The Exchanges

Q Uh, but a thousand dollars donation or you answer it, okay? Okay. And there's no, and there's no skirting out of it, okay? So question number one, what was the worst investor meeting you've ever had?

A So there are two to come to mind. Uh, one, I pitched Peter Thiel, and I was so green, and I'd just gotten back from Afghanistan, and I literally would go to work in slacks and leather shoes, like a business lawyer-looking type person, and the Founders Fund guys, at least in those days, did not respect people who wore button-down shirts, and I got looked at, like, literally I laughed at. Um, that hurt. Number two, I had a few meetings with Mike Moritz, and I was very excited. I think there would have been great investors, and I was on maybe the third or fourth meeting, went to kind of partner level meeting, and I thought this was going to be the one, and I walked in, I could just see something on his face, and, and I go through my spiel, but I'm like, something's not right, and I just knew, like, he had, you know, he just decided against it, and he was like, what have I done scheduling this meeting? And he walked me out and shook my hand without looking me in the eyes, And, and then just really turned and walked off and, and that brought out like very, very bad feelings in me. Like, you know, high school fisticuffs level feelings. Um, so those would be, those would be two.

AI assessment note: “So there are two to come to mind. Uh, one, I pitched Peter Thiel”

Q Wow. Ok, first off, like, why are we burning cash like a drunken sailor, and what are some lessons from that?

A Spend less, grow faster. It's a weird law. Um, is probably my net out. We were single product essentially. And in that August, 2019 round, we bought a company in the permitting and licensing space. And we did probably ninety million dollars of transactions in like 45 days. And that worked very well. And as we broadened our product suite, Things started to work. The economics of the business started to work. Basically, you're paying all this money to market and sell. You're even paying a bunch of money to deploy. And if you have more product, more arrows in the quiver, you get higher ASPs for the same, essentially, cost. And everything started unfolding there. We ended up doing an acquisition, you know, one each year, basically, as we broadened our portfolio suite. And I learned this a little bit from John Chambers. Um, M&A can be innovation. It's not just buying for customers or revenue. We don't even do that. We buy for product quality and adjacency, and it jumpstarts the innovation.

AI assessment note: “Spend less, grow faster. It's a weird law. Um, is probably my net out.”

Q Wow. Ok, first off, like, why are we burning cash like a drunken sailor, and what are some lessons from that?

A Spend less, grow faster. It's a weird law. Um, is probably my net out. We were single product essentially. And in that August, 2019 round, we bought a company in the permitting and licensing space. And we did probably ninety million dollars of transactions in like 45 days. And that worked very well. And as we broadened our product suite, Things started to work. The economics of the business started to work. Basically, you're paying all this money to market and sell. You're even paying a bunch of money to deploy. And if you have more product, more arrows in the quiver, you get higher ASPs for the same, essentially, cost. And everything started unfolding there. We ended up doing an acquisition, you know, one each year, basically, as we broadened our portfolio suite. And I learned this a little bit from John Chambers. Um, M&A can be innovation. It's not just buying for customers or revenue. We don't even do that. We buy for product quality and adjacency, and it jumpstarts the innovation.

AI assessment note: “Spend less, grow faster. It's a weird law. Um, is probably my net out.”

Q Wow. But just because you hated it so much for the rejection sake, like why?

A It's a huge time suck. It's definitely not, it's not fun to get said no to, but that's fine. I said, I'm, you know, I sell every day and that that's no big deal. It's just, it doesn't actually create that much value. And a lot of people talk, oh, I raised this much hundreds of millions or these valuations. It's literally irrelevant. You will be, you will be judged and weighed by your exit and by the liquidity That you can provide to people. And so there's these tremendous roller coasters that go on between the time you take the money in and the time you got to give it back. And I think a lot of people lose sight of that and you over capitalize the company. I mean, it's just more, you got to, that's a higher prep stack and it's more dangerous for the common stock, which is, you know, management and employees. So I just found it was kind of like not a great deal in many respects and the tighter we got, the better we did. So We started to get to cashflow positive and EBITDA positive, and it was like, great, like, let's keep this going. I don't, I don't want to return to those days.

AI assessment note: “It's a huge time suck. It's definitely not, it's not fun to get said no”

Q How did it feel when you signed? Everyone dreams of this for years and years and years. How does it actually feel?

