#91: From Startup to Grown-up: Mike Seckler, CEO of Justworks — how to run a great board process,...

when I would walk through the office and I would like be visibly anxious, the whole company would become anxious. When I was walking through the office being optimistic and excited and enthusiastic, the company would become enthusiastic and excited. And so that energy flow is real within our family, within our company, it's real. And so the moment you realize that, then you realize, wow, I have some obligation if I'm gonna be a leader to think about what is the energy I'm putting out there and what's the effect of that gonna be? And am I gonna be happy with that? Like, you'll be dealing with something And you'd be like, why is everyone like this? And then when you realize, oh, I'm just looking in the mirror. They're just reflecting my energy right back at me. And so if you want your company to be a certain way, your relationships to be a certain way, I think it's generally helpful to stare into oneself first a bit and think about the role that you might be playing that you were ignorant to that is actually triggering these reactions that you're either liking or disliking.

Welcome back. This is From Startup to Grownup. My name is Alisa Cohn, and today I'm thrilled to welcome Mike Sechler to the podcast. Mike is the CEO of Justworks, the platform that helps small businesses manage payroll, benefits, and HR all in one place. Mike has had a long entrepreneurial and leadership journey, co-founding his first startup in the dot-com craze when he was just 22. Everything was up and to the right until it wasn't. He survived the dot-com bust and gained a lot of experience leading through a downturn and uncertainty, eventually selling his company to ADP. We had a great conversation filled with leadership lessons. We talked about how leaders can motivate themselves to make hard decisions and follow through on them and the tools to make them easier. We also discussed how he went from being on the board of Justworks to the CEO, including the key insight he got from his daughter when he was considering making that change. Since Mike was a board director before he was the CEO, he has a strong point of view and process about how to run the board, and we get into that in detail. You're gonna wanna copy this for your own board process. Mike also shared the powerful exercise he used to build trust during an acquisition, which helped them succeed. Another thing you're gonna wanna steal. You're gonna love this conversation and it's packed with actionable tools. So please enjoy my great conversation with Mike Seckler, CEO of Justworks. Mike, welcome to the show.

Thank you.

I'm so excited to be here with you, and I wanted to maybe start with the founding of your first company.

Mm-hmm.

Which I guess was called Employees. Is that right?

Yeah.

Incredible. In 1996, love that, when you were in your 20s and you sold it to ADP and you were early in on the internet. How did you see that opportunity?

Yeah, so the first business was Employees, so Employee, E-A-S-E. Love that. And I was 22 when we started it, and I started it with a great friend of mine, John Alberg, and we were classmates in college. I was a geology major in college. My summer internships were working on the Appalachian Trail. I wasn't destined for business by any means.

Or tech.

Or tech. Yeah. But you know, it was interesting. So there were two things. John Ahlberg was the beautiful mind at our school. He was the one who created his like custom major between comp sci and math. And you know, we were always talking about business ideas or technology in the sciences at that time. We were using the internet, we were using email. But when I graduated from college in '94 and got my first job, like the business community wasn't using that yet. It was fascinating. It was kind of like growing up with AI maybe in this moment in time where there's a dislocation. We came into the workforce and everything just seemed so weird and archaic because they weren't using tools that we had spent the last couple years just immersed in. And we got our first jobs, saw how broken the employment experience was. Began to imagine like, wow, one could do this with the internet. And those were some of the conversations that made us think differently. I mean, Netscape just had gone public in '95. We were working in our first jobs, and then we had this idea for that perhaps, and this was revolutionary at the time, that you could connect a database to a web browser, and by doing that you could create webpages on a fly, and that would allow you to build applications that were native to the internet. And it took years for the market to coin that SaaS, but we were very much, you know, we helped pioneer that model and we were the first kind of SaaS player in HR technology.

It's, it's incredible. And as you went through that journey of that company, you had a lot of ups and downs. Can you sort of share? Yeah. Some of that, the highs and the lows?

Yeah. Well, you know, it was interesting. The, the, the 3 chapters of that business I would say were from '96 to '99, which was like where the dot-com boom really accelerated. And then, you know, As the dot-com bust happened, weathering that, and then from 2003 to '06, really building a real company that generated cash and ultimately selling that to ADP where it's now the largest part of ADP, $150 billion market cap company. But that first period was super interesting. We were building what made sense to us, but we didn't have a whole lot of context in the prior generation of software, which is a client-server model. And we were very fortunate. We were we were Bill Gurley's first venture investment. And so we kind of grew up with him. He was, before he was at Benchmark, he was at Hummer Winblad and Ann Winblad, who's like this legend in the space. You know, she dated Bill Gates for many years and, you know, started a software company in the '70s that she sold for millions. And, you know, she was, you know, kind of like a celebrity. And the two of them were, kind of did our Series A and mentored us for sure. Capital became really easy. Customers became easy. You know, it was the tech boom. People didn't want to work at banks or consulting firms anymore. They wanted to work at hot technology companies. So access to talent was easy. And then, and we made money on a per-employee-per-month basis and all of our customers were hiring super quickly. So we had all these tailwinds and then around, you know, 2000 and certainly through 2001 and September 11th, things got really hard.

Yeah.

Capital dried up. Customers stopped growing. Many of them went out of business, and so it became super hard to grow. Capital became unavailable. We had to do extraordinary things to weather that time. I think a very high percentage, 80, 90% of our cohort of companies didn't make it through that time. But by 2003, after weathering that very severe downturn, and it was really hard to do that informative in retrospect, we found ourselves with a business that had customers that loved us. We had loyal employees, we were generating cash, and then from 2003 to 2006, we grew very quickly 'cause we had survived that storm. And, and then we became part of ADP in 2006.

