The Exchanges

Q And it's not at all, but Procore has been an epic 21 year journey. And I heard from a little birdie that actually this is, uh, down to your wife, Hillary, who came up with the idea wanting to move to Santa Barbara, but that was all I got. So how did Hillary Santa Barbara move lead to Procore?

A So yeah, so I was, I was running a small tech company up in the Bay area in the heart of Silicon Valley. And by the way, I was flying all over the United States, uh, servicing clients in a completely different industry. And my wife said to me one day, Hey, guess what? We're moving to Santa Barbara. And I said, No, we're not. We live in the Bay Area and I run a business up here. She goes, No, your son and I are moving to Santa Barbara. We haven't seen you in months because you all you do is travel. And if you're not, we're not going to see you. We'd rather not see you in Santa Barbara than San Francisco. And so, I, ah, just very much against my best judgment, I came down here kind of kicking and screaming. And, uh, and lo and behold, you know, we started building a house and, you know, she got sick of me complaining about the challenges of building the house, and so she said to me, like, hey, why don't you just go out and solve this problem and stop complaining about it? And that was the, uh, origin story of Procore. So, uh, yeah, it's all her, it's all her idea.

AI assessment note: “she got sick of me complaining about the challenges of building the house”

Q I mean, that is just amazing. Uh, I'm, I'm a uni dropout too, so sadly never quite got that certificate. Um, what's the best piece of advice you've been given?

A I was sitting in the front row of a class in college, uh, before I, I dropped out, uh, and, uh, I was doodling on a piece of paper and the professor walked up to me and she said to me, she said, Hey, you want a piece of advice that will change your life forever? And I'm like, sure. She's like, when you have five minutes, like you do right now, do a five minute job. Tackle something, and I swear Procore would not be where we are today if I didn't think about that every moment of my life. If there's ever a moment of idle time, I find a way to fill it with something productive, and so therefore I am highly productive all the time, and I, I honestly think it's been one of the best pieces of advice anybody's ever given me.

AI assessment note: “when you have five minutes, like you do right now, do a five minute job”

Q I need your help. I'm an investor today, and I don't like to take market timing risks just because it's an externality that's so out of both of our control. What would you say to me who's fearful of market timing given the depth of what you've been through?

A The more things that have to happen in order for a company to be successful Uh, the higher the risk ratio is, right? So I would look at it definitely that way. You know, if you were to invest in Procore in 2002, we didn't even take, I didn't even take our first friends and family until 2004, but if you were to invest then, you would have had to believe the internet. First of all, that, that the construction industry was going to digitize. Second of all, that the people that work in construction were actually going to be proficient enough in technology to use it. Third, that the internet was going to need to make it to the job site. Fourth, that mobile applications were going to be able to untether people from a job site trailer to actually do their job in, in the field. And fifth is that, uh, people would actually look at these tools as productivity gain tools, as opposed to documentation tools. So you, all of those things would have had to, had to have happened in order for you to believe that Procore was going to be successful.

AI assessment note: “The more things that have to happen in order for a company to be successful”

Q I got you. I spoke to many of, you know, your investors, board members. I had so many awesome things. One thing I want to start on is, like, the GFC apparently, really hard time, uh, and that was, I think Will and Brian both said this. You almost went bust. I think it was a time when you stopped paying yourself. What happened there, Tui?

A Yeah. Well, it was a really rough time. So we were selling our software to mostly, uh, custom home builders prior to the great financial crisis. And of course, the very first part of the construction industry that fell apart was the custom home business market. So we basically, our customers all went out of business. And so we had this shift really, really quickly to commercial construction. Uh, but in that, in that two year timeframe that it took for us to kind of make that shift. Yeah. Myself and Steve's on my co-founder. Uh, we had to go without a paycheck, and I'll never forget, Harry, having to go home and tell my wife, uh, who by the way, at this point, we had sold everything that we had acquired in life. Like, I had, I had, like, two mortgages on the house. I'd sold, you know, a car. I'd sold to make payroll. I'd done, I'd sold it. I had nothing left to sell. Uh, and I told my wife one day, uh, when I went home, I'm like, look, we're not gonna get paid for a while. Uh, and I was scared to death of how she was gonna respond. You know, the, the coolest thing of all is that she was like, look, I believe in this vision as much as you do. Let's make it, let's make it happen. So I, I got really, really lucky, and thank goodness Steve Zom's wife didn't kick him out of the house either, so we were able to go for a couple of years and just scrape by, you know, borrowing money fro…

AI assessment note: “our customers all went out of business. And so we had this shift really, really quickly”

Q And tell me, have you given her two credits along the way, Tui?