A Yeah. So the deal was, it was really wild. Uh, I spent probably the better part of six months on this. It was exhausting and nerve wracking. In December of last year, I started breaking down. I was like breaking. I got sick three times in December. I got hand, foot and mouth disease. I didn't even have a child. I got some Victorian era virus. I'm like breaking out and things. And this is the middle of the price negotiation. I remember Chambers saying, Zach, sometimes you got to play hurt. And I'm like propped up, you know, talking about big numbers. Well, I have a 103 fever. So that went on. We're supposed to close in January. And I had had like a, a baby moon or a pre moon, uh, booked in Hawaii. And I went on the trip, the deal got pushed by a month. And this is at a point where It's pushing, and you're wondering if it's actually going to happen. These things do break, and I'm in Hawaii. I'm on the phone, like, two-thirds of the time. The rest of the time, I'm literally, like, in the gym, like, trying to manage my adrenaline. The deal ended up happening in February, and Alex Taylor, the chairman, CEO of Cox, came out, and we announced it to the employees. I was so amped up and so exhausted at the same time. Uh, very excited. Felt like I was making a good decision. But, like, I wasn't present, if you will. Do you know what I mean? Like, I wasn't, like, living the moments. So, i…

AI assessment note: “I was so amped up and so exhausted at the same time.”

Q Boom. Uh, what is the worst thing about having Mark Marc Andreessen on your board?

A He's tough. He's out to ensure governance and investor interests. And I learned a lot from that, but it was not, I had a warm, loving relationship with John, with Catherine, with Mark, Marc is a lot of business. It's a lot of, I mean, we had fun, we had warmth, but like he took his role seriously. So it was a, it was a, It was a, I wouldn't say it was transactional, but I'll give you an example. I scheduled a two-hour board meeting, and the board was opening up, a lot of give and take, big discussion going on, some important issue, so I decided to let it run, and at, you know, maybe it was 10 a.m. to 12 p.m. At 12 p.m., Mark literally just pulls his chair out, gets up, grabs his briefcase, walks out, slams the door, leaves the building, and we see him drive off, and everyone is just like, What just happened? And I text him afterward and he was like, you told me the board meeting ended at noon. And it was like a pretty stark message of like, manage the board meeting, stay on time, run it tight, like be in control. And so these were the type of, I wouldn't call them avuncular lessons, but like, you know what I mean? Like, so it was, it was, it was tough.

AI assessment note: “He's tough. He's out to ensure governance and investor interests.”

Q How much do you have to get per customer to really justify that spend, to have the full sales cycle, the outbound motion? Is it 50 K? Is it a hundred K?

A Uh, 10 years ago, 25, 50, 75, uh, it used to be like, all right, get to a hundred K. Now I think kind of big league enterprise salespeople think a hundred K deals is like tic-tacs and we need to be targeting seven figure deals. Marc Andreessen said to me, you want a big company? Charge high prices. You want a medium-sized company? Charge medium prices. You want a small company? Charge small prices. And there's a lot to that. He actually said there is no upper limit on the price of software. Like, there is no upper limit. It's just the quantity of software and the pain that you're discovering and the value you're creating. And so, it's an interesting business from that perspective.

AI assessment note: “we need to be targeting seven figure deals.”

Q I think there's actually A joy in being unloved, which is, I think a lot of investors bluntly take your time. You go for dinner. You don't always want to go for dinner. You don't always want to chat as much as they do. You get great freedom from being the unloved one that can shine in the darkness, so to speak. Do the best founders need help?

A I'm not sure I'd categorize myself in that rank, but from my perspective, the moral support was what mattered a lot. I don't need to go to your house and spend all Sunday afternoon doing strategy sessions on the business, which mostly consists of reminding you what products we have. Um, when I get a note from like Josh Kushner, just saying, we're honored to be in business with you. It's like, I just walk off and I'm like, gosh, I love that guy. Thank you, Josh. And when I got a, you know, a book at Christmas with a handwritten note from Joe, Saying, you know, I admire what you're doing, Zad. It's like, ugh, that means a lot. And yes, I'd have lots of strategy sessions with Joe, who's a co-founder and chairman, but it's that moral support that just means a ton versus the group that's like, hey, we'd like to come to your office next Tuesday and spend 90 minutes reviewing X, Y, and Z. And I'm like, I can tell them no and like damage the relationship, or I can suck it up and waste a bunch of my time on it. It just starts to be a bad, you know, kind of trade.

