So I got good news and I got bad news for y'all. So the good news is that you all have a shot. To be successful, to grow, to exceed expectations, to create a world-beating company and totally kick us. That's the good news. Bad news is I'm not sure it gets any easier. What kind of employees you hire, even when everything works well, is really, really critical because you will have advice.
They didn't know how to help. I wasn't sharing enough information. I wasn't giving them the context they needed to help pull us out of this. And I think that was probably the most important actually step that we took to actually staying the market, not leaving the market. We got to go faster. We just ran down the runway and jumped over a one-foot bar. We got to jump over the five-foot bar. He's the only CEO that I've worked with who screwed up his company almost as much as I screwed up mine.
I think a lot of the people were way too much trying to keep everyone happy. Taking a company from idea to household name is always difficult. But the past few years presented challenges that caught even the most season CEOs of garden. And we're not talking about challenges like a pixel-breaking or a key customer turning. We're talking about when shit really hits the van. Times like when a virus decimates your revenue going from $100 million to zero.
After a year of growing a workforce from 200 to 1200 employees. Or as Ben likes to say, being a post-revenue CEO. In this episode, you'll hear from two CEOs that navigated these waters and somehow came out on the other side. Plus, these recordings come straight from our exclusive Connect Enterprise event, bringing together top executives across the A16C network. First up is Navon Co-Founder and CEO Ariel Cohen, in conversation with A16C Co-Founder Ben Horowitz.
You'll hear how Ariel pouts back from perhaps the worst curveball the world could throw at a travel company. Plus, how he thought about hiring the right type of employees during a crisis and how Navon ultimately bounced back. Especially into a platform shift that threatened its entire core business. As a reminder, the content here is for informational purposes only. Should not be taken as legal, business, tax, or investment advice. Or be used to evaluate any investment or security.
And is not directed at any investors or potential investors in any A16C fund. Please note that A16C and its affiliates may also maintain investments in the company's discussed in this podcast. For more details including a link to our investments, please see A16C.com slash Discochars. I always like talking to Ariel because he's the only CEO that I've worked with who screwed up his company almost as much as I screwed up mine.
A lot of you may have been like pre-revenue CEOs. We were both post-revenue CEOs as we lost all of our revenue. And so let's talk about that. So Ariel maybe take us on your journey from starting the company pre-revenue, revenue, post-revenue, and what the hell happened. Yeah, COVID happened. But first of all, I'm happy to be here. Thank you for listening to us. I think it will be interesting. So we started in the van in O15S trip actions as kind of with a very simple idea.
We thought that nothing makes sense around the TNI, around travel and expense. Both Elon, my co-founder and I used to walk in different organizations. And when we needed to travel, you send an email, you call somebody, it's back and forth. And then if you need to change something, it's a nightmare and expensive. It's like you print out a receipt and then you walk it back and you need to make it digital again. So we thought it doesn't make any sense.
And we thought that there is an opportunity to create something that would be super easy to book, super easy to get support, super easy to expense. And then the company is getting everything that they need, policy and compliance and safety and saving money and all of these things. So that was kind of the journey. We picked up really quickly. I was kind of talking with CFO's trying to sell the idea to them.
We didn't have a product and every CEO kind of failed mainly start-ups that I've met was telling me, okay, yeah, I want to use it. So then we really needed to accelerate the product development, launched in O16, grew extremely fast, kind of like on the 500, 600% every year. Even kind of with big numbers, got to around $100 million on the run rate. And COVID happened and really has been saying it's due because two days to lose our entire revenue.
Yeah, so 100 million in revenue, but your expense line was even higher. Exactly. And then all of a sudden you had no revenue. So like once you processed that no money was going to be coming in for, you didn't know how long. How did you feel? And then what did you do? Like take us through like the emotional journey and then how you landed on, okay, I got to do this. So we had this crazy idea that we should buy one of our biggest competitors. That's was in February 2020.
Actually, it was several months of negotiations. So it started a little bit earlier, but it was really, really, really big deal to finance it. It would be actually crazy execution even in old 19, but we were kind of getting the deal in order. And late February, I flew out to Seattle. This is where this company is to kind of almost closing the deal like me and my CFO was flying out.
And I'm landing in Seattle and I'm getting a text that this was the day that the two first cases of COVID in the US was discovered in Seattle. So of course they cancelled the meeting. I'm kind of turning around in the airport flying back to SFO. And I remember in the airplane, I was texting you. And at that point we had a plan to go another kind of, I think it was full X in 2020. And I told you, hey, I think we need a completely different plan.
I still didn't feel anything at that point. I was kind of mainly suspended. You're like, wildly coyote running off the cliff and then you're suspended in the air. I started to get depressed actually in April May. It took me like a month. In March, it was just execution. Obviously everybody went to go and walk from home, all of you. But we had a pretty big call center. These are travel agents that sits in an location. And there is a lot of requirements around PCI and other things.
So it's not that easy to take all of these people to walk from home. So we needed actually while we are losing our revenue, we needed to invest a lot of money to actually go and put this call center in place. Somebody told us that all of the flights to the US will get cancelled. So we needed to have like a plan of like in two days bring all of our customers back. So while we are kind of collapsing, we kept investing money of trying to kind of do the right thing.