A No, I, I take all the credit. No, I'm just kidding. I, uh, I learned long ago, Harry, that, uh, yes, you give credit where credit is due. One other really funny story along the way was I started Procore in the guest room of our house and I was by myself for a long time. And one day my wife came in and I was on the phone with one of our customers and she said, hey, you got to get off the phone. I need your help. And I said, well, no, I'm kind of like, hey, I'm on the phone like this is a customer. And she kept coming in and finally I said, look, I got to call you back. And I said, what is going on? And she said, well, I'm making a recipe and I need you to run down to the local grocery store. To buy me an ingredient because I'm, I'm, I'm kind of stuck. And so at that moment I said, you know what, I'm going to go rent an office somewhere and I'm going to get out of here. So she then encouraged me through that action to actually go out and start Procore by opening up our first office. So she gets credit for that too.

AI assessment note: “I learned long ago, Harry, that, uh, yes, you give credit where credit is due.”

Q I need your help. I'm an investor today, and I don't like to take market timing risks just because it's an externality that's so out of both of our control. What would you say to me who's fearful of market timing given the depth of what you've been through?

A The more things that have to happen in order for a company to be successful Uh, the higher the risk ratio is, right? So I would look at it definitely that way. You know, if you were to invest in Procore in 2002, we didn't even take, I didn't even take our first friends and family until 2004, but if you were to invest then, you would have had to believe the internet. First of all, that, that the construction industry was going to digitize. Second of all, that the people that work in construction were actually going to be proficient enough in technology to use it. Third, that the internet was going to need to make it to the job site. Fourth, that mobile applications were going to be able to untether people from a job site trailer to actually do their job in, in the field. And fifth is that, uh, people would actually look at these tools as productivity gain tools, as opposed to documentation tools. So you, all of those things would have had to, had to have happened in order for you to believe that Procore was going to be successful.

AI assessment note: “The more things that have to happen in order for a company to be successful”

Q just heard it from Will and Brian, so recent additions, but I, I heard about kind of the dozen products that we now have at Procore, and I wanted to ask, and they asked actually, to be fair, I'm such a VC, take credit for others' work, You can tell it's a natural proclivity of mine. What were your biggest lessons in terms of scaling product line without losing focus?

A Yeah, those are, there's a lot of lessons in there, right? So we, uh, up until 2017, uh, we only had one product. It was our project management tool, and it's still our flagship product. Uh, but what we had heard was, um, our customers were sick of having point solutions, and so they really wanted to have our platform be the platform of choice for all of their kind of core business needs, from financial management to quality and safety and things that matter in construction. And so we very deliberately Force rank those. So we prioritize which are the biggest needs and we kind of worked our way down from there. And, um, so I, I would say some of the lessons learned were, uh, we, well, one big lesson we learned was, you know, in the early days, you're kind of faking it till you make it and you don't really realize that scales might happen. And so some of our, our financial product line was a great example was, you know, we had built that very quickly, got it to market. Arguably wasn't a hundred percent enterprise grade. So we had actually had to stop developing that product at a certain point and go back and re architect it. So it was enterprise grade. And we literally stopped new future development for a year, but we realized that if we weren't going to, if we weren't going to get this thing to the point where it was enterprise grade, we weren't going to be able to scale it.

AI assessment note: “one big lesson we learned was, you know, in the early days”

Q I'm so pleased you said that, because you said to me before, knowing my weaknesses has been the key to my success. What are your weaknesses, and do you always agree with hiring them away, or should we actually get good at our weaknesses? Some people say so, some others not.

