In the latest episode of To Be Continuous, Edith and Paul discuss a medley of start-up pertinent topics. Paul wonders whether the pendulum has swung too far the other way, with too many startups now glorifying failure.
They also examine ways of coping with founder guilt and dispel some common myths about life in a startup. Finally, they examine the invaluable role of the “Everything Else” person in start-ups. This is episode #35 in the To Be Continuous podcast series all about continuous delivery and software development.
This episode of To Be Continuous, brought to you by Heavybit. To learn more about Heavybit, visit heavybit.com. While you’re there, check out their library, home to great educational talks from other developer company founders and industry leaders.
Edith Harbaugh: So Paul, we were just talking about how hard startups are.
Paul Biggar: What do you mean, startups are wonderful.
Edith: Yeah great. Is that why you’re starting another one?
Paul: Well no I recognize that startups are fucking awful in so, so many ways but you know sometimes you like to build shit.
Edith: So let’s dive into this because you know here we are doing our podcast.
Paul: Our startupish podcast.
Edith: Yeah so what do you like about startups, what are you doing another one for?
Paul: Well primarily I’m doing this new startup because I can’t get the idea out of my head which is the same reason I did Circle. Circle had been in my head for a good year before I actually did it. So I think that that’s a really good reason to do a startup like lots of people are like “I want to do a startup but don’t necessarily have an idea.” And that’s not a bad reason to do a startup but it’s now how I think about them.
Edith: So this will actually be your third startup.
Paul: This will be my fourth startup.
Edith: Oh wow.
Edith: Did you have a startup back in Ireland that we don’t talk about?
Paul: Yeah exactly. It started up with a total of six of us right after college.
Edith: Oh wow.
Edith: So tell me a story Paul.
Paul: Six of us started a thing after college so it was “let’s consult while we figure out a product.” And after about four or five months I realized I was on a different page than the rest of them on many, many things and a couple of them work at Circle now.
Edith: Were you in the same book?
Edith: Well you said you were on a different page.
Paul: We were kind of in the same book but we thought about the world in different ways. In lots of ways.
Edith: And now a couple are at Circle?
Paul: Now a couple are at Circle yeah.
Edith: That’s pretty cool. I always see people downstairs at Heavybit with Circle jackets. Do you know them?
Paul: They work for Serverless. They are former Circle employees who found their way over to Serverless.
Edith: How does that make you feel?
Paul: It’s good. I mean it’s good that they still wear their jackets. It means they’re proud of the history.
Edith: Or they don’t have many jackets.
Paul: Maybe but there are a bunch of former Circles. This is the thing when you have a startup in the Valley people find their way to other companies. So you know a former employer works at Rainforest. No one yet on the Launchdarkly team?
Edith: We pretty much have our original team.
Paul: Oh wow.
Edith: But I came out of TripIt and one of the things with TripIt founders are proud of is that of about 25 people who were there I think eight have gone on to start companies.
Paul: Oh wow that’s really good.
Edith: So I hope that Launchdarkly has a similar record.
Paul: But the people who started companies do you think that they fucking hate startups?
Edith: So it’s funny I actually gave a talk recently on how I failed at running a hundred miles.
Edith: And I thought this was just me talking about failure.
Paul: Yeah okay.
Edith: And everybody found it incredibly inspiring.
Edith: And I thought it was me just talking about how I failed.
Paul: The Silicon Valley fetishization of failure.
Edith: Well I talked about how I had failed repeatedly.
Paul: Okay you kept going.
Edith: I failed three times running a hundred miles.
Paul: This reminds me of the story about the FedEx vendor. Everything was going to fail, they were about to run out of cash but he took all of his remaining money brought it to Vegas bet it on red, doubled it and then had payroll.
Edith: I just ran a lot. I didn’t go to Vegas.
Paul: It’s like keep going no matter what.
One of the worst things about Silicon Valley is that it celebrates failure in a way. Failure is a learning experience but lots of people have swung too far in the opposite direction.
They sort of put failure on some sort of pedestal.
Edith: Well that’s the funny thing. So what happened was I was trying to run these 100 miles when I started my company Launchdarkly and it was really hard in the early days. So it was John my co-founder and I.
We were living off our savings.
He left a very well paying job at Atlassian so I had this weight of guilt on my shoulders. I got my friend to give up a high paying job.
Paul: Right. But he is a co-founder. I feel it’s a bit different when you have employees who you convince to give up whatever they had going to join your ship.
Edith: And we were starting to hire first employees and I felt an immense amount of guilt.
Paul: What was the guilt about? Launchdarkly hadn’t quite kicked off yet. It was not the success that it is today.
Edith: Oh I mean in the beginning it was John and I sitting at a co-working space. We had no customers. We had no revenue. We had no product. All we had was this idea.
Edith: And that’s when I got into how I’d run many races. I could run 100 miles because I didn’t have any money. So I couldn’t really go out to dinenr.
Paul: Oh right I see.
