Transcript for "Afore Capital's 8th Annual Pre-Seed Summit": Oh, that's a lot of people. Let's go. Wanna go first? Wanna go where's that? Stand. Alright. Awesome. Oh, great to see so many of you. Standing room only. That's amazing. Hopefully, there's a couple of seats here, guys, if you wanna if you wanna come up. Welcome to the eighth annual pre seed summit. My name is Gaurav Jain. I'm one of the founders of Afore Capital. For those of you who are wondering, Afore rhymes with before, which is what we aspire to do, is invest before everybody else. Admita and I, you know, went through a bunch of different names when we're starting the fund. One of our early names was Tribe. That didn't stick. Then we tried proceed, kinda kinda tried to be cute with precede and proceed. That didn't stick, thankfully. But the night before we had to close the fund, the lawyers were like, yeah. We're not we can't close the fund until we have a name. And, we went to nautical terms, and we, a four was, as you can imagine, top of the towards the top of the list given it starts with a. And it's like the front part of a ship or something. I think that's sort of where it comes from. So that sounds good. If Ford obviously was available, we we ran with it. But, anyway, that's been, it's been nine, almost ten years. And this is my cofounder? I'm Anametra, Gaurav's cofounder. Afore, one of the benefits of, calling ourselves Afore outside of the fact that it comes together with aforementioned is that we are, when it comes to conferences, right after the numbers, right after Andreessen and Excel, it's a four. So that allowed us to punch above our weight class back back in 2016 or so. One of the things we did back then is to decide that, our pre seed stage founders weren't really getting a light to be shown on them, and we wanted to do a summit of some kind. So we made a decision in 2016 about nine years ago. Instead of building Afore brand, we wanted to build a pre seed brand. And one of the first things that we did eight years ago is to do a summit like this. It was in a much smaller room than this, but, but a bigger bigger occasion now. One of the things that we do is that we invite founders who have who have made it, who are well, past breaking through on product market fit. They're well past finding their first set of customers, their first billion dollars, then their $10,000,000 We want them, to be to be well past many, many stages of fundraising. In fact, the folks you'll be talking hearing from today are many of them are past $10,000,000,000 in valuation. But it is it is, it is particularly emotional for them to talk about what it was like when they were first getting started. We had Tony Xu not too long ago, cofounder of DoorDash, on an event like this, talking about what the company was like when they were building paloaltodelivery.com before it was DoorDash. Many of you are in the similar similar boat where you're starting something out, and and you also want to sort of aspire to these folks. So, so today, we'll be hearing from some amazing speakers. Josh, who's backstage, who'll who'll be who who who's the CEO and cofounder of of Gusto. Any everybody probably knows about Gusto. If you're running a company, and you and you have employees, you're running benefits, you're probably using Gusto. And after that, if you're if you have if you have a database of any kind and you're and you're, and you want the database to be faster, you're probably or so your developers are probably using ClickHouse, which is amazing an amazing company. And Aaron from ClickHouse will be talking to us about that. And then a company in the news, Mercor, recently valued at $10,000,000,000. It's one of the poster childs of of AI applications. Others will be here to talk about, spinning all the details about that round and hopefully much much more about about MoreCore. So we're quite excited to have all of them all of them come and present and and talk, talk about what what their experiences was like when they first got started. Earlier this morning, we presented to our LPs. It's called an annual meeting. Having now invested in pre seed stage companies over the last nine years, almost ten, we've done about a thousand or so financings, in about 300 or so companies. We've amassed a vast amount of data that gives us some unique perspective about the pre seed market. And we wanted to share a few of those sort of data points with you, just to just to lay the stage of of of the way we see pre seed today. And before we before we do that, you know, wanted to share a a story around kind of pre seed. You know, we've been beating the drum for ten years now, almost ten years around this concept of pre seed. Sometimes I feel like you know, have you seen the Steve Ballmer video? Where he's go developer, developer. We feel like that with pre seed. You know, we're constantly beating the drum of pre seed, and I'm sure some of you are like, dude, chill. We get it. Pre seed. Yes. Okay. But, you know, we're trying to help create a new category in venture. And as you know, VCs talk a lot, so try to cut through all of that. We need to be really loud. You know, when we started at four in 2016, Forbes, announced our first fund and called it a hot new stage, precede. But not everybody in, in hopefully, you guys can see this. Not everybody was a big fan. In fact, Paul Graham, obviously very famous in the venture world, called it a bogus term. Right? Said I hate the term precede. Hopefully, nobody ever uses it. But, you know, like founders, when you get pushed back, you kinda keep going. I'm sure a lot of you guys feel this today where there's pushback to your idea, but you believe in it and you you keep pushing through. So we did as Anavithra mentioned, we started the pre seed summit. We raised multiple funds, and and we started to see some green shoots, you know, in, circa 2020, Crunchbase started to break, pre seed as a separate stage, separate from seed. And that to to us was, was the first validation that something was starting to work, you know, and obviously made it easier to track the number of precede rounds versus seed rounds. Carta introduced the first state of precede report, right, in addition to the state of seed report. So we started to feel like things were working. But this week this week, I felt it was an inflection point in the life of precede. Sequoia Capital, which I'm sure some of you heard of companies have invested in like Apple and Google, they pivoted this week and called themselves a precede fund. They said they said, now we're gonna be investing at the earliest stages, and that early stage is called precede. Frankly, nine or ten years ago, if you had told us that Sequoia would be calling themselves a precede fund, we would have laughed at you. We wouldn't have believed ourselves. That was obviously the mission is to try to create this category, so we can serve founders really well. We we we saw firsthand, and I was at a seed fund, where we would tell founders they were too early for us. They needed to go. And and a lot of times founders push would push back. You'd be like, well, how do I get started? I need some money to get started. What do you mean? Like, that's the job of a VC, and I'd be like, I don't know. Find Angel Capital, go to AngelList or something like that, which became the genesis for us to start a four. But I'm so glad that it's not just us. There's many, many pre seed funds in the audience, and outside who are supporting these founders at the idea stage, sometimes even pre idea. And it feels like we've come full circle now with Sequoia also getting in the mix. One of the things that we see is the round size at the pre seed stage. When we first started back in 2016 out of a $47,000,000 fund, when pre seed was still something that only some people did, round sizes were smaller, about 1,400,000.0 across our pool of companies. Then that round size has got a little bit larger in our Fund two, which is a 2019 vintage and a little bit larger in Fund three, which is a 2021 vintage. And what we're finding with our Fund four, which is a 2023 vintage, early twenty twenty five or so, we started to invest out of it this year and a little bit last year, is that the round sizes have come down again to about a million dollars, for a pre seed round. And to to us, that was kind of interesting. And the takeaway for us is that while it's always been easy and low cost to get a company started because you don't have to spend a whole lot of money only. It's only two founders. What we're finding now is that with the with with the advent of AI, it's even cheaper to get started. We had a founder this morning at our annual meeting who said the third cofounder in our team was Cursor. You don't you don't you don't need the third or fourth or the fifth folks because you got you can you can get you can get that compute, with all the credits and raise much less. And the the second most important thing is after they raise very little money, they can get so much far farther ahead than what they did back in 2016 or 2019. They can get to $1,000,000 in run rate, which is our proxy for product market fit, and many more of those companies are doing so across our funds. In our Fund one, we had about 10 companies that got to about $1,000,000 in run rate. In Fund two, we had about 16 companies. And in Fund three, what we find is 19 companies have gone through the $1,000,000 barrier. And what they've done is that they've gotten to $1,000,000 in about a third of the time. So So if you look at fund one, it took about three years for our companies to get to a million dollars, roughly the same amount of time with fund two. But in fund three, they're getting to that same metric in about a third of the time. So by the so about one year or so, they're getting to about a million dollars. Most of it is driven by AI applications. It's it's cheaper to build, and it's faster to revenue, which is which is great, I think, for many, many founders who are looking for capital because you don't have to raise all that much. It's raise as little as you can to go go as far as you can. And it's not just our data. If you look at the card up pre seed report that just came out, what they charted was that the number of rounds that are less than a million dollars in size has constantly gone up versus the rounds that are million plus in size have have stayed flat. What that means is there's more founders choosing to raise less than a million dollars to get started than raising, you know, 1,000,000 plus. When when Amit and I started Afore, you know, nine and a half years ago, precede rounds were 1 to 2,000,000. Sometimes even larger than that. Right? Because you needed to hire a bunch of engineers, maybe some sales folks to get to that first million in ARR so you can unlock a series a. Increasingly, they're able to do that much faster, much more capital you know, much more efficiently. So you don't need a lot of capital. In fact, to take it a step further, out of all the precedes this is Carta data. Of all the precedes, almost half of them are less than $250,000 in size. And there's a bunch of different factors at play. Some of that's capital efficiency. Some of that is also, like, a lot of college dropouts. Right? Starting companies, they don't need a lot of capital. Right? They were gonna do an internship otherwise, make a few thousand dollars a month, and they can, you know, get away with a lot with $2,550,000 dollars. But it's a really interesting trend where we're seeing companies being more capital efficient, able to accomplish more. And I think in net net, it's really good for founders. Right? Selling capital selling equity to investors is very expensive. Right? If you can get more done with less and own more of the company, I think it's a huge win for the ecosystem, and hopefully the outcomes also also get much larger. And then I want to introduce the team. For a long time, it was just the two of us. Now we have nine folks in our team. I wanted to I wanted to call some of them out. Many of them are around. You must have met them already. Derek, Joe, Kayla, Jack, Laura, Jared, and Joy. We don't have any event staff at a four. We don't have any other helpers outside of this group. We've done, we've done the morning, and we're gonna do the summit. And then, once this is over, we're gonna do tequila shots together. It's it's we're all gonna be worth it. Amazing. Well, with that, let's get started. We've got, Jake Saper, who's a GP at Emergence Capital. He's an investor in Zoom and many other amazing companies. He's interviewing Josh Reeves, who started Gusto. I was looking up on chat g p d earlier. The last round was almost $10,000,000,000. So, clearly, they've got something going on, that that's working well. And I was gonna put Jake on the spot. He's a very, talented guitar, player, but also a singer. But I'm not sure if I'll I'll if if nothing else, we'll get him at the happy hour later, and he'll sing us a song. But, but I'll I'll let him, come in and take it from here. Thank you. Yeah. I was like, nothing. Nothing. Hello, everyone. Nice to see you all. Hello. Hello. Gord and I were back Gord was really pushing me backstage to sing, and so I played him the song that is all the rage with my six year old's friends right now, which is Golden, from the k pop demon hunters movie. And the fact that Gaurav didn't recognize the song made me think that most of you wouldn't recognize that song. So we decided to scratch the singing part of the show and get into the best part of the show, which is the conversation with Josh. We are very lucky to have Josh Reeves here. Josh is the cofounder and CEO of Gusto, an amazing, amazing company and product. Before we start the conversation, Josh, my first question for you is should we be shoes on or shoes off? I know when I'm at home with my family, and I have a six year old who absolutely loves the song, Golden, plus the rest of that soundtrack, we take our shoes off. When I'm out in the wild, hopefully, it doesn't surprise folks. I tend to wear shoes. So I'd say let's keep shoes off. I think I think it'd be even it would be pretty weird if you showed up in events like this, Shoeless, but it would be memorable. Memorable. We like to be memorable for other For other reasons. Like help helping small business. Yeah. Let's see if we can grow for other reasons. So, audience that primarily precede founders or aspiring founders. So we're gonna focus the conversation primarily on, stories and and information. Hopefully, it'll be helpful for folks in your shoes. So the first question that we wanna talk through is just Gusto's journey to, first of all, founding the company. So did you start with this idea? Did you start with people you wanted to start this company with? Did you start with something else? Like, what was the the germ of this thing? And I'm gonna go even a little bit earlier and do a little longer answer here to the beginning because we have this nice, long, meaty time together. I'm sure you'll plug this shortly, but eager to get into audience q and a. Folks can submit on Slido as well. I know Jake will popcorn back and forth. A little bit more about me, and then I really wanna get into the mindset. And it takes a little bit of time because it's been a bit of time, of Gusto and me when we were at the stage you are at today. Because at present, Gusto will pass, you know, 500,000 customers this year. We'll pass 10% of employers in America in the next year. So That is a wild start, 10% of employers. Progress, but that's fourteen years in. So, again, not as relevant to where you are right now, eager to get back to where we were, where I was back in 2011. But I wanna go a little bit earlier, like I said. So first off, just congrats on taking the time to be together and even think about wanting to go build or create something. That's to me what what precede means. Right? As you're probably still prior to, like, I'm gonna build this exact thing. This is my exact customer. You know, for me, the the whole concept of entrepreneurship, people tend to associate with tech start ups. To me, it's more of a mindset of wanting to turn nothing into something. You know, seeing the way something is, not accepting it, and then wanting to make it different and better. And my first exposure to that was actually through my parents. So my mom and dad, were both teachers, not in tech. I grew up in the Bay Area. My mom's an immigrant, came to The US when she was 18, didn't speak any English. You know, they're both the first in their families to go to college. They both created nothing from something. Right? They didn't have someone guiding them, especially my mom coming from Bolivia. She didn't know anyone here when she moved to San Francisco. And so if that at all resonates with some of you, like, that can feel lonely. Communities like this are a fantastic way not to feel like you're alone in that in that journey. But back to 2011, I definitely had less white hair. Today, I have four kids. I had no kids then. You know, I would say Gusto was my second company. I actually had a prior startup chapter in 2008, and I we juxtaposed the two. It's very, very different, and I hope you're more in the latter category than the former. My 2008 startup chapter was, hey. Bunch of my friends are starting companies. Seems like a cool thing to do. Facebook platform is going live. Virality sounds interesting. I have a buddy from Stanford who's working at Google. We're chit chatting. We're like, hey. This seems like the thing to do. Let's go do it. And, hopefully, it won't surprise folks. That was that was not a great couple year journey. We didn't know what our purpose was. We didn't know who we were really trying to help and serve. We did some fun virality stuff on Facebook. We were making some revenue. But whenever anyone asked me what my what am I up to, I would say we're in stealth. Right? And that's to me code whenever I meet a founder of, like, they're probably still figuring it out. That's fine. But if you're in stealth for a long, long time, then something's probably off or wrong. Because once you find a customer that you wanna help, and then you start building something that actually makes their life better, you're gonna wanna tell every single human you meet what you're doing. Because you're gonna wanna evangelize, tell them, see if they could be helpful, have them tell someone else about it. So my first startup chapter, I wanna contrast with where I was again in 2011. 