AI assessment note: “from my perspective, the moral support was what mattered a lot.”

Q Do you agree with him then, always raise prices?

A If you can, yeah. I look at like Tanium. Uh, I remember when they were like in their major growth curve, they were charging massive prices, you know, five, 10, twenty million dollar prices. Look at Palantir for instance. I remember Michael Ovitz talking about the first deal they did with JP Morgan. They went into the room. Supposedly I wasn't there and, uh, they discovered a huge amount of pain on a big kind of mortgage program that they were working on and combating fraud. And they said, we think we can save you a hundred million dollars. Or maybe, actually, maybe it was like a billion dollars. And JP Morgan was like, we want it. And they're like, great, we'll take 10% of what we can save you. And JP Morgan was like, no, no, no, we'll pay you a few million bucks for the software. And they were like, no. And they got to a stalemate, and they walked out of the room, and they didn't answer the calls for like six months. And then JP Morgan was like, fine, fine, fine. And apparently it was like a hundred million dollar deal.

AI assessment note: “If you can, yeah.”

Q Does that matter? Like when you think about compounding over a 10, 12 year period, does that matter? And I guess the honest question that I'm actually really going at is like, truth be told, Zach, Venture today with the fund sizes we have. We need ten billion dollar companies.

A Yeah. Look, I have two, there's two areas to take this conversation. I love it. One is durability of growth. The reason I think Cox was so interested in us and a lot of other kind of private equity firms are, are drooling over this GovTech space is the sustainability and durability of the growth. A lot of venture backed companies, they get to 50, 70, a hundred million, maybe 200, and they kind of crap out. Yeah. And you see them orphaned as public companies, uh, you know, in the, you post IPO land and they're growing at. 15% or they're literally bobbling along, not growing cause they're selling new business to make up for the, the churn. You see a company like Tyler technologies, which you probably haven't heard of. And most of your listeners probably have never heard of. It's a, it's the vertical incumbent, if you will, in, in, in GovTech, they do about two billion a year. In revenue for state and local government software, and they trade at twenty five billion dollars on the S&P 500 on the New York Stock Exchange. It's been a Wall Street darling. Supposedly, it's the 10th best performing stock of the last, like, 20 years. Um, and few people have heard of it, and they print cash, and it's an extremely well-managed and impressive, uh, company. We compete against them. And that's an example of what can happen with growth durability. And you know, if you're growing at 25, 24, 23,…

AI assessment note: “Tyler technologies... they trade at twenty five billion dollars on the S&P 500”

Q Something that's challenging for me, by the way, Josh, I think is just one of the greatest humans ever. Um, one thing that's challenging for me is so many young founders are so magnetized to the big brands, and really just see stars and kind of Hollywood, so to speak. What would you say to them, knowing all that you do?

A I don't think it's irrational. The, the brand, it's one of the, I, I, look, are the Sequoia guys, like, Amazing investors. They probably are, but it's probably also an incredible flywheel or network effect where if they invest in your company, it simply helps you recruit better talent and better executives. And maybe it helps you a little bit get some more press. And if you're selling into, you know, commercial or enterprise, maybe it's a stamp of approval for early adopters. But I actually think it's just helpful. So I do think brand name matters. However, for those who can like bootstrap, that's the ultimate That's the ultimate, in my opinion, to avoid all of the conflicts that come from raising venture capital, and to own much more of the company yourself, that, that's when I'm like, tip of the cap, and like, very jealous. I don't know if you follow the Founder Collective guys at all, but, uh, David Frankl is like one of my biggest buddies. They're first class, and they, they were in OpenGov early. I got into a bunch of trouble in 2019, so I, I, I'd overspent the whole way. And I'd raised too much money, and I almost lost the company a few times. I'm happy to cry on your shoulder about it, and it was 19. I couldn't raise. I was, you know, I had got one term sheet after 30 no's, and it was onerous. Pound of flesh. I went through the deal, and I said, I'm not gonna raise any m…

AI assessment note: “I don't think it's irrational. The, the brand, it's one of the”

Q When did you and your investor base disagree most, Zach?