Yeah. So, when you were, I mean, I can totally understand. I remember that time myself where everybody was leaving consulting or not wanting to go into consulting. They were going into tech, right? Startups were the thing, you know, everybody was into the startup boom. And then it was the, both the the internet crash or the, the so-called bubble crash. And then also September 11th, which really stopped, put the brakes on the party for everybody. And when you say 80 to 90% of your customers went out of business, that's like very intense.

Well, I don't mean our customers did, I mean that other venture-backed technology companies did. I see. And so it was the lesson I would say was fascinating. Yeah. 'Cause in '99 it felt like we were on top of the world.

Totally.

We're like in the covers of magazines, like we're growing fast, everyone wants to invest at any valuation. And you felt great, but you couldn't see what was right in front of us, which was that it was about to get really hard. And then by 2003, after reducing the size of our team and taking on some dilutive financing and just doing whatever we could to survive and feeling like, man, maybe we should just go to business school. This thing's never gonna work. It was when we felt the lowest, there were only good things in front of us. And so it was a real interesting lesson in life that sometimes when you feel great, you're like on the verge of really challenging period. And sometimes when you're maybe on the verge of quitting, only upside is from there. And that stuck with me. And now that, you know, the average age at my company, you know, at Justworks is like 30 and I'm older than that. It's just interesting to see people go through these first cycles for the first time and try to make sense of them after being now through, I guess, two before this period.

Yeah. Because human nature is what it is and everyone's to keep relearning everything.

Sure. And you always, it's, it's natural to think that what you're experiencing in the moment is going continue forever.

Totally.

But it's often a kind of, that's misguided.

Totally. But I guess I'm curious, like, what did it take for you? Do you think you were a natural entrepreneur? Like, what did it take for you to really dig deep to say like, oh my gosh, we're gonna do what? And so there's two things, right? We're gonna stick with it. And also we're gonna do whatever it takes to stick with it, including taking dilutive financing. I'm sure you had to lay people off. Like, make hard decisions. What was that like for you?

Yeah, I don't know if I was a natural entrepreneur. I think John Allberg, my co-founder of those first two companies, was very much a natural entrepreneur. I mean, just as an example, he grew up in Seattle. His father was involved in technology. You know, we were a year and a half outta college when we started that first company. His parents were like, John, what took you so long? My parents who met in the Navy and was a medical family, you know, I just got promoted in my first job, you know, from like nothing to something slightly more than nothing. And they're like, what, you're gonna leave? How could you leave? And so I don't know if I was a natural entrepreneur, but, but it's interesting the way you frame it though, in terms of the grit to keep going. That definitely came na naturally to me. It, it, we always operated and Justworks, you know, today we continue this way with a very mission orientation. Like these customers we take care of, we care deeply about the people that choose to hitch their careers to our company, always care deeply about.. And, and so as a leader, feel tremendous responsibility to come through for those folks. So even when it got really challenging, the idea of anything but continuing to keep our feet moving and find our, find the way to the other side, that was always the 100% of our focus. And that, that was natural.

Yeah. That was kinda the drumbeat in the back of your mind.

Sure.

Yeah.

Yeah. And in retrospect, like this, I got so many things, stories about this. I mean, people often quote the Steve Jobs thing, like, you know, increasingly convinced that more than half of what separates the successful entrepreneurs and the unsuccessful ones It's just pure perseverance. They don't give up. But I had a really formative conversation with Ann Winblad and Bill Gurley when they wanted to invest in '97. We're sitting at dinner, El Vago Bondo in New York, which was like, I don't think it's around anymore, but they had like a bocce court in inside and they were going to give us a term sheet and it was clear that we were done selling them. They were now selling us to take the deal. And so it was this incredible opportunity for us to ask them questions. And Ann had been around forever. She, dated Bill Gates for a long time. She knew Steve Jobs. And I said, Anne, you've been around for a while. What does it take to do this? What does it take to be a successful entrepreneur? And she said something really interesting. She says, well, you see this whole spectrum. You see the Larry Ellisons of the world who believe so strongly in something. If you disagree, they'll punch you in the nose and never talk to you again. But then you have really collaborative people like Michael Dell who surrounds himself with differential viewpoints, and you can be successful across that spectrum. She says, but they all have one thing in common. And so John Alberg and I were like on the edge of our seat. What's she gonna say? And she says, what they all have in common is the ability to like believe in something and then take two steps and realize that 80% of what they believe was wrong, but take the 20% that remains and then just recast their vision and keep going without much drama or hesitation. And then she said, and what I have observed is that, or what, and this is her words, Most entrepreneurs have to do that a dozen or more times in the course of a venture. And I remember when she said it, it sounded so wise. And in my mind, we coined it Ann Winblad's concept of intellectual stamina. But as we went through things, like we always went back to that because like, oh, she was telling us then what we were in for.

Yeah.

Like it kind of made sense. But until you're like getting kicked around a little bit and then having to pick yourself up over and over, it didn't feel as real. But in retrospect, I thought it was like one of the greatest bits of startup wisdom I had ever gotten.

Yeah. And it was like she was forecasting the journey for you.

Yeah.

And not like letting you live in this mythology of like, ta-da, it all worked out.

Yeah.

Which we see a lot of, I think, in the startup world.

Yeah. Well, I mean, sometimes it might seem like that. I don't think it's often like that. I mean, there's some, but—

That's true. But then we get por— that gets portrayed.