Yeah, right customer satisfaction. Customers satisfaction and just even do the right thing. Yeah. You know, stuck everywhere. So March was execution. We did pretty massive layoffs. Got a lot of negative press around it. We needed to manage that, needed to manage kind of employees, more islands. Right, I remember you got attacked because you did a layoff over Zoom during COVID. When like they would have attacked you for bringing people together. So like it was. We were the first ones.
So I think that was the issue. We were like acting really fast and did layoff several Zoom. And it's a really good headline. And probably if I thought about it, I would have waited for Adios to be the first ones. But I didn't. So it was a lot of execution without a lot of thinking. And then in April, I think I started to think about it. And actually, I know there are a lot of founders here. I think it's a lot of cost. Anyway, and we had a lot of other crisis in the company.
I know that now probably in enterprise, it's actually really, really how to sell. So there's always this thing. There is always this kind of all of cost there. And I think you may be moved psychic as a founder. It's actually really, really critical. And pretty much through June, I was pretty much in depression. And I talked a lot about it. And something in June kind of lay June changed. And I started to manage the company. So it took me like three months or four months to get there.
But it's important. It's important because at that point, people were not traveling. But everything started to look kind of good. Yeah. So one of the things, because you're growing 500% a year. And you were going to grow another 400% in 2020. You did it. That's kind of funny and retrospect. But when things stopped and you looked at the company, how much of your mind was like, well, look, we were in a race against time. The market was there. We were spending the money like we had to.
And nobody could have anticipated COVID. And how much was in your mind like, I could have spent half the fucking money. And I would have been fine. Like, what the hell was I doing? I wasn't getting anything out of all these people I was hiring. I was just destroying my own culture. And I only asked that because I had those thoughts in my mind when I was in the same situation. So we grew in 2019 from 200 employees to 1200 a year. Down. So you can imagine the mess that we had in the company.
But what makes it even worse? We're kind of the right company to join. Like, growing really fast, the right investors were having you in the board. All of the right headlines in the press. So think about Silicon Valley. Really, really, really easy to hire employees. But not all of them, but some of these employees would be employees that will join that line. Actually, they're joining you almost signing an agreement with them. Hey, you know, I'm going to have an exit.
You're going to be able to put in your LinkedIn that you walked at this company. And it's really different from the early employees that you can do a lot of ups and downs and they don't really care. So I think that was the hardest thing. I think the hardest thing was to actually manage these employees through that type of change. And the reality is that a lot of them have left. So I think the what kind of employees you hire, even when everything works well, is really, really critical
because you will have a crisis. And I said, I think we had like three crises in the end of the night, not in the same level of COVID, but three level three crisis and the employees around you would actually will define it will make the difference if you're going to survive it or not. So in retrospect, because like we all deal with this, there's employees and God bless them that you get and are on your mission, believe in the company, want to make it something.
Really are trying to do something kind of beyond themselves. And then there are particularly in Silicon Valley, there are many employees who are like, well, what's the best deal for me right now? And if this deal isn't good, then I'm going to move on. And we all hire probably more of the ladder than we'd like. Oh, look at the way they went to Stanford and is a PhD in AI and this and that, blah, blah, blah. And all the reasons that your managers tell you they have to hire them.
Do those employees the ladder have actual value? Like if you could do it again, would you hire any of them? Would you hire some of them? How do you think about that? I will hire some of them for sure. Some of them are still in the company. Actually, I would say that I'm kind of looking at these kind of employees cohorts. Yeah. We have the employees that started the company and a lot of them are still there. And that's like employees that are there for eight years.
And the next court are actually employees that joined us during COVID because they can probably be the same thing as the early initial team. It's like they can get any type of shit. And then you have people with the join us in 18 or 19 that some of them are still in the company. And these employees are really good. So if they stayed and they stayed where all of their friends were telling them what the fuck are you doing? Like nobody can level travel again. That shows a lot of resiliency.
And these are good employees. And it took me very, very long time to figure it out. I think we have now in a van this formula that basically says we are hiring employees based on a focus areas. The first one is drive. It's not any drive. It's white exactly. Like let's understand what drives them. Yeah. The second one is the smeltness. How they smelt or not. The third one is qualification. And the fourth one is actually a collector. And this is very how to define right. How do you define it?
How do you figure it out in an interview? I think you know once you are actually writing it in the beginning of the interview. And that's the only thing that I'm actually trying to understand. And I'm kind of putting like plus, minus, I don't know, kind of. And until I'm figuring it out with this question, that question, the other question. I'm actually not leaving that person. And if I didn't, I would not hire that person. And what is it when you say character like how do you define it?
I'm finding it deal with engineers. Of course, I've explained it in an all-in and of course the entire engineering team was asking because that's not like, like this is what you do. This is not well defined. And what I was telling them would you go and have beer with this person, right? Do you want to actually spend some time? But there is another way to think about it. I have this thing and I think probably a lot of you have it. You sit with somebody and is it kind of painful in your gut.
It's kind of it could be a one-on-one with one of your execs. And it's really, you know, I don't want to be like, it's painful. And better, that's when I know that I need to file. But that's when I realized that actually you can also do it when hiring. Yeah, that's actually a really good point. Even if it's you not them, if you don't like talking to any of the people on your team, they're never going to be effective and you're never going to be effective with them.