A I've had a lot of disagreements. I'll tell you a few anecdotes. One, very early on, I had this boneheaded idea that we were going to create a network of governments across the country, and we'll have the largest repository of public performance and financial data, and all the governments will learn and share from each other, and they'll benchmark, and they'll cut, you know, waste and improve efficiency. The problem was we didn't have many products. And you come for the tool and stay for the network. You don't come for the network, stay for the tool. And so I was putting our metrics up at our board meeting saying, we're going to get all these logos. The logos will just magically produce value over time. And, and Mark Andreessen was like, do you want to be a real company? And I was like, yeah, yeah, I do. I'm like a young entrepreneur. And he's like, cause real companies measure revenue, not logos. And I was like, ah, got it. So I came back to the next board meeting and I'm like, here's our two key metrics, logos and revenue. Gave me the same speech. He's like, real companies measure revenue. And I'm like, ah, so that was a fairly, you know, it was coaching. Um, two was hard times and kind of 15 and 16. We were, we were overspending. Growth was slowing. We were learning about our vertical. We were not a horizontal SAS company. We've got to go deeper. And I could see I was kind of…

AI assessment note: “I've had a lot of disagreements. I'll tell you a few anecdotes. One, very early”

Q You mentioned the gray hair there. That's kind of what a board's for in many respects, and what they often proclaim to be. What's your biggest lessons and advice on how to manage boards effectively?

A I think a lot of experienced CEOs really understand this, and a lot of Founders and, and, and folks that are new to it, which is where I was for many years, I didn't understand the board is for governance. The board is for governance. They're to make sure that there's no fraud, and like, it's a real company, and primarily to hire and fire the CEO. They represent the stockholders, and in the, in the, in the sales process that is fundraising, which goes both ways, a hot company, you know, is being sold to by investors, It's easy to get confused and think, oh, these are my, just my mentors and coaches and friends and like, we're in this together and we're partners. One thing I learned from, you know, from Mark and even, even Joe in the later years is like, oh wow, we have natural conflicts. My job is to grow the share price and I need to like, A, deliver on the mission and win for our employees and customers, but I need to win for our stockholders, and that's my principal's job. And so, when you go into the board meeting, like, you, you're the chairperson. Whether you're the chairperson, whether you think that or you have that actual title, the CEO needs to run that meeting. The CEO needs to explain the direction. Sure, gather input, but boy, there are times, Harry, Where Mark would be like, I've seen this 10 times, you gotta go right. And Lonsdale or somebody else would be like, …

AI assessment note: “form your own opinion, become a real leader and a CEO, use your independent judgment”

Q Uh, but a thousand dollars donation or you answer it, okay? Okay. And there's no, and there's no skirting out of it, okay? So question number one, what was the worst investor meeting you've ever had?

A So there are two to come to mind. Uh, one, I pitched Peter Thiel, and I was so green, and I'd just gotten back from Afghanistan, and I literally would go to work in slacks and leather shoes, like a business lawyer-looking type person, and the Founders Fund guys, at least in those days, did not respect people who wore button-down shirts, and I got looked at, like, literally I laughed at. Um, that hurt. Number two, I had a few meetings with Mike Moritz, and I was very excited. I think there would have been great investors, and I was on maybe the third or fourth meeting, went to kind of partner level meeting, and I thought this was going to be the one, and I walked in, I could just see something on his face, and, and I go through my spiel, but I'm like, something's not right, and I just knew, like, he had, you know, he just decided against it, and he was like, what have I done scheduling this meeting? And he walked me out and shook my hand without looking me in the eyes, And, and then just really turned and walked off and, and that brought out like very, very bad feelings in me. Like, you know, high school fisticuffs level feelings. Um, so those would be, those would be two.

AI assessment note: “So there are two to come to mind. Uh, one, I pitched Peter Thiel”

Q Boom. Uh, what is the worst thing about having Mark Marc Andreessen on your board?