2011, I had left a a tech start up, and I wanted to really spend time in this uncomfortable space of figuring out what my next life chapter is gonna look like. And for me, that meant starting by focusing on who I'm gonna spend time with. So I have two cofounders, Gusto, Tomer and Eddie. For me, it didn't start with let's go talk about a product. It started with who do I wanna spend a lot of time with, thinking about brainstorming, connecting with, figuring out, is this someone who I wanna spend a lot a lot of my life with? And then from there, we spend a lot of time looking at problems in our life, problems in our family's lives. We had families running small businesses. We had run these prior start ups. I had set up payroll. I had set up health benefits. I had set up a whole bunch of things from my prior four person startup. That's how we kinda got into the problem space. But I wanted to give a little bit more background to, the head space we're in when we started Gusto. The you had authenticity to this problem. Like, you had felt it yourself Yeah. Anyways. To me, that, like, that's a common theme I see with our founders that the founders that in our portfolio have gotten to product market fit the fastest most frequently have genuine authenticity around the problem they're solving. They face the problem as a customer or a employee or something else in private private prior life. Yeah. And that's why I give advice to folks. Like, imagine it's the ten thousandth time you're describing what you're trying to fix. You can start with the product. I actually think it's better to start with the problem. What are you trying to fix? What are you trying to make better? Will you be as excited as the first time? For us, you know, to fast forward a few months, like, we got really excited to help small businesses. We got excited because it was a big pain point. They have many different problems in their life. We focused a lot on payroll because that's when you're gonna hire your first employee, the most necessary thing to do. If you don't pay someone, they quit. So kind of the least optional task. And from talking to a lot of small businesses, we felt like, payroll was way too complex, cumbersome, painful, time consuming, manual, and that we could potentially make that a lot better, a lot easier. And, yeah, we're obviously fourteen years in on that journey, but that problem still today gets me excited because I can see how we can make a small business owner's life easier. And, again, you wanna find that same type of resonance with the problem that you're trying to fix. So what was the journey from identifying that as the problem you wanted to pour your life into to building the product and trying to find product market fit? Yeah. So once it's like, hey. This is a real problem, because we didn't just feel it ourselves, we talked to small businesses. Whoever you're thinking of serving, you can talk to them pre building a product and just figure out, like, what's painful and broken in their life. And so now we know there's a problem here. The question is, can we solve it? Right? And this is not gonna do with fundraising or scaling. Like, if you can't solve it, you don't really have a business. And so three of us were all, at that point, able to do technical work. So we start building our product, and we know that we have to scope, scope, scope it down. You know, we're three electrical engineering alumni from Stanford, which has no relevancy to building payroll software, by the way. That makes got the clear connection there or a lack of one. And so we had to prove to ourselves, but also if we're gonna raise money, the number one thing we felt we had to prove was could we build a system where it would be accurate, compliant, money would move, taxes would be calculated correctly, forms would be filed, people would get their pay on time. And even if we could do that just for a few companies, that would be a big, big milestone to derisk us saying versus actually showing. And we also added a kicker to that, which was we're not gonna pay ourselves till we can use our own product to pay ourselves. So it's a little added incentive there. And so, we started building. You know, this might surprise folks. I think today, we would obviously just, like, create a front end in a weekend. But, back then, a lot of the different tools we use today weren't available. We focused more on the back end, that tax calculation, tax payments, tax filing system, and the money movement direct deposit type system. So the first milestone for us, besides paying ourselves, was then having a few of our friends' companies highly scoped. We had to be new companies who had never run payroll before with full time employees, no contractors, all in California, all w two. And what we did was set up a way for them to, use at that point, our name was Gusto, and the interface was actually there was no website. You would have Tomer, one of my cofounders, go to your house, and you would, type into his laptop. And then if you had any questions or had to make any updates, edits, you would call a cell phone. And, maybe today, we'd call that, you know, an agent with a human in the loop. Ford deployed engineer. Except yeah. Ford deployed engineer. For that. All the jargon you'd want. I mean, he did have twenty four seven accessibility. He definitely had high, high NPS and customer satisfaction, completely non scalable, but it gave us a chance to prove that next milestone that, actually, we can do this now for several companies, have hundreds of thousands of dollars run through the system. So I'll go through a couple more, but, hopefully, you get you're gonna have this long, long list of actions, milestones to go accomplish. The sequencing of what you derisk really just starts with what's the biggest risk you have. And then as you derisk, you know, if you decide now to go accelerate what you're doing, that's a good moment to do financing, for example, to collapse time and accelerate more on r and d. But, some of these things can't be done in parallel. They have to be done sequentially. So once we had done it for a few of our friends' companies to fast forward, the next big, big milestone was testing that thesis we had. If you're gonna serve small business, it doesn't just have to be a product that's easy, intuitive to use, but also to set up. The whole thing has to be ridiculously simple. And not just because small business owners are really, really busy, but because our core hypothesis was why this segment hadn't been solved in the past was, that folks basically can't go, you know, install computers or install software on their computer at home. They're not gonna do this high touch sales relationship. They just really want want a self serve experience. And, also, the unit economics, the revenue you make per customer, is obviously much smaller. If you have a three person company versus 30 or a 300 person company, you're gonna make much, much less revenue per customer. So, you know, you have to actually build a product that can be self serve. Otherwise, if you have to go talk and spend lots of time with them, you're gonna end up incurring too much cost. And so we launched several months later in California, December 2012, with a product you could onboard, set up, run payroll without ever talking to us. And when a 100 folks signed up and started using it without talking to us, all over the state of California at that time, and then the next month, all of the customers we got in knew were from word-of-mouth of those folks saying this is amazing. That's when we knew we're onto something interesting. You went from I looked back at our investment memo from the b. You went from $500,000 in annualized revenue to $5,000,000 in annualized revenue between December 2013 and December 2014. And for context, those numbers in today's, like, Gen AI land feel awesome but not unheard of. In pre gen AI land, I can tell you as an elder from that that era, that was wild. When we saw Josh's growth, we were like, this is different. You are you have tapped into a pain and you were solving that pain very well. Can you tell us, like, what happened there? What did what unlocked that acceleration? So I'll try to extract some learnings. I'll talk obviously a lot about Gusto, but many of the businesses you'll be creating might not be in small business, might not be in b two b. So I'm gonna try to expand to what you might be spending time on. I think something that is true of all business is when you're in earlier stages, experimenting and learning, like, what matters is learning as fast as possible. But But if you're gonna be in scaling stage where you're gonna wanna, you know, bring it to many, many more people, you know, call me old school, but, you know, unit economics should matter. Right? How much do you spend to go acquire the customer? How much do you spend to go serve the customer? And so to break that down and how we actioned that principle, you know, when we launched in December 2012, you know, my focus became go to market. So I shifted out of kind of more of an r and d role. My cofounder stayed in that area, and I started focusing entirely on, like, how do we go grow, get more customers. And, obviously, it only works if we retain those customers as well. And we didn't do any paid acquisition for the first year after launch. And that's because we wanted to figure out, could we build a a customer love engine where word-of-mouth referrals would drive the bulk of our lead volume? And I think a lot of folks, at least then, maybe now, jump too quickly to paid acquisition programs. There's nothing wrong with paid acquisition. We do a bunch of paid acquisition. It's a portfolio. We'll do a whole bunch of different stuff related to search and, you know, social and influencer and podcasts, you name it. But early early on, you're trying to figure out, have you created a product that's really useful and helpful? And then if you're in small business land with that lower ACV, like, can organic work? Because if you only end up growing by spending money through paid, it's unlikely your unit economics are gonna work. You're gonna have to move up market to much, much larger enterprises. And so we did no paid acquisition in that first year. I mean, that's a surprising concept. And we grew from, a 100 customers to a thousand customers. And it was all through word-of-mouth and some PR. So we did do, obviously, some articles when we announced our financing, for example. And so, I think that was that was a really important kind of insight approach to we're talking go to market still. Right? I'm trying to get back to the heart of the question. Yeah. Like, how did how did you unlock acceleration? And maybe as you touch on that Yeah. A question that that's already come in and feel free to to send questions in through Slido. That market that you chose was not a, sleeper market. There were, at least two massive incumbents that were dominant. Yeah. You had Zenefits, a startup that was kinda roughly the same stage, super super competitive. How did you manage to do that acceleration in the context of that competitive dynamic? So maybe a little bit more education on the small business market, and I think it goes back to what you should know about the market you're tackling. So if there's no competition in the market, you should be kinda worried about how attractive that market is. On the flip side, you should also not overthink it. For us, the data made it pretty simple. You have 6,000,000 employers in America, two thirds are less than five employees. Another way I think about this is there's actually more dentist offices in The US than tech start ups. So and it was thrown probably more of tech startups than or future tech startups than dentist offices, but we were really focused on, like, mainstream small business. And then the big incumbents in the space were ADP, Paychex, and Intuit. And if you add them entirely up, what's their entire market share? It was, you know, in the range of of half the market, which meant when you do the math and we did a bunch of research yeah. When we started Gusto, 40% of businesses in The US were doing things like payroll by hand. So for where we were focused, it was actually a highly fragmented market, very greenfield, and a lot of folks moving off pen and paper versus us having to go head to head and have someone switch from an existing software product they're using. So I think that's just a a lot of the early stage when you talk to investors will be people make, assumptions, and you have to get, really clear ways of breaking down what's what's real and what's a myth. And if you can debunk myths very quickly, it can help you focus the conversation on what is actually more important. So for us, we definitely were aware of competition, but our focus was on this whole bunch of folks that are using pen and paper and having a product that actually they could shift to that is just dramatically simple, easier to use. Back to the 10 x, I think early early on, you know, you wanna be doing things like 10 x a year. That's not abnormal, frankly. That's these are off small numbers, so that should be logical. And then at some point, you shift into more of, like, it can be double, triple, double, kind of a whole playbook there. When you get to, I would say, for us, at least, you know, tens of millions of revenue was a milestone. We wanna make sure. Things like, again, gross margin, CAC payback. You have to forecast. You start getting into this whole world. It's not yet your world of planning, which sounds like a hassle, but, really, it's just about coordination. You know? Might give the metaphor to folks sometimes if you're gonna go to, like, Tahoe, which is three hours from here, and you're two, three people, you can just kinda wing it on a Friday and go up, and it'll be a great trip. If you're 10 people, you can kinda wing it. Go in two cars, probably stay at the same hotel, rent a couple rooms. If you're, like, 200 people, people are gonna get lost. Someone's gonna get stuck somewhere. You're gonna have people in different resorts. So, eventually, planning becomes an important topic. I thought you were gonna use the family analogy. Because, like, when you're three people going up, it's fun. When you have, like, four kids, planning to go up to Tahoe is, like, a spreadsheet Grandparents are the key there. We have four grandparents nearby that make a big difference. Lucky. That's that's actually probably the best advice that's here to get today. So let's let's talk about the SMB focus. We've got a few questions around this. Yeah. It's now more obvious sitting in 2025 that you can build a very large business with an SMB focus. HubSpot has now done that as have a bunch of others. Back in 2030, 2011, it was less obvious. The conventional wisdom was, like, enterprise for the unit economics reasons you're me you're mentioning, the average contract value has to be large enough to support some sort of go to market motion. Yeah. So I guess, one question is, how did you convince yourself and investors back in the day that this, like, super, super small business motion could work? And then I wanna talk about some of the tactics. Yeah. When I meet folks focused on SMB, the two metrics I ask slash encourage them to be obsessed with is what is your CAC, your customer acquisition cost, and what is your net dollar retention? Because the the challenge with small business is every year, there's about 500,000 new employers. There's millions more one person small businesses, but only about half make it to year five. A lot of them will shut down. Right? And if you don't build the net dollar retention correctly and actually, you know, be more medicine, not a vitamin in their life, probably the majority of small business focused founders I meet, one or two years in, pivot and have to go after enterprise. It just doesn't work for their business to stay focused on small business. So I love the fact that it's not just Intuit anymore. There's Gusto, there's Toast, there's Square, there's HubSpot, Shopify, and others that serve small business. Some of those folks serve larger companies too. But it just comes down to the Hiremath. You know? You have to show it. Like, we're fourteen years into cohorts of, like, robust, effective LTV to CAC, CAC, NDR, but that's because of our product suite and our, you know, approach to serving this market. I'd say a lot more of the companies I meet end up pivoting and shifting to enterprise after a couple of years, frankly. Yeah. I I really admire the discipline that you've had since the beginning to say, this is our ICP. This is our ideal customer profile. We are layer laser focused on that profile, and it's tempting, particularly for those folks who are selling into tech startups that have started SMBs, to grow with those tech startups to try to go up market and do the enterprise thing as they grow larger. I have distinct memories of friends who started their companies on Gusto. Companies became huge, and they had and and I'm reaching out to to you and the Gusto team saying, like, hey, can we serve them? You're like, it's just not our core ICP, and so we will help them transition to a competitor. That's a wild idea. Well, it's it goes back to numbers. Again, it wasn't we wanted to stay focused on small business. We love helping small business. But if the Hiremath hadn't supported it, we probably would have shifted. Right? So there's kind of this combination of marrying your passion, your interest, who you wanna help with. If you're building a business, it better work. You have to be able to have, like, a functioning viable company where, you know, you can scale and have free cash flow and and be an indefinite, you know, sustaining enterprise. On the customer side, I just to be clear about it, we love helping companies, you know, call it one to 500 employees. You know, if I was to ask folks to guess, it's a little bit hard to do it in this forum. But, you know, out of, you know, 400,000 plus businesses on Gusto passing 500,000 in the coming months, how many have grown from being small to over a 100 employees? Anyone wanna yell at a guess? It's like a 100 a 150 companies out of 500,000. It's incredibly rare. And I hope many of you end up being the ones that do that. But reminder, right, two thirds of the employers in America, less than five employees. Right? So most of these companies are gonna stay under 10 employees. That's the majority of companies in The US and the world for that matter. So and then within tech, you know, again, wish the best upon all of you, but it had a 10 tech startups. Don't don't work out. Right? So it's it's it's a very rare occurrence to grow into that fifty, hundred employee count, which meant it wasn't really that relevant to our our strategy. So to make an SMB strategy work, you have to be relentlessly focused on the numbers. But the substance driving those numbers can be very creative. You slept in an RV with my best friend from business school. This is a riddle. Everyone's gonna have to figure out what's going on. 4,000 miles. Why did you do that? And how did this drive the company? So I'll try to, again, take the learning here. But what happened was in 2015, we reached all 50 states. So besides launching in California in 2012, expanding, we now have this customer love engine working. NPS is high. Retention's high. By the way, today, even, majority of our leads and growth come from organic and word-of-mouth at the scale we're at. It does scale. We then became very focused on bringing our product to all 50 states. In The US, for what we do is more like 50 countries. And so there was a process to go state by state. There's a lot of compliance, regulatory rules, local filing requirements. And so we got to all 50 states in 2015, and we had a big celebration. And one thing that has always been important to Gusto, and I hope for every one of you, is, you know, we don't exist for our benefit. We exist for our customers' benefit. Right? And our success is our success. And I simply had this idea with some of my teammates brainstorming of, I love meeting our customers. We love seeing them. We love interacting with them. We now have customers across the whole country. You know? Let's go meet them. And so that became a a two week, you know, RV road trip. Me and my colleague, Mitch, who went to b school with Jake, driving the RV, sleeping in the RV across the country to meet small businesses. And I would say again, like, what was the main purpose of that? It was to to connect. It was to create attention for small businesses. In each town we were in, we did a bunch of local media stuff. It was definitely to create awareness for what we're doing and create awareness for Gusto, our product, our value prop. But maybe the extension to what you all are thinking about is how do you just continuously find ways to stay connected to your customers? Today, we do that through our all hands. We do that through live meetings. We do that through shadowing sessions. Maybe I'll do another RV road trip. For what we do, our customers are are everywhere, so it'd be impossible to go to every single town in America. But but it's really important to always be connected to your customer, and that was one way that I wanted to make sure we could do it. Such a cool story. Let's talk about hiring. So you personally made the first, I think, 60 offers. And obviously, net not every hire worked out. What are some hiring mistakes you made and the key learnings from those mistakes? Yes. A little philosophy on hiring first. I I really believe hiring is a search for alignment. You're not convincing someone to join you. They're not