Sure. I mean, even some of these like more recent stories, I think if you dig into it, you'll see that they had like 2 failed startups before.

That's true.

And, you know, had to endure real hardship and some level of, you know, things that could be even humiliating when you had these big dreams that didn't come through. And it was on, you know, the third try that it looks like an overnight success. So I think there's, there's often more to it than that.

That's true. Actually, one of the predictors of becoming, of building a unicorn, a so-called billion-dollar valuation, is that you've had at least one startup before that, that was, it was one way or the other a little bit successful. Maybe it was sold for $10 million, right? Something super small, but that, You know, there was like, you had the experience of moving something forward.

It makes sense to me.

Yeah.

I believe that.

So let's talk about Justworks. So you came to Justworks in kind of, I guess I considered a non-traditional way. You were on the board and then you became the COO. I heard you were promoted to be, oh no, no, maybe you were promoted from the COO to the CEO.

Yeah.

And so you went from the board to the COO to the CEO. What, what happened? Why, how did you get pulled onto the board and then why did you end up joining the company?

Yeah. So, you know, John Alberg and I, you know, we did Employees, we sold that to ADP. I stayed there for a couple years. That was actually quite interesting and successful. But John left and started the foundation for what became our second company, a company named Euclidean Technologies that we started in '08 and uses artificial intelligence to invest in the public markets. John still runs that company. It's a great business, intellectually very interesting. And it was like after 12 years of VC-backed life and a very intense life, John and I were kind of like, let's start something we can own 100% of and we can generate cash in year one. And we did that with Euclidean. But what happened over time that I started to miss was the meaning that comes from leading people and big teams. And Euclidean making investment decisions using machines and data, you don't need a lot of folks. So some of those muscles couldn't exercise there. And so I ended up just to find energy, you know, I was spending time with other entrepreneurs and organically I was asked to serve on some boards, which was pretty cool. And one of these conversations was with Isaac Oates, the founder of Justworks. We met in 2014. When we met, he had 20 employees and I was introduced to him because I had built a company. Our first company had some things in common with Justworks. So Fred Wilson of Union Square Ventures was like, my wife just wrote this angel check. This guy seems really smart. Sounds like he's building something similar to what you did before. Would you meet him? I was like, Fred, anything that's for you. He's the godfather of New York City Tech.

Of course.

He said, yes, Fred, whatever. Of course, whatever you want. And I met Isaac and I was super intrigued. He grew up at Amazon as an engineer, built a company that Etsy bought and then built the payments platform there. So this was like pretty interesting guy. And I had no commercial interest. I just was looking for energy, being around company builders. And we'd meet once a month, have a hamburger,, you know, just talk. And then he came to me and said, listen, it's just me and at the time, Will Gaybrick, who's now at Stripe, but was then at Thrive Capital, just me and, and Will on the board. We'd like a third board member, an independent board member. Would you be open to it? And I thought that was a pretty cool honor to be asked. And so I joined the board and was on the board for, I think, 4.5 years. And the company got a lot bigger. And so two things were happening. One was what's happening with Isaac, one was what was happening with me. So Isaac calls me and says, hey, it's getting really hard. I'm having less fun. Company had like 400 or 500 people. I think I need help running the company. And for me, I was again missing the energy of running things at scale. John loves, loved, and continues to love Euclidean. He didn't want to start a more traditional software company. And I was like, ah, I don't know if I can work at someone else's company. John and I have been joined at the hip forever. But John loves Euclidean, so I felt a little bit unclear about how to navigate that. But when Isaac made that comment to me, it was like two friends who are thinking about dating. He's like, I think I need help running the company. And I, I was like, well, Isaac, you know, as your lead director, I will help you find the best help. If you think it might be me, we could talk about it, but if it's awkward, you know, and he is like, would you? And anyway, so we, we entered this conversation and it was, it did feel complicated. It did. You know, my wife had a big job at the time, 3 girls, 3 daughters. I'd been working with John Albert for 20 years on our own businesses.

Mm-hmm.

But I felt like, you know, this was a business I knew. I'd been working with the founder for 5 years already and I knew the board, obviously. It just felt so like if I didn't lean into that conversation, I was basically saying I could never work in anyone else's company cuz it would never be teed up like that. And, you know, I talked to John and how we're gonna work through things with you, Claudia, and I talked to my wife, but the, a real important conversation actually happened talking to my girls around the dinner table. And my two younger ones weren't really processing that, but my oldest one who was 12 at the time, I said, hey, listen, I'm thinking about doing this new thing. It's going to mean I'm going to have less flexibility, be home for fewer dinners. I'm going to be making less money for a while, but I think I might want to do it. What do you all think? And my 12-year-old looks at me and says, well, dad, you don't talk to us a lot about Euclidean, but you talk to us a lot about Justworks and this Sky Isaac. Maybe that should tell you something. And it was kind of wild, right? She could see it. She could see where I was feeling energy. And so we worked through it and I came in to help run the business. And then, you know, it wasn't really intended on day one, but it became clear that for Isaac, he wanted to ultimately do an even bigger transition that we worked towards over a period of time and did a CEO transition, I guess, 2 and a half years ago.

There's so much there. By the way, when you were then on the board, when you left the board, was the board still 3 people or had it been gotten?

No, no, no. We built an amazingly robust board.

Yeah.

Yeah. We believe in governance. Yeah. I think there's a lot of value to, to constructing it. So important. Yeah. We could talk about that.

We're definitely gonna talk about that.