Edith: I couldn’t travel. But running is pretty cheap. So I could just put in all these miles and it was when I was trying to fundraise and I just remember how crushed I was because I went to run this 100 mile race right in the middle of my friends and family around and I didn’t finish the race. I dropped at mile 70. It was such a low point. It was like my round isn’t coming together. I can’t finish 100 miles. Utter failure.
Edith: And I told this story to some of the very people who’d turned me down.
Edith: And they loved it.
Paul: Well because you kept going and you got through it.
Edith: But I was amazed. Earlier I remember this low point where like everyday I would go into work. I’m like “I’m an awful CEO and I’m an awful runner.”
Paul: They wouldn’t have applauded it if you hadn’t been the kind of CEO who’s able to give this sort of talk a couple years later. Like that’s failure fetishization, forgets that 90% of the people in the same story do go nowhere and end up failing.
Edith: Is that it? I mean I didn’t talk about the company.
Paul: Yeah but I mean you’re on the stage. You must’ve done something.
Edith: No it was just like a small gathering of 50 people.
Edith: At a retreat that Soft Tech does.
Paul: Oh yeah I mean if you’re on the Soft Tech retreat I think there’s enough social capital given to your story that all these people are listening to you in the first place.
Edith: Yeah but it was just so hard in the beginning because there’s the guilt that I was recruiting people who were giving up a lot to be on this journey with me.
Paul: Yeah. I had that fundraising guilt as well so about two or three weeks into my seed round I got started off with some really good momentum, got featured on AngelList. Got a verbal offer of a term sheet that seemed to take a long, long time to come. And about a month into it I was at this low point of most of my warm leads are turning colder and colder. There’s almost no committed money. In fact there might’ve been zero dollars committed at that point and there’s this thing in fundraising. I’m sure you’ve seen this where there’s a whole lot of nos followed by the occasional yes and then suddenly everything turns to yes.
Edith: That’s called FOMO.
Paul: FOMO right exactly.
Investors are sheep just like everyone else. No one wants to be the first person to do it.
When you’re in that thing constantly getting no, no, no, no and you’re startin’ to think like well maybe this isn’t a great idea.
Edith: No I got more pissed off.
Paul: Oh really?
Edith: Yeah I was like this is a good idea.
Paul: Well it’s not that the startup itself isn’t a good idea but just that sort of fear and anxiety of maybe I’m not good enough, maybe I can’t do this startup. Maybe they’re right that there’s no market for this or whatever.
Edith: No I was convinced that we were doing something good. I was also convinced that I was not very good at fundraising. So I was very determined that I would get better at fundraising. So running was something I could control.
Edith: I could get better at it.
Paul: So getting good at fundraising is something you can get better at.
Paul: Well that’s absolutely true.
Edith: Yeah so it’s just like okay I’m not very good at this right now I will get better at it. But yeah the beginning is tough. You’re this unknown company with no product.
Paul: Well there’s so many things that are just like this where you feel that you’re failing your team. You haven’t rolled out a new internal initiative. Right maybe there’s a new process and it fails or you roll something out and people hate it. And then you just feel like a fucking asshole. Like you feel like everything’s falling down around you and that it’s all your fault.
Edith: So I have something that helps me a lot because I do feel the same way is that I will find new ways to fail.
Edith: I hate failing but as long as I admit something to don’t work I’m willing to try something else.
Paul: So taking the view that it’s all kind of a learning experience and that you’re gettin’ better at it and you don’t make the same mistake twice that kind of thing?
Edith: Well sometimes you make the same mistake three or four or five times. At least you realize it. And I think that’s part of being a CEO is that the job I have today is very different than the job I had two years ago.
Paul: Oh it’s insane how quickly it changes. You’ve just started to get good at something and now you don’t do it anymore.
Edith: But that’s fun. If it was always the same job it would be boring.
Paul: Well yeah I found one of the simultaneously great thing and shitty thing about being a CEO is that because of that constant learning curve it’s always hard. Learning is always difficult. You’re always doing it wrong and if you’re going to start a new thing you’re going to have to learn and you’re going to have to do it wrong but because
As a CEO of a startup, we have new jobs every three months and we’re constantly doing things wrong.
There’s no time to settle down.
Edith: But I think that’s fun.
Paul: I mean yeah but it’s also fucking awful.
Edith: I think the only way that you can survive it, is so that was one of the questions after my talk was like why did you run a hundred miles? Because it’s fun. It’s like running a startup. Like it’s hard but it’s hard and it’s fun at the same time.
Paul: The thing that really worked me around that sort of failure was whenever I found it difficult to do a thing or difficult to be motivated to do the thing, I would say “am I going to fail my team and my company and my investors and all these things because I didn’t want to do X?” Right you know I was nervous about emailing this investor. Do I want to fail my startup because I was too nervous to send an email? And that sort of like shamed me a little bit into pushing through.