A He's tough. He's out to ensure governance and investor interests. And I learned a lot from that, but it was not, I had a warm, loving relationship with John, with Catherine, with Mark, Marc is a lot of business. It's a lot of, I mean, we had fun, we had warmth, but like he took his role seriously. So it was a, it was a, It was a, I wouldn't say it was transactional, but I'll give you an example. I scheduled a two-hour board meeting, and the board was opening up, a lot of give and take, big discussion going on, some important issue, so I decided to let it run, and at, you know, maybe it was 10 a.m. to 12 p.m. At 12 p.m., Mark literally just pulls his chair out, gets up, grabs his briefcase, walks out, slams the door, leaves the building, and we see him drive off, and everyone is just like, What just happened? And I text him afterward and he was like, you told me the board meeting ended at noon. And it was like a pretty stark message of like, manage the board meeting, stay on time, run it tight, like be in control. And so these were the type of, I wouldn't call them avuncular lessons, but like, you know what I mean? Like, so it was, it was, it was tough.

AI assessment note: “At 12 p.m., Mark literally just pulls his chair out, gets up, grabs his briefcase, walks out”

Q Does that matter? Like when you think about compounding over a 10, 12 year period, does that matter? And I guess the honest question that I'm actually really going at is like, truth be told, Zach, Venture today with the fund sizes we have. We need ten billion dollar companies.

A Yeah. Look, I have two, there's two areas to take this conversation. I love it. One is durability of growth. The reason I think Cox was so interested in us and a lot of other kind of private equity firms are, are drooling over this GovTech space is the sustainability and durability of the growth. A lot of venture backed companies, they get to 50, 70, a hundred million, maybe 200, and they kind of crap out. Yeah. And you see them orphaned as public companies, uh, you know, in the, you post IPO land and they're growing at. 15% or they're literally bobbling along, not growing cause they're selling new business to make up for the, the churn. You see a company like Tyler technologies, which you probably haven't heard of. And most of your listeners probably have never heard of. It's a, it's the vertical incumbent, if you will, in, in, in GovTech, they do about two billion a year. In revenue for state and local government software, and they trade at twenty five billion dollars on the S&P 500 on the New York Stock Exchange. It's been a Wall Street darling. Supposedly, it's the 10th best performing stock of the last, like, 20 years. Um, and few people have heard of it, and they print cash, and it's an extremely well-managed and impressive, uh, company. We compete against them. And that's an example of what can happen with growth durability. And you know, if you're growing at 25, 24, 23,…

AI assessment note: “Tyler technologies... trade at twenty five billion dollars... example of what can happen”

Q Do you agree with him then, always raise prices?

A If you can, yeah. I look at like Tanium. Uh, I remember when they were like in their major growth curve, they were charging massive prices, you know, five, 10, twenty million dollar prices. Look at Palantir for instance. I remember Michael Ovitz talking about the first deal they did with JP Morgan. They went into the room. Supposedly I wasn't there and, uh, they discovered a huge amount of pain on a big kind of mortgage program that they were working on and combating fraud. And they said, we think we can save you a hundred million dollars. Or maybe, actually, maybe it was like a billion dollars. And JP Morgan was like, we want it. And they're like, great, we'll take 10% of what we can save you. And JP Morgan was like, no, no, no, we'll pay you a few million bucks for the software. And they were like, no. And they got to a stalemate, and they walked out of the room, and they didn't answer the calls for like six months. And then JP Morgan was like, fine, fine, fine. And apparently it was like a hundred million dollar deal.

AI assessment note: “If you can, yeah. I look at like Tanium.”

Q When did you and your investor base disagree most, Zach?

A I've had a lot of disagreements. I'll tell you a few anecdotes. One, very early on, I had this boneheaded idea that we were going to create a network of governments across the country, and we'll have the largest repository of public performance and financial data, and all the governments will learn and share from each other, and they'll benchmark, and they'll cut, you know, waste and improve efficiency. The problem was we didn't have many products. And you come for the tool and stay for the network. You don't come for the network, stay for the tool. And so I was putting our metrics up at our board meeting saying, we're going to get all these logos. The logos will just magically produce value over time. And, and Mark Andreessen was like, do you want to be a real company? And I was like, yeah, yeah, I do. I'm like a young entrepreneur. And he's like, cause real companies measure revenue, not logos. And I was like, ah, got it. So I came back to the next board meeting and I'm like, here's our two key metrics, logos and revenue. Gave me the same speech. He's like, real companies measure revenue. And I'm like, ah, so that was a fairly, you know, it was coaching. Um, two was hard times and kind of 15 and 16. We were, we were overspending. Growth was slowing. We were learning about our vertical. We were not a horizontal SAS company. We've got to go deeper. And I could see I was kind of…

AI assessment note: “I've had a lot of disagreements. I'll tell you a few anecdotes.”