And that's an important realization. A lot of people kind of try and gloss through that. So kind of getting back to the crisis, sorry to retraumatize you. But most companies have that, we call them WIFIOs. We're fucked, it's over kind of moments where like we're in bad trouble. And so if you kind of characterize yourself during your kind of depression period and when you came out of it, one of the things that a lot of CEOs do is they feel like, oh my god, I feel like I'm going to die.
I can't let the company think it's going to die. And they get, I would say, polyannish, optimistic outside and then completely depressed inside as opposed to just being realistic. This is what it is. We have a narrow window to get through this thing. If you want to stay in, if you want to leave, go ahead. How would you characterize kind of how you went through that cycle and how it made you feel?
I think there was a different layer, which was not the business layer, because the business layer was easy. Basically, I came to my staff and then to other employees. And I was telling them something very simple. Do you believe that people will travel in and travel again? And if the answer is no, the answer is obvious. And by the way, there was like a whole contingent of people, a lot of VCs who were basically saying, travel is never going to happen again. Yeah, we raised money as strangers.
It's made sound in May 2020. So that's after COVID started. And I think I've talked with more than 20 investors, which I've never talked with so many. And I think 18 out of the 20 were basically very, very clear. The travel is not coming back. I'm not coming back. I'm not talking like 70% or 80% not coming back. Yeah, never. But that was kind of a open Twitter back then. And that's what the Twitter will tell you. But that was the layer.
There was another layer, which was not the business layer or the company layer. It was everything that was going around. Like COVID and in June, there was Black Lives Matters and all of everything. And we actually, we have a really big call center, which means that we have people all over the US. So I also had this kind of cultural war inside the company. Yeah. While I'm actually trying to figure out how to manage that thing.
Yeah. So that had another very, I would say, complex layer to the thing. Yeah. And this is why I'm always mentioning June, because by the end of June, I was like, fuck it. Either you are here or not and do whatever you want to. But this is what we're going to do. And this is how we're going to get out of it.
Yeah. And one of the kind of interesting counterintuitive things that you did, because you had the travel product, which you kind of built the company on and got it to 100 million, and then zero revenue on. And then during COVID, before you got travel back, you started building an expense product. So to expand the product line, when you had no revenue, and a limited amount of cash, and everything else going on, like, why did you do that? And then how did it work out? It's funny.
I think you talk about all of these things now, and everything makes sense, because our expense and payment business is really big right now, and it's going like it's more than doubling every year, and with pretty big numbers. So it's kind of now everything makes sense, and maybe I look like you know it. Yeah, because I think most people here probably are getting the exact opposite advice during kind of this period. That way, we're revenue is going down and so forth.
Like the last thing you should do is start a new, bloody product line. So I think it goes to intuition, got field, but also mission. I think that again, if you believe the travel will come back, but nobody needs it right now, you need to ask yourself, so what people need in the kind of area, of what you're doing, and obviously expense management and payments. It's an integral part of it, and we always wanted to do that.
So yeah, the counter intuitive will accelerate it right now, when I'm basically trying to save money. But back then, I didn't think about it like this. Back then, I was like it was almost an obvious move, and another obvious move that was very expensive, that was even a bigger bet, was to continue to sell. We kept ourselves and marketing teams, and we told them go to customers right now, and tell them, hey, we'll sell you now.
It's free anyway, but implement it, and when travel will come back, you just did change management without any price. And our biggest customers are entire enterprise segment. We didn't have enterprise, we called it. Our entire enterprise segment was created like that. So companies like Netflix and Adobe and Unilever, which would not think to do change management to a company like us, because we were just not mature enough for them to do anything.
I think else to do anyway, you know, there isn't anything. So maybe we can implement in a van. And I think that was probably the most important, actually, step that we took to actually stay in the market, not leave the market, and then develop out of things. Yeah, it related to that. We look back on it now, and it's like, one of the things that was weird about COVID is, when it started, as you said, it was like, oh, are we going to have to like shut down for two weeks?
And then it got longer and longer and longer. How did you kind of know to come out of COVID when it was ending? Because like, there's still, I think lately, the New York Times has been writing COVID still going. Go home. It's a more shots, all that kind of thing. So how did you see, yo, how'd you go? Okay, the pandemic's still here, but it's going to change for our customers, and it's going to change for us.
So I almost like at the beginning of COVID, because it impacted my life and my company, and everybody's life is so much that kind of almost became a COVID geek. I read every article about the pandemic, everything. And it's very consistent. It's always two years. It's not, if you have a casino note, or if it were a vanishing note, it was obvious that it will also stay. But it's kind of people are adapting to this, and there is more of immunity and so on. So it was very, very obvious.
And I remember when the discussions were, you could see me, you know, with interviews in the press in April 2020 saying that it's two years. Like I was saying it's two years, and I know that a lot of people are saying, maybe it's two weeks, three weeks, two months. And when you kind of say it's two years, then you know what your cash situation is. And a lot of other things. It's funny because it took a year for the vaccine and for COVID to kind of decline.
But the thing was, we already started to scale back up, like call centers, hiring employees. And suddenly the Delta variant came. We were way more resilient at that point, and at that point, we were like, okay, we'll figure it out. But we raised money again. And that was on an applound. So I think we also learned how to manage ourselves. And even if there are waves and stuff, how to manage our money, how to raise money, how to tell the story, we got better this way.