Edith: Yeah so that actually ties back to you. So I was running a hundred miles and you’d written me a note before like good luck. Some standard nice note. And at mile 40 I was thinking about dropping off. Like I was throwing up. It was 97 degrees I was in a bad state. I was like I don’t want to write Paul and tell him that I dropped out. I’ll keep going.
Paul: Right nice.
Edith: So you shamed me into it.
Paul: Oh good. I’m not sure if shaming another person is the same as sort of shaming yourself.
Edith: Well it was definitely peer pressure. But that metaphor has carried on because you know it’s very popular to write all these failure posts like to your point about the fetishization. Oh, I didn’t do this.
Paul: How we failed to do X and how I didn’t get into Y combinator and that sort of thing.
Edith: So always when I’m faced with something that I don’t really want to do. Like there’s certain things I just hate doing. But I’ll think do I want to think back my company did not succeed just because I had a mental block around blah.
Paul: So one of the things that you mentioned is how hard it is to sell to developers.
Edith: Yeah well
I think there’s two types of developers. There’s developers that want to build themselves and there’s developers that don’t want to build themselves.
Paul: Mhm okay.
Edith: And depending on what you’re doing they could be the same developer.
Paul: Depending on how you spin it or something like that.
Edith: No just depending on the maturity of your product, the maturity of the categorical. Like I remember when people used to build their own application servers.
Edith: Nobody does it now.
Paul: Certainly with Circle we found it very hard to get people to give up their code which you need for CI obviously but once the company got mature enough or it had a bit of stuff behind a bit of backing. Like today no one asks this question but the first six months of Circle, that was the only question.
Paul: I don’t know about giving my code to some third party.
Edith: Yeah I think every developer tool has some sort of maturity level where everybody thinks there’s no way in hell that I could have somebody else handle this.
Paul: Right. But when you’re in that early stage and people are just telling you no for some random reason and you’re just like, you don’t really know and this is especially true for people who used to be product people and who used to be engineers. People just constantly telling you no, it’s not what your job typically is and so it’s a shitty new part of being a founder as a first time founder.
Edith: Oh it’s a huge transition. Like it’s a huge transition. So a conversation I had with an old boss of mine was, I was an engineer and then I was a product manager and he’s like well as a product manager you’re used to fighting for your projects and then not always happening and I’m like yes but you have a much better success ratio.
Paul: Right yeah exactly. You might get one in three, one in four but when you have 10, 20 customers in a row telling you “now’s just not a good time.”
Edith: It’s funny
I think I’ve gotten much tougher since I’ve been a CEO about rejection.
Paul: Right yeah now you have all these employees who are saying no and are potential hires that are saying no.
Edith: Actually no we do very well with recruiting.
Paul: I’m just mocking you I actually have no information here. I just assumed at that some point. I mean we found even when people got like super excited about Circle it was still a 50% hire.
Edith: We have a pretty good hit rate.
Edith: I was more talking the thing that taught me about both customers and investors and job interviews as well. It’s not always no. It’s sometimes not right now.
Paul: I’ve had a bunch of nos or not right nows be you know a couple months later, you know actually now’s a good time. I’ve been rethinking my current company. This startup isn’t a good idea and now we want to join your startup and that sort of thing.
Edith: Yeah or just like when I was raising my seed round I was talking to a lot of A investors and our mutual friend Matt actually told me, he’s like Edie you’re talkin’ to the wrong investors.
Paul: Oh yeah.
Edith: He’s like you should be talking to seed funds not these guys.
Paul: Yeah not VCs.
Edith: Well they’re still VCs.
Paul: Well yeah.
Edith: Then I was just like oh you’re right. And that’s a re caliber of you know not everybody needs a feature flagging. Not everybody is right to join Launchdarkly.
Paul: Not everyone needs to raise some series A investors.
Edith: And then like the people who I talked to two years ago when we were doing our seed fund are totally wrong to talk to now.
Paul: Right exactly.
Edith: So what’s it like for you? What’s motivating you to start another company?
Paul: What’s motivating me to start another company? It’s entirely about the product. I guess both the product and the mission. So the mission is huge. It’s a much bigger thing than anything I’ve worked on. The closest parallel I can find. At Mozilla our mission was to keep the web open and I think that’s the same level of mission that Dark is what my startup’s going to be called.
Edith: I like that name.
Paul: Or well the code name.
Edith: I like that name it sounds familiar.
Paul: It does yeah I don’t know why that is but a number of people from you too have mentioned it.
Edith: Maybe it’s because you’re wearing your Launchdarkly shirt today.
Paul: Maybe that’s it yeah.
Edith: You know so I’m staring at the word dark on your Launchdarkly shirt.
Paul: Oh yeah Dark is a sub-string of Launchdarkly I hadn’t realized that.
Edith: Oh well thanks for wearing your shirt today. By the way, somebody actually wrote in asking for a shirt.
Paul: Oh nice. If you’re interested in a To Be Continuous shirt or a Launchdarkly shirt or a CircleCi t-shirt send us a note on Twitter.
Edith: Yeah we don’t actually have To Be Continuous shirts though.