convincing you to hire them. You're both trying to figure out, can we do something incredible together? Right? And then the alignment in in our world falls into three buckets. We like frameworks and structure. That's my engineer brain. So it's values alignment, motivation alignment, skill alignment. And I think a lot of times folks gravitate to the third bucket. Values alignment is actually you and your founders figuring out what about the way you work and the way you operate is unique that you wanna maintain as you add more people to your organization. And especially in the day and age we're at today, you might not add many people. Right? You might be adding lots of agents, and it might be a much, much smaller team relative to then, you know, five years ago. You're still probably gonna have people joining your org. It's probably not gonna stay founder only indefinitely for for the majority of you. Maybe some of you will be an exception. And so when you're now adding people to your team, what is what is the thing you wanna keep and propagate? That's what I would call values. And if someone's not aligned with your values or not a bad person, it just means they do better in a different company. So at Gusto, like, this obsession with customer centricity is a very core value. We screen for that. We want reference points on it. We want examples in someone's life. We want it to come across as, like, an intrinsic part of how they function, this kind of service mindset. I'm here to go help make this person or this customer's life better. Big, big part of our culture. So values alignment is important. Motivation alignment is, do they care about the problem you're fixing? For us, it's like making health care more accessible, making small businesses more successful, enabling more entrepreneurship in The US and the world. Not everyone has to care about that, but we wanted to figure out who does so that they can then join and be supportive. And then the third is, you know, the skill set, what people are able to go do. And so, with this framework, you know, it felt very logical to me, you know, besides focusing on go to market. Like, someone joining your org, the first person that we hired was a quarter of our company. Right? So, of course, at that point, it makes sense. We're all interviewing and meeting the person. But even when you're 20 people, someone joining, right, is one, you know, twentieth of your company. And so, you know, that's scaled up, and then it breaks, and you have to create a framework or a system to to scale further. In terms of mistakes, learnings, I'd say, you know, 2015 hired our first, quote, unquote, executive. You know, I always wondered, what does that term mean? It sounds made up, that people that like to call themselves executives. And so, what it means is bringing in leaders who have experience leading larger teams. And there's absolutely things that you can learn, from that profile, rather than reinventing the wheel entirely on your own. Right? But the pitfall is, they're bringing in practices, customs, experiences from prior companies they've worked at. And there's a whole question of are they the right fit for the stage you're at. The mistake I made was I hired someone who is a wonderful person, highly skilled, but would have been probably a better fit for Gusto two years later than the stage we're at at present. So it's not even finding the right person. You have to find the right person for the period in which you're in, and they could be a better fit for a prior chapter or a future chapter. That was kinda one of the first, learnings I had in in hiring more senior leaders. The chapter concept resonates a lot. One of your board members is a wonderful woman named Andre Mundy, who I've gotten to work with through a variety of companies, Gusto and and others. And she and I shared a passion for instilling and instituting values at the earliest stages of a company, which seems stupid because, like, most people look at values, it's like they're on the wall, no one actually knows them, this is a waste of time, it's performative. I'm and she are big believers in the idea that these things can actually drive behavior and can be used to fundamentally shape a company. I think Gusto is a really good example of putting that into place. So I'm curious about how you decide what your values are and then how they've changed as the company's changed. Yeah. So I kinda got a little bit into this. I'd say values, again, more a byproduct of looking within than, like, doing research. I don't think people have personal, professional values that are wildly different from each other. And any one of your values are probably a byproduct of a whole host of things. Your entire entire life experience, who you've spent time with, your family, you know, where you're from, what you've learned, who you've, you know, done projects with. All of that can affect ultimately what someone's value system is. Right? And there's no right or wrong value system, but we all don't have the exact same value system, especially in the context of work. And so, how we did it tactically was, Tomer, Eddie, and I, while we're in that building building mode and then thinking, actually, this seems to be working. Customers like the product. We're gonna hire a first employee. We actually just spend time reflecting on what about, you know, the the sixteen, seventeen hour days we were living together, working together, at that point. What about it made it not seem like work? What about it made it seem like just really fun and exciting, and we would wake up and couldn't wait to, you know, get started and then work, you know, outside of eating and going to the gym and stuff, like and then work until we're ready to go to bed again. And it was a lot of these core values. Right? It was how we navigated different disagreements and frustrations. It was having that very clear due north on being of service to customers, our interest in serving small business. So I'd say, you know, set up side time, be reflective. You do need to codify them in some way. Doesn't mean you put them on walls, on t shirts, etcetera, but you do need a a thing to look at and evaluate against, because to me, the main way values manifest is in hiring. You're gonna use these as a filter to figure out. Even if someone has incredible skill and cares about your problem, but they're not values aligned, the hard thing to do is you're gonna say no to a candidate, right, because they're not values aligned. That's actually where the rubber hits the road. Otherwise, you could just throw out that whole exercise and and not have values be a part of your hiring. But for us, it meant saying no to candidates probably could have been helpful and valuable, but would have been created a different way for for Gusto to operate and function as a company. Instead of putting him on the wall, like, the the thing I like too, and this ties back to our music conversations. I think about values needing to pass the pop song test, where, like, they are pithy and memorable enough that they stick in everybody's head. So it's it's like Golden or any other song that's stuck in your head. Like, you wanna know all the values because otherwise, they're not gonna guide behaviors. Yeah. Doesn't matter if on a t shirt or on a wall, but you need to be in your head. Well, they should be a part of day to day conversation. I I mean, one of the bars that I love coming up because it's thought provoking is, productive discontent. Like, people I'd rather be impatient than complacent. I'd rather run than walk. I'd rather be busy than bored. There's a bunch of ways to think about it. Those are things I say a lot. But, like, fundamentally, we are all about how do we get better, how do we improve, how do we serve our customers better. But how do we channel that discontent, maybe that impatience, in a productive way to go move balls forward? I love I love seeing chats where there's, you know, stinky fish being put on the table, if you've heard that metaphor, and folks kind of sharing frustration, but it's channeling it towards towards something productive. K. Changing the topic a little bit, taste. How do you define it? How do you institute it? How does it manifest at Gusto today? So I'll start by mostly focusing I've been talking a lot about hiring and Gusto's is what we call ourselves, kind of the internal side. I'll start more on the external. I think it's, again, taste is a byproduct of the people you have in an organization, but then you wanna codify your principles and your approach to what some would call brand or your product, or how does your product not seem like Frankenstein because eventually you're gonna have different parts of your team contributing to different parts of your product. One of the biggest pitfalls you wanna avoid is shipping your org chart. Your customers should never ever be able to see how your company is designed and working through how the product shows up to them. Right? That's a huge, huge, huge no no. And so, again, I think it comes down to, like, who we hire and and and what we reinforce. I guess, for Gusto, a key concept that we've been navigating from day one is a big part of what we do is take complex, painful things like tax filings or health insurance enrollment, and we wanna go automate, streamline, and give you peace of mind. So that has to work right. It has to be accurate. It has to be compliant. It has to be efficient. You kinda want it to be this machine that's, like, a 100% doing what it's supposed to do all the time. But on the flip side, you know, we believe a big part of what we do is also tied to people making these very, very important life decisions. Like, who should I hire? What should I pay them? And how much should I allocate towards benefits? And, you know, someone's doing great. You know, should I promote them? And if so, what should I increase their pay to? All these very human decisions. And so for us, the taste that we've always kind of tried to coexist within is this, you know, trustworthy, reliable, accurate part of what we do, but also this warmth, this humanity, this, you know, celebration of, like, a human being joining your company. And how amazing is it that we're a part of that process? Or someone getting paid, which, you know, prior to Gusto, was seen as a transaction. But if you've used Gusto, you know that, you know, there's an email that says you got paid today, and that's not just a transaction. That's an acknowledgment of someone's hard work and contributions to whatever company they were a part of. So I kinda went into more examples to not stay too high level, but whatever is gonna be a key part of how you want your product to show up, Ultimately, your brand is your product, your people, every interaction, every word-of-mouth mentioned, all of that is what contributes, and it should be consistent. And the one consistent thread between all of that is the people inside your company. So in many ways, it comes back to things like values and motivations. Alright. Now I have to say AI because it's been thirty minutes and I haven't yet. So Gen AI, the rise of this is presented an existential challenge opportunity for pre Gen AI large SaaS companies or growth SaaS companies. Famously, Owen came back to Intercom and changed almost everything and launched Fin successfully. As a pre gen AI company, how have you navigated this shift? So the cool thing, we have a lot to do ahead on this, obviously, as I think everyone does. But, fundamentally, our goal as a company is to be your teammate, your partner, help kind of literally be the equivalent of, like, joining your company and running your whole back office. And so this technology specifically seems like a fantastic accelerant to accomplishing that goal. And so, you know, internally, that means, disrupting ourselves, if you will, but it's not a a change in purpose. It's more now we can actually get further along faster than ever before. But rubber hits the road around, you know, running the train while building the train. Right? Kind of always gonna be doing both in company building. I mean, to be really specific, we have the existing kind of web workflow, more SaaS one point o esque interface. We obviously have native mobile app as an interface. And the future for both is a much more conversational interactive, proactive, where you are interface. And so, I guess, to make it sound a little bit boring, it mostly comes down to, like, prioritization, resourcing, and, you know, we're pretty aggressively focusing on the future and not the past. But I think for other companies, it is probably more existential, like, their need goes away or maybe the the thing they're fixing, they no longer have any unique value in fixing. At least for us, it feels like an accelerant to kind of our our due north. But, you know, there's a lot of fire lit inside Gusto right now to to act upon that, not just talk about it. And, hopefully, people are seeing that in our product velocity and our product improvements. You're a very gifted fundraiser. I've experienced it on the other end. I have a very, vivid memory of you coming into our office to pitch. I think it was for the b. And, you brought a tremendous amount of both authenticity to the problem as well as, like, a level of mastery of the business. And I think the reason those two, adjectives stood out to me is you came in and I'm pretty sure you did not present us a deck. You came in and you opened your computer and you opened the basic Apple Notes app and you said, what questions do you have? And we all kinda pop up popcorn questions because we'd review the materials ahead of time. And then you basically told a story in real time integrating each of these questions. It was it was like I know this sounds very sick of fancy. It was fucking cool. It was very impressive that you were able to, like, pull that off. I can think of one pitch that was, like, even more memorable, which, maybe I'll tell you guys at the end. But, how what are your tips and tricks for these folks as they raise money? How do they find the right investor or partners? How do they present the story well? How do they find, like, long term mindset people you're famously focused on long term? I remember one of the things you said was, this isn't an exit. This is my life, and I will be doing this until I'm not really working anymore. And you're kind of, you know Yeah. One decade in, many decades to go. Yeah. So, like, what's what's your advice on all this? How do you raise money? How do you find the right investor partner? Yeah. Well, I would so thank you for those kind words. Again, that think about that as twenty fifteen, four years in. So I would hope, frankly, anyone at that point, if you've been building a business for four years, can talk about it in your sleep and know every single thing about it. So I'm gonna try to go back to this stage you all are at, and I have a couple pieces of advice, at this stage. First off, you know, my mental model for fundraising is you're hiring someone to your team. And so, you know, you're interviewing them as much as they're interviewing you. And I think what was really helpful thinking back to, again, 2012, we did our seed round. There was no pre seed back then. We did our seed round. I guess, first off, it was understanding what are the biggest risks to what we're trying to go accomplish. And there should be a lot. Because if you derisk the business enough to not have a lot, you should already be, like, a series d or something. Right? So by definition, if you're a seed or pre seed, there's a lot more question marks than resolutions. So for us, like I said, it was a work back. Like, we're gonna go make sure we can run payroll, pay ourselves, pay three companies, because I don't want every question in our seed fundraising to be, can they even build a product? So, again, that's just an example of, think about what are the risks, the things that are gonna be the biggest question marks, and can you go prove one of them, Maybe just one of them before before actually doing a a full fundraising. Second, just because you haven't proven something doesn't mean you can't talk about it and build confidence in the investor that you're gonna go solve that problem. Right? At the end of the day, I think precede seed as an investor, and I do angel investing, kind of from time to time, it's really a bet on the people. Right? So to be tactical with Gusto, I knew that a big question was gonna be, how are we gonna go acquire customers in SMB, in small business? Because, obviously, the at that point, kind of SaaS playbook of a higher touch sales motion makes no sense. The revenue is way too small to justify a salesperson even being involved on the account. And I knew that we weren't launched yet. We weren't probably gonna launch for several months. So I could have just said, we're not launched yet. We'll get back to you on that. But instead, I had a slide because I think decks can be useful at the right time. And I had a slide that just said, you know, here is the, you know, seven or eight, I forget how many, different ways folks can approach small business customer acquisition. Here are the three that I think are most relevant to our business and why we're launching in several months, and we're gonna spend time at that point iterating and executing across these. And, hopefully, people get that as an example. To me, the takeaway, because it ended up resonating with investors, was not, you know, does Josh know exactly what to do? No one knows exactly what to do until you've done it. But it was, hey. This person seems logical, rational. They don't seem like they're gonna be intimidated, surprised. They seem level headed. They've done research. They seem like they're gonna be intentional about executing against some of these different playbooks. So probably they're gonna figure it out. So that's, again, my advice at seed stage is investors are, I think, channeling two emotions at all times. One is, how do I categorize you into one of the five reasons that I know most commonly startups fail so I can move on to my next chat because I have 20 more chats scheduled? And then there's channeling also a FOMO of how do I not miss the next OpenAI or Google or Facebook or whatever. And there's two emotions or Augusta. Yeah. Well, we have we have work to do to get to that, but onwards to to 1,000,000,000,000. And so, you know, those are the two emotions, and then hopefully that gives you some tactical advice. Like, clearly communicate your purpose, vision, strategy. Clearly communicate where you wanna go. Derisk one or two components to it. You know? For things that are ambiguous, tackle it heads on. And then at the end of the day, know they're gonna make a bet on you as a person and be okay with that. It's fundamentally an investment in you as the founder or founders, not actually what traction or adoption you've had so far. For proceed and proceed, I have a different set of advice for a or b or c. We have a lot of really good questions that are gusto specific, how you become a trillion dollar company, etcetera. But just in the interest of trying to keep this as applicable for everyone else in the audience, I will ask the last question, to to try to be a bit more, applicable here. And the last question I wanna ask you is this. If you were to start a company today with generative AI at its core or, presumably, the ability to take advantage of it, what would you do differently than you did when you started Gusto? When we're working towards that right now, I would say I mean, the the biggest change, I guess, to be very specific and I can give you it in the context of ratios. So Gusto has always been, you know, how do we solve problems with software? The question is just what software is accessible to us. Right? So, obviously, we didn't invent anything related to LLMs, but now that's accessible to us as well as you. When we started Gusto, the biggest tech trend that we were leveraging was paperless, mobile, and cloud, which at that point were still relatively new in terms