Just realized it took a little bit. We'll manage the company while the COVID waves. Right, right. Here on the A16Z podcast, we cover the future of technology and how builders are turning innovation into impact. And that is why I'm delighted to share a new show for fellow technical optimists. It's called Age of Miracles. And it's hosted by Paki McCormick, A16Z crypto advisor, and writer of the popular Noporn newsletter.
Each season, Paki and an expert co-host go deep on the industries behind an abundant future. And the many people doing the hard work of making our sci-fi dreams a reality. The first season is all about nuclear energy. After decades of decline, nuclear has quickly gained public support. But what will it actually take to build more nuclear power? Should we concentrate all our efforts on fusion, or are small experimental reactors to play?
And what would cheap, reliable, super abundant energy enable for a solve? Joining Paki this season is co-host Julia DeWall, co-founder of Nuclear Startup Antares. And together, they talk with entrepreneurs, scientists, policymakers, and investors, including A16Z's very own Catherine Boyle and Dave Yulevich. So if you're curious about the future of energy, or are just a techno optimist looking to escape the doom mode, go check out Age of Miracles, wherever you get your podcasts.
So switching gears a little bit, one of the things that I remember you doing is you have your CTO built a whole machine learning model, build its own COVID model, like how the spread would go and all that. He does accurately, right? Yeah, yeah. Well, it was accurate eventually. Like all the COVID models. It was wrong until it was right. I love how modeling has become science now. It's like anybody with a model is a scientist.
But one of the kind of big things that is kind of coming out your business to maybe help it or destroy it, is generative AI. And that when you talk to kind of futurists and so forth about like, okay, what's going to happen with generative AI? One of the first things is, well, the user interfaces that we have now, we call them the WIMP Windows icons, menus, that kind of thing, is going to go away, and we're going to go to a natural language interface.
And the first example everybody uses is travel. Right. It's like, well, like why am I pulling down menus and trying to pick an airline and stop, nonstop and stop and first class and business and this and that? Can I just say I want to go to Paris and like, you know me, can you put me on the right plane, the right flight, and the right way?
So how do you think about that with Navon, which has got a big gigantic user interface and all kinds of code behind that and all kinds of experience behind that, like how are you looking at AI for travel? I guess what's the future of travel look like? And then how are you going about getting there first? First of all, I think that people are right. I think travel is an amazing, amazing, amazing use case for generative AI. But there is a reason for that.
So even when we started in Navon, we did ask the question, but why people are calling an agent? Yeah. Even back then. And people are calling an agent because the agent knows them. And the agent actually dreams down the possibilities. The agent is basically telling you, you know, when you go to Paris, there's actually three hotels, not like three thousand, but three hotels. Yeah. And choose out of these three hotels.
And that's why frequent travelers actually like agents and they don't like OTAs or online. Yeah. But just they're going to call. So we knew it from the beginning. And even in the beginning, we used machine learning to prioritize the search results. Yeah. So you'd be able to basically whatever you see in the first three results would be that thing that you're going to select. Yeah. So we knew that machine learning would be the solution to that agent kind of issue.
Yeah. Obviously, generative AI is kind of flip-flogging and allowing you to do something else, which is a discussion. But then with the data that we have, because we have frequent users, right? With the data that we have, we can create a match. So I don't need to do like this prompt, I'm a real, I'm the CEO of Novart, or like we know that, we can push it. And that thing can tell me when you go to Paris, you're likely to want that thing. Yeah. So let me book it for you.
So we went with generative AI on kind of three steps. The first one, we took where we bought Ava that was always kind of doing powerful support. And we took her and we kind of connected her at the beginning. Her the AI. Yeah, exactly. I'm kind of personalizing her. But two open AI later to other models. Yeah. To mainly save support time. That was an obvious move in a really, really fast move. Then we did the same with the analytics. Basically, how can I save company money and kind of show me?
How can I do that? And again, very, very obvious steps. We're going to release in two weeks, something that will do that thing that I talked about. Basically that match. And basically I'm flying to Paris. Can you make this trip happen? But we don't think that people are fully ready to just switch to that. Yeah. So we'll do hybrid with the UI, right? So you'll have kind of Ava here, kind of you're going to chat.
Based on whatever you're going to do there, it will start to kind of show you what is going to happen. Navigate you through the interface. And eventually we'll see what people are doing. Actually, don't know what people will prefer this thing or that thing. But we'll play a lot between these two. Yeah. People do have to get used to the new UI. I remember a lot of us.
If you had parents who had computers, they had a much harder time going to a smartphone than parents who didn't have computers, they were like immediately you get them an iPad or whatever and they were like, oh my god, I can use a computer now. So it is interesting in that way. But the use case is obvious. Like, and I think people are right. What's unique, what maybe people don't get or appreciate is how much infrastructure you need to have to actually book a flight. Yes, yes, yes.
And that's kind of where connecting these to that infrastructure, I think it's very powerful. Talk to me a little bit about because we'll finish on this question. Okay, great. But how many people do you have at Navan now? 3000. 3000 people. And all those people built this other thing, this last generation interface. And now you're talking about, okay, we're going to change the way people travel.