Paul: Oh no but if enough people asked for one we’ll make them.
Edith: How lean of you.
Paul: Exactly. I think a lot of people, they’re always fighting the battles of their last relationship okay? And with startups that means that people are looking to not do a startup afterwards. You see this a lot. Startup founders who fail to get product market fit, they’re like I want to be an employee or I want to work at a place that already has product market fit. Or I want to work on something that isn’t such a big idea or maybe I don’t want to work in consumer I want to be in B to B. Or I don’t like B to B, I want to be in consumer. People just do the opposite.
So I expected that after Circle I would want to do a not venture backed startup. And it’s not that I have anything against VCs or any of that sort of thing but like it is definitely a challenge building a growth startup. The venture model is inherently tied to growth and with growth you always have what have you done for me lately? We grew 50% last year or three X last year or whatever it is. It’s like okay now for this years three X.
Edith: And in fact the fact that you grew very rapidly last year puts more expectations.
Paul: That’s right yep. And all sorts of similar things. A lot of people when they start startups they start them with this sort of expectation of you know you’re doing your own thing.
Paul: You didn’t want to do your own thing?
Edith: No you’re not.
Paul: Oh you’re not exactly. You’ve got a board. There’s like..
Edith: Your Co-Fo.
Paul: Customers, yeah.
Edith: You know the old joke right? About hospitals?
Edith: They could get a lot more done without all these darn patients.
Paul: Right exactly. There’s all this stuff that is in startups that isn’t product.
Edith: Yeah it’s funny. I hope she doesn’t mind me sharing this story but do you know Heidi Roizen?
Edith: I love her.
Paul: Heidi’s awesome.
Edith: So she’s telling me a story about starting a company with her brother before you said well you should start it with somebody you known all your life. I mean who have you known all your life?
Paul: Yeah a sibling.
Edith: But it turned out he just wanted to build his own thing. And he didn’t really want to do anything else.
Paul: But when you’ve got a board you’re not building your own thing. You’re building for the contract that you had with the board members essentially.
Edith: Yeah and the board is just other people’s money.
Edith: It’s pension funds. It’s universities.
Paul: You’re probably like 10 steps away frow pension or at least three steps away from pension funds but yeah that’s essentially who it is at the end of the day.
Edith: Closer than you think. So I went to a SoftTech event and they had all these football players there and I asked why and they’re like well because they’re our Lps.
Paul: Oh hilarious.
Edith: So they had Ronnie Lott who’s like a four time Super Bowl winner hanging out at Soft Tech.
Paul: What team does he play for?
Edith: He was the Super Bowl Champion at the 49ers.
Paul: Okay that makes sense that celebrities in the area would be investing into startups.
Edith: Yeah I mean what else are they going to do?
Paul: So you have investors and you also the team right?
Edith: Who depends on you.
Paul: So one of the problems that we had is that the sort of contract that we had with the team wasn’t necessarily the same contract as we had with the investors.
Edith: Tell me more.
Paul: We were very into flat at the start.
Paul: Yeah I know and it’s a constant problem that everyone has. If you’re thinking of doing a flat startup say no or at least heed the following advice.
We were very into flat, but we never defined what we meant by flat.
Paul: Yeah so it turns out that loads of people who started had different ideas about what it meant to be flat. And so then, in the pursuit of growth and startupness and all the sort of thing which I think to be fair I hadn’t really identified as that important at the start. It was like it was in the back of my head but it wasn’t a thing we necessarily talked about.
When you’re pre-product market fit you think a lot about product and then you are post series A you think a lot about growth and when you’re pre-product growth isn’t at the top of your mind so it’s a thing that we didn’t necessarily talk about at the start when we hired people.
Edith: When you say growth do you mean of the company?
Paul: Of the company just as a startup right you know part of what you’re doing and being a startup is you’re trying to at the risk of giving a cliche, you’re trying to change the world in some way. You’re trying to build a product that affects people and that makes some engineers lives in your customer’s company better in some way. Not necessarily the biggest change in the world. You’re not curing cancer but you want to have some sort of impact.
And part of that impact is reaching more and more people and that’s kind of why I got into things but I didn’t necessarily think of growth as it. So when we talked to our early employees, early hires that sort of thing we weren’t really harping on the growth band wagon but we were harping on the flat bandwagon because that’s how we believed in the world and so when it came time to focus on growth, that was a shift from what we had been doing so far and in many ways that was a shift that contradicted people’s definitions of flat.
Paul: And that’s inevitable if you have 10 people. We had 10 people we probably had 10 different definitions of flat.
Edith: You probably actually had 20.
Paul: Yeah maybe yeah depending on the day of the week.
Edith: What they read lately and who they talked to.
Paul: Exactly so there’s all these people that you’re serving who have completely different criteria and so between your employees, your investors, things like your spouses and partners and families and so on and vendors, customers, you’re serving kind of all these people in a certain way and you’re never really just serving yourself.
Edith: Oh no.