of their adoption. And so, you know, we knew that we're gonna have a product you can log in and use, self serve. We also knew people would call us, email us, and wanna get help if they had additional questions. And we wanted to give you an incredible experience with a human answering that call and then figure out afterwards how to prevent that call from happening in the first place because the better experience for the customer is not needing to call in. And one of the things we obsessed over early on was the ratio of how many people we have picking up calls, emails, doing chat, to how many customers we're serving. And our goal was to have one human to 1,000 small businesses, and we hit that target. So to answer your question, I think we would probably have a target early on of, like, one to a 100,000 small businesses or something in that vein, and that's what we're working to right now. But early on, it was definitely one to 1,000, which means it shouldn't surprise you today. We have several 100 people at Gusto focused on this type of work. Now I'm really excited for those folks to shift into different jobs in the company as many, many more of those types of interactions get done through, a more AgenTek experience. Anything else that you think about, maybe even beyond Gusto, if you were to start a new company afresh right now, anything you would do differently? Even beyond AI learnings or perhaps just, like, things you've learned in the journey and things you would do differently. Well, there's lots of things we've done wrong and made mistakes on, but we are who we are because of those. I mean, I'd say instrument everything. The more data you collect, to track events and log different parts of the experience, the more you can optimize, fine tune, and improve the experience. So that's a pretty tactical one in the context of software product development. You know, I would say, 2015, a learning comes to mind. We you know, I heard you compliment us on that 10 x growth. You know, you're gonna hit a time and a phase when you are now at scale where you can't just kinda be like, oh, we'll grow 10 x again next year. And so we actually literally were like, oh, we grew 10 x last year. Let's grow 10 x again next year. And it turns out, like, you need more you need to do more if you're gonna actually do forecasting than just be like, 10 x again sounds good. And so 2015 was a great year in many ways. We reached 50 states. We launched health benefits. We moved to Gusto as a brand. I got married. And, also, it was probably the most painful year we had in in that entire decade because, we had to learn quickly how do you do better forecasting, how do you understand where you're gonna be in three, six months. Because at at scale, which, again, hopefully, you all get to, that affects things like, you know, how much server capacity you need. That affects things like how much headcount you want in, like, support or a sales, function which we had for our accounts and channel. So a little bit around FP and A probably, if you wanna use a a industry term. It's funny how back off I mean, you sell a back off like, it's funny. You're like you're so thoughtful about people and planning, so it makes sense. Yeah. But, yeah, eager to get to anything folks wanna ask advice about. I think that is the end of our time. Please join me in thanking Josh Reeves, I went back. For this conversation. Thank you. Thanks, everyone. Thank you so much for that walk down memory lane, both of you. Hope everyone's doing good. We are gonna bring out our next speaker. So if you need to, feel free to grab a quick bathroom break now, come in and out. But, otherwise, we're gonna keep rolling. So please, stay in your seats or do your quick in and out now, and we're excited for the next speakers. You want us to come up now? They're all they're all leaving. We're live. We're hot. Yeah. We love should. If you could all please take your seats, we'll do another break in just forty five minutes. So you probably won't all fit in the restroom, so you may want to, take your seat, and and then we'll make sure you guys have a little time to go in and out then. Should I go? Just let me give me a minute. Okay. Okay. Perfect. We're gonna shut the doors now, but we'll let people trickle in quietly if that's okay with you guys. And I'll hand it over to Matt and Aaron to introduce themselves. Thanks for being here, guys. Great. Thanks everybody for coming. I am Adarsh Garrett. I'm a general partner at US Venture Partners. Did other investing since before that, worked at Salesforce for a while, overlapped with Aaron a bit. So that's how we initially got to know each other through that. So, I'm gonna, Aaron, thanks for coming. So before we go in and give, your background, I wanna get into your background and and your story. But maybe just give a quick overview on ClickHouse and kinda what ClickHouse, does. Sure. So, first, maybe just a show of hands if you're familiar with ClickHouse so I can get a sense of, the folks in the room that have either heard. If you're using ClickHouse, if you could keep your hand up. So one, I'd be curious to understand your use case. So ClickHouse is an open source analytical database, satisfies a number of different use cases, which we can get into, I'm sure. Yeah. It's short for click stream data warehouse. So it was originally designed for web scale analytics. So if you think about, you know, querying petabytes of data, both historical data and data that's streaming in, and the characteristics of those use cases are often high concurrency and low latency, and being able to store the data very efficiently. And, it's under a very permissive open source license, which we could talk about open source licensing if people are interested. Send her an Apache two license. We formed a company around it, four and a half years ago. It's a venture backed startup, headquartered down, near Stanford. And, and I'm sure we'll get into how people are using it today. Yeah. Maybe just before we go into, your background, just maybe give a couple quick examples. Who are some, you know, Lighthouse customers and different use cases? Well, the surface area that we cover is very broad. It's a database, so the use cases are very diverse. People use us for AB experimentation, sentiment analysis, fraud detection. But if you had to force some distribution of use cases, they'd fall in rough thirds. The first would be traditional cloud data warehousing. And so in that use case, we commonly replace technologies like Snowflake, Google BigQuery, or Amazon Redshift. The second would be observability, and that's where I first discovered, ClickHouse at my, prior company, Elastic, and that's analyzing logs, metrics, and traces. And there, we commonly replace Splunk, Elasticsearch, Prometheus, Datadog, etcetera. And then the last third would be what ClickHouse was originally designed for, which is kind of what we call real time analytics, which is typically customer facing b to b SaaS application and where you've got high concurrency and low latency requirements. And examples of that would be Vantage, Ramp, Klaviyo, Attentive, Weights and Biases, Vercel, Langchain, LangFuse, etcetera. Some prominent customers, Anthropic, recently replaced Splunk with ClickHouse for, kind of bread and butter logging product, project. Vercel exposes build logs to their customers using ClickHouse Cloud. Weights and Biases We product is built on ClickHouse. LangSmith, LLM observability for Lang chain is built on ClickHouse. We've got several thousand customers using our managed service and then, many more that use the open source. Right. So we'll come back to ClickHouse and and the story there. So but maybe take us back a bit, and just give the audience a bit of your background, all the way through up through Elastic. Sure. So Matt and I are the same age. And, so I think we probably bring the average age in the room up. A little bit. A little bit. Although a friend of mine started Okta and did a study on successful startup founders and concluded that the average age for a successful startup founder is actually 45, which is how old I was when I started ClickHouse. So it gives me a little bit of There you go. Encouragement when I feel, out of date. And so, I've been in enterprise software for twenty five years. I started at Sun Microsystems during university and then went to work at PeopleSoft, did a startup in the city during the dot com boom. And then in 2002, met with Marc Benioff and Salesforce was a three year old startup, 150 people. And Marc hired me as a sales engineer, what people now call solution architect. We called SCs back then. And I spent twelve years at Salesforce, running various sales functions. That's where Matt and I overlapped. And then eleven years ago, I got recruited into a open source company called Elasticsearch, which many of you are probably familiar with. And I ran the go to market functions at Elastic for six years. And then How how big was Elastic when you joined? Elastic, when I joined, was about 70 employees, mostly engineering. They were doing a couple million dollars of ARR selling support. Yeah. Typically, most open source companies start by selling support for on prem deployments. You weren't head of sales when you came in, were you? I was just yeah. I was, essentially the CRO. Okay. Yeah. But it was such a small company. Yeah. We didn't need a c level title. Right. Yeah. So, yeah, we grew that company very quickly from 2014 to 2018. We took it public in 2018, and I spent a few more years, running the go to market functions at that company and then stepped out during COVID. Yeah. So you had a great run at Salesforce, great run at Elastic. A lot of things you could go do. What, like, what were you considering and and did you know you wanted to to start a company? Well, I had three kind of three options at the time. You know, the first was kinda stay in my lane and just be a mercenary sales Yeah. CRO leader. And I had some I had some good opportunities there, that that I think would have been great outcomes. But I just had already done that job. And, the second was it was in vogue at the time for, CROs to become venture capitalists. And, Phil is. And so I I tried that and did some investing for a year and it didn't it wasn't for me. Don't take it personally. Just, I'm kind of a a a a ditch digger. It's really hard. Really hard. Not to say you guys don't work hard, but, I'm more of a grinder. Not to say you don't grind either. I'm sure I'm sure you'd work very hard. And, and so then the the the third was I wanted to run a company. And so my options there were also kinda limited because most founders are in their mid twenties, not their mid forties. And so I could do a turnaround. And, there were companies that were looking to swap out their their CEO who didn't couldn't scale it for whatever reason and bring in a go to market person like me. I could start something from scratch, but I'd now have, like, ten years to get product market fit. Right? And that's when ClickHouse presented itself, and with through a company called Yandex, and I suspect we'll probably wanna spend a few minutes on that. Yeah. Maybe talk about that. I mean, it's kind of a crazy story. There's this I remember when we were talking about it. It's this company in Russia inside of another company, Russian company. So maybe talk about, like, how how you found out about it in the origin story. Sure. Is this being recorded? Do we know? Is it Chatham House rule? It is being recorded? Okay. Can we turn off the record? Yeah. No. It has to be edited then. Who who, who here is sort of Yandex, in the room? So about half the room. So Yandex is commonly referred to as the Google of Russia, which is not a great moniker right now. But it it was five years ago. It's a publicly traded $30,000,000,000 company and they operate a lot of Internet services in Eastern Europe, including they're the primary search engine, and have more or less captured that market. They, developed a database internally called ClickHouse and it powered the equivalent of Google Analytics called the Index Metrica. And they open sourced it in 2016. And at the time, I was at Elastic and we started losing some very prominent customers migrated their logging and metrics workloads to ClickHouse. Uber moved all of their logging off of Elasticsearch onto ClickHouse. We lost a big metrics project at eBay. So it was on my radar. And like a lot of open source technologies, like Kafka was developed inside LinkedIn. That was spun out to form, Confluence. Same thing with Hadoop back in the day, developed inside of Yahoo, spun out. You had Orton Works and Cloudera. So this is a very common, thing for for technologies to to to do. And, so I I met the CEO of Yandex. He's kind of the Larry Page, Sergey Brin of Eastern Europe, Arkady Volozh, and, we started to talk about ClickHouse, and, I I proposed that we form a company around it. And, it So you you kinda knew that, like, the product was good. The open source community was was was really big. Was it at that time, was it more about the, like, logistics of getting the company? Or were you still uncertain about the the technology? No. The technology so in the so in in the database world, as many of you know, like, you've got transactional databases, relational databases, special purpose databases, like a vector database that kind of the bloom is off the rose there because a lot of people just want one database to satisfy a bunch of these different use cases. And so, ClickHouse historically would be referred to as an OLAP database or an analytical database versus a transactional database. And, although we support transactions. And so in that category, there were three popular open source databases. There was Apache Druid. There's a company called Imply behind that. There's Apache Pinot, a company called StarTree behind that. And then there was ClickHouse with no company behind it. And from where I sat, ClickHouse was emerging as the winner Yeah. In that category. And so, I felt like I had identified the right technology, that the risk profile with the technology wasn't there. It was just really around Yeah. Company formation execution to monetize. Yeah. And so and then I start to see people using ClickHouse for much more diverse set of use cases and analytics. Right. Right. So so maybe then talk about actually getting it out of the company, pulling it out of out of Yandex, sort of, you know, how how that came together came together and when you were sort of negotiating it. Right? Like, was there any have to haves, like, things that if this didn't happen or break a certain way, because it's always, like, these are pretty complex negotiations, and you have this company that, you know, they wanna hang on to a bunch of stuff. So unless they're willing to give you certain things, probably won't work and it can die on the vine. Sure. I mean, so you and I were talking about this when I was forming the company, and I was talking to a few other venture capitalists who in the world of open source infrastructure have done this a few times, and that's Peter Fenton at Benchmark and Mike Volpi at Index. I worked with them at the last company. And so I I told them that I was working on this and would they be interested in investing? They both said yes. This is like peak 2021. So they were saying yes to a lot of things. And so I went back to, Yandex and said I've got capital committed. And, there are some conditions if we're gonna do this. We have to find a cap table that's gonna work for everybody. The deal fell apart like three different times. We all walked away because the economics just weren't in our favor at the time and we finally found something that would work. And so, we ended up raising $50,000,000, which I guess was technically a pre seed. So kind of in vain of this comp. A small pre seed in the AI world. That's right. So, yeah. I I don't know. What are the conditions of a pre seed? Well, I'm What are the characteristics of a pre seed round? Oh, you've you met those. Oh. I had no deck. You had no deck. No product. Right. No team. No revenue, no team. Right. No. That's pre that's a pre seed. Okay. Yeah. You're So I did a $50,000,000 pre seed, and then I I followed it with a $250,000,000 seed round. Yeah. Because I still had none of those other things. I I just I just had a small team. So what were the conditions? I needed the creator of ClickHouse, Alexei, and his his team of a dozen engineers, and they're the key committers. As everyone knows, open source, you get thousands of contributors to popular projects, but, the committers need to be, a bit more organized if you're gonna form a company around it. And the company needs to employ, from my perspective, needs to employ all of the committers to really control the roadmap, in terms of what goes into the main branch. And so that was a condition that needed to be satisfied. And at the time, Yandex was a, again, a public company, liquid RSUs. I had to convince them to trade that in for for options. And then I had to, frankly, convince them to leave Russia. And this was in the 2021. Russia invaded Ukraine in early twenty twenty two. I didn't have this foresight that was going to occur, but I knew enough that I couldn't have them coding on a Russian network. And so I, asked them to relocate their lives and they did to, Amsterdam. And that's now where they're they're all living. And so that was a condition that needed to be satisfied. And there there were a few others, but those were the big ones. How how hard was it to convince the teams to move and, you know, leave Yandex, give up RSUs, and, you know, move to Amsterdam? It took six months. Yeah. I mean, they had to get comfortable with me and and vice versa. And it was peak COVID, so we couldn't get on a on a plane to to meet one another. And, you know, we didn't have a ton of capital. I couldn't just throw money at the problem, which a lot of companies now can do. So, yeah, it took some time. And then were there other key hires that you needed to make to really pull this together? Because I mean, these are some technologists that were in, you know, Yandex. They're not, like, they've never started a company and build a commercial product that they're gonna sort of monetize to do Well, I mean, obviously, what's going through my mind at the time was, like, you know, me and 12 Russian engineers I've never met, like, what could possibly go wrong? I'd And so I thought, you know, if I could get a third cofounder Yeah. To help me form this company, and that person had the same amount of experience that I do on distribution, on engineering, that could be, you know, very unique. And so I I recruited an executive out of Google who I had met when he was running engineering at Netflix, and he led their migration to the cloud. He was AWS's largest customer named Yuri Zraeliewski. And he's a bit of a legend in the world of enterprise software, that we live in. And so I convinced him to leave Google. I could tell he was bored and he'd already made a mountain of money and So what's your pitch? Hey, there's me. There's these 12 Russian guys. And $50,000,000. $50,000,000. And I got 250 more lined up. What what could go wrong? That was pretty much it. Yeah. Yeah. He was 40 you know, we're we're the same age, so it's like I'm like, you're you can't toil away at Google. Like Did he take a lot of convincing? It took a while. Yeah. But I could tell he wanted to do it. He was pretty familiar with ClickHouse. So He was very familiar with it. Yeah. He had used it in the past. He had seen its rise in popularity. And, again, which, you know, very fortunate that he had these great experiences, to where he didn't need to, you know, optimize for, you know, Google's benefits. Yeah. Yeah. Put it I hear that pay well. I hear that pay well. Yep. So so talk so, I mean, do you going in, was the playbook really clear? I mean, especially, you'd spend time at Elastic, you've taken an open source company, commercialized it, and, you know, you've run that playbook. Was it really clear, and how similar was