A So, I'm in the camp of, ah, you really cannot, ah, overcome your weaknesses to a, to a level that is going to be satisfactory for the business. At the scale that Procore's at today, I can't be a mediocre finance guy, and I can't be a mediocre HR guy, and I can't be a mediocre salesperson because that's not going to help the business. I know where my strengths are, and I know my strengths are, I, I, I set the vision for the company I help prioritize. I said, you know, we help build the annual plan. I provide resources to our teams. Um, and I, I spend all this time with our customers knowing what their, their needs are. And that's the stuff that gives me energy and fuels me. But when it comes to like the low level operations of the business, um, I just am not, um, I'm just not great at it. So I surround myself with great finance people and great HR people, great legal people, uh, all of them doing all the work that I just am not Great at, and I don't intend to be great at.

AI assessment note: “I'm in the camp of, ah, you really cannot, ah, overcome your weaknesses”

Q I mean, that is just amazing. Uh, I'm, I'm a uni dropout too, so sadly never quite got that certificate. Um, what's the best piece of advice you've been given?

A I was sitting in the front row of a class in college, uh, before I, I dropped out, uh, and, uh, I was doodling on a piece of paper and the professor walked up to me and she said to me, she said, Hey, you want a piece of advice that will change your life forever? And I'm like, sure. She's like, when you have five minutes, like you do right now, do a five minute job. Tackle something, and I swear Procore would not be where we are today if I didn't think about that every moment of my life. If there's ever a moment of idle time, I find a way to fill it with something productive, and so therefore I am highly productive all the time, and I, I honestly think it's been one of the best pieces of advice anybody's ever given me.

AI assessment note: “when you have five minutes, like you do right now, do a five minute job.”

Q I hear you used to do some pretty crazy things to get customers Wi-Fi. Thanks, Brian. What did you do?

A So we would, we literally, Steve Zahn and I literally would buy airline tickets, go to a customer. We went to Sea Island, Georgia, which is on the other side of the United States. Uh, we went to CompUSA and we bought our, uh, bought a router and bought a wireless access point and bought, and then we went to Home Depot and bought a toolbox, and we actually went to the job site. This is like what we used to do. And we would install the internet at the job site. Uh, so a customer could then, you know, pay us 95 dollars a month for our service. The, the answer to the question was, the internet was not at the job site. There was no such thing as mobile technology at all. The iPhone didn't come out till 2007, for goodness sakes. iPad in 2011. We just were super, super early. But, you know, I knew it was going to happen. It was the last industry I could have, I was aware of that had not Digitized, and I'd seen all these other industries digitized, and I'm like, it's just a matter of time before it happens. We just have to be patient.

AI assessment note: “Steve Zahn and I literally would buy airline tickets, go to a customer.”

Q I absolutely love that. And totally with you there. So take me to that conversation. You're like, Steve, no mailbox walk for you. And he's like, yeah. And then you go, why didn't we go raise money? How does that conversation then come to be?

A So you have to understand the dichotomy between Steve and myself. So I'm the carpenter who failed out of college, right? Steve's the, uh, Stanford grad who went to, uh, you know, got his MBA at Haas, uh, at Berkeley. You know, a lot of these companies, if you think about a lot of big Successful companies actually have this kind of dichotomy and co-founders, right? So Steve was very much business focused, and he was the one who was like making all of the kind of recommendations. So he said to me, he's like too, he like, look, I think we, I think we have enough product market fit that we could actually go out and, and, and figure this out and raise some capital. Uh, and so I was like, well, you know, um, I'd always known we were going to, and You know, that we were gonna have this opportunity. So I was pretty bought in right off the bat. I was a little intimidated, um, you know, walking up and down Sand Hill Road and, you know, meeting the likes of Brian Feinstein and Byron Dieter and, you know, um, and Will Griffith and, you know.

AI assessment note: “he said to me... look, I think we have enough product market fit”

Q in terms of why you'd be more like Facebook. That's so helpful. Thank you. Why didn't you be more like Mike Moritz? But, you know, we can both play that game. Um, what, what happened then? So, you kind of come back with the tail between your legs and go, okay, that was a bit preemptive. And is that how it went? And then you come back seven years later?