Q Boom. Uh, what is the worst thing about having Mark Marc Andreessen on your board?

A He's tough. He's out to ensure governance and investor interests. And I learned a lot from that, but it was not, I had a warm, loving relationship with John, with Catherine, with Mark, Marc is a lot of business. It's a lot of, I mean, we had fun, we had warmth, but like he took his role seriously. So it was a, it was a, It was a, I wouldn't say it was transactional, but I'll give you an example. I scheduled a two-hour board meeting, and the board was opening up, a lot of give and take, big discussion going on, some important issue, so I decided to let it run, and at, you know, maybe it was 10 a.m. to 12 p.m. At 12 p.m., Mark literally just pulls his chair out, gets up, grabs his briefcase, walks out, slams the door, leaves the building, and we see him drive off, and everyone is just like, What just happened? And I text him afterward and he was like, you told me the board meeting ended at noon. And it was like a pretty stark message of like, manage the board meeting, stay on time, run it tight, like be in control. And so these were the type of, I wouldn't call them avuncular lessons, but like, you know what I mean? Like, so it was, it was, it was tough.

AI assessment note: “He's tough. He's out to ensure governance and investor interests.”

Q Uh, but a thousand dollars donation or you answer it, okay? Okay. And there's no, and there's no skirting out of it, okay? So question number one, what was the worst investor meeting you've ever had?

A So there are two to come to mind. Uh, one, I pitched Peter Thiel, and I was so green, and I'd just gotten back from Afghanistan, and I literally would go to work in slacks and leather shoes, like a business lawyer-looking type person, and the Founders Fund guys, at least in those days, did not respect people who wore button-down shirts, and I got looked at, like, literally I laughed at. Um, that hurt. Number two, I had a few meetings with Mike Moritz, and I was very excited. I think there would have been great investors, and I was on maybe the third or fourth meeting, went to kind of partner level meeting, and I thought this was going to be the one, and I walked in, I could just see something on his face, and, and I go through my spiel, but I'm like, something's not right, and I just knew, like, he had, you know, he just decided against it, and he was like, what have I done scheduling this meeting? And he walked me out and shook my hand without looking me in the eyes, And, and then just really turned and walked off and, and that brought out like very, very bad feelings in me. Like, you know, high school fisticuffs level feelings. Um, so those would be, those would be two.

AI assessment note: “So there are two to come to mind. Uh, one, I pitched Peter Thiel”

Q Listen, not at all, but I want to dive right in, and I want to start at kind of the, the company creation point. You said before, when it comes to starting a company, that it takes too long. I want to start with, what did you mean by it takes too long in that respect?

A There's like a wilderness period and the, some companies come out of the gate and these entrepreneurs, they, they, they get the, the, the kudos rightfully if they just shoot off. And there's a lot of companies that just bobble along in the wilderness. We were one of them. As I look back on our first few years, I don't know what we were doing. It was a learning period. It was confusing because We were, we actually came out of the gate selling about a year in, but we were selling 5000 dollar software, 10,000 dollar software, transparency reporting. It was kind of a political sale. Governments would buy it to show off the data in their 3040 year old ERP green screen systems. And I got tricked into thinking it was 1999. You're going to sell it for a loss and make it up on volume. And I realized the year end, oh my God, we, we've got to broaden the suite. We've got to get Average selling price is higher, and it wasn't really until probably five years into the company that things started working. So when you're selling enterprise software, you're basically breaking into organizations. Organizations are filled with people, and people disagree with each other. And when you're building a business, alignment is the most important thing you can get for execution. And when you're looking at a customer, how do you get them aligned on buying your product? Well, you have salespeople. You have…

AI assessment note: “There's like a wilderness period and the, some companies come out of the gate”

Q How much do you have to get per customer to really justify that spend, to have the full sales cycle, the outbound motion? Is it 50 K? Is it a hundred K?

A Uh, 10 years ago, 25, 50, 75, uh, it used to be like, all right, get to a hundred K. Now I think kind of big league enterprise salespeople think a hundred K deals is like tic-tacs and we need to be targeting seven figure deals. Marc Andreessen said to me, you want a big company? Charge high prices. You want a medium-sized company? Charge medium prices. You want a small company? Charge small prices. And there's a lot to that. He actually said there is no upper limit on the price of software. Like, there is no upper limit. It's just the quantity of software and the pain that you're discovering and the value you're creating. And so, it's an interesting business from that perspective.

