier to build,
just take the initiative to go out and build products and talk with
customers and take that leap of faith because I think that that is in so
many ways the largest barrier to more innovation in the economy in any way that
we can support that. Yeah, there's so many people that just, nothing, let's not bash
the podcast, but just listen to podcasts, read posts, just keep reading and listening and
don't do anything with that information. And there's never been an easier time to actually
build stuff and try stuff. So definitely take that advice. Just you can do things.
You should move your donut stand 50 feet and get out of their jurisdiction. Okay,
Brendan, with that, we've reached a very exciting lightning round. I've got five questions for
you. Are you ready? All set. What are two or three books that you find
yourself recommending most to other people? Let's see. I would say In Order, High Output
Management is a phenomenal book on running companies. Second is Zero to One, which of
course is a classic. And then third is Shoe Dog, where I just find it
to be a really inspirational story. What is a recent movie or TV show you've
really enjoyed? I really liked... Oppenheimer. My favorite TV show of all time is Suits.
So I know not recent, but if I had to choose a recent one, probably
Oppenheimer. Very cool. Suits, first time someone's mentioned that. Favorite product you recently discovered
that you really love? I love using Codex, like the new version. I know
it's sort of new in terms of version. Yeah, I think it's incredible and just
a huge, huge improvement. So yeah. Do you have a life motto that you
find yourself coming back to, sharing with folks, finding useful in work or in life?
I think it's you can just do stuff. You know, what we were talking about
earlier, take the leap of faith. I thought you were going to say can do,
which is in your Twitter profile. It could be can do as well, yeah. Two
great ones. Final question. So we were chatting before this about things that we could
talk about, and you share this interesting thing that you haven't shared anywhere else, which
is that you're dyslexic. Mm-hmm. Why don't you share that with folks? And just how
do you get around that, having built the fastest growing company in history? I don't
hide it at all. Like I think a lot of my colleagues know. And I
think on one hand, it definitely makes it difficult to go through a thousand emails
a day or read every document that I'm supposed to. But on the other hand,
I feel like it helps me to think a little bit differently, to be more
creative and perhaps see the ways that markets are changing that not everyone sees.
And so it's turned out okay so far. And so, you know, I
try to, I think one thing it's helped me realize from a management standpoint is
that we focus much more on how we can leverage people's strengths rather than helping
to improve weaknesses. Because there's some things that I'm not great at and I'll never
be the best in the world at. And there's others that I can hopefully refine
and strive to be. That's such a also recurring theme on this podcast of just
focusing on strengths and not over not focusing over all your focus on weaknesses. Brandon,
this was incredible. I learned so much. I have a billion more questions, but you
got shit to do. Two final questions. What should people know about what you're doing
and roles you're hiring for? And then how can listeners be useful to you? Absolutely.
We're hiring a ton across the board on our team. We're hiring strategic project leads
on our operations team, software engineers and our engineering team, as well as researchers. And
so please go to Mercore.com and we would love to work with you. And that's
the largest way that you can help us. Share it with your friends as well.
Over half of people in our marketplace come from referrals because we have a platform
of people that love us. And so any jobs that you want to apply to
or send your friends to, we'd love to have you. Brandon, thank you so much
for joining me. Thank you for having me. Bye, everyone. Thank you so much for
listening. If you found this valuable, you can subscribe to the show on Apple Podcasts,
Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving
a review as that really helps other listeners find the podcast. You can find all
past episodes or learn more about the show at Lenny's podcast dot com. See you
in the next episode.
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