it to what you did at Elastic? Elastic? Vic, night and day. Couldn't be more different. So like I said, the typical open source business model is you you build a enterprise version that's proprietary, you bundle support, or you sell services, and then you eventually stand up a cloud service. And there's all sorts of inherent risks in that with licensing and the hyperscalers taking your database and then offering it as a managed service, etcetera. So we went through that, whatever. It was a it was a good outcome. It's a $8,000,000,000 company, doing over a billion dollars of revenue. It was like, there's confluence in a similar category. MongoDB, I think, is probably the best of the three in terms of their Atlas service and how they've been able to generate. Again, I think they're doing over a billion dollars just on their Atlas product, maybe even more. And so but from where I sat, there was no need to, you know, take time to try to monetize the open source versus going straight to a a managed service. So on day one and the other thing is, like, hosting an open source database is not difficult. And so, it has to be differentiated from your open source. And so, we took a year redesigning the actual table engine to enable the separation of compute and storage for our cloud products. So that architecturally, we look a lot like Snowflake, where your data stored in object storage, like s three or GCS or Azure Blob storage, and then your compute nodes are stateless. And what that enables is auto scaling and idling. A lot of these analytical workloads are very bursty in nature, so you don't wanna pay for all of this compute that you may not be using during, you know, non peak periods. And so, because we're able to do that and design this differentiated service and because we're very well capitalized, we had $300,000,000 by the time we launched the product itself, we're really able to just focus on ClickHouse Cloud. Got it. Yeah. And that that was the ClickHouse cloud was the first product that you It is. And we sold support opportunistically to IBM or ServiceNow or Disney just to get them referenceable Yeah. And, frankly, try to migrate them to our cloud service, but it wasn't a meaningful source of revenue. Yep. Got it. So you were talking about, you raised, 250,000,000, at we've talked valuations, right, throughout public Sure. At at, like, 2,000,000,000 in 2021. That was peak of the market. And then that was right. I mean, I guess, just just maybe talk through that. The market crashed right after, you didn't have any revenue. Did that create any any heartburn, any concerns, or you're saying, hey. We've got we're sitting on $300,000,000 of of capital, we're in a good spot. We were feeling pretty good, honestly, because our competitors, many of whom were public, were under a lot of stress at the time. As growth was decelerating, the public markets were they lost 70% of their value in the 2022 and in some cases in the companies that we are competing against. So we felt like we were well positioned, to get more aggressive against them frankly and forward invest and we ended up raising a bit more money that we didn't disclose, just to kind of pad the coffers. And so, yeah, you know, when Silicon Valley Bank fell apart, that was a very short Yeah. Stressful period Yeah. Of time that many of us in the industry faced. We have $300,000,000 on a bank's balance sheet that is rumored to be insolvent. That keeps you up for a few nights. But we we responded pretty quickly to that and, you know, moved money to other banks and contributed to a bank run. From from a uh-huh. From from a expect that I would do that. From a from from, like, when you started building the product and and getting it from, call it zero to 10 and where you started to get some momentum, what what were some of the biggest product or engineering setbacks or some of the biggest challenges that you you faced that maybe took longer than you thought or didn't work out? Well, taking a step back, when I, you know, when we're starting the company, I said, hey, I'd like us to look a lot more like Datadog in their early years than Snowflake, for example. And they're both very successful, but they went at it in very different ways. Datadog was very PLG Yeah. Developer led, self-service. And we saw this at Elastic, and they just emerged and exploded on the scene and they were dismissed by many. And Snowflake, conversely, went heavy after the enterprise. They invested in sales and marketing, spent hundreds of millions of dollars, took years to to accomplish that. And I just thought the Datadog model was so much more attractive. Yeah. And so when we designed the service, we said, like, hey, success will be, you know, we don't need to hire salespeople really for the first few years that the product kinda sells itself. And our sales team needs to be extremely technical, ex engineers that can moderate a POC and not do contract engineering, like what a lot of salespeople do. I also said success will be we never have SDRs and we never have CSMs. And because I think in you know, we're to blame at Salesforce for these functions, and then I replicated them at Elastic. When you say SDRs, I mean, I think most people know, but maybe talk more about the role and but the but the rationale. Yeah. I think everybody knows that SDRs is a sales development rep that does lead qualification or lead generation of their BDR historically. And the CSM's a customer success manager that takes your customers and irritates them with, you know, questions about renewals and expansion. And I've just found that handoff to be really clumsy Yeah. Between the SDR, the rep, and the CSM. Right. And so I just thought, you know, a, the product should be able to sell itself. Yeah. Like, I don't need an SDR to qualify, especially in the world of AI, where so much of this in the telemetry can tell you what's a qualified and nonqualified lead. And then in terms of CSMs, I just thought the salesperson is always gonna be the best equipped to manage that customer relationship. Yeah. And we haven't introduced those functions yet, and people seem to be quite satisfied with that. And the customer feedback, most importantly, is very positive. But you're you're 50 outbound 50% outbound, 50% inbound. So, I mean, how do you then, if without an SDR, who's doing the outbounding the eight, the sales reps? Yeah. So we're so 50% of our revenue is, we never touch. It's just, you know, I don't know if you I don't know if you're using our cloud service or not, if you're using open source. Okay. So we don't have any customers in the room. There's a sign up sheet that will pass around. That's right. Yes. Free software. Is, yes. You know, you come in, we never touch them. The other 50%, you know, is a large company, Capital One will come to us and say, hey, we're using Databricks and Snowflake. They're expensive, and we wanna look at you as an alternative. And we have a very deliberate sales Yeah. Intent there. But I often say, you know, edit this part out. Like, I think I could fire my whole sales team and still hit plan for the quarter because it's all consumption based. Right. And, I wouldn't get the commitments, you know, those annual contracts. Right. But I've got customers that put a $100,000 a month on a credit card and probably accumulating a lot of miles. Yeah. Yeah. And, you like, I could go to that customer and say, I want you to sign a contract. I want you to prepay annually upfront. And they're gonna say, okay, you have to discount, a, for me to make that commitment. And I know the use case. It's very sticky. I think the likelihood of churn is very low. And so why wouldn't I have them paying this price month to month? Yeah. But that SDRCS outside of a product that's self serve that you're selling to largely technical teams, like, do you think that's generalizable outside of other kind of businesses? Would you do that if you were in a more of a enterprise software SaaS business? I think sales it's it's hard to draw the analogy to Salesforce because it's an applications company where infrastructure but I think Salesforce is probably the best of the bunch of, like, creating a billion dollar product line with SFA, Salesforce automation, then getting into customer service and support, and, like, incubating these products Yeah. Along the way. Yeah. We tried to do too much at Elastic from my perspective. We we, you know, we did site search, enterprise search, application search, logging metrics, cyber security, endpoint security, and, like, it's really hard Yeah. Not just from an R and D standpoint, but a distribution perspective to get that right in such a short period of time. And and that's why I said for a database, let's just invest in the underlying platform. Like, the integrations are gonna be the most important thing for us, other than reliability and security, is, you know, how do you get data into the database and then how do you get insights out. So, like, the ingestion layer and then the visualization layer. And so we invested heavily in language libraries Yep. And ingestion formats and visualization tools, and that's proven to be Yeah. Effective. So you you sound like you know a lot about technology. However, you're you're a knuckle dragging salesperson. So how can now talk about, like, when you were forming the company, how how hard is that as a, you know, someone who's from a a sales background and especially as you're, you know, bringing on product leaders and you're continuing to innovate on the product, you know, does that create a challenge? You are very technical, but how do you how do you balance that out and how do you manage that? Matt gives me shit for being non technical. And I've been He's not an engineer. Matt's an engineer. He always reminds me of that as well. I've been in the industry for twenty five years. So I've been in around software for for a while. So I think part of it kind of seeks in. And then when you set low expectations and you kind of lull people to sleep and you and they just assume that you're not technical, you Yeah. You know, surprising them periodically. And so I worry less about that. It was a bit of an insecurity earlier in my career because I knew that my, you know, career path would be limited if I was just on the sales side. But I think the industry has demonstrated there are a lot of very successful, founders and CEOs that don't come from a traditional software engineering Yeah. Background. And we worked for one. It was a it was a it was a SaaS it was a SaaS product. That's fair. You know, it's not very technical. Well, I think if you extract away the the technical aspects from a lot of these services, they actually are more appealing. What's that? Mark Mark was a a coder. By the way. Well, Mark was not an engineer. He's building a I'm Mark claims to be a lot of He was he was building a Atari programs when he was You're gonna have to edit that part out of the video as well. Yeah. I again, you know, I worry less about the the reality is, I'm sure you heard other people say this before me, like, the the job of the CEO Right. Is the is just to surround yourself with people that are better than you at every aspect of the company. And so, if you're you if you think you're the smartest engineer in the company, it's gonna be really hard to be a CEO as well Yeah. Because who wants to work with somebody that thinks you're smarter than everybody? How do you manage, though, if there's do do you ever have disagreements around less around product vision, but more I mean, not super technical, but the combination of of decisions that have technical implications, product decisions, where you have a disagreement maybe with with your cofounders. The primary one would be around M and A activity. Yeah. We which you know very well. So Matt ran Salesforce Ventures for many years. And so, we've bought five companies, and they're typically, you know, seed series a stage, venture back startups, typically less than 20 people, less than 5,000,000 of ARR. And they're always product complimentary to to one of the use cases that I described. And that would be the primary area where, like, I feel like I've got good intuition. We bought six or seven companies at Elastic when I was there in terms of the teams, and then I'll have a team of engineers tell me that the the the technology is slightly inferior. Yeah. And that's the probably the biggest friction point Yeah. In my job right now. But I largely defer to Alexi and Yuri, my two co founders on on product roadmap. Yeah. I'll, you know, I'll explain the addressable markets of each and, you know, the target customer base and things of that nature if they haven't done that level of diligence because they're really just focused on the core feature set. Got it. Alright. So so back in the, like, going through through hard things and lessons learned, so the it was it was after you'd raised your round, in 2021 when, maybe take talk me through the timeline of when you had Russia invaded Ukraine. You still had a bunch of people in Ukraine, if I recall. We had a we had two employees in Ukraine and or the yeah. In Ukraine. And then we had, everybody out of Russia when when the war started. Got it. Yep. Was that a hard time for the company? I mean, because imagine many of them had families as well. Yeah. Well, we relocated the families as well. And then we we had to accelerate things very quickly when when Russia didn't invade Ukraine. We had a few people that we needed to get out of the country. And so that was a stressful time. And the reality is most of these folks are military aged males who, you know, were were gonna be conscripted to the war. So they had other priorities going on, obviously, at the time than than building a software company. And so, yeah, that period was was quite anxious. But you fast forward to where we are now, I think they're quite happy to be to be in Amsterdam and, you know, we've we've invested heavily in that in that office and Got it. And, you know, we have employees in 20 different countries right now. We have about 400 people. Over half the company is outside of The US. Over half of our revenue is outside of The US. Over half of our customers are outside of The US. And you could say, like, the origins of the software being in Europe aids in that, but, you know, our business in Europe is booming. Our business in Asia is booming. And you could say, well, maybe you just haven't executed well enough in The Americas Yeah. Which could be the case. But it's a very international company in that sense. And you're you've always been very distributed. You know, there haven't been that many fully distributed companies that have gone public. GitLab did very, very technical products, similar user base, user set. Is there, any lessons about, you know, distributed companies' pros, cons, and and do you think it's possible? Or or is it much easier to do it if you have a a company that's a it's a much more tech technical company versus, like, a Salesforce? I'm not gonna say anything terribly insightful on that question because I contradict myself in this area Yeah. All the time. Like, we were born during COVID, so the expectation with our employees was that they could work from wherever, whenever, and that we say we don't care what you're doing, you know, at 2PM on a Tuesday, just as long as you perform your job. I grew up at Salesforce in the city here. I was in the office ten hours a day, five days a week. And I remember how formidable that was for me when I was in my mid twenties. Yeah. I'm now in my late forties. So, like, I but it was just such a different period of time. Like, remote work wasn't a thing. The tooling wasn't there. The infrastructure wasn't there. It wasn't commonly accepted. And so, sometimes I'll talk to my younger engineers or sales reps and say, like, how are you doing with this remote environment? They'll be like, we wanna get into an office a couple days a week. We're not gonna have some draconian return to work policy, but, we have now satellite offices in London, Bay Area, New York, where there's a pod of employees. And we kinda let them just self organize, and then we fund it and say, we're not gonna, you know, count how many times you're in the office. And and, as long as the company is performing the way it is, you know, I often just say, I've got bigger Done. Shit to worry about than, you know, some return to work mandate. Yeah. I think if we decelerate and we stop shipping product and use our competitive edge, we could look deeply at Yeah. How efficient we are Yeah. With this distributed approach. It definitely comes at a cost. Like, I ran a forecast call this morning at a 100 people on it, which is many more than we have in sales, but we have all the other And end of the quarter to tomorrow. So Yeah. It's very very nice very nice to come in, end of quarter. Like many, we adopted the January fiscal, which is a great fiscal year if you're starting a company. Yes. The January is a great fiscal period having lived a few different fiscal cycles. But so you don't think that, that it's easier to do a distributed company selling a more technical product? I think it's easier than in I well, I think it's less expensive to start. Yeah. So and I think you get access to better talent Yeah. More importantly. Yeah. It was because we hire engineers. Five minutes or ten minutes? Ten minutes. Alright. I'm looking to the questions. We're not gonna maybe talk about, you know, as you think about product road map, we were talking about this in the car on the way here, is that, you know, a lot of the advantages that your product has, there's I mean, at least I see some parallels to Snowflake. You're you're better, faster, cheaper, than the competitors. That's that's really what what allows Snowflake to grow so much so much faster. But GCP and the others, I mean, they had BigQuery and those were around, but but Snowflake kinda ripped past them. You know, fast forward, they've got they've they've caught up and and so now Snowflake's kinda looking for what their AI story is. Like, how do you how do you think about that and sort of future proof, the company? Well, I I think less about Snowflake than I do Databricks, because I think over the last five years, Databricks has executed, frankly better than Snowflake has Yeah. In terms of product development and innovation and distribution. And they benefited from being a private company during the same period. So they could, you know, just lose a shitload of money and forward invest, whereas Snowflake Right. Was a public company and had to maintain this margin profile and cash flow profile. And Databricks has this, like, seemingly unlimited access to capital, so they can just raise more money whenever they want at a higher valuation. So I think Ollie is probably, done a better job in the same period. But not just in terms of Ford investing, but in terms of of getting ahead of the AI cycle Yeah. Than I think, Snowflake has. And, and so that's how I'm thinking about those two, those two companies. Snowflake, we have a clear competitive position against, which we think you can use our software. It's less expensive and more performant and faster. I don't think you're gonna build I don't think Vercel, Weights and Biases, Langchain, are gonna build OpenAI, Anthropic, or gonna build an application on top of Snowflake, but they would on top of ClickHouse. Yeah. Whereas, Databricks, you know, I think is much more of a viable, competitor. So that's how I'm thinking about those two. For that one specific use case, which is really only a third of what we do. Yeah. Which is I mean, and you also have the advantages. You have three different common use cases, whereas Snowflake sort of have the one. Yeah. With Databricks, we're investing heavily in Iceberg and Delta Lake and integrating with the Unity catalog. So we can kind of say that we, have these open table formats as a supported structure and, you know, if we can execute against that, I think that'll open a big market for us. Because you can say you don't have to replicate your data or move