We, we really invested heavily in building a great board. Our board right now has Isaac as the founder in the founder seat, myself as CEO. We have our 2 largest investors, so Thrive and Bain are represented, and then we have 4 independent investors. 4 independent board members, each chosen for very specific reasons for their expertise. One individual who has been a CEO of healthcare companies, so knows the health insurance landscape, very important to our business. A woman who had been the CFO at DreamWorks, she runs our audit committee, she's a world-class board member. A woman who had been a CEO of a, a tech startup and all the way through SVP of human resources at Time Warner, obviously relevant as well. And then Emily Chu, who was at Square and built Cash App there, and she now recently left there and she's now CEO of another technology company. So really strong board with diverse perspectives that help us run the company.

Yeah.

Or help us, mm, shouldn't say run the company, help us make the right big decisions around the strategy and the governance of our business.

Yeah, I love that. I definitely wanna talk about that in a second, but I wanna go back to Isaac. What do you think was going on with Isaac that helped him have, it's very challenging for a founder to leave quote unquote their baby. I think, oh, so two things are challenging. I think many things, but two things in particular are for a founder to realize, I need help running this company and I need to have like somebody who's gonna run it for me, sort of. It's hard to be like, oh, to recognize you can't do everything. And the second thing I think is hard is to actually step away from being the CEO and from day-to-day operations. And I'm curious, what do you think was up with Isaac that he had the self-awareness to realize that, or?

Yeah.

How was he able to realize that?

Oh, I think you'd have to ask him those questions. I don't really know how I would answer the question in terms of how he developed the self-awareness for that. But what I do know is that, you know, he invested a lot in our relationship. We got to know each other over a very long period of time. And in retrospect, like it was a gift to the company because when he was no longer getting that energy, he had cultivated a relationship with someone, me, that he trusted and thought would be well positioned to help run the company. And, and that both the initial coming in the company, but also the CEO transition was, was handled really gracefully. It wasn't a traumatic moment for the company. It was, it was like a graduation. Right. And yeah, Isaac and I still spend a lot of time together and yeah, I, I think he, he deserves a lot of credit for navigating that, I think, better than most founders do.

Yes. I really agree.

Yeah.

I really agree. So now I wanna talk about your board for sure, because I, you know, I've done a lot of research on you and I have to tell you, I was, something I never say, inspired. Oh. By what you talked about with your board. Inspired. And that never happens because we all know that boards are toxic and, uh, oh, you know, it's been challenging, da da da. But like, it seems like Even for you to say we believe in governance. Wow. Who says that these days?

Yeah.

I'm really curious, kind of, first of all, I know you have a process for running your board. I'd love to hear about that because I think people would really benefit from that.

Yeah. Yeah. Well, so much to talk about there. I mean, you know, we serve, you know, 14,000-ish small businesses. We have a co— you know, I think $3 billion a month flowing through our organization. Like there's a lot that's should be protected and cared for. And having mechanisms to ensure that we are operating in a world-class way on behalf of all our constituencies, I think is just super important. And we very much aspire to be an independent public company over the long term eventually. And so you might as well act as if, right? Get used to that. So in terms of how we run the board, you know, Isaac, even when it was just a couple of us on the board, was always super Deliberate about, you know, the setting, the way we would have conversations, you know, putting our phone in a basket, sending materials a week in advance. The expectation being that everyone reads those materials so the meetings are actually substantive and digging into material issues, not flipping through a deck that was sent out the night before. You know, there's like, it's not that complicated actually to raise the level of a board's performance well above the median. In startup land or VC-backed land. And so by setting those norms, as the board grew, we've just built on them. And I think if you were to talk to each of our board members, they would say that it's just a very energizing environment. We don't agree on everything, and certainly there's some board meetings that, I don't know if energizing would be the right word, but challenging, but I think appropriately so. I mean, listen, when you're trying to grow really fast and innovate, not everything goes as planned. And being able to like look look at that with clear eyes and understand what is happening. And, and having a lot of experts kind of ask hard questions and put it under scrutiny, I think forges, you know, the diamond of the business that we want to create.

It does when it happens constructively. And I think some of the tactics you just talked about, you know, like just being organized, right? Getting materials a week in advance. I mean, even just like putting the phone in a basket sets the expectation that you're here and you're present. So those are probably some of the cultural aspects that you all have built with the board. I also understand you have like an offsite, like an overnight offsite, is that right?

Yeah. Yeah. We have done offsites with the board. I mean, it's important for the board to build a deeper level of understanding of the business and some deeper understanding of what's going on in different functional, you know, the most every year, you know, the strategy, the strategic plan's somewhat different. And so being able to surface different leaders that are key to that, to the board, I think is helpful to deepen their understanding so that they can ask better questions. But what was I going to say about that?

About the culture or the offsites or culture of the board?

Yeah. I mean, the offsites are something I had never seen done, and I think that has contributed to, you know, a good level, appropriate level of camaraderie on the board. But now there was another point, but maybe it'll come back to me.

Oh, it'll come back to you.

I'm sure.

I think what, what I'm, first of all, many of my clients, the CEOs of startups, have trouble getting their board to come in the night before for dinner. I just want you to know that, or even having a dinner or lunch like that same day because everyone is so busy.

Yeah. Let me talk about that.

Yeah.

Because I've seen this too. I've been on other boards. I think that a lot of this, there's two things. And one is that I think most CEOs for some reason do not bring the same level of leadership to their boards as they do with their leadership teams.

Yeah.

And I think sometimes it is because CEOs perceive there to be a power dynamic of, oh my gosh, well, this might be the first board that they've ever had or sat on.