AI assessment note: “we need to be targeting seven figure deals.”

Q Now, never let facts ruin a good story. Um, can I ask you, you also have, like, the doggiest market, no offense. Like, yeah, we, we said that we'd be totally honest. Like, you sell to governments. Like, this is where investors run the fuck away. Your sales cycles must have been horrible. Am I right?

A Yes, basically. But, look, I've been laughed at since we started the company in 2012. And when we were raising money, the number of times people said, basically, you, you were more artful, but, you know, government, no thanks. I came to Silicon Valley to get away from government, or good luck with that, or it's all waste, fraud, and abuse, no thanks. That was a little contrarian on our part. We're very, very mission driven. Our mission is to power more effective and accountable government. We're probably naive and a little, little thick in the head, as you would say. Um, but, The customers will partner with you for life if you make them happy. And that's called stickiness. And the whole game in enterprise SaaS is high gross retention. Let's just be clear. The whole game is high gross retention. You look at a lot of companies, if they're in the, you know, seventies, eighties, good luck. I don't want that business. I'll take ours in the, in the mid to high nineties. And, uh, so there are a lot of attractive things actually about this little corner of the world. You know, we were growing steady while everyone was in Zerp. You know, absolutely smashing it with 70, 8000% growth rates, and now those same companies are growing 1015, 20%, and we're growing faster than them, and I'm kind of like, hey, just little, little, little engine that could.

AI assessment note: “Yes, basically. But, look, I've been laughed at since we started”

Q How is M&A for innovation? M&A is traditionally seen in the eyes of basically run out of all fucking ideas and that's why you're buying in companies and you're buying in growth.

A I, I get it. It, uh, it takes years to discover exactly what the product needs to do, particularly for highly verticalized, highly specialized use cases. So we sell software to departments of public works and building and planning and finance and budgeting and procurement. And if you're not a sleep art, Harry, Wake up. I know you're a little bit asleep. These are very specialized complex use cases with governmental accounting and like 12 bureaucratic processes that all have to be done and they're regulated and other things. And then if you just want to think up these use cases or just unleash AI and think you're going to build the perfect product, you're wrong. You're going to have to go through months, if not quarters or years of interactive work with the customers. So getting the first 1,000,002, three, four, five of revenue Can take as long as going from five to 25. And if you can catch a company that's managed to get some semblance of product market fit with a beautiful kind of fully multi-tenant stack that has done the years of discovery about what the customer needs and what the product needs to have, you've saved years worth of work and you've captured tremendous subject matter expertise. And now you can pour engineering or R&D into the product, which is exactly what we've done. So we build organically, but also if we come across a company that we admire, we'll buy it, a…

AI assessment note: “if we come across a company that we admire, we'll buy it, and we'll double the investment”

Q You mentioned the gray hair there. That's kind of what a board's for in many respects, and what they often proclaim to be. What's your biggest lessons and advice on how to manage boards effectively?

A I think a lot of experienced CEOs really understand this, and a lot of Founders and, and, and folks that are new to it, which is where I was for many years, I didn't understand the board is for governance. The board is for governance. They're to make sure that there's no fraud, and like, it's a real company, and primarily to hire and fire the CEO. They represent the stockholders, and in the, in the, in the sales process that is fundraising, which goes both ways, a hot company, you know, is being sold to by investors, It's easy to get confused and think, oh, these are my, just my mentors and coaches and friends and like, we're in this together and we're partners. One thing I learned from, you know, from Mark and even, even Joe in the later years is like, oh wow, we have natural conflicts. My job is to grow the share price and I need to like, A, deliver on the mission and win for our employees and customers, but I need to win for our stockholders, and that's my principal's job. And so, when you go into the board meeting, like, you, you're the chairperson. Whether you're the chairperson, whether you think that or you have that actual title, the CEO needs to run that meeting. The CEO needs to explain the direction. Sure, gather input, but boy, there are times, Harry, Where Mark would be like, I've seen this 10 times, you gotta go right. And Lonsdale or somebody else would be like, …

AI assessment note: “form your own opinion, become a real leader and a CEO, use your independent judgment”

Q How do you think about that? That challenge.