your data into ClickHouse. Yeah. If you're using Iceberg, we can still be the query layer that sits on top of it. Yeah. Now, I don't think they wanna concede that ground. Yeah. But they also have a very friendly, better together story Yeah. With a lot of companies like ours. Yeah. So Alright. I'll I'll I'll ask you one more product question and then more of the the leadership questions. So, you know, you were the company was around formed, before ChatGPT moment hit. Have you had to adjust how has AI impacted your business? Have you had to change anything? Well, we've got a lot of tailwinds from AI because these companies are using ClickHouse and Yeah. As their data volumes explode, they store more data and use more compute. So, like, it's been a big boost to our company, the companies that I mentioned. And then we've made some product investments to where you don't have to. So ClickHouse is written in c plus plus and, you know, it supports SQL, natively. But you don't have to, you know, be a data analyst to write your query in SQL. You can just have a natural language prompt, which I think frankly is table stakes for Yeah. These companies. So I actually don't think it's that differentiated. But we're gonna be announcing something shortly where we develop our own MCP server, where you can have, you know, a prompt, you can ask a question. I demoed it to you on the Yeah. On the drive up here. It's pretty powerful. Like, I can ask any question about my company in a natural let's say, build me a stack bar chart that shows, you know, regional revenue distribution and then forecast where I'm gonna end the year. And then also create three different scenarios, like a negative, a pessimistic, an optimistic, and a realistic scenario, and it can like, it spits it out in thirty seconds. It's pretty powerful. And I can use literally take that to my company and my investors to say this is where we're gonna land. But we benefit from having a lot of data to analyze to be able to run those prediction models, but not every company does. So that's that's one area. The other thing is, you know, any natural language query or prompt can generate up to 50 SQL queries. And what are the characteristics of the database behind that? And OpenAI spoke at our conference earlier this year and so did Anthropic, is speed and performance. Yep. And, because the latency that's required, we've all sat there and watched the interaction with an LLM being like, what the fuck? Like, this is taking a lot longer than I would have expected. Yep. And then when you get the results in less than a second, you know, and you know that there had to be several queries executed, you think about, like, what type of query engine can power that. Yeah. ClickHouse is emerging as a a winner there. Well, so so shifting gears a little bit on on kind of, leadership, so for those of you who aren't as familiar with ClickHouse, I mean, it's it's ripping. It's it's, you know, the likes of of Snowflake and Databricks in in terms of growth, one of one of the fastest growing companies. And so, obviously, you have a lot of success. I mean, as you as you think about, you know, being a successful CEO or at least living in the company successfully at this point, what are what are some of your superpowers you think that that allow you to do that? I mean, I guess just casually observing, I've found you to be very good at, you know, prioritizing things, really being able to delegate, lean on others, and getting things done. But what what are some of the things that have allowed you to be successful? Yeah. I wouldn't say I really have any superpowers. But one thing that I'm effective at is I don't think you realize how efficient and how well you delegate. Yeah. Well, I think people like to be, empowered. Yeah. And I do. Yeah. And so I kind of apply the golden rule to leading a little bit, which is, just get out of the way and make sure they're resourced. Yeah. And, and, give real time feedback. Yeah. Like, I personally don't do annual reviews, to my management team. If they're not working, they're not working. I think one of the benefits of being in this industry for as long as you and I have been is you have a lot of pattern recognition. Yeah. And you can identify characteristics that lead to success. And, and then you've got a pretty broad network. So that's one. We raised more money earlier this year. You know, the terms were favorable and, we're going forward aggressively. So if I could, you know, double the balance sheet health and have over $600,000,000 with 400 employees and revenues growing, you know, three to four x year over year with with very strong expansion characteristics and good retention, it's like, why wouldn't you? Yeah. And then we're not building, you know, a mobile app. Yeah. Like, these database services are expensive. You know, like, our CICD infrastructure is very expensive. Yeah. And then, you know, m and a's, you know, one that I think a company like ours is Yeah. Could be more aggressive around, especially in the current environment. Yeah. But I also think you do a really good job of identifying talent and bringing in good talent seemingly from the outside. Well, I mean, the the you get the right incentives. And, frankly, when a company is performing well and the equity is valuable and then you provide your employees liquidity on a reasonably regular basis, we've done two employee tenders. Yeah. And then you make sure that the investors are lined up to buy common stock at a preferred price. Yeah. And, it it keeps people around. What's what's been, what what has been some of the biggest learnings or some of the hardest transitions from moving from, you know, not being CEO to to CEO? You know, to be honest, it it came pretty naturally. Like, I've always felt like Riding a bike. When I you know, Mark sent me out to Singapore in two thousand five. You know, like, I want you to open up our office in Asia. I've never I've never even been to Singapore. I'm like, I was 28 or something. I was like, alright. Well, this sounds like an interesting challenge. It was I was kind of on my own. And, you know, in a lot of jobs, you kinda need to assume that you're the CEO of that Yeah. That role. Yeah. And that's around resource allocation, prioritization, and, and just getting people in line with with vision. Well, it sounds like when you say what you learned, a lot of stuff with the experience at Salesforce prepares you for this? Yeah. I think Salesforce during that vintage, you know, really produced, you know, you know, a lot of people. I talked about Freddie that started Okta with Todd, and there's many others Yeah. That went on to to to do great things in the industry. I think Mark, you know, single handedly is to thank for Yeah. A lot of innovation that we've seen over the last twenty years. So so one of the questions from the audience, if you could go back and do one thing differently in your career, what would it be? Well, the only reason I'm here is because I didn't get into business school. I always the whole plan was to go get my MBA in 2002, and I I got rejected from every school I applied to. I got wait listed at MIT, and who knows whether or not I would have gotten in. So that was the only reason I I, went to work at Salesforce. And so that would be my advice to somebody who's, like, weighing the pros and cons of of going back to school Yeah. Or or finishing their undergraduate degree, because I know that's now something like when you and I went to college, it was just assumed you go to a four year college. Like, you didn't really hear of people that dropped out. You heard about Bill Gates or something like that, but it wasn't quite common. Now it's very common. So that would be a piece of advice that I would offer to anybody, which is, like, I had this formula that this was gonna be my career and it included an MBA, and it just didn't pan out. And how did you get the job at Salesforce? I, I just used my personal network in the city to get in. I mean, were you were did you know that was a good company or were you just looking for a job? I'd used the product at the start up, the failed start up I was at. And and and Mark, you know, appeared to be this big thinker. Yeah. And, I had at the time, I think they were doing about 20,000,000 of of ARR. Yeah. I think we the company went public two years later. We were doing about a hundred, two hundred and fifty million of ARR memory serves, a billion dollar market cap. So, I knew I wanted to work at a start up. At the time, Siebel was, you know, the dominant vendor in the category or Oracle, and a lot of my peers were gonna work at those companies. And I just I knew I wanted to be in a Yeah. High growth environment. Yeah. And so, I mean, you you talked about the importance of Salesforce. I mean, any advice in terms of I can see say for me personally, I mean, that there that was a big inflection point in my career too. You know, any advice in terms of people when they're thinking about getting getting their, their jobs and the importance of, like, finding one of those companies where you sort of, you know, like, that that opportunity you had in Singapore, for instance. I mean, it seemed like that was probably a big inflection. Yeah. And I see you're out of time, so this might have to be the last one. I don't know. And you've heard this, like, if you get a invitation on a rocket ship, you don't ask which seat you're sitting in. And so that was kind of my experience at Salesforce. Like, I was unemployed. I had I hadn't got into business school. Did I wanna be a sales engineer for, like, the small business segment? Like, it wasn't the most glamorous job at the company at the time. But I was like, fuck it. If I can just get into this company Yeah. I can prove to Mark that I'm more capable than just this role. Yeah. And it worked out that way. So that would be my advice, is especially for those who are earlier in their career Yeah. Is being in a high growth environment Yeah. It just is so different. And seeing what good is. I think so. Yeah. Yeah. You learn a lot to see. And working with people that have done it before. That's right. You know? Like, so Alright. Well, thanks, Aaron. Really appreciate it. And, thanks everybody for the time. Yep. Thanks so much, guys. We're gonna keep the show rolling. So I'm gonna have Anamitra introduce our next speakers. Hi, everyone. I'm Anamitra. Thanks. This is the this is the last one, but it's and it's gonna be a lot of fun. We are going to hear from, two wonderful people from Mercor. Rayhan, who is one of the earliest employees at Mercor. He, manages some of the largest relationships and and customers at Mercor. He also had a company of his own that got acquired. We'll be interviewing, others who is, used to go to Harvard, dropped out to cofound, Mercor. He now runs the engineering organization. As you know, as you probably have heard in the last one week or so, Mercor announced they raised around at about $10,000,000,000 valuations, growing like gangbusters. So, what it's like to be inside of the storm, inside of the of the of the bull's eye of, of an AI application that is growing, faster than one can imagine. Let's hear it from Rehan and others from our core. Hi. Hi, guys. Nice to see you. So here we have Adarsh, the CTO of Mercurize who got the intro. And I think it'd be good, maybe, Adarsh, to start off with just a little bit about yourself, some of your background, what got you interested in start ups, and what were you doing as a kid? Yeah. I mean, so first of all, this is an amazing event. Thank you to the Afore team for putting it together. So I guess a little bit more about me is that I grew up in the Bay Area where my mom was a professor teaching organic chemistry, and my dad was a software engineer. So from a very, very young age, I was just kinda in this tech ecosystem, for a while. I got close to one of my cofounders, Surya, when we were in fifth grade. We were 10 years old, and we were the only elementary schoolers who wanted to compete in these high school debate tournaments together. So we had this, like, weird trauma bonding thing sort of going on and then became really close that way. And then we all kind of met and grew closer in high school where we did debate together in San Jose at a school called Bellarmine. So Surya went on to be my debate partner. Brendan was also in the debate team. We had practice together, traveled together, prepared together, and then we went our separate ways for for college. I went to Harvard for undergrad where I studied CS, and I did a bunch of ML research across bio, NLP, computer vision. It's kinda that combination of things that and that background that ultimately preceded me founding the company. Yep. That makes a lot of sense. And you guys founded it, you know, your your your sophomore year of college. So tell me a little bit about, like, before you know, that year before you founded it, like, what were you guys doing? Were you guys working on, like, a lot of different side projects together? Were you texting about it, or did it kinda just come out of nowhere and and you were just down? How did how did it happen? Yeah. I mean, I think, some people, when when they're asked why did you found a company, they say, you know, I was just born to do this. Right? Like, this is my calling. I knew I would have done this. I did not know I was gonna do this. I actually, for a really, really long time, wanted to be a researcher, and that's why I spent so much time doing research. But then I actually got roped in by my cofounder, Brendan, who was always hustling in high school, like, selling donuts, reselling these Google Home minis. We would work together on this AWS, arbitrage. So then he said, I mean, let's just learn how to build software together. So what we actually did when we started off, you know, exploring these different ideas is Brendan and I would kind of build these apps for startups who wanted, you know, software. So it would just be like, hey. Here's $5,000 if you make this part of our website. And then I'd build it with Brendan and a and a team that was overseas. And then, you know, very, very quickly, we realized that the actual constraint to scaling up those apps was just these really, really high caliber people. And that was around the time that ChatGPT was released. So, we had built kind of this engine without even knowing it to find these exceptional people and allocate them on the right projects. And very, very quickly, that became the focus of the company. Yeah. That that that's super fascinating. Is there, like, a a specific project or, like, person or something that you remember that, like, really made it click for you that, like, this is super important? Like, when you started finding these people, it's, like, a moment in time where you were like, oh, yes. This is, like, driving a ton of impact. Yeah. I mean, the thing that always kind of, you know, fascinated me was on a really, really small scale. Right? The software consulting contracting agency that we we had built out, you'd hear all these amazing stories of people who said, oh, wow. Like, getting put on this project really, really changed my life. And we're doing that really manually right before Mercur became what Mercor is. And the thing that fascinated me was, okay, what if we can actually do this on the order of magnitude of millions, right, or billions at the cost of software? An automated engine to kind of match people with high paying contract roles that sort of match their skill set and expertise. And it's kind of that that got me really, really thinking about the potential of, kind of building this matching system. But, obviously, you know, going from there to finding this market, there's also a story there as well. Yeah. No. Absolutely. And I'd imagine that there's a lot of, you know, young founders kind of in the room, maybe even, like, student entrepreneurs. What's kind of, like, that moment where you're doing this on the side, you're doing it in college? What's, like, that moment when you're, like, we're gonna drop out, we're gonna move to Palo Alto, we're gonna move to New York? When did, you know, when when did that kinda hit? Or was it, like, gradual? Was it sudden? How did that happen? Yeah. I mean, I have to say New York was a mistake. I shouldn't have pushed my cofounders to move to New York. But I will say that the thing that actually really got me excited about the company was just that, you know, in reflecting on my time doing debate, I actually thought the x factor, for Surya and I was not that, you know, we were each individually the best debaters. It was just that we were so complimentary as a team. And I felt that exact same way about Brendan and Surya before we started the company. We had no idea what we wanted to build. We had this weird services contract software consulting thing. But in my back of my mind, I knew I just wanna work with these guys. Right? Like, it doesn't matter what we work on. As long as I'm working with these guys, I know I'm gonna have a great time, and I know we're gonna make it all work. So when I had that, it it sort of just became a no brainer to to start the company. And I think one of the interesting things is that when making these big life decisions or leaps, there's just so many opportunities to sort of just, say that you haven't fulfilled a prerequisite to doing that thing. I need to take this course so I'm good enough to get a job to do this thing, or I need to do one more work experience before I can found a company, or I need to learn from one more person. But the thing that I realized is, ultimately, those things just become a way to rationalize inactivity, and doing nothing. So when I felt that most of the pieces were there, I realized I needed to take the leap of faith. And you mentioned New York. You guys moved to Hell's Kitchen for a while. I I I'm sure you have some fun stories from that. There's, like, the really early days. Can you share some about why you like New York so much? Yeah. I mean so my my cofounders and I have gotten in a handful of arguments. One of those arguments by the way, I was it was one v two against this against my cofounders in this particular argument, was whether or not we should base the company in New York. So at the time, I was like, look. You guys went to Georgetown. I went to Harvard. We're doing the startup thing. We're not gonna be friends with anyone, so why don't we just go on the East Coast. Right? So at the time, I was prioritizing lifestyle instead of the company. So then I had these heated debates with them, you know, I I won that one. And then we go, you know, find this Airbnb and the Airbnb says, the place is in Hudson Yards. Okay? And there's this huge circle. Right? Because Airbnb has, like, the circle where the places could be but then when you actually pay, it shows you where the place is. So then we get the Airbnb, and then it turns out that that's actually in Hell's Kitchen, in a bad part of Hell's Kitchen. And we're in this really, really small apartment scared to, like, walk in because there'd be, like, a new group of, like, dangerous people outside every single time. So that was not a a fun fun experience. But but yeah. I mean, even at the time, I actually didn't even think we're gonna be able to, like, do the New York move. We had this cash flow business that was barely generating money, and we're paying ourselves $200 a month. And we moved to New York after accepting one check, a $25,000 check from Virat, who later became our our first, employee at the company. So at the time, I was wrong about New York. And even if I was right about New York, I didn't even know if we'd be able to survive there. So you only had $25,000 in the bank. So Nice. And and tell me, so you you mentioned so that was New York. That was it was just you guys hanging out. And then soon you added, like, you know, a few more employees. Hurrah joined. Your roommate from college joined. How was, like, that early process of, like, deciding who you're gonna go down this journey with? And also on the other side, like, how