Totally.

And you have these investors that have been on lots of boards, so they should know what to do. And so you just assume they're gonna fill in the space. No, but then no one fills in the space. And then when no, no one's doing it, eventually someone tries to, and sometimes that feels really bad when an investor starts asserting oneself. So CEOs could do a better job thinking about how they want to run these boards and then set these norms and lead them that way. Number 2, I think when you're, I mean, these foundational decisions, like from co-founders to first investors, they're going to set a tone for a lot of things. So if you got some things going, you're raising money and you've got an investor who you really gel with, who like sees the, shares your values and sees a future that is aligned with what you see. And then you got someone else who because there's a lot of excitement around your business, is willing to pay a bit more, but you don't have that same level of alignment. If you err to the optimization for that transaction without appreciating this might be like a 10-year marriage where this individual's going to be on your board, you can make these early self-inflicted wounds that can make it really hard to corral your board over time because if people are pulling in different directions, that's not a great setting. So it's not just like how do you manage your board, but how do you make the right foundational decisions to include people on your cap table and then invite the right independent board members so that you have a chance at having a high-energy environment. And certainly to the extent you have a strong point of view around how you want your board to run, having those conversations upfront with an investor who might be joining your board if they were to invest, or an independent board member, and being super explicit about it. And people either lean in or, or not. Be like, that's not gonna work for me. Great. Well, maybe this isn't the best company for you to be a part of. Whereas someone else might be like, oh my gosh, I've been on other boards. They didn't do that. I, I'd like to be, you know, participant. 'Cause that sounds like it'd be quite productive. And so you need people to buy in.

Yeah. You know, could, could you riff for just a minute on like, almost like a script that a CEO could say to a board, you know, a potential investor and a potential board member about The way we do things around here, the way we run our board.

Sure. What would that conversation look like? So, so you're, let's assume you're talking about a potential independent director.

Yeah.

Because there, there's no right to a board seat.

Perfect.

If you're inviting someone. Now, once you invite someone on your board, it can be complicated to get them off. So, so, you know, obviously you'd want them to understand your, your business, your strategy, the values of the company. You'd want to see some level of alignment. You'd wanna understand their background to really believe that there's something in there experience base that they're going to bring that's going to be truly additive and orthogonal to your other board members. But once you have that, I think you'd want to be able to, you know, we have a one-pager lays out like, this is our board's mission, this is our values, this is what success looks like. You know, we do self-assessments. Here's the standards that management commits to. We're going to get materials a week in advance. You need to read that fully, have digested them. And you know, we start the meeting on time, not at 9:05. And, and you know, this is, this is how we will run it. And I imagine that conversation, you would pick up energy that will tell you whether there's alignment or not. And if there's not alignment, you should listen to that. And, you know, it's kind of like, you know, this whole thing can't be all things to all people, right? If you had a restaurant, you'd be like, we're going to cater to people like Malaysian food and Mexican food and French food. And people would like, it's going to be a mess. So you got to decide what kind of food you're serving and then find people that want that. I think that's true for target customers. It's true for how you might cultivate your board. I don't wanna overstate it. You want diverse perspectives, but in terms of like values and expectations and the willingness to commit to a high-performing environment, there should be no diversity on that. Everyone should be fully aligned.

100%. That's so, I, that's what I mean, inspiring. Like, I think that's so great. And I agree with you that, you know, founders and CEOs, especially first time, don't always know to, that they have that kind of leverage, if you will.

That's right.

And I love to talk to the founders that I work with and to really tell them, you know, you need to think about your board as no direct report. And they often think like, I report to the board, which is true, but there's also, I have to run and manage the board, which they sometimes don't quite see their role in doing that.

Yeah. And like, by the way, your investors and other board members want to be led. Like they want this to be well organized. They want perspective. They wanna know what you think the most important issues are. They want you to guide the conversation. And so when there's a vacuum, it's not good for anybody. Yes. You know, Nobody likes that.

Totally. Especially when that's where sort of toxic things kind of fill in the vacuum, right? Sure.

Your partner's trying to fill in the space and then she goes like, why are we talking about this? Well, I was like, you're not leading me there.

So this is— Yes. So true.

Seems self-inflicted often.

Yes. But you know, I think we don't know what we don't know, right? So another thing that you, you know, that when I was really thinking about you and researching you, something you talk a lot about is purpose and mission and values. And you've just talked about it here. And I would say that, oh, people talk about that, but for you it's not these sort of pretty words that are on the side. For you, that's really core to your business. And I would ask you, where did you learn that, first of all? And how does that actually help you guide you and others in the business day to day? Yeah.

Well, I mean, it's like very much like the same. It's like you're getting to the, it's like the same thing as the last conversation. It's if you're gonna build something that's gonna go to the sky, you need strong foundation. That's true for how your board works. True for how your company works.. And this was very always, I think, intuitive to me. I think we got this very much right in our first company. And it's just like, I get energy out of believing we have an important mission and at Justworks, you know, there's a core belief that underlies everything we do and a value system. And that core belief is that we believe that entrepreneurs, small business owners, people that work at these small and growing companies, we believe they're heroes. Because they're out there trying to manifest their dreams in their companies, trying to overcome the odds. And when they succeed, it's like magic happens because they, out of thin air, they create jobs for people. Those jobs give meaning to people's lives and those jobs create the fabric for healthy communities. And so we believe they deserve the best. We observe that our industry has typically not provided them with the best and we exist to change it. It's that simple. That core belief underlies everything we do. And then we have a set of values which we call KOGIS and it's comradery, openness, grit, integrity, and simplicity. And those are the values that we talk about every day. And we give out our company awards around these values because they're what guide us on the journey to realize that belief in that vision when sometimes it's fuzzy what to do. And I can talk about how we use those values in practice, but—

Yeah, I definitely wanna hear that because also I'm processing, I've heard it said about companies before, like, yeah, they're great on values, but like they're not good on performance. And I think when they're great on values and they have the right values, it leads to being good at performance.