How many of them, what percentage of them in engineering are going to be relevant to the new architecture? And how do you think about that as a CEO and how you evolve? Because it's a very different skill set. So I'm old. Yeah. It was around in 1999. And it happens all the time, right? It web happened and then cloud happened and SaaS. And then mobile happened. And now this happens. And probably this one is faster.
And I think if you already develop it or anybody, like you can be a salesperson that knows to sell on-prem kind of. And doesn't know how to fuck with SaaS, right? So I think you always need to adjust, definitely if you are in tech. And you need to learn. And I really didn't know what generative AI is like in November last year, never held of this in my life. So my co-founder, Ken of New, but even he didn't really know it. But now I really know. So that's it.
You have to learn, you have to adjust. And if you'll not, you'll have a problem to find a job. It's a reality. Yeah. And then how do you go about figuring out who's who and that equates? Like who's come up to speed and who hasn't? I think you see it. I think it's exactly like we talked about these transitions in COVID. And you saw, you know, we are handling something right now and we had a bold meeting yesterday. And we talked about it in the bold meeting in June.
And that was kind of a low point of this thing. And you saw yesterday, the team completely adjusted to the problem to fixing it. And now you can actually see that. Yeah. So I think if you have a team that can adjust, they can adjust. They can adjust to a lot of different things. And one of them is, we've talked about a day after Chechy Pt was released. We've done almost like an emergency meeting.
And I was saying it's the thing that can actually make us bigger or the thing that can kill us and really, really fast. Because of everything that you've said earlier. And the team already adjusted. And you can see how many things we're doing around it. So it means that we took a team that was doing one thing. And we told them, pay. It's not relevant. Let's do something else. And still tell things, you know, how this thing is with other agents. Why do you tell them?
Because if somebody in the company is using... Yeah, not the AI agency, human agency. The human agency. To answer the phone. If somebody is building a model to replace them, what does it mean? So... I think you know what that means. So definitely you need to almost finding them a certain mission. Right, right. Great. I'd like to thank Ariel. And thank you for listening to us. Thank you. Next up is OxyCoFender and CEO Todd McKinnon.
Like Ariel, Todd faced a whirlwind of challenges since he chose to bet on the cloud in 2009. And today he shares his war stories with A16C General Partner, David Yulovich. Todd does not hold back here as he discusses the difficulty of being measured as a public company, including missing many quarters in row, and the tension that can exist between keeping the board and employees happy. So, I've known Todd McKinnon for a long time. Co-founder and CEO of OCTA. I'm not going to read his whole bio.
I will tell you two quick facts about Todd. One is when I was at Cisco, I tried to buy OCTA. That turned out to be really stupid. And I called up Todd and I was like, hey, we want to do some things in identity. Can we buy your company? Are you fucking smoking cracks? Do you not know how good we are? You made a smart decision to not take another phone call.
And then the second thing about Todd is I realize at some point, I think just before COVID or during COVID, you became a world champion, a CrossFit champion, like one of the top 15 in the world. It was 14. 14. Your number 14? That was sure. 14, which I am not a CrossFit person, which you may have already known by looking at me. But I think that's quite a hard feat, while being CEO of a publicly traded company. So, those are my two intros for Todd.
I'm proud of those things, but my father, Ali, ever cares about as my kids. So, that's all he calls me up because I go, don't talk about OCTA business. He goes, how are the kids taught? That's what a grandpa should do. Well, we're going to talk about OCTA because I'm not your father. And so, you are the only founder and CEO of a publicly traded company that we have here on stage. So, I'm going to start there. How have you managed the whip-lash effect of the last few years?
You've had massive financial changes, cultural changes, way that you work changes, personnel changes. Talk about how you've managed that as a CEO. Well, I was thinking about this group in this room, and it wasn't very long ago. I was much earlier stage in the journey as a CEO and a founder and a company life cycle.
And I remember coming to meetings like this and watching CEOs of companies that were further ahead of me in the journey and thinking to myself, man, that person, I'm never going to be like that person. That person's made it. They must be happy and calm and not have to deal with a lot of problems. So, I got good news and I got bad news for you all.
So, the good news is that you all have a shot to be successful, to grow, to exceed expectations, to create a world-beating company and totally kick us. That's the good news. Bad news is I'm not sure it gets any easier. The problems are different. They have different flavors, but it's a challenge.
It's kind of like what I love about it, proving that we can build something and we can keep going forward and we can do something that we think a lot of people, or we think is very unique to what we're trying to do and it's a challenge. So, yeah, there is adversity and we're dealing with all this stuff like you all are. But I think one thing about me is that, and I think I have this in common with a lot of people here, is that I'm very kind of challenged driven.
So, if there's a challenge and I have to fight for something and I have to go through some adversity, I kind of seek that out. So, when it gets stressful and hard and tired, I just go back to that fact that everything in my life when I've had a lot of happiness or a lot of satisfaction has always been going through some hard times. It's kind of like a type 2 fun, as they call it. Exactly.
Have you changed the way that you lead your own teams as CEO from remote work to in person, to all hands, those kinds of things like how have you even just tactically sort of changed the way that you operate and lead? Yeah, like recently. Yeah, I think a big change I've noticed in myself and maybe some of you have noticed the same thing.