Paul: Right but a lot of people start startups because they’re like I want to be my own boss.
Edith: Oh no.
Paul: Yeah terrible reason to start a startup.
Edith: No I mean I think that works if you’re not employing anybody.
Paul: Maybe I had a dream for a long time of how can we have a startup which has no employees and no customers?
Edith: How do you make money?
Paul: Dunno. That’s kind of the challenge right? I mean I guess the only thing where you can do that is some sort of arbitrage but that feels like a shitty business model.
Edith: Yeah even like so my friend just started a business where they’re a consultant now but she’s even more beholden because she has to go find work and then she has contracts with customers and she has to fulfill the customer.
Paul: Right and you have to get a renewal for that contract.
Edith: Yeah so is she her boss, I mean is she her own boss? Yeah but does she get to control everything? No.
Paul: So there’s a bunch of different challenges there. Let’s talk about the employee one for a second. So you start off and there’s maybe an idea that employees work for you.
Paul: Yeah exactly.
Edith: So have you heard of the idea of a servant leader?
Paul: Well yes. That’s exactly what I’m talking about.
Edith: Where we get to trail off into agreeing with each other?
Paul: Yeah I was talking to a friend earlier and I’m definitely not going to name names but he worked at this startup who had the very opposite of a servant leader. Like the leader would send misogynistic emails to employees amongst other things. He would yell at people in meetings like people were crying all the time and half the company just got up and left and I don’t really understand how anyone could be like that.
Or how anyone could think that that was a successful model but definitely anyone who is a successful leader, maybe leader in general but certainly in a startup is the very opposite that.
Edith: Well I think some are. I mean like Steve Jobs was notorious.
Paul: I feel that Steve Jobs is going to be the biggest disservice to startup founders that there ever was by his example.
Edith: I think so too. I remember an old company. So I’ve always been big on iteration and lean in cycles. Somebody else was like Steve Jobs didn’t do this. Why don’t you just pick a direction and be firm and I’m like dude I called him didn’t answer. He’s dead.
Paul: Wow. Too far. It’s too soon.
Edith: I told him I would get him into Flour and Water because there’s this famous shot, you know Flour and Water this Italian restaurant in the mission?
Paul: Um yeah.
Edith: There’s this famous shot of him getting turned away at the door.
Paul: Steve Jobs?
Paul: Did he not have a jacket or something?
Edith: No they are really tough to get a reservation. They have half walk-ins and he showed up too late.
Paul: And just like no.
Edith: No. So it’s like but if Steve Jobs was alive and I got him dinner there I still couldn’t do that every night I’d still want to iterate.
Paul: Yes so this iteration and being the asshole leader but between all the that, the thing that you imagine about your startup of like I’m going to be this thought leader. In your most egofull day of looking at Larry Page or Mark Zuckerberg or something and thinking that’s what it’s like to be. No it’s never been like that.
Edith: It’s so hard. I mean I love it. I think I have the best job on the planet but I think when you start a company so I start off in engineering then I was in product and there would be these floors of other people in accounting. I was just like what do they do all day?
Edith: Now after having to have to do it myself I’m like oh.
Paul: Yeah so
Our first hire was the “everything else” person.
Edith: Which we should’ve hired eons ago.
Paul: So good. I’ve never run payroll once.
Edith: What are you going to do now?
Paul: Well so I’ll have a co-founder and they will run payroll or they will hire someone who will run payroll. One of these options definitely.
Edith: Where are you going to get the money for all these hires?
Paul: So fundraising I can do. It’s just running payroll I can’t do.
Edith: Payroll is actually very easy.
Paul: Okay fundraising is actually relatively easy.
Edith: No I’ll show you how to run payroll.
Paul: Okay and I can show you how to fundraise.
Edith: The thing is to run payroll you have to have money. We didn’t run payroll for awhile because we weren’t drawing a salary.
Paul: So the first employee did so much in the company.
Edith: What made you decide to get an everything else as a first instead of an engineer?
Paul: So the idea is keeping the most important thing the most important thing. There’s so much shit that you have to do with a startup. So like you know getting an office is a really good example of this. It takes a lot of work to like push that project through and it goes wrong in so many ways but it has to happen. If you don’t get an office there’s nowhere for employees to work or making sure that you have an internet connection in your office. And having a secondary internet connection and all this shit.
Edith: Well are you familiar with Maslow’s Hierarchy of Needs.
Paul: Yeah it’s a good way of thinking about it. So the important thing at your startup is let you know level four, level five but you can’t do that if your employees are worried about level one.
Edith: Yeah if you’re like I don’t have a place to go to work and the internet doesn’t work. Those are just basic stress.
Paul: Right exactly. So you need to solve those but they’re not the most important thing.
Edith: Well the most important thing is you have a product that customers like.
Paul: Right exactly. So you always want to stay focused on that. So you hire someone to take care of the other stuff.
Edith: I should’ve done that far sooner. Let me give a nuanced answer. I think
Things have gotten much more outsourceable than they were five years ago but even outsourced systems still need a level of care.