Well, I mean, it's important that values are appropriately understood.

Yeah.

So like camaraderie, camaraderie could be used in a way that could lead to a low-performing culture.

Totally.

If what people took away is like, hey, it's all about getting along. And so like, you know, you know, Jim really worked hard on this and he's my friend, so I'm not going I think that's a disaster. So if people misinterpret what these values mean in practice, it could lead to a values-driven company being subperformance. But if you're clear about what they mean, in our case, we're innovating very quickly. We have a lot of change. That means that we need individuals who are reaching across traditional boundaries in our company to let go of the old way that we've organized around the old just works and to come together in new ways to form the new just works so we can delight customers in new ways. And that's hard for people, but people make that happen and build those connections and bridge teams that might have had somewhat different working styles or cultures, that's amazing leadership. And those are great examples of camaraderie. And so when we give out an award, it's not the person who's most well-liked, it's often the person that's worked through really hard things to get people to come together in new ways. And grit, on the other hand, grit is an interesting one. Grit can be weaponized and some people inquire about that value because a company could use that to say, it's like, we need 100% of you all the time, and I don't care about what's happening at home. That's not our culture. Like, we believe people need some semblance of balance. At the same time, like, we are helping these small businesses who have been perpetually underserved, and sometimes they need us to go the extra mile. You know, when COVID happened and all these government relief programs, I mean, we had lots of teams working nights and weekends to make it so that you could click a button and get access to the Employee Retention Tax Credit or shared work programs with various states. And being there for our customers in their most vulnerable time. And so sometimes we do need to go the extra mile. And it's interesting though, is that, you know, we just had a team that had like a Jan 1 ship date and it turned out to be a more complicated project and they worked nights and weekends for a couple months. And at the end of it, if you talk to them, they would say two things. They'd say, okay, wow, I needed a break. I'm glad I got a break. But they would also say that it was like a peak experience because they entered a flow state with their team to do something harder than they had ever done. And they learned something about themselves and they realized just how good they could be when they solely focused on something like that. And so while they needed a break at the end of it, they kind of want to feel that again. That's like where grit's beautiful. And so each of these values needs to be contextualized so people get the right message because it can be taken to extremes or they can be misunderstood in ways that would lead to, you know, suboptimal cultures.

Yeah. Wow. Totally. And I think that that is sort of misunderstood and I think people certainly want to do a good job and want to align with values, but they're easily misunderstood. One that comes to mind also is that people talk about radical candor, right? You know, of course we know Radical Candor by Kim Scott. And her point is be candid and also compassionate, sort of. I'm really shorthanding. And people only hear candor. So they say, I'm just having radical candor with you. You're a jerk, right? No, that's not the way to do it. But I do think that in my 25 years as a coach, I see the, let's say, two poles of cultures. One is, we're so nice. And then the, by the way, that's good. We have camaraderie at work. We like each other. There's good culture, feel-good vibe. But part of that is then we need to learn to have difficult conversations with each other and tell the truth to each other. And the other side of that is, you know, a more aggressive, not so nice,— you know, I'm gonna say aggressive and overly direct culture. And it sounds like you, at least your intention is to thread the needle between those. And so how do you—

Everything beautiful is about the gray.

Yeah.

I mean, like, it's harder because people, it's easier for people to process the 1 or the 0 and the extremes. And they'll often hear 1 or the 0. And so, yeah, as a leader, you have to be careful what you talk about. But like, the most beautiful answers are almost always at the efficient frontier between those things. And so it —does require a lot of communication, a lot of examples. I think that where Justworks is today is actually in a really sweet spot. One who historically was errant a little bit too much on the high empathy side to the extreme of sometimes avoiding difficult conversations. I think we've gotten quite past that over the last couple of years.

How have you led the team past that and been able to demonstrate and to, you know, really show people and then have them show you that they can have difficult conversations?

Make hard decisions and be super transparent about them. Is there an example? Sure. I mean, you know, we, we architected our organization. We reduced the size of our team to increase financial resilience, but also because we thought there was an opportunity to make it easier for people to do great work. Things had gotten a little complicated in our org as we went somewhat distributed to innovate, and that was very successful. But now as we have these new products, the name of the game is about bringing them together in a beautiful, seamless way for customers that required moving more to functional alignment. And in doing that, there was an opportunity to simplify things, you know, reduce some goals. And then you just did that just a few months ago, like in February, right? And we worked through it and there was one frame in terms of how we were working through it that we wanted to make sure every way that we were going to make this decision and communicate it, we would treat people who were going to let go and the way we're going to explain people the why that we wanted to be so clear and so robust that if it, the whole plan, the whole internal email got published on the front page of the Wall Street Journal, that it would be viewed as a brand building as opposed to a brand eroding event. And that was kind of a test. So as we're working through our plans, we write it out, be like, man, it doesn't feel robust enough. And so what do we do? We went a little bit extra in taking care of the people who departed. We definitely invested heavily in helping people understand the why. And 2 weeks after, the company had metabolized it and people are like, oh my gosh, things are easier now. There are the things I used to have to get 4 people in a room to negotiate. Now I just I need to sit down with you. So, you know, avoiding those kinds of hard decisions is like, you know, that's the route to, you know, build a pretty mediocre company.