Over the last two years or three years, particularly, I think three years ago, I myself and Octa and I think a lot of the people were way too much trying to keep everyone happy. Employees and partners and customers, although I think it's always good to try to keep customers happy and be really oriented on that. Particularly on employees, there was this vibe and this mindset of if we do anything wrong, if we do something that's going to make people upset, people will quit, we can't keep talent.
Oh my God, their stock options might be underwater, we have to give them more stock. If we make some comment internally in the company that they don't like politically, they're not going to like work in here, we were very, very, in myself. I was very, very kind of like cautious and wanted to just keep everyone happy. Part of that was the war for talent and part of that was just the macro environment, there was jobs everywhere and companies were competing and money was free.
I think that right now I'm much more in the middle of the spectrum. You don't want to be totally careless and cavalier about employee satisfaction and what employees are going to love and want. But I think we were too far on the spectrum.
Now I think we're more in the middle where it's having more confidence. If you have conviction as a leader and as leadership team that it's the right thing for the business and it's the right thing for the market, you got to do it and you got to be clear about it because this is going to be clear for the employees, what you stand for and what's important in the company, what your strategy and what your priorities are.
It's going to be less confusing and it also has the effect. It sounds obvious when you say that a lot but it has the effect of galvanizing people that are aligned with that and want to do that. So it's a win win. So I think speaking at a very high level, that's one example I would give. You can give a concrete example. For you. Because I hate when CEOs talk about this stuff and they're like super high level and like all this work. This is what we're here for.
Yeah, and so I'll give you a really concrete example. So we did this acquisition a couple years ago and we were 3,000 people and this company, Auth0, was 1,000 people. So we're integrating the company and we did the GNA functions first and then the go to market teams 18 months ago and then we were really, really slow to integrate the security teams. Auth0 security, Octo security. There was some reasons, you know, like the security team was kind of embedded in the development team.
So there's all these excuses about why upset the Apple cart and why make a change. What are we really doing at Florida? People won't like it. People will leave. But then for stuff that was going on in the industry and stuff that happened to Octo about security issues, it was very clear to me. Like getting our shit together for security internally was really, really critical.
Being the most secure company in the world, locking everything down and having two separate security organizations for these companies was not the way to do it. So just made the card call there being combined tomorrow. So the debates over, I don't want to hear any excuses, figure out how to do it there being combined tomorrow. And turns out some people did leave and it was controversial. But I think it was just a very concrete example of this shift I've been on.
Much clearer for the people that stay. Yeah, exactly. This is what we're about. We're going to make the hard call to do what's right for the company. Awesome. How is a public company you get measured every single quarter in a different way than a private company in sort of a board meeting gets measured? How do you think being measured on a quarterly basis by the public markets has changed here as a CEO and has been able to do it.
And would you have taken anything you've learned there and applied it when you were a private company? Well, I think this is a big topic. So recently, one of the more interesting things is that I have a challenge because when you're public, you want to set really realistic external expectations. And then hopefully you execute and over achieve them and you know, beaten raise you've all heard the term.
So the last year or so, a lot of companies have really been conservative on their external expectations as we should be because what's going on in the macro economy. So internally, you have your internal plan and you're maybe missing it or just meeting it and you think you can do more. And you're trying to fire your team up to really get aggressive and don't take excuses about macro. And we got to go faster and do more and fire people up.
We missed this number, do this and then externally you do these earnings reports and it's like you blow out your numbers. And Wall Street loves you and this talk price goes up and you know, everyone's celebrating high-fiving. And then you're walking around the office and you're going like, I know that you got to just suspend belief on that for a second because we got to go faster. We just ran down the runway and jumped over a one foot bar.
Like we got to jump over the five foot bar. It's like, come on. So it's a little bit of a different twist on that. But in terms of the being measured quarterly, a couple of other things I'll add there. I think that there's a lot of things about being public that are great. Access to capital markets, you can raise money if you need money much, much faster than raising it privately and at much better terms, although with interest rates is changing a little bit.
That's good. The other thing is that I think we're paying all our people in stock. And it's just, it's a fair thing for the employees. People forget this. Like the most obvious reason to go public is that you've paid your people in stock and you got to give them a fair deal. You got to let them sell it. It's not fair to stay private for many, many years and then have these weird kind of secondary markets, which is not as liquid as a real stock market.
So that's a good reason. And one more thing on this too is that it's like table stakes for going public is somewhat of a predictable business. Because the main point I wanted to make here is that the investor relations, it's very simple. You might think you got to communicate a vision and be compelling for the long-term and all that stuff.
But they're going to look at the numbers. And when they look at the numbers, it's like deviations from plan are speak loudly and get punished or rewarded more than anything else. So you got to make sure you have someone of a predictable business. I don't know how folks went public with the traditional revenue model in software or they didn't have recurring revenue. Having that recurring basic business and stable retention and stuff makes it much more manageable.
Because once you get out there, your arcs goes. But I think if you have that solid business and that stable business, there are a lot of benefits that I think make it very worth it. Nice. I'm going to shift more to the founder journey and sort of building a company. He started the company in 2009. There was the height of the financial crisis. There were pros and cons, but people sort of perceived it to be a more difficult time to fundraise.
Let's start with capital raising. You raised money from Andreessen Horowitz, first check. But talk about the fundraising journey and the company formation of those early years. Well, I was running engineering at Salesforce. And so I say that just to make myself kind of sound cool. And that's true. In this room, that is very cool. Okay, yeah. That is very cool.
