The Exchanges

Q That reminds me of a story you told me about how you made your eng team do some manual work of an algorithm involved in transformation. Can you share that?

A Okay, so I'm gonna preface this story by sharing that I'm a huge math nerd, and one of my favorite books on logic is called Gödel Escher-Bach. And in this book, there's a fun scene where there's an ant farm that bands together to do the work of a computer flipping bits from zero to one to solve logic gates. And so this chapter of that book was really the inspiration for an exercise that I ran my team through. So about a year ago, We were doing a big zero to one new project at dbt Labs, and we were going to change the algorithm for how we built customers' data transformation graphs. And I needed a way for the team to really internalize all of the changes that we were going to make, and I needed them to own it because otherwise they wouldn't be able to anticipate all of the edge cases. It wouldn't be quite as durable. You couldn't copy paste the algorithm. So I showed up to a team offsite with a spool of rope and, uh, sticky notes. And I think my team looked at me crazy, went with two heads when I started to tie people up to create a graph. So each node of the graph was an engineer, and I, ah, the rope was kind of the edges of the graph to connect them. And then we worked through the new algorithm extremely slowly, step by step. And it was a way that you couldn't leave that exercise without knowing exactly what was going on, because everyone had a role to play. So I think a lot o…

AI assessment note: “I showed up to a team offsite with a spool of rope and, uh, sticky notes.”

Q So you have a really interesting career path in that you went from VC into product management. Usually it's the other way around. Usually PMs become VCs and it's rare to see this kind of version of it. And so I wanted to start with just a question of just how did that, how did that come to be?

A I, I do have an unusual background, but you know, it doesn't surprise me that people who are interested in product are also interested in investing and, and vice versa. You know, for me, I've always had Three interests broadly, and that's an interest in business, an interest in technology, and an interest in markets. And I get to express those interests both in investing and in product, but just with different weights. So in product, you go a lot deeper on the tech and markets is, is less of a focus, but you still get to do all three. So I, I have an unusual background and I used to be a professional investor at NEA. I did all of, um, about all my time investing in early stage startups that built for technical audiences. So think dev tools, infra data companies. And in 2019, I first discovered dbt, which was an open source data transformation framework. And I got really very, very excited about dbt because when I talked to people that were using it, The way that they described their experience on DPT was like, unlike anything I had heard before. It was much more of an identity for them than just a tool that they were using to get their, their job done. And that really struck me. And as I kind of thought about what was happening in the market, there was a lot going on in, in, in, the markets were changing quite a bit. Cloud data warehouses were starting to explode. Like this was…

AI assessment note: “I used to be a professional investor at NEA... in 2019, I first discovered dbt”

Q Is there any other frameworks or just general processes that you found to be releaseful and building awesome product, running teams?

A I'm not a big framework person, but there's kind of two sayings that I find myself repeating, or either to myself or to others, and it's, ah, um, worse is better, and, ah, tech debt is a champagne problem. And what do I mean by that? It's really to help me combat this perfectionism, because perfect doesn't exist, and you should instead go with good enough, because when you ship, that's the moment when you get to learn a lot from your users, And you just can't anticipate it. You try very hard to understand exactly how people will use the product and get all the edge edges, uh, ironed out, but you, you can't until you ship. And I'll, I'll share an example. So my team helped support the dbt cloud scheduler and the initial version of the dbt cloud scheduler was pretty naive. Like we were a little embarrassed by it. It was A big old for loop over a big old jobs table. And so we would look, like, is this job, is it time for this job to run? Okay, yes, run this job. Okay, it's not time for this job to run. Next. Continue on, like, is it time? Yes, run this job. And it would just loop over. And it's extremely naive and very simple, but it got the job done. And I try to remind the engineers, like, we would be so lucky to have tech tech debt because That means people are using the product. And, you know, now we've had to rebuild our, our scheduler several times over because we do have me…

AI assessment note: “I'm not a big framework person, but there's kind of two sayings”

Q of the table of M&A transactions, including, I think you led the acquisition of a company. I was an investor in the dbt acquired that I think is public company called transform. And so my question is just four founders who are Currently thinking about M&A, M&A meaning acquisition, essentially. What's your best advice for them for how to be most successful in an M&A kind of outcome for themselves?

A When it comes to acquisitions, the time to start thinking about an M&A strategy is hopefully when you don't need one. And the best strategy that I could give a founder is to have a really strong offense in building their company. And when founders start their businesses, they don't usually set out to start a company to sell it to another business. They start it to be an enduring, independent, standalone company. And if you have that path, then you'll have the upper hand in Absolutely every single M&A conversation because you have a viable alternative, which is do nothing. Stay the course. You don't have to sell. But of course, that's not the case for, for most companies. Most companies don't have a viable path to being an independent company forever. And so they have to think about M&A. And so M&A is always about creating plan Bs. And the way I would think about it is for any one company, there's only ever two to three buyers that Find what you're building to be extremely strategic. And the strategy that I would do in, in how do you get noticed is I would figure out the area that you bring a competitive advantage, and I would inflict pain on that potential buyer. Make it impossible for them to not notice you because that's when they're gonna have their ears perk up and say, well, what's going on with this company? You know, we just bought this company, Transform. They were doin…

AI assessment note: “the time to start thinking about an M&A strategy is hopefully when you don't need one”

Q How many people did you end up talking to? Who is doing these conversations? And is there anything really important you learned about how to ask these questions in these sorts of leanest to pay conversations?

A So we talked to dozens. It was a combination of product and product marketing, having the conversations, and, you know, people aren't very willing to share explicitly, like, what they will pay, but there's some tools that we used on relative value. People most think about what is the relative value of DBT in their cloud warehouse, and we also tried to employ some of the tactics that we tried to suss out. What, what do people view as Very inexpensive. What's a price point that's very cheap or a no-brainer? What price point is, uh, maybe fair or comfortable for them, and what would be kind of too expensive? And then we had all the data back to figure out where we landed.

AI assessment note: “we talked to dozens. It was a combination of product and product marketing”

Q Sometimes with M&A discussions, there's a lot of, like, uh, subtlety to the way you communicate, where you don't come out and be like, please, we'd love to sell our company to you. Any advice on just the phrasing and how to approach it, or do you think it's just, it's fine, just tell us, we're looking to sell our company, are you interested in being a buyer?

A Yeah. I just wouldn't be too clever here. Like everyone understands like, oh, I'm evaluating strategic alternatives. It means you're, you're looking to sell your company and it depends. Like, are you looking, do you have time if you, if you have time? Yeah. Don't, don't come out and say, Hey, I'm for sale. Like that's not gonna end up in a, a good outcome, but depends where you are in your, your company journey. If you have time, Then don't talk about M&A at all. Like, that's the last thing that you want to speak about. Instead, you're talking about maybe collaborating or partnerships, how to work together, knowledge sharing. And M&A is a dirty word if you have, like, a lot of runway and you're, and you're going to try to continue to pursue an independent path. But if you're, if you're out of time, you're, you're out of time.

AI assessment note: “I just wouldn't be too clever here... If you have time, Then don't talk about M&A”