Yeah. You pay now, you pay later.

So you, yeah, you, you listen, you make these decisions, you fix your roof when it's sunny outside. You, you don't wait till you're forced by outside circumstances to do things. And then you communicate why. And, you know, for someone who like me has been through a couple cycles, you know, I'll talk about what happened through the dot-com boom and bust. I'll talk about the financial crisis. I'll talk about that. I cannot predict the future, but I can imagine a wide swath of scenarios and to make sure that we're gonna be able to be successful across all scenarios, we're gonna make some changes and here's why. Yeah. And, you know, that's not always like what people want to hear, but if you're just always leading by what people want to hear, then I mean, you're just never gonna make it.

Yeah, for sure. Yeah. So that is obviously very dramatic and that's like also about you having to tell bad news to people and get your leaders on board and that, I mean, you know, layoffs and forced reductions, it's always a thing. What about day-to-day? How about, how have you helped your people learn to just be honest with each other day-to-day to make the work better?

Well, I think, you know, I wish, you know, it would be nice to be able to say, well, we did this great training program and then it all got fixed. I think it's about having— That never happens. Yeah. It's about having great leaders. It's about who you recognize and who you promote and who you exit. And the things you celebrate are what becomes your culture. And the things that you don't tolerate, like, also inform your culture. And so, you know, a lot of it's storytelling. You know, you, we brought on some amazing new leaders. When stand up in front of the company and introduce leaders, talk about, you know, the 7 references I did and the questions I asked and how I got satisfied that this person was gonna help us be better on some of these dimensions where we could be better. So it's storytelling. You give out these company awards. We architect them, as I said, around our values. But when you're picking the person who wins the Integrity Award or the Openness Award, you're picking a story that reinforces the, you know, a shared high-resolution picture that our 1,400 people can hold to be like, ah, that's what openness looks like. That's what's celebrated here. And so you're just trying to give people the examples that they can then emulate. But, you know, there's no magic bullet. It's like, you know, lots of lead bullets.

Yeah. Yeah. And it's a day-to-day work. Yeah. One other thing that you do that I'm sure everyone really sees visibly is that you make time every month, if I'm not mistaken, to call CEOs of your companies and mingle with your customers and target customers. What's that like? I'm gonna ask you an obvious question. Why do you make time for that? But also, what do you learn from those experiences?

Yeah, it's so awesome to get that question right now because I'm literally coming today. We have our customer board in town. And this is why Mike's so dressed up today. Yeah, no, seriously, it is. I mean, I don't know, I didn't know this would be recorded. Uh, no, because we have customers in town, so I put on a sport coat, but otherwise it'd be untucked black shirt probably. Yeah, yeah. We have, we have 10 customers on our customer board. Every year we select a different group who we think we can most learn from given our strategy. And so these folks all have elements of things that maybe, you know, we want to emphasize that we're doing well with, but also some needs maybe that that we, you know, we're some of how we like to think of ourselves as still aspirational and they can help fill in the blanks on in our thinking around what it's going to mean to be great. So they're here. I was with them all morning and I'm going to be with them tonight over dinner, but to hear them talk about their companies, what their employees mean to them, how they want to both manage their work and provide, you know, an employee experience that they're proud of how Justworks facilitates that, where there are elements where they wish we did more, and to have them both not just talk to, I mean, not me. I mean, we, I just, right before this, we had a company all hands. So we had, I don't know, 1,000 of our 1,400 people listening to 4 of those customers on a panel, like essentially answering those questions. And so again, like you can operate in the abstract around our values are camaraderie and openness, Or, you know, our customers care about X, but when you have customers up there talking like in real life around, this was my experience before, this is what was so hard. Here's, here's what I got from Justworks that was amazing. And this is what I love about Justworks. And this is like, as I look forward, if I had any one thing I would say to you, Justworks, all 1,000 of you, or, you know, this is what I wish you would build for me next. That's powerful. Yeah. And everyone goes to lunch and is like, whoa. Oh, you know, you hear what Chuck said, you know, you hear what Scotty said. That was really interesting the way she said that. And, and you give customers that, or you give our employees that added texture around what we're really doing here. Cuz at the end of the day, right, everything we do in the company only matters if it, if the customers notice it. Totally. And if they care about it, everything else, if it doesn't ultimately result in a better experience for them, we shouldn't be doing it. And so if our people aren't hearing directly from customers about their experience, then Like you're kind of at risk of making bad decisions.

Totally. And you're also at risk of like just making the donuts. So I come in and make the donuts and you forget, hey, there are people on the other side of this.

Well, yeah, that's really important to call out. So we are, we're in a pretty mercenary industry and we are a mission-driven company. I think the only one really. And if you went and talked to 100 JustWorkers, you'd sense it's, I think you'd sense like two camps. One is you'd realize a lot of JustWorkers have had their own small business or grew up in families of small business owners. And they feel like what we're doing is the most important work cuz they just connect like directly. And then another big group almost, I mean it's, and this is sometimes, you know, complicated, but almost looks at our mission through a social justice lens where they perceive that in the United States for sure, big companies have all the power, influence, small companies less so, and they want Justworks to be an advocate for them, for small businesses. And so we do things like we take customers down to DC and we advocate for things that we think our customers care about. We do, we, you know, we have many nonprofit customers. We do a lot to make our services more affordable for them. We have a grant program where we give money back to the nonprofit community that relies on us. And that's not just like what we feel like is the right thing to do, but it's like very motivating for people at Justworks. And it gets a little bit to like, how do you, you know, pick the right board members? Well, I can tell you like if you're you're a potential employee or potential executive we might hire and you're not like viscerally energized by helping small businesses, our people smell that in the interview process. And you might even— that person might smell it in the interview process and be like, this isn't for me because I'm not that bought in. Great, there's another restaurant down the street. They serve different food, right? But here, like, it's like self-reinforcing that, you know, people that come to Justworks, like, they get energized and attached to this importance of our mission. Mission. And, and so yeah, hearing customer stories just further like fuels that.