A Yeah. Yeah. Then we, you know, so I guess I was saying it was, we were a little intimidated going back, right? Uh, when we were, cause we had had such a, such a, um, demoralizing experience on our first run, you know, at, uh, institutional investors. But the good news was we, um, We learned that it's, it's almost less about the brand of the, of the, of the venture firm, and it's more about the partner, right? And so, I got to know both Will Griffith and Brian Feinstein personally, deeply personally, and I spent a lot of time with these, with them as well as some other investors that, um, that we ended up not going with. I decided that I was going to make sure I was going to be working with people who shared our values, uh, and actually were, Really vested in our success. And it wasn't just another deployment of capital. This was somebody that was going to lean in and be very heavily, heavily engaged in this journey. And fortunately for me, we found two amazing institutional investors that till this day are on our board until this day, believe in our mission and are a hundred percent behind what we're doing. And, and yeah, so we got very lucky.

AI assessment note: “we were a little intimidated going back, right? Uh, when we were”

Q That is, yeah, that's a really tough one. Any other big lessons in terms of product expansion, when to do it, mistakes that were made?

A I mean, timing is everything. Um, one thing that we did learn was, so when we were selling in the Australia, New Zealand market, uh, they, they had these, these new laws in place in Australia, uh, around if a, if a job site accident led to a death at a construction site, uh, and a safety violation had been, um, seen prior to that that wasn't Document it. The CEO of the construction company would go to prison for, uh, for, for manslaughter. Uh, so, uh, all of a sudden when we were talking to our, our customers in Australia, New Zealand, they're like, look, love your project management tool. We need quality and safety because I don't want to go to prison, right? So, uh, we're like, okay, so we started building this product for them, uh, and we got really good product market fit, and then what we realized is that we took it, you know, globally to our global customers. Everybody valued that new product, and so we were able to, You know, kind of hyper scale that product because one market demanded it, but the rest of the market needed it. So, um, we learned that we had the opportunity to kind of capitalize on those, on those kind of finite needs and then take them globally. And, uh, you know, and it's, and it worked.

AI assessment note: “we learned that we had the opportunity to kind of capitalize on those”

Q And when I started obviously Will and Brian, they told me about the decision to be volume based. I'd love to hear your lessons on pricing from maybe contrarian decision to be volume based. And that question of, could you have been as successful if you were seat based?

A No, no. So our mission is to connect everyone in construction on a global platform. I knew from day one that if we went with a seat based licensing model, which by the way, remember I'd run a technology company before this. So like, I knew that that was the only really prevalent model at the time was seat based. I knew that what would happen was our customers were going to make value decisions Based upon who was going to get a seat, but the way that construction done is, is a team sport. And so you need everyone to have access to the system because everyone needs to contribute. So I realized that I couldn't go with a per seat model because that was going to, that was going to actually make it so we were never going to be successful. Uh, and so I had to come up with another yardstick. And honestly, um, the only thing I could come up with was construction volume. One of our customers one day said to me, Harry, I said, how do you buy other things? And he said, well, I buy our, I buy our insurance based off of our construction volume. So if I'm going to do ten million dollars with the construction volume next year, I will buy ten million dollars worth of insurance. And so I thought to myself, well, here's, here's a way that they're used to buying, uh, and it's actually a yardstick that actually scales nicely, uh, with customer size. So let's adopt this. It was so wildly unpopular w…

AI assessment note: “No, no. So our mission is to connect everyone in construction on a global platform.”

Q Can I ask, do you think that CEOs will always need to get on calls? You know, Procore today is a close to nine billion dollar public company. Do you think CEOs will always need to close the biggest customers?

A So I actually have a, a very strict line at Procore. I do not do deal negotiations anymore, and I haven't for the last five or six years. I build relationships with the customers that I want, that I do not want to be transactional. So, uh, I make it very clear with all of our Uh, prospects and all the people that I'm, I'm talking to are, uh, customers at renewal that I'm not, I am not going to be doing the commercial terms, but what I am going to do is I'm going to be a long-term partner of them that there's to put together a, uh, you know, a joint strategy of success. Uh, and so I, I create a very big delineation. I talk to a customer. I think every single day, I think there's nothing more important than a CEO can do than to talk to a customer. And I actually get, kind of, blamed for it sometimes. Like, people are like, are you spending too much time? And I just don't believe you can spend too much time with the people that you're serving.