Paul: They need a manager to take care of them.
Edith: Like even if you have an outsourced book keeper you still need somebody to review the books.
Paul: Yeah. Even with an outsourced book keeper, someone has to do the reconciliation. Someone has to say how much the sales people commissions are.
Edith: Until very recently, I did that. And there’s just stuff that you don’t realize how much time it really takes. The bulk of our business is not self-serve but through order forms. That just takes time.
Paul: You should’ve done like this bottom up dev focused startup. That would’ve been a better.
Edith: We tried.
Paul: I know.
Edith: We tried but turn out people wanted to pay us.
Paul: Even when you think that there’s a startup that does this inevitably someone needs to manage the 20 or 30 different vendors that you use to do this between your lawyers, your payroll, your accounting, the office, the food.
Edith: Or I’ll give you a really simple example. We wanted to set up a 401K because our employees wanted it. So we’re like great we’ll set up a 401K everybody will be happy. It turns out that even if it’s totally automated there’s still some paper work you still have to fill out. The government makes you fill out stuff that basically says that you’re in compliance with various rules. You have to get a bond so that if you go out of business none of which is complex but all of which takes time.
Paul: Right yeah. There’s this tendency in startups to defer everything until it actually is important. It’s kind of one of those things that startups do and in many ways it’s probably illegal but you do it anyway and everyone kind of tolerates it because you can generally fix it at the end. But that means that a lot of times a situation will come up that needs to be dealt with right now.
I think there are some basic social contracts you have with everybody.Things we cannot defer like when employees needed health insurance.
Paul: Right exactly.
Edith: That’s something I took very seriously.
Paul: I think that’s a really good example because we didn’t have health insurance until we got an employee. We’re hiring employees and the employees are like “we need health insurance.” I’m like “well of course you need health insurance we will get right on that.”
Edith: Yeah it was the same. So beginning it was John and I my co-founder we were paying Cobra through our old jobs. Easy peasy. And then we wanted to start hiring and they said you know hey they had kids they’re like “can you get us health insurance?” That’s what I mean by a social contract. That’s not something you can punt on because they want to go to the doctor.
Paul: We had a good example of that the day that the first employee came in and said that they were pregnant and they’re like what is your pregnancy policy and I’m like “I don’t know but we will have a very good and fair one.” So Geneviere was our first employee. Geneviere’s the one that you could just hand anything like this and she would come out with this amazing compromise.
Not so much a compromise that took into account all of the things and was very employee fair and that sort of thing. I was like this will be excellent because Geneviere will take care of it. And that was like really comforting to all the employees.
Edith: Yeah I think in hindsight I made two mistakes and I don’t know if they’re mistakes but just I think I underestimated how much of this other stuff time sucked up.
Paul: Oh yeah so much.
Edith: And then like I believed in the hype. So we were Zenefit’s customer.
Paul: Oh right I see.
Edith: And in my mind I thought it was Zenefit’s like applying for credit card.
Paul: They’ll do everything for you.
Edith: Yeah I just have to input fields done. No.
Paul: It’s the same with Stripe. You use Stripe and it’s like Stripe will handle everything and then you’re like I need better reporting or the board needs accrual based accounting so “I don’t know what accrual based accounting is but there’s no button for it in the Stripe dashboard.”
Edith: I keep looking for this button. I keep right clicking. Yeah like something we do by hand right now and John Sheann actually tweeted about this and I tweeted back please fix this was we reconcile our Stripe accounts with our invoice accounts because I need a consolidated revenue sheet.
Paul: I swear I heard that Stripe was doing invoices like three years ago.
Paul: I mean I don’t see it so perhaps not.
Edith: Maybe I’m double clicking in the wrong thing.
Paul: I haven’t looked at the Stripe account in quite some time. So there’s this idea that being a startup CEO is some kind of glamorous job.
Edith: I think when people think about that they think of the series C or D like they think of the Intercom guys now. So you’re friends with the Intercom team right?
Paul: Yeah so I sat across from Owen when Owen was the only person in their San Francisco office. We were sitting in an investor office a couple blocks up from here in the Stork building and it was me and Alan and him and Macy. And that was the San Francisco team of Intercom.
Edith: Yeah. Was it glamorous?
Paul: I feel to a certain extent Owen always had some sort of aura about him. You could tell just from talking to Owen that Intercom was going to be an amazing company.
Paul: But I mean certainly his job was lots of difficult shit.
Paul: Yeah I mean that’s the early startup founder.
Edith: Yeah I remember I got absolutely furious at our mutual friend Fred once because he’s like “Edith you look so stressed. You just need to hire somebody to do this, this or this.” And I’m just like “dude with what money?”
Paul: This is hilarious because I remember shouting to Fred about this and he’s like “we’re kind of trying to transition from seeds to series A” and I’m like “here’s what you do. Here’s what your organization looks like” and I knew this because I’d failed to do this. I was like “here is what we should’ve done and what everyone else is doing” and he’s like this is amazing. Life seems amazing.