I think it's a room and maybe zero other rooms in the whole world. I say that because being at that company for six years at the time, this is late 2008, it was pretty clear that cloud computing as a service we're going to be huge. And being at that company, it was pretty obvious to see it because you had us at the app layer we're doing while you had, they called it Google apps for domains at the time was going to be like the collaboration layer and email was going to go in the cloud.
AWS was out, simple storage was out and compute was out EC2 and you could tell the infrastructure was going to go this cloud thing was going to be big. It was pretty obvious. Not everyone thought, but I did. And so I had a great job running engineering and kind of convinced my wife that it wasn't totally insane to quit because from the outside perspective, it was like the financial world was going to the shit.
I mean, it was like, Lehman brothers was failing and banks were going away and the financial system was freezing up and the government had to bail everyone out and it was a shit show. And you know, technology arc was very clear. So for me, it felt like a great time. Then I got out into the VC world and started the fundraise and you could tell that when you talk to these venture funds that they were nodding and they were maybe listening to you, but you could tell they were scared.
You could tell that I don't know the details. I didn't ask for the details, but like you could tell they were thinking to do my LPs have money at Lehman brothers and I do that capital call to the LPs is going to come in and they were really unsure about raising them. And my co-founder and I first got introduced to this really exciting new firm called and recent Horowitz is even before that a 16 Z and recent Horowitz.
And we went into conference room at the Rosewood offices and it had a laser printed sign that said, in Dreson Horowitz, laser printed and taped to the wall. We walked into the conference room and it was marked and it was been and it was Scott Cooper. And we sat down at the folding table that was folded out and stood up in the conference room.
And my co-founder, I was nervous. I was like, these guys are going to give us money? Are they scared? They even have money? Yeah, as I go today. And we're sitting there and I'm looking at Mark and Ben and Scott and my co-founder looks at him and he goes, did you get this table at Costco? Mark said, yeah, and Freddie goes, oh yeah, I have one too of my backyard. So the ice was broken. But Mark and Ben, they wrote a check. I joke that we had kind of a little bit of an interesting idea.
Some credibility because besides this room, they're probably only two people that think the VP of Engineering Salesforce is cool. Someone that might be able to do it. But I say that this is all seriousness. If we would have walked in there three years later, they probably would have been like, yeah, all right, go talk to someone else. So they were willing to take a shot and it worked out great. But it was a scary time. And yeah, those are some of the early memories there.
So I actually forgot your question. Do you have a question? No, that's pretty good. Like the stories are the thing that we're all here for. Yeah, yeah. I sort of just like make up a prop that will generate a story. That's me. So GPT. Yeah. So continuing that thread, you've had tremendous success. But I have heard from Ben that there might have been a period of like one or two or like five, six or eight quarters where you missed your name.
And a row. That happened. Yeah, it was not all up into the right. Yeah, we've had the last couple of years for Octa. We've had some bumps. Well, I mean, in the early days. Yeah, I'm getting there. Oh, I'm a, I'm a stateful chatbot. I can bring it back to the question you asked.
It's been rough. And when we were going through these rough times, we had this issue with a security issue where some hacker claimed that they had access to the system and wasn't true. And we didn't handle it great. And it was pretty stressful time for the company. We had an acquisition. We were integrating that we could have done better.
So some stressful times. And I used to tell people that the company has like, listen, this may not even be in the top five of times in the company. And if I were to stack rank that for you. Number one would be we raise money and begin 2009 and in 2011, some of you. I'm sure maybe remember this phase of your company or not yet or maybe in right now. But you've been doing it long enough where the early hype and excitement is kind of waned a little bit.
You're able to raise money. It energized people. There was a story and people were excited. They gave you your own on a roll. The hype had waned and there were expectations. It's been a couple of years now. You should have revenue and customers and you had a financial plan and you got to hit it.
But really two years probably wasn't enough. Like cloud adoption maybe wasn't where it needed to be the product wasn't quite good enough. And so you're kind of in this valley of death or tough times. And so that was a tough period. And how did we get through that? Well, first thing is we had a board and one thing I did differently.
During that time period, I shifted from early in the company with the board, particularly my mindset and my mode of operating was kind of like collaborative in the sense of there's a bunch of ideas we have a bunch of ways this could go a bunch of thought we had what do you guys all think.
And like kind of collaborate and try to get an opinion out of the board. That was huge mistake because when I did that. Well, when I did that, the perception, my perception was like, now I have a really strong instinct on what we should do. But I'm not totally sure it would be right.
So if I come out and bang my fist on the table and say, this is where we're going, they may not agree with me and they may think I'm not a good leader. But when you flip that around, what really was happening is when I was saying this is different options, what do you guys think we should do.
What they were hearing was he doesn't know what to do. And why are as people going to follow him if he doesn't even know what to do. So I switched my approach and I still remember the board meeting where I said to myself, all right, I'm going to change my approach. I got vibes from your board members. You guys get vibes from your board members. Vives like Todd, this is a mess. Like you got to do better job. Todd, maybe some people in the board don't have confidence in you, those kind of vibes.