AI assessment note: “I do not do deal negotiations anymore, and I haven't for the last five”

Q And do you think that's just what you have to do though? Sadly, if you want to be CEO of a public company, I'm not saying you can do well, but if you want to be the fucking best, You got to give it everything.

A Well, like, here's a great example. Um, he and I were in San Diego yesterday visiting my mom, his grandmother, and he, we dropped him off on the way coming up north in L.A., and he goes, hey, Dad, you want to stop with me and go see the Charger game tonight? Uh, football, football game. And I, I said, I would desperately love to do it, but I've got earnings this week and I can't do it. And, um, just because I've got so much going on. And those are the tough, like, even at this age where he and I are like best friends, You, I still have to make those really difficult decisions, and it, and it breaks my heart, but like, it's just what you have to do, I think. I don't, there's not enough time in the day to be able to do both amazingly well.

AI assessment note: “it's just what you have to do, I think.”

Q just heard it from Will and Brian, so recent additions, but I, I heard about kind of the dozen products that we now have at Procore, and I wanted to ask, and they asked actually, to be fair, I'm such a VC, take credit for others' work, You can tell it's a natural proclivity of mine. What were your biggest lessons in terms of scaling product line without losing focus?

A Yeah, those are, there's a lot of lessons in there, right? So we, uh, up until 2017, uh, we only had one product. It was our project management tool, and it's still our flagship product. Uh, but what we had heard was, um, our customers were sick of having point solutions, and so they really wanted to have our platform be the platform of choice for all of their kind of core business needs, from financial management to quality and safety and things that matter in construction. And so we very deliberately Force rank those. So we prioritize which are the biggest needs and we kind of worked our way down from there. And, um, so I, I would say some of the lessons learned were, uh, we, well, one big lesson we learned was, you know, in the early days, you're kind of faking it till you make it and you don't really realize that scales might happen. And so some of our, our financial product line was a great example was, you know, we had built that very quickly, got it to market. Arguably wasn't a hundred percent enterprise grade. So we had actually had to stop developing that product at a certain point and go back and re architect it. So it was enterprise grade. And we literally stopped new future development for a year, but we realized that if we weren't going to, if we weren't going to get this thing to the point where it was enterprise grade, we weren't going to be able to scale it.

AI assessment note: “we actually had to stop developing that product at a certain point and go back”

Q I'm so pleased you said that, because you said to me before, knowing my weaknesses has been the key to my success. What are your weaknesses, and do you always agree with hiring them away, or should we actually get good at our weaknesses? Some people say so, some others not.

A So, I'm in the camp of, ah, you really cannot, ah, overcome your weaknesses to a, to a level that is going to be satisfactory for the business. At the scale that Procore's at today, I can't be a mediocre finance guy, and I can't be a mediocre HR guy, and I can't be a mediocre salesperson because that's not going to help the business. I know where my strengths are, and I know my strengths are, I, I, I set the vision for the company I help prioritize. I said, you know, we help build the annual plan. I provide resources to our teams. Um, and I, I spend all this time with our customers knowing what their, their needs are. And that's the stuff that gives me energy and fuels me. But when it comes to like the low level operations of the business, um, I just am not, um, I'm just not great at it. So I surround myself with great finance people and great HR people, great legal people, uh, all of them doing all the work that I just am not Great at, and I don't intend to be great at.

AI assessment note: “when it comes to like the low level operations of the business I'm just not great at it”

Q What do you say then to founders who do have market timing and market adoption risks like you had, and are told you need to do something? Like they have investors We need, we can't just wait.

A Yeah. Well, uh, trust me, we didn't just wait either. We, we, uh, we did a lot of things as a company that, uh, supplemented our income in order to make payroll, uh, through those, uh, lean years. I don't know if those were the best ideas, but they kept us alive. We, um, you know, customers would ask us to do custom development on a new application and, you know, if, if they're gonna pay us 30,000 dollars for a month's worth of work, we would literally Put two engineers on it and just ship a piece of software that had nothing to do with Procore for them, just to keep the lights on. So, um, I would just say, like, look, as they say, the only thing that matters in, you know, in business is that you survive to fight another day, and so whenever I talk to founders who are like, you know, look, it looks like it's all over, I'm like, just the oxygen to the business is revenue, just go generate some frickin' revenue, you know, and you will, uh, you'll survive.