Edith: Yeah but there’s a stage before that when you’re scrapping when you’re like you and your co-founder and you don’t have any money, it’s like well yeah sure life would be grand if I hired these 20 people.
Paul: Well what you should do is get 10 million from Sequoia.
Edith: Just off the bat?
Edith: Just why Sequoia and why 10 million?
Paul: Those are just particular numbers that came to mind at the context of the conversation that we were having.
Edith: Really? Do you have 10 million from Sequoia?
Paul: No we don’t we have 18 million from DFG on scale.
Paul: That was our series B.
Edith: Oh I thought you meant you personally right now.
Paul: Me personally? No, no I’m talkin’ about CircleCI.
Edith: I thought you were dropping some big hint about funding.
Paul: I’ve talked to investors but not as a “I would like your money” sort of thing.
Edith: So I do think that life gets easier somewhat on some vectors when you get more funding. And I say funding loosely either from VC or from customers.
It’s like the old rule of when you get more money you can offload and get more and more leverage.
On the other hand then you have new different challenges.
Paul: Right it’s that learning thing.
Paul: Well I mean once you’re series C or D you can swan around the conference circuit and people listen to you as a thought leader.
Edith: Yeah but then also you have this weight of “okay now I have to make 100 million, 200 million every review.”
Paul: I think Twitter’s an excellent example of this.
Edith: Oh tell me, tell me.
Paul: Well so I remember I don’t know if you’ve read Hatching Twitter or something about their troubles but the point that which we enter the story Jack is back in the CEO’s seat has been for a year or two or whatever and they’re now going to their S1.
So they’re about to IPO and Jack is invited to speak at Startup School. And they’re in their quiet period before the IPO so he can’t talk about Twitter at all. So he’s giving this talk to a room full of I don’t know a thousand people something like that and also live streamed on the internet and he can’t talk about Twitter at all.
So what he ends up talking about is, he plays some jazz for us and he reads a passage from his favorite book and there’s something else that was equally ridiculous and half the room were like Jack fan boys. Like they were loving it. Like every word that came out of his mouth they were sitting there like part of the experience.
Edith: It was a Jack fest?
Paul: It was. They were basking in the experience of the Dorseyness and the other half of the room is like what the fuck is this shit?
Edith: Self indulgent.
Paul: I mean I don’t know exactly if I would call it self indulgent because it was in the quiet period. He couldn’t talk about Twitter and had to find something. But on the other hand Jack does have a bit of a reputation.
Edith: There’s many things to talk about beside your company. Like the talk I gave about running 100 miles.
Paul: There we go. You could’ve played your favorite bit of jazz. Let it move the audience.
Edith: I don’t jazz.
Paul: Yeah so I think
There’s that point where your fan boys are swanning over you but then three years later the market has expectations and you’re not meeting the expectationsand the chickens are coming to roost.
Edith: Well I will say something that our advisor Shawn Burns told me which is.
Paul: Don’t work at Uber?
Edith: Was to celebrate the wins.
Paul: I’ve heard this. This is good. We were very bad at this and I think need to be much better at it.
Edith: I don’t mean be too self-congratulatory but I mean startups are really hard.
Paul: Yeah I’ve heard that.
Edith: Have you lived it?
Paul: Oh yeah.
And if you don’t have those moments where you look back on and say “that was a good day,” the bad days can seem really bad.
Paul: Yeah. I think this is the reason to have a co-founder as well that when you have a really great co-founder and a great relationship with your co-founder it’s much, much easier to handle the downs of a startup of which there are many.
Edith: Sometimes I think that the startup is the hardest and funnest thing I’ve ever done.
Paul: I think that’s a good example. It’s like you know when you get off a roller coaster and you’re like that was tough. You know that kind of roller coaster. Like it’s too big a roller coaster. No? Am I alone in this? Okay. You know when you go to Six Flags and once you get off the roller coaster they let you get back on if there’s a spare seat.
Edith: And sometimes you don’t want to get back on.
Paul: Exactly. Yeah so like you do it once that was amazing. You do a twice that amazing. You do it the third time it’s like what the fuck was I thinking?
Edith: Well because it’s your inner ear.
Paul: Right and there’s this point I think startups are like this that you eventually leave the roller coaster everything is wonderful and continues being wonderful that may be challenging. It may be difficult but it’s rewarding and you learn a lot. But eventually you’ve stayed on the roller coaster too long and you need to get off.
Edith: Well I mean honestly though what I found though is working at other people’s companies was that it was still a roller coaster that I was on and control of it.
Paul: All those places you were working at, startups. You could work at a nice boring job.
Edith: Even boring jobs like industries change suddenly it was a very steady job is not.
Paul: Like earning a taxi medallion maybe.
Edith: Yeah that seemed like a sure bet once.
Paul: They’ve lost all your money.
Edith: There’s only so many taxi medallions. What could possibly go wrong? No I’m serious.