Yeah. Well, I was getting those vibes. And so I changed my approach. I said, I'm just going to be super strong about what I think we should do. This is what I think we should do. We got to change this go to market strategy. We got to like be clear about this. This is the direction we're going. And it just was a dramatic difference. It was like, yeah, they gave me input. And it wasn't like all of a sudden they thought it was flawless analysis and perfect direction.
But it totally changed. And it was like, this guy is going to be in charge. This guy's going to take us forward and they had more confidence in me. At the same time, one thing I did that was really a step forward, I think was internally in the company. And this is just to give you an idea, we probably had 50 people. So it was 50 people in the company, maybe not that many 40. So like 15, 20 engineering and like few people in sales, GNA. So that's good. You a scale.
And we probably in revenue was our new AR bookings target for the quarters were like 200 grand. So the whole year was going to be like a million in AR bookings. So it's pretty small. Which ironically at the time felt like a huge number. But that's the stage we were. So internally in the company, I kind of had this mindset of it was almost opposite.
It was like my mindset in the company was I got this I can do it all. Yeah, I'm the CEO. I was a CEO two years before, but it was really a tight company with only a few people. Now I'm a CEO, I got this I can do everything I know all the answers. I'm going to be like make no mistakes. And internally that was having bad effects and the effects were that people didn't feel bought in. They didn't feel like they could help. They didn't know how to help.
I wasn't sharing enough information. I wasn't giving them the context they needed to help us out of this. So it's like I flipped my whole persona with the board. I was like, this is what we're doing. Stop checking your blackberry during the board meeting pay attention to me. I'm the leader. There wasn't really someone of the blackberry. It was just us number black. But internally I was like totally opened up and I said, you guys. These are our problems. We have a lot of problems.
I made some decisions. They weren't the greatest. But together we can open up recognize the problems share the data and we can get through this together. And it really galvanized the team and it got them focused on the problems. And really they were part of the solution. And I think even to the culture and octah today. I can see the reverberations of that switch. It's like pretty open, pretty transparent, pretty team oriented, bring people and solve the problem collaborate.
So those were some of the things I remember from the four minutes of stuff. So being a leader with a plan in the board room but having the right team around you. And you've had a lot of people with a long tenure at octah. But you've also gone through executives in different phases of the company. I think that's something that founders in the room either they have gone through that. And after a while they start to think they're the ones who are the problem.
Or they have not yet gone through it and they probably should go through it. Talk a little bit about how your executive teams evolved over the course of octahs. And especially in the early days. So I remember I was surprised by this but when I became a founder in a CEO. My decision making actually slowed down. It sounds weird but as a leader in engineering at Salesforce. I was pretty decisive as like this person needs to go. This person's coming in and we're doing this.
But I noticed myself being slower and more circumspect at octah. And as I analyzed why it was pretty obvious after thinking about it as like. At Salesforce my boss could like overrume me or like tell me I was doing the wrong thing. And I had someone to help me basically above me. And being a CEO as you all know is different. It's like the buck stops at you and the mistakes seem like they're more consequential and difficult to unwind.
So I had to really try to get back to faster decision making even though I didn't have that boss that was helping me guide me along the way. Particularly another thing that changed was related to this fast, particularly on people this fast decision making is that when you go through a year like 2011 and you start to get some traction and you start to come out of that place where you really thought the company was going to die.
You build this loyalty to people. And five years on from that when the company started to outgrow a lot of those people and their capabilities and what they wanted to do. It was pretty hard for me and I was pretty slow to make some tough decisions that would have basically in my mind I was perceiving them as breaking that loyalty.
And I think for me it was like I basically had to outgrow it. I had to outgrow this feeling that this core group of people that got us through these tough days are going to get us forever. But it did take some time and it's something that if I had to do over again I'd probably make that shift faster. I've made the mistake in both ways. Like I've made the mistake we've had new leaders come in and I've counseled them to go too slow in making changes in their team.
Like right before the IPO we hired a new go-to-market leader. He was great. He wanted to make a bunch of changes. And I really said listen man slow down just don't mess anything up before the IPO let us get through this. And it ended up really hurting us like a couple years later we hadn't made changes fast enough we weren't scaling fast enough and now we're like three four quarters as a public company and it really almost really hurt us.
We had so much slack in our external guidance we were okay but it was really almost ended up hurting us. I've made the opposite mistake too. I've had leaders come in and I was like too permissive in what they could do and let them do everything and to basically screwed a lot of stuff up. So it's like finding that balance between loyalty and going slow and trusting what got you there but not being too aggressive and not over changing things. It's kind of an art to find that balance.
That is the name of the game is CEO and I think that's an excellent note for us to end on and Todd I really appreciate you making time out of your schedule. I know you're actually flying up I think for a board meeting with Ben tomorrow. Yeah my whole perspective on all this stuff might change based on how tomorrow goes. Yeah yeah we don't want confident Todd we want Todd to do collaborates better.
Thank you for taking the time here you've looked an amazing company even a great friend of the firm and it's always great to see you. Yeah thanks David. If you liked this episode if you made it this far help us grow the show share with a friend or if you're feeling really ambitious you can leave us a review at breakthispodcast.com slash basic stt. You know candidly reducing a podcast can sometimes feel like you're just talking into a void.
And so if you did like this episode if you liked any of our episodes please let us know. We'll see you next time.