did you convince these people, to come join you? Yeah. I mean, it's a really, really tough sell as a 20 year old with no job experience. I mean, I still haven't worked a full time job to get someone to quit whatever they're doing in life and join your start up. And I realized that when we were recruiting our first couple, team members, which is why I I had to rely on some advantage, and that was just people that I was friends with, sort of like extended founders in a way. So the first engineer that I kind of recruited to join the team was Artemus. He was actually my roommate in college, so we used to sort of stay up till 4AM every single day working on these problem sets. And through some grace of God, I just convinced him to take the leap of faith, work in SF while finishing up his degree at Harvard. I'm not sure Harvard's supposed to know that, but we made it work. And then the rest is history. After you get the first one, then it's easier to get the second and the third and the fourth because the good people wanna bring even better people, and then it becomes kind of this, engine that has so much momentum that it's unstoppable. Some element of that so definitely, like, the the early group of of Mercor shaped, you know, a lot of, like, the success now. And so some element of that was, like, the people that you were in close proximity to. Mhmm. But some of it was definitely, like, the selection process early on. I remember, you know, when I came on-site, there was a very, like, deliberate kind of interview process, like, a lot of talking to people. It was super high touch. You know, I talked to each one of you guys before joining the company. What do you think are, like, kind of the the biggest criteria that led to at least starting off with such a strong and successful team? I think there's a couple of things. So the first thing is, when I said that it's a really, really tough sell for a 20 year old with no job experience to convince someone to join a company, the people that actually do end up joining the company are just a little bit crazy in some way, shape, or form. And that includes you too because you left an amazing job at Insight to join us when it wasn't obvious at all. And in that way, that, like, self selecting nature of that initial group of people that we brought on just led to, like, a group that was just so cohesive and so aligned and doing it for the same set of reasons. Right? You sort of get that at an early stage. You don't really get that at a couple 100 people. So it's something you need to more intentionally screen for. The second thing is the common attribute across every single person that we brought on is just having immeasurable amounts of energy. Like, there are just these people who have so much energy that whenever they're faced with any problem of any level of difficulty, their initial reaction is how do we solve it and how can I motivate others to solve it? Like, that is just so contagious and so powerful and every one of the first 20 people at Mercor had that. And reflecting on those days, I mean, it just didn't even feel like work. It just felt that whatever problem we had, we were gonna solve it because anyone just was so enthusiastic and so excited to win. And reflecting on that process, is there any advice that you have for for people, like, thinking about either, one, on the joining the early team kind of side, but also, like, people that are looking to, like, kind of recruit their first 10 to 20 people that that are gonna really gonna define their company? I honestly think 90% of the success of a company can basically boil down to the caliber of the first 20 to 30 people. And I know that doesn't sound quite right, but I could just assure you reflecting on it, so much of the reason that we caught lightning in a bottle is because of the caliber of those first people that we kind of brought onto the company. In terms of advice for people considering various companies, I mean, I think the advice would just be along similar lines, which is the most important predictor of success in startups is that early cohort of people. And when you're considering joining a company, you should be asking that question. Are these gonna be people that push me? Are these gonna be people that make me excited to solve these exciting problems? Are these gonna be people that I wanna work with after I leave this company? All of those should be the top questions in my opinion before joining any company. So last year was a pretty crazy year. We went from, I mean, basically, a small group of people to a seed round, a series a, a series b that closed the end of the year. We hit, you know, multiple, like, public milestones, like, a million dollars in revenue, $10,000,000 in revenue, etcetera, etcetera. What are kind of some of the defining moments that you think like, one, that allowed us to kind of win and do do so well, and some of the defining moments that kind of, like, sit in your mind as, like, this is, like, what made Mercor kind of Mercor last year? Yeah. Absolutely. First thing I'll say is on the topic of blowing past these milestones, it was just such a learning experience for every single person involved. Right? Again, I've I've never worked a a full time job before. Right? So sort of like racing a Ferrari while you're changing the wheels while you're on the racetrack. It's just a crazy experience where it's just a perpetual stress test on every single function of the business. Right? And it's still a stress test. The business is still stressed. There's so many processes that are broken. There's so many things that we don't expect to happen, but they just happen. There's so much crisis. But that's the thrill of all of it, and I learned to appreciate all that comes with it, as a part of the process. Now on the kind of make or break moment for Mercor, maybe I could start off with a little bit of context on the company, which is that Mercor accelerates AI model advancement by placing these expert contractors at the top AI labs that train, test, and challenge these models to make them better. And if I had to kind of reflect on the journey and think back to the single moment that really, really made the company, it was when we realized that this market was just first and foremost a talent assessment problem. Like, when I say data labeling, you guys probably think of people drawing boxes around stop signs. There's a stop sign in this image or, like, is this a hot dog? Is it not a hot dog? It's kinda like stupid stuff. But now it's way way more high skill. Right? It's like the model is bad at Rust programming, and we need an expert staff engineer at Rust programming to make the model better at Rust. Like, finding that person is a talent assessment problem, and no other competitor thought of it that way. And that realization and that moment that we had was the realization that shaped the product strategy, the go to market strategy, and ultimately led us to catch lightning in a bottle. Tell us more about that moment. I'm kinda curious. Like, kind of what was the thing that led up to that moment? And then, like Yeah. You know, what was, like, the right the aftermath? Like, was was everyone aligned and they disagreed? Or was it, like, you and Brendan, like, hashing it out? Like, how how did that happen? Oh, no. There was no hashing it out. We got our first kind of request from our first largest customer, for for tons of engineers and and data scientists, and we're just kinda confused. Why couldn't they do it themselves? Why is it engineers and data scientists? Why are all these assessments to understand how competent they are? Oh, wait. We can use our AI based assessments and interviewers to actually solve this use case. So, actually, the moment that we had was actually in the hot tub. Like, we we had a hot tub at the apartment and we're breaking down this contract. And it was me, Brendan, and Suri, and we're just looking at each other and we're like, guys, holy shit. We just struck gold. Like, that that was literally what it felt like. And there was, like, no revenue really. Like, no revenue growth at the time. It was miserable. Like, I was staying up till, like, 3AM to kind of debug the AI interview and all these different assessments. I mean, I was also dealing with all this, like, insecurity around, like, am I gonna make this work? Right? Like, I just dropped out of college. Like, what am I doing? Who am I? Like, all these different things. But despite all of that, we just looked at each other, and we knew that this was the thing that was gonna take off. And none of us had, like, a single doubt in our minds about that, and that happened in the hot tub. So and just to make it concrete, like, that hot tub discussion happens. You wake up the next morning and, like, do you change what you do? Like, how do you change what you do? You know, what exactly? Like, how does that turn into action? I mean, I woke up the next morning and I went to the hot tub again. I think moments like that provide one thing, that's super valuable and can make or break a company, which is focus. Right? When you have complete clarity on what you should be doing, right, and what everything should be in service of. Like, we didn't have that clarity before before having that moment, and I think that really, really made was a make or break for the company. Got it. And and since that moment so so that was kind of the moment that we went in the direction that we did that we are now. And in that journey, have there been other such moments? For example, there's been a a lot like, we've raised rounds. We've we've grown the team. You know, our our biggest competitor, I think, to quote you, got torpedoed overnight. Have there been other such moments that you've had discussions like that? And, like, what what moments are those? And, like, kind of or have you ever reassessed that direction as well along the way? Yeah. I mean, I remember checking the news, and there's a company. It rhymes with Bailey Eye, and they got acquired. And this this company had billions of dollars of revenue kind of, like, pointed at it. Right? And just overnight, every single lab was just like, who's gonna fill this demand? So I think that was the second kind of moment for for us or at least accelerant to the kind of growth of the company where, you know, every single person in the company literally just locked in. They felt the gravity of the situation. They felt the the opportunity. No one was concerned about, like, role, scope, title, nothing. Like, this entire company was just unified in capturing this crazy opportunity. And I think, again, that's a moment that brought focus, and with focus comes lots of momentum and progress. Yeah. That that makes sense. And I think probably on that note, you know, the environment after that that acquisition occurred, and there's probably, like, a lot of, you know, questions just generally about more core culture. And so I know that we've been in public and said things like nine nine six. We have there's a lot of different interpretations of this culture, but would love to get your thoughts on on what that means to you. I have no idea how this nine nine six thing caught on. I have no idea how it became a part of company branding. I think it was included in a title in a podcast. And ever since then, this phrase nine nine six, when I close my head, my eyes, it just pops up, because everyone keeps associating that with the company. I think in a lot of ways, that's actually, a little bit misleading about what the culture at Mercor is like. Like, we don't have a top down mandate for people to be in the office from 9AM to 9PM, six days a week. In fact, I would urge you to question any company that has such a top down mandate because, ultimately, companies should be output driven. Like, I actually could care less if you're working on Saturday, if you're working on a Sunday. I could care less if you finish your work on on Friday, and then can take it easy for a weekend as long as the work actually gets done. But most importantly, if you're in the office from 9AM to 9PM six days a week, but you're not actually doing anything, but it's because of some top down mandate, and if if that's kind of the culture we've built, I would say that we failed. Right? So where nine nine six sort of came from was the fact that everyone is in office not just six days a week, but seven days a week in the early days. And they did that because they were all really, really bought into the company in a mission and wanted to make something succeed. And I think if you look back in history, every legendary company, pick your favorite company, they were not working from 9AM to 5PM five days a week. There is not a single example of a successful legendary company that has had that schedule. And I think so much of the lightning in a bottle moment came from the passion and intensity of the early members of the company, and, of course, the output that comes with it, not, you know, being in the office in some time bound, basically. What advice would you have for somebody who's considering joining a company like that? Because, obviously, that might not be a good fit for everybody. How would you characterize the kind of person that should should make a decision like that, and what would you want them to think about before they do that? I mean, I think the most important thing is conviction on the company. Right? I think nine nine six at a company that's that's not gonna make it is probably miserable. And I think it just comes back to the caliber of the the people and the size of the opportunity. I think one thing that people don't quite appreciate is if you're really swinging for the fences and the scale of ambition is really, really large, like, there are just so many pockets of gold to be found. Right? Like, one of the things that is super, you know, exciting to me is just the fact that with Mercor, there's an opportunity to define a category. Right? In the same way that Robinhood democratized access to investing or Airbnb made it possible for people to put their homes, up for for sale or for rent. Mercor kind of has the opportunity to to define this post AI economy work where a job search is automated. It's passive. You can be matched with contract opportunities in a way that you can kind of, like, depend on. It's frictionless. Those are all the things kind of going through my mind when kind of designing the matching system, for more core. And, consequently, I think the thing that's really, really underrated is how big is the scale of ambition of the company. Right? You you wanna be working those hours because you'll learn, of course, but because there's a high probability of winning and because the opportunity is so large that getting up at at 9AM doesn't feel like a slog. Yeah. And you you mentioned the matching system, and I think you mentioned some some really interesting, kind of, like, concepts that we work on. And so I'm kind of curious also given that, the crowd is, like, you know, very engineering heavy. I'm I'm kind of curious. What do you think the most interesting engineering problems are to work on currently at Mercor slash will look like in the next two years into an engineer that might, you know, look at joining the company? Kind of what what of those, like, enticing excitements would you kind of dangle in front of them? So I think maybe I can start off with just kinda, like, the high level areas of product investment that Mercor is focused on. So Jeff Bezos in one of his shareholder letters said something that really resonated with Brendan and I, which is, you know, most people are focused on things that will change over the next ten years and trying to actually ride those trends to some level of success. But the thing that people aren't focused on are the things that actually won't change over the next ten years, and how can you build technology that basically compounds over those things that won't change for ten years and beyond. And identifying those things that won't change in a lot of ways is just so, so much harder than identifying the things that will change. So from our core, there are three areas of focus sort of derived from the things that won't change. The first thing is building a vast talent network. Right? There's an opportunity in defining the future of post AI economy work, and we need to have those people on the platform. No brainer. The second thing is building a matching engine that that works well. Right? So understanding what opportunities those people should be matched to, high paying contract opportunities on the frontier of AI today. But over the next ten years, maybe the nature of the opportunities changes, but we'll still need to be able to match them with the right work. And the third thing is fast delivery. Right? So fast fulfillment for our customers. Being able to automate the logistics around contractor management, data delivery, and so on and so forth. So each of those three things brings very, very different engineering problems, all of which are exciting to different types of engineers. Right? On the delivery side, like, we pay out $2,000,000 a day to talent. Right? There's zero room for error on payouts to talent. Right? If someone is missing their payout that erodes credibility and trust with the platform, that's a payments problem that has, like, a lot of, a lot of kind of interesting things to navigate. On the matching side, right, like, you have all of this data on a person. Right? Maybe their resume, their GitHub, their AI interview, text, video, audio, data on who's done well on projects in the past, who hasn't done well, data on the opportunity, data on how much that opportunity might actually pay someone. How do you package all that into a matching system that's coherent? And and more importantly, LMs disrupt all this stuff. That's a hard problem. On the topic of actually bringing people onto the supply side, there are all these different consumer social problems. Right? Where in recent months, like, north of 70% of people who've been hired on the Mercor platform had have had a touch point with a referral. Right? So this is talent on the Mercor platform that refers other people for opportunities, and they feel accountable to those that they referred. There are a whole set of kind of consumer social problems there. Of course, now with the labs, the thing that everyone's talking about is our own environments and our own related use cases. We have a team of applied AI engineers that interfaces closely with these labs, packaging those requirements into something that we can action on. So the answer is there's a broad set of different problems and each of those problems bring their own kind of unique approaches. And Mercor is unique in the sense that it's so vertically integrated that there's room for engineers to work across all of those things. Yeah. That's super exciting. And I think since we're on the topic of kind of what all of our engineers work on, something is we we've grown super fast, you know, this year, and I think there was a point where, yeah, I walked in and even just, like, on the operation side, it was, like, more than half the people at the company had started, like, in the last, like, forty or fifty days. And that, of course, comes with, like, pretty unique challenges. And so I'm kind of curious to get your take on, one, you've never worked a a real job, and then, two, you have to scale an engineering org reminding me. Yeah. You know, in case you didn't say it. And then, two, you have to scale, like, an engineering org to quite a large size in really just the last twelve to sixteen months. What have you learned? What have been the challenges? And what would be some takeaways to other engineering managers, other engineering leaders looking to do similar things? Yeah. Well, the first thing is when you're onboarding people so quickly, the thing that people don't quite understand is, like, what is the company? What is the company optimizing for? What are the goals of the company? Who are the customers of the company? All things that