Paul: I know I understand it.
Edith: Like you lived in New York City right those would go for 200 K because like there’s only so many taxis this is a gold mine. And then what happened? Uber.
Paul: Apart from all of the ups and downs, I think that the hardest thing for me was moving away from product.
Edith: Tell me more.
Paul: So I think there’s two kinds of founders. The people who want to start startups for starting startups sake and the people who want to start startups because they have this deep belief about a product or maybe a subject area or something like that.
Edith: Well so I mean let me subdivide that. I think there’s three reasons people start startups. They want to get rich.
Paul: Oh okay yeah. I think getting rich is sort of a lower level thing for everyone. No one is really, really invested in not being rich.
Edith: So let me subdivide. I think everybody has a primary, secondary and tertiary.
Paul: Okay good way of putting it.
Edith: You want to get super rich and they have this fantasy of being you know the Snap dude.
Paul: Dating super models.
Edith: On a yacht popping bubbly. You want to get famous. It’s like “oh I’ll be on TV all the time.”
Paul: Yeah people will listen to my jazz.
Edith: And then there’s people who want to make stuff. And I think every startup founder is some combination of these three.
Paul: I think that’s true.
Founders have to move off product at some point and I think that’s a real challenge.
I certainly found it a real challenge.
You know that addage about working on what’s urgent versus what’s important. Right what’s important has to change around probably a little bit after you get product market fit or you know you get the first really good product, you start to have to work on the company.
Edith: Yep the company is your product.
Paul: The company is your product that’s a good analogy that I’ve heard before that I actually don’t like because I don’t like working on the company.
Edith: Well I think of it as a type of creation.
Paul: Sure but it’s not the product that you’re in love with.
Edith: But I think for me what I realized is I realized that it gave me just as much joy and happiness.
Paul: It did not do that for me.
Edith: Like to the thought that we’re creating this thing in the world that’s our culture.
Paul: Well it’s one or two levels of abstruction away from it. So it’s like you like helping people so you build a product to help them. So then you build this organization that builds that product and then you manage the people who are actually building the organizations that build the product and then they’re building organizations. There’s a lot of levels abstraction.
It’s like you’re building a factory that makes little factories.
Paul: That’s right exactly.
Edith: The thing that gives me happiness is by having an organization I can make more products.
Paul: Yeah so there’s this game, still is this game on steam called Factorio.
Edith: By the way Paul you are a brilliant game player.
Paul: Thank you.
Edith: I am far better at pawning but you’re far better at games.
Paul: Some context for people at home.
Edith: Is that there’s no context.
Paul: I absolutely destroyed Edith at Settlers of Catan the other night and I think she’s bitter.
Edith: No I’m a better punner.
Paul: You definitely are a better punner.
Edith: I was just saying I don’t know how you’re so much better at games. Do you hold a game board in your head and you’re thinking ahead or is root learning or?
Paul: I think it’s just experience. I actually don’t like to focus too much on it, I think it’s hard. This startup analogy coming.
Edith: Incoming. Incoming startup analogy.
Paul: I really enjoy playing games but I don’t enjoy managing them too much. I don’t enjoy the process of managing, of trying to win the game. I just try to play as well as I can.
Edith: Oh no you like winning.
Paul: I absolutely do like winning but I don’t enjoy, let me give an analogy to my analogy. So when you’re selling I enjoy being in the room. I enjoy making the pitch, I don’t enjoy running the pipeline.
Paul: In a game there’s a certain amount of running the pipeline. You have to get a couple levels of abstraction away from the actual activity and I just enjoy the activity. And I think this is the same for me in a startup. Third.
Edith: Your analogy has looped back on itself.
Paul: We’ve come back to what the analogy was analogizing about. I really enjoy the process of doing the activity of the startup. Building the product. The purpose of the startup, building the product. I enjoy doing that. But when you start being at the level where you’re organizing the processes that then calls the product to be created, it’s just not as much fun for me.
Edith: Say that again.
The role of building the product is great. The role of organizing for the product to be built is not something I enjoy.
Edith: See I get into it and I think because I have built products so many times that to me this is a new challenge.
Paul: Interesting. It’s not so much that I don’t enjoy it because I certainly enjoyed a lot of that at Circle but when it starts getting really tough like I was able to drive this intense motivation from product like solving the product problems, I found it much more difficult to pull that satisfaction from running the company.
Edith: Oh really?
Edith: I find it immensely joyous.
Paul: Well this is why in my new company I’m going to be the CTO and I’m hiring a CEO.
Edith: So Paul gets to go do all the fun product stuff.
Paul: I get to do all the fun product things and someone who really wants to be a CEO is going to get a very unfortunate lesson.
Edith: What’s the lesson?
Paul: No I’m kidding.
Edith: That sounded ominous.
Paul: Presumably I’m going to hire someone who loves being CEO.
Edith: I just like feeling and maybe I’m getting high on my own supply, it’s fun to build something that’s bigger than yourself.