AI assessment note: “just the oxygen to the business is revenue, just go generate some frickin' revenue”

Q Does that mean you should then limit budget, do it from where you are, build that base, and then move people there? Is that how you'd recommend?

A With the beautiful thing about, you know, SaaS, right, is this, we had a lot of customers in Australia and New Zealand long before we went to that market, just because of the way it's an internet-based Tool. You can buy it from anywhere. So what I suggest you do is that you actually deploy your customer success and your, and your field and, and product marketing folks, uh, There first build that Brown, get the groundswell going with the referenceable customers, then put your go-to-market team in afterwards to capitalize on that and all kind of candor. We, we went all in into our early markets thinking like they're going to love us and it's, you know, it's all going to go well. We have learned that you, you really, there is a playbook here and that you have to really build that brand first. But what we find is the longer that we've been into any particular market, the more success we have. The way you enter markets matter, uh, and you have to be patient. Nothing's going to happen overnight. It took us years to build the brand in the US, uh, and so we have to be patient building brands and new markets.

AI assessment note: “then put your go-to-market team in afterwards to capitalize on that”

Q way. I didn't actually intend to release them. People don't know that. Um, yeah, I just wanted to learn from great people and realize that it was the best way to people to give me time. Uh, my question to you is like when people are loyal and they put in the hard work and all the inputs are there, but the output isn't there. What do you do then?

A You just make the tough choice. You make the tough call. Now, fortunately, the way business works is that you don't wake up one day and realize that somebody is not scaling, right? It's you, you get all of the tails going up to it. You know, if there's a leader underneath me, who's, who's starting to kind of, uh, not, not scale to where we need them to go, you work with them on scaling, but at a certain point you start having conversations around, like, you know, let's, let's find a place in the organization where you can actually be successful. And then if that doesn't work, then you, you, You, you, with all empathy in the world, you walk them out the door, and you help them find another job somewhere else, and I'm very fortunate that a lot of the people that have, we call it graduated, but graduated from Procore, have moved on to have illustrious careers elsewhere that we've been very instrumental in helping them get, so that's the path that usually, you know, it can, it can go.

AI assessment note: “You just make the tough choice. You make the tough call.”

Q Can I ask, do you think that CEOs will always need to get on calls? You know, Procore today is a close to nine billion dollar public company. Do you think CEOs will always need to close the biggest customers?

A So I actually have a, a very strict line at Procore. I do not do deal negotiations anymore, and I haven't for the last five or six years. I build relationships with the customers that I want, that I do not want to be transactional. So, uh, I make it very clear with all of our Uh, prospects and all the people that I'm, I'm talking to are, uh, customers at renewal that I'm not, I am not going to be doing the commercial terms, but what I am going to do is I'm going to be a long-term partner of them that there's to put together a, uh, you know, a joint strategy of success. Uh, and so I, I create a very big delineation. I talk to a customer. I think every single day, I think there's nothing more important than a CEO can do than to talk to a customer. And I actually get, kind of, blamed for it sometimes. Like, people are like, are you spending too much time? And I just don't believe you can spend too much time with the people that you're serving.

AI assessment note: “I do not do deal negotiations anymore, and I haven't for the last”

Q love a good discussion. Whenever people like, we hire to our values, I'm always like, whose values are really contrarian respectfully to it? So everyone wants someone who's like hardworking and ambitious and kind. I, I'm not a team player. I'm largely in it for the money, and I am egotistical. I'm not saying I'm at any of that, but like, I could be really fucking great for a business.

A So the value hiring is one piece of it. The way we solve for that is hungry, humble, smart. So we, we will not hire somebody who doesn't demonstrate that they're hungry and that they're humble and they're smart. And trust me, I have hired a lot of hungry and smart people in this world. They tend to be assholes and, um, they tend to not be good team players and they tend to tank culture. And you know, what's interesting about culture is once you get, once you get a solid Culture that's based off of your values and you hire correctly. No longer as a CEO are you responsible to be the keeper of culture. The, the, the business itself keeps culture. I always say it's like angular momentum, which is once the culture set, if something comes, if somebody sneaks into through it, through the filters and gets in that there's in the cultural fit, the teams eject them. Like it's, you just can't survive at Procore if you are not Hungry, humble, and smart, and if you don't live our values, it's just, it's just that simple.