sort of felt obvious to me, because I have so much context. Right? I live and breathe this company. This company is the first thing I think about when I wake up. It's the last thing I think about before going to sleep. But for someone who joined forty eight hours ago, that actually, understandably, they don't have context on those things. So one of the big kind of realizations for me was just that you have to set up environments to reiterate the values of the company as frequently as possible in, maybe even in a counterintuitive way because you just underestimate the amount of context you have versus someone who has just joined the company. So that's the first thing. Now the second thing on scaling an engineering organization. Right? So as you repeatedly point out, I I haven't worked a full time job before. But the thing that I grew to appreciate is that if I can do one thing right in my job at Mercor, they'll be bringing in other exceptional people, which is hiring. And I really, really underestimated how hard hiring is, especially in this market for the best people who have all the different opportunities in the world. What about Mercor would would make that person take the leap of faith? And the answer is different for every single person. But keeping the bar really, really high and systematically finding those people and convincing them to join, is something that I kind of learned to refine over time and I I'm excited by and wanna get better at, but it's it's just the most important thing. Because, ultimately, talent inflows and outflows tell you everything you need to know about a company. Yeah. No. That that makes a lot of sense. And and I'm curious, even at, like, a higher level, there's been so much change in the past year. Company has grown so much. You've, again, gone from, like, very small team to, like, full kind of fledged company. If you're looking back on, like, the last, you know, twelve, eighteen months as as, like, a founder, not even as an engineering manager, like, what what are the kind of the biggest takeaways that you have? What are the things that you wish you had maybe known at the start of the journey rather than figured out now? I think a lot of people give this answer, but I kind of wish I knew how hard it was, right, when I started. I just had no idea. Like, of the Brendon, Suri, and I, I was the last kinda domino to fall start when starting the company. And the reason I was the last one was because I actually kinda liked school. Like, I had I had a great group of friends at school. It was super fun. I felt like I was learning a lot, and it's totally fine to like school and wanna stay in school. And the second thing is that I also really liked Brendan and Surya. So I was sort of deciding between two great, options. But the moment that really, really did it for me was when my debate partner, Surya, or former debate partner just asked me, you know, how hard could this be? Right? So I just turned to him. I was like, that's brilliant. Can't be that hard. And then we just dropped out. So this is after weeks and weeks of me just in this state of mental anguish and turbulence debating whether or not I had made the right choice or would be making the right choice. Suri and I just kinda, like, shooting the shit in a conference room. He's like, hey. How hard could it be? I'm like, alright. Let's go. Let's drop out. I submitted the papers the same day, and I didn't even tell my parents. I just did it because of what Surya said. And, yeah, I didn't understand how hard it could be. It was way harder than the the hardest things in my imagination, but I think that's what makes it so fulfilling. Yeah. That makes sense. And we talked about some of the hard stuff, and I think there's also I think what people don't realize is, like, when you're growing so fast, there's a lot of, like, chaos. There's a lot of, it's kind of like fun chaos in many ways. I think one one thing that I find funny is, like, when I was flying over to, like, join the company, I remember texting Suri and asking if we had, like, onboarding materials. And he's like, yeah. Sure. I have this, like, doc. And I think I opened it maybe, like, an hour too early because when I opened it, there was, like, two sentences. And I, like, watched the third one get written in front of me. And it was like, this guy is gonna, like, teach you how to do operations, and that goes, like, period. And I, like, watched it, like, on the flight. And I texted Suri. I was like, is that, like, all we have? And he's like, yeah. Honestly, like, forget about it. Like, you'll just figure it out tomorrow. I wonder, like, are there, like, fun kind of, like, fun stories that, like, highlight kind of the craziness, that we've been through in, like, the past twelve months? And if so, are there things that stick out to you that's, like, it was crazy kind of that this happened, but we also, like, made it through? And and, yeah, curious to hear your thoughts and also just wanna be entertained as well. Well, for engineering onboarding, we've had a similar kinda set of problems where I remember, the initial team was kinda based out of India, and and that's really, really who built out v one of everything on the product. I was on call at weird times at the middle of the night to make it work. So for me, I'd actually never onboarded an engineer in San Francisco to the code base, for a while. Right? So then when we started ramping up this hiring in in The US, I remember I was, like, kind of bulk onboarding, a couple of of engineers. And they're like, okay. Let's get this local development setup working. And then I'm like I'm like, go to the onboarding docs. So, like, just read this. They're like, it's not working. And then I I, like, go and try it myself, and then they're like, it's it's then I'm like, oh, it's it's not working. And then they're like, I mean, isn't this, like, the first thing you do when setting up your your computer? I was like, yeah. I mean, I guess I was like, welcome to the to the ship. Let's figure it out together. And then they were just like, I have no idea what I just signed for signed up for. So these are all kind of things that you navigate. I think one really funny moment that I still remember was, at the time, kind of like our CICD system had not been built out properly. So we were sort of, like, experimenting with a bunch of different things, you know, building these, like, kind of vanilla setups. But, you know, the first part of our c I c d pipeline was just, you know, dropping everything in our database and then, you know, putting in some dummy data, running tests, you know, tip what kind of vanilla stuff. Someone had misconfigured the actual service account that was dropping the table. So it wasn't a development account. It was the production account. And then I look in the logs. It's, like, dropped to Mercor users. And then everything cascaded, and the whole production database just completely got wiped out. This is kind of in the the early days when we're just, like, about a dozen engineers. And then, like, I get a bunch of Slack calls, and then I'm like, what's going on? And then, like, the engineers just respond, DB is gone. Like, what are you talking about? The DB is gone. And then it's everyone kinda, like, gets into a huddle and just tries to fix the issue. So there's so, so many issues like that, that I think about from the early days. And something that I think probably also uniquely because when the company started off, we were, you know, admittedly quite young. A lot of the team was quite young. But I think we're still able to get quite close. I mean, we went to Bali in January. That was quite fun. And I think since then, we've still been able to remain, like, quite tight knit. Where do you enjoyed Bali a little too much. Yeah. I go back every every now and then now. But how you think about kind of, like, maintaining kind of, like, this tight knit culture when we're growing so fast, and it's, like, hard to even remember kind of, like like, to create environments like that where people can hang out and have fun? I don't know. I'm still figuring it out. I think there are a couple of things that I've realized over time, which is creating more environments for people to get to know each other better, reiterating the values of the of the company, reiterating what the company is and and and and what recent wins are, where we wanna go. Just reinforcing those things that might be obvious. But it's super hard. Right? And you're scaling up the company super quickly because the opportunity is just so, so large. How do you make sure you're bringing in the best people? How do you make sure those people are motivated or know their peers and are excited by the mission of the company? It's super hard, and every company struggles with this. And to some capacity, Mercor struggles with it as well. So we're very, very much, figuring that out as we go. Yeah. And I was looking at some of the audience questions, which I think are coming into the QR code. And there seem to be a few questions about, like, how we think about, both the trade offs of having, like, a a little bit more of, like, an intense culture and then also our kind of opinion on things like online, and remote work. So curious to get your thoughts on that. Let me just put it this way. I think absolutely zero of my best ideas have come from a planned meeting. Just zero. If I reflect on every single one of these kind of ideas that I had that, you know, I I'm just surprised that I came up with it or just feel so obvious in hindsight, it literally just came from, like, open dialogue in the office and unexpected conversation, someone coming up to your desk and asking you something that provokes some thought. I just don't think you get that remotely. Maybe it's controversial. Maybe people disagree with me. There's a lot of companies that have done it really well and succeeded, and kudos to them. But I just don't think you get that remotely. And I think especially in the early days where the feedback loop is so important, the iteration speed is so important, and and those ideas happen so quickly. The company runs in real time. You kind of just have to be in the office. And that's my personal perspective, and I think it's worked out well for us thus far. On the topic of intensity, intensity makes or breaks companies. Like, every single one of your favorite companies that is legendary has had an intense culture. It's a fact. Challenge anyone to come up with a counterexample. But the thing that's really, really important to realize is that burnout is real. It's super real. Right? When everyone is working super, super hard over a long period of time and they get to the point where they don't actually enjoy what they're doing anymore, that needs to be avoided at all costs. And there's so many ways to kind of create kind of intentional, intentionality around how people work and making sure that they enjoy it. Because kind of the ideal end state is everyone's working all the time, but doesn't really feel like it's work. Right? And keeping that going as much as possible, and that's the most important thing. So there are ways to kind of balance intensity with well-being and enjoyment in a way that I think a lot of the successful companies have done. Something that's kind of interesting is that, also, given that, like, a lot of our engineers that started off were quite young, a lot of them have kind of come to this world as, like, AI native engineers in many ways. And I know a lot of people probably in the crowd are thinking about what is, like, the future of an engineer in the next year, two years. And I think we probably have a unique perspective both because we work with labs and then, two, because we you know, you've built kind of an engineer guard. We have a lot of engineers. What is your perspective on, like, how the role of an engineer will change in the next year, two years? And, like, what do you think it's gonna take to to remain on, like, the cutting edge of being, like, an engineer? It's a super important question. And, actually, at Mercor, we literally have dedicated engineers focused on that. It's just how can we accelerate the output of the entire engineering organization by utilizing AI CodeGen tools and running all these experiments, experimenting with Cursor, Cognition, Graphite, Code Rabbit, all your favorite tools, codecs, Cloud Code, and figuring out how they integrate into our workflows and how they can make the entire team more productive. So it's a question that we take very, very seriously, and I'm still looking for the answer to. On the topic of what do I think engineering will be like over the next decade or so, I just kinda view the LOM stuff as just the next kind of abstraction. Right? I've spoken about this before, but I feel that, you know, with that there's the lowest level. There's assembly, then there's Python, and there's all the things on top of that. To me, LMs are kinda just that next level of abstraction. And if I look back in history about all the different kind of times where there's been another level of abstraction, it's created kind of opportunity and abundance. And in the coding landscape, I think the opportunity and abundance will be that every person will be able to do more. The more skilled engineers will be able to do more because they now have a fleet of hyper competent AI agents that they can work with. Even someone who's kind of not competent can probably do more too. And I think that's really, really exciting to me. Right? It's just that AI will enable all of humanity to do more, not just in coding, but also just throughout all of society. And the way that that progresses is just gonna be, phenomenal to watch. That's super exciting. And I think now, I think maybe taking and knowing that we have, you know, only a few minutes left, I would say taking a step back and thinking kind of about the future. One, like, what are you most excited about from, like, Mercor point of view? And then, two, like, even outside of Mercor and kind of this new era of, like, there's, you know, tons of new startups, tons of new technologies, and essentially people in the crowd that might be, you know, wanting to, like, start a company in the next six months, next year. On both of those layers, like, what are you most excited about, and what do you think is really gonna be, like, very defining in the next couple years? I think the most legendary winners of the past, you know, several decades have had really, really strong network effects. And in a world where because these agents are so good, you can just spin up any dashboard. You can clone your favorite SaaS app like this. What are the companies that are really, really gonna be enduring? It's gonna be those companies that have network effects. My cofounder, Brendan, put it best. I think he put it on Twitter. He just said, I think the companies that endure are gonna be the companies where you could leak the entire code base and it still survive. Right? If Uber leaked its whole code base, it doesn't matter. I'd still use Uber because it has the best network of drivers, and I can get a driver instantly. Right? It doesn't matter if the Instagram code base leaks. Like, all my friends are on Instagram. Right? It doesn't matter if the Airbnb code base leaks. I'm not gonna go on some in some random person's house because they cloned the Airbnb website and slapped on a new logo. So I think the question is, which of those companies is gonna have network effects? I think the marketplace companies will be an answer to that, where every participant on either side of the marketplace enriches the experience for the collective marketplace. And I think they're also gonna be really, really interesting opportunities to create defensibility and network effects in things like coding as well, where, theoretically, with enough user data, you can answer these really, really hard problems that you can't answer off the shelf. That makes sense. And I think one other question that might be interesting to the crowd is, like, when faced kind of the question that you faced, you know, and maybe yours was during college, so maybe it's slightly different than some people. But just a question of, like, should should you start a company? What advice or, like, what thoughts would you have there if someone's thinking about it? You know, maybe they're at a job, maybe they're working at a tech company, maybe they're thinking about making that jump. How would you answer that question? Yeah. I mean, I said it earlier, and I think the answer is being really, really honest with yourself about what the blockers are to starting a company and to hitting your goals, maybe more generally. Right? If you're at point a in your life, you wanna get to point b. There's a straight line from point a to point b, and you should do everything at all costs to be on the critical path. Right? And it's so easy to go off the critical path. If you wanna start a company, you know, just convincing yourself that that getting one more work experience will just solve something that enables you to to to actually, like, do the thing that you wanna do. In some cases, it's the right answer for people, but not in a lot of cases. Or that, there are set of prerequisites that you haven't satisfied. And I ultimately think that if you're not honest with yourself about what's on the critical path, most reasons to kind of defer chasing your goals and your dreams are just total baloney. Right? And you should always try to be on the critical path. And I don't mean this to say that everyone should start a company. Like, I think there's for some reason, people think that I I don't like college or whatever. I actually love college, as I mentioned. I, in fact, think that this trend of people who are, like, 17 years old who can code, telling them to drop out and move to San Francisco and they can't even do their laundry is just absolutely horrible. So so I I actually don't think that everyone should start a company. But the the reality is that people aren't as honest with themselves as they should be about whether what they're doing is on the critical path. Nice. I know that we're about at time, and I think we're, like, the final blocker before, like, happy hour or something. So do you have any final words that you wanna share? Nope. Thank you so much for having me. I enjoyed it. Cool. Alright. Thank you, guys. Amazing. Well, thank you guys very much for for doing this. This is incredible. Thank you. Wow. Well, can I get a round of applause for not just Adarsh and Rehan, but all the all the speakers today? What what really stuck out for me was just how open and transparent and humble all the speakers were. They're all running billion dollar companies. First of all, the fact that they took the time to be here today, we're not paying any of them to be here. They're just doing it from the goodness of their heart. That was that was really, inspiring, but just these stories and learnings. I feel like I was taking notes, and I was like, I'm gonna listen to this again, later on because we're recording this, this day today. And thank you to all of you for for coming out today, and being an engaged audience, asking some great questions on on Slido. We're gonna break for, happy hour, which is just outside. Feel free to stick around, get to know each other. If any of you are starting a company and and are raising funding, I have to plug, please, come reach out to us. Email us or find us. Find one of us in the in the in the happy hour later. Or if any of your friends have started a company, please reach out to us. As we said earlier, nothing is too early for Afore. We can invest at idea stage or even earlier than idea. If you've gone full time or not full time yet, doesn't matter. We're we're, we're very interested in getting to know you. So thank you again for for taking the time, and we'll send an email to get some feedback as well. If there are things we could be doing better for next year, please, please let us know. Otherwise, we'll see you next year. Thank you.