A Occasionally it works. They have, you have to build product furiously. And I, in my opinion, getting to a suite or a suite of suites is the way to do it, at least in vertical software. And they have to be maniacally focused and it requires the proverbial pat your head and rub your belly. Like literally you now have a customer base on this 10 K, 20 K, 30 K product, and you've got to keep selling it or you're not going to raise your next round. You're not going to have any momentum. The employees are going to know something's wrong. And you have to do that while building a new product and a third product. That's, that's the entrepreneurial hack. That's the magic.

AI assessment note: “getting to a suite or a suite of suites is the way to do it”

Q Wow. But just because you hated it so much for the rejection sake, like why?

A It's a huge time suck. It's definitely not, it's not fun to get said no to, but that's fine. I said, I'm, you know, I sell every day and that that's no big deal. It's just, it doesn't actually create that much value. And a lot of people talk, oh, I raised this much hundreds of millions or these valuations. It's literally irrelevant. You will be, you will be judged and weighed by your exit and by the liquidity That you can provide to people. And so there's these tremendous roller coasters that go on between the time you take the money in and the time you got to give it back. And I think a lot of people lose sight of that and you over capitalize the company. I mean, it's just more, you got to, that's a higher prep stack and it's more dangerous for the common stock, which is, you know, management and employees. So I just found it was kind of like not a great deal in many respects and the tighter we got, the better we did. So We started to get to cashflow positive and EBITDA positive, and it was like, great, like, let's keep this going. I don't, I don't want to return to those days.

AI assessment note: “It's a huge time suck... It's just, it doesn't actually create that much value.”

Q Did you ever doubt whether it would work?

A The short answer is yes. Basically all the time. I don't know how I kept going because I felt for years like I destroyed my career. I'd made the worst set of decisions. I came back from Afghanistan, uh, in the summer of 2012. And I was like, wow, I used to be somebody, you know, I was, I was a lawyer and I was in foreign policy and I was doing things. And now I'm like in this like dank three bedroom apartment style office, like, you know, Hiring and firing and making like a total mess out of everything. And I was like, what have I done? But I was like, I've already, you know, it's a burn the boats kind of thing. I've already made the mess. So why don't we, why don't we keep going?

AI assessment note: “The short answer is yes. Basically all the time.”

Q Maybe. Do you know what I mean? So that, that is mine. Can I ask you, you mentioned that, like, oh, go go, like, not sell. Why the fuck does any Stripe, Databricks, Starlink, you name it, go public when there is so much money in privates?

A Look, I think they have to. I, I, I don't, I'm a little surprised this has gone on the way it's gone on. Databricks supposedly raising the largest private round ever, I think. So, I guess that's your, that's really the point you're making, but you know, my read is, and what, what motivated me a little bit is, look, at some point, you've got to deliver the money back to investors. They're raising, Databricks is raising most of that to deliver secondary to employees, including to deal with some tax issues, and I know that's what Stripe did, and Josh, I think, is doing most of these. So, look, I think that can continue, but no, I don't see how these companies don't go public. I'm sorry, they've raised a ton of money At some point, people need liquidity, and that's gonna come, so I, I don't know whether it's in 25, 26, or 27. If I'm guessing, it's probably 26, but I think these, the markets open up, and all these companies end up going public.

AI assessment note: “at some point, you've got to deliver the money back to investors”

Q Wow. But just because you hated it so much for the rejection sake, like why?

A It's a huge time suck. It's definitely not, it's not fun to get said no to, but that's fine. I said, I'm, you know, I sell every day and that that's no big deal. It's just, it doesn't actually create that much value. And a lot of people talk, oh, I raised this much hundreds of millions or these valuations. It's literally irrelevant. You will be, you will be judged and weighed by your exit and by the liquidity That you can provide to people. And so there's these tremendous roller coasters that go on between the time you take the money in and the time you got to give it back. And I think a lot of people lose sight of that and you over capitalize the company. I mean, it's just more, you got to, that's a higher prep stack and it's more dangerous for the common stock, which is, you know, management and employees. So I just found it was kind of like not a great deal in many respects and the tighter we got, the better we did. So We started to get to cashflow positive and EBITDA positive, and it was like, great, like, let's keep this going. I don't, I don't want to return to those days.

AI assessment note: “It's a huge time suck. It's definitely not, it's not fun to get said no”