AI assessment note: “they tend to not be good team players and they tend to tank culture”

Q And do you think that's just what you have to do though? Sadly, if you want to be CEO of a public company, I'm not saying you can do well, but if you want to be the fucking best, You got to give it everything.

A Well, like, here's a great example. Um, he and I were in San Diego yesterday visiting my mom, his grandmother, and he, we dropped him off on the way coming up north in L.A., and he goes, hey, Dad, you want to stop with me and go see the Charger game tonight? Uh, football, football game. And I, I said, I would desperately love to do it, but I've got earnings this week and I can't do it. And, um, just because I've got so much going on. And those are the tough, like, even at this age where he and I are like best friends, You, I still have to make those really difficult decisions, and it, and it breaks my heart, but like, it's just what you have to do, I think. I don't, there's not enough time in the day to be able to do both amazingly well.

AI assessment note: “it's just what you have to do, I think.”

Q too. I mean, no offense, like, 13 years plundering. I mean, that is, like, real persistence. No wonder marriage is a piece of cake. Um, but my, my question is, like, 2015. What happened then? Because I spoke to Brian, and he said, like, ask him why you chose institutional financing then as the first point. Um, what changed in the business then, and why did you raise money then?

A Steve Zom stopped going to the mailbox every day. And let me tell you what that means. For 13 years, we would, every day, Steve Zom, co-founder, we'd go to the mailbox and wait for a check from a customer to make sure that we can make payroll, right? So, every day I would see Steve in the hallway and I'm like, what's going on? He's like, oh, I'm going to get the, going to get the mail so I see if we can make payroll. One day I caught him in the hallway in 2014, 15, and I'm like, what are you doing? He's like, um, nothing. He goes, but what I'm not doing is I'm not going to the mailbox. And I said, why? And he goes, We have enough money in our account and customers are, you know, we have enough revenue now that I don't have to run to the mailbox every day to check for, for checks. So we realized at that point we had turned some sort of a corner and that it was time to step on the accelerator. We had some product market fit and all we needed to do was go out and raise some capital to bring this idea to market.

AI assessment note: “we realized at that point we had turned some sort of a corner”

Q And you were at 9.6 million, I think he said. What was it like?

A You know, it really started within about a year, uh, where we would double, and then double again, and double again, and, and, and double again. Uh, and so it really did, I mean, around 2017, we were rolling. What's really interesting to me, Harry, is in hindsight, we never stopped to kind of think about what the heck was happening, because you're, you know, I used to, when I was a kid, I was a skateboarder, right? And so if you're, When I was skateboarding down the hill, and you get too fast, and you get speed wobbles, you have to leap off your skateboard, you're hoping that your feet can run as fast as the speed of the skateboard, so you don't fall on your face. Those years were us running as fast as we possibly could, trying not to crash. So we had no time to kind of think about, like, what the heck's going on here? You know, you kind of wake up, and you look around, and I'll never forget when we got a billion dollar valuation on Procore, and we're raising some private capital. Uh, we, we were all standing in a hotel room somewhere. We were at a conference, the leadership team, and I was talking to our, our investors about, you know, the pricing the round, and it came up to be a billion dollars, and I'll never forget, that was the, that was a moment where I'm like, I cannot, like, I, I, I had missed like a hundred million in valuation to a billion, and that we were all like,…

AI assessment note: “Those years were us running as fast as we possibly could, trying not to crash.”

Q I have this problem, and then you actually finally delegate it to someone, and then they don't do it as well as you. And you go, see, I, I knew it. They need me. And so you go back in and do it. And then they never learn and they never do it. So help me. Literally, how does one do this efficiently?

A Uh, you have to let them fail. Now you want to, you want to minimize the blast radius, right? You can't let them fail, you know, which with an existential, you know, threat, but you, you have to let them fail. I look at, I look at this very much like I look at parenting, right? A lot of parents, big mistakes are they watch their kid, you know, start to stumble and fall. And they try to catch him and save him from it, right? My parenting style was always like, if Henry was going to stumble and fall, look, I didn't want him to hurt himself, but if he skinned his knee, for instance, and kids get like freaked out, and he would look up at me, I would be like, you know, hey, that was a quite a tumble you just did, as opposed to being like most parents, which are like, oh my goodness, like that is the scariest thing I've ever seen. Let me help fix you. Um, because you want people, you want people to learn from their mistakes and you want to teach them Without, without doing their job for them, how to overcome those, those obstacles. So it's, it takes a lot of, like, it takes a lot of, like, trust in order to do that, but you have to do that.

AI assessment note: “you have to let them fail. Now you want to, you want to minimize the blast radius”

Q love a good discussion. Whenever people like, we hire to our values, I'm always like, whose values are really contrarian respectfully to it? So everyone wants someone who's like hardworking and ambitious and kind. I, I'm not a team player. I'm largely in it for the money, and I am egotistical. I'm not saying I'm at any of that, but like, I could be really fucking great for a business.

A So the value hiring is one piece of it. The way we solve for that is hungry, humble, smart. So we, we will not hire somebody who doesn't demonstrate that they're hungry and that they're humble and they're smart. And trust me, I have hired a lot of hungry and smart people in this world. They tend to be assholes and, um, they tend to not be good team players and they tend to tank culture. And you know, what's interesting about culture is once you get, once you get a solid Culture that's based off of your values and you hire correctly. No longer as a CEO are you responsible to be the keeper of culture. The, the, the business itself keeps culture. I always say it's like angular momentum, which is once the culture set, if something comes, if somebody sneaks into through it, through the filters and gets in that there's in the cultural fit, the teams eject them. Like it's, you just can't survive at Procore if you are not Hungry, humble, and smart, and if you don't live our values, it's just, it's just that simple.

AI assessment note: “I have hired a lot of hungry and smart people... They tend to be assholes”

Q way. I didn't actually intend to release them. People don't know that. Um, yeah, I just wanted to learn from great people and realize that it was the best way to people to give me time. Uh, my question to you is like when people are loyal and they put in the hard work and all the inputs are there, but the output isn't there. What do you do then?

A You just make the tough choice. You make the tough call. Now, fortunately, the way business works is that you don't wake up one day and realize that somebody is not scaling, right? It's you, you get all of the tails going up to it. You know, if there's a leader underneath me, who's, who's starting to kind of, uh, not, not scale to where we need them to go, you work with them on scaling, but at a certain point you start having conversations around, like, you know, let's, let's find a place in the organization where you can actually be successful. And then if that doesn't work, then you, you, You, you, with all empathy in the world, you walk them out the door, and you help them find another job somewhere else, and I'm very fortunate that a lot of the people that have, we call it graduated, but graduated from Procore, have moved on to have illustrious careers elsewhere that we've been very instrumental in helping them get, so that's the path that usually, you know, it can, it can go.

AI assessment note: “You just make the tough choice... you walk them out the door”

Q I call Hillary. You call a fucking customer. Brilliant. Uh, that is amazing. No, listen, you got the first, like, credit in at the beginning, so we're kind of working our way back to neutral now. I, I, I do want to just, final one on, like, CEO-ship. A common statement is that the best CEOs are the best capital allocators, more resource allocators. Is that true, do you think?

A Yes, I am a huge believer. I don't know if you've read the book The Outsiders, uh, but to me, that, that was a, that was a, uh, uh, Absolutely cathartic experience for me to actually understand that that is truly what, you know, one of the top four things a CEO has to do is be a, uh, an efficient capital allocator. Uh, and, uh, it's funny, uh, one of our investors for Rose Dewan, who's one of my favorite people in the world, he recommended this to me one time when we were on a plane going somewhere. So, you know, we're doing our twenty-twenty-four planning right now, right? And so, like, capital allocation is top of mind for us. And, you know, there's a lot of, A lot of opportunity for Procore, but really being judicious about how you, how you allocate capital. It's not easy, but it's primarily I'm the responsible party here, so I have to get it right.

AI assessment note: “Yes, I am a huge believer.”