Totally. And reaffirms that. And then it's just sort of the cycle because even people who aren't customer facing can have that experience of being in front of the customer. And then when people have to work nights and weekends at times to get something done, they have a picture in their head of why they're doing it.

Yeah. Yeah. And if I just can share one more thing on this, like when you're small, when you're a small company, you think about like the size of a balloon, like, and, and if you think of like your employees that are inside this balloon. When you're small, there's not much distance from like anyone inside the company to the edge where you meet the customer. But when you grow hundreds, and now we're 1,400 employees, that distance grows. And as we go to 3,000 employees, it's going to grow further. So there's more distance between the average employee and the face at which we meet our customers. And the hardest thing, or the worst thing about it, is sometimes the most senior people are the ones who are most And so if you are not intentional about overcoming that fact and just routinely being with customers, then you end up getting as a leader, your information, like a couple steps removed and being out of touch with what's real, particularly given that people generally want to please you as leaders and bad news can travel less quickly if people don't perceive that you would welcome it. And so meeting directly with customers and CEOs as a matter of course is I don't know, it's like the, it's a super important practice to be in touch with what matters most. Yeah.

I think it's so important for everybody. And also it just reminds me that like you get all these reports and this data and da da da, but like there's nothing like just being, seeing the customer from their own point of view and them articulating by themselves. Yeah.

I think you gotta contextualize the data. Yeah. And for me, until I have like enough high-resolution stories that like rhyme with the data, I don't believe I can't believe the data enough to act on it.

So I do both personally. I saw a video of the CEO of Home Depot. I can't remember his name, not the founder, but the CEO, but he acted like a founder. And one thing he said was, I spent all my time on the shop floor or in the stores because they're gonna tell me the truth. And every time I get a report, it's gone through like 7 layers of check, check, checking, and it's so sanitized and they're trying to keep the truth from me.

Sometimes. Yeah. Yeah. Yeah. You gotta make sure that you're not susceptible to that as a leader, for sure.

Right. Right. Now, you guys did an acquisition. You, you acquired a company called Via. Yeah. And I know that I, I'd, I'd love to hear the story of how you found Via and how you, you know, ended up acquiring them and, and doing the post, post-merger acquisition. But I know that you did a specific exercise with the founders of Via that you found very impactful. And I'd love to, as part of your story, Hear you tell everybody about that.

Oh, wow. Didn't know you would know about that. I'm happy to talk about it. There, there's a bunch of things you just asked. So like in our industry for decades, you could be really US-centric as a payroll provider, as a PEO, and for particularly for small businesses. But that really changed with the pandemic because when companies went more remote or more hybrid, that dispersion of employees didn't stop at the boundaries of the United States. And so, you know, you had a company in 2019, you had 15 people coming together in an office. And then 2020 comes around, everyone goes remote, and your best employee's like, well, if we're gonna be on Zoom, I'm just gonna go work outta Mexico City. And you're like, well, that sounds great. Wait a second, how am I gonna pay you? Totally. What does tax withholding look like there? What's the law? Holy smokes. And so all of a sudden these international needs became really important and we began building those capabilities. We, I wanted to move faster, but it wasn't clear that we could move faster through through buying another company because I got to know these other providers of international solutions. And what I heard from their customers was not a lot of love. A lot of fast-growing companies that weren't very customer-centric, you know, again, mercenary versus mission-driven companies. A lot had raised money at such crazy structures and valuations that would make a combination complicated. And then I was at a CEO gathering. So again, the purpose, the value of being with customers and other leaders. And each person I talked to was sharing horror stories about their providers for international. And I was increasingly concluding that I had to build it myself, or Justworks had to build it itself. And then I met an individual named Martin, and I forget his last name, but he's the CEO and founder of Moondy based in Brooklyn. And his employees are in Mexico, Colombia, and Argentina. And he is telling me in Argentina, everyone wants to be paid as contractors 'cause they want dollars. Maybe that's changed now under the new leader. And everyone in Mexico Mexico definitely wants, needs to be employed because you need to be employed to get access to the government pensions and so on. And then in Colombia it's this mix. Oh God. I'm like, gosh, Martán, that sounds so complicated. How do you manage it? He said, oh, it's not complicated. I have a great partner. I hadn't heard this before. I'm like, wait, what do you mean? He goes, no, we rely on this company named Via. They're amazing. They take care of everything and I focus on growing my business. And I was like, whoa, can you introduce me? And he introduces me to the two founders, these two who are these powerhouse entrepreneurs who started Via 6 years before and had just been living in this kind of problem of international employment. And what I found were folks that shared our values, very capital efficient, very customer-centric, all about depth over breadth, you know, in terms of taking care of customers. And we just got to know each other and it ultimately led to them becoming becoming part of our company. The exercise that you're referencing was, and like there's some things about executive hiring and M&A that, you know, I think there's something I'll say that have in, I think have in common, which is where you really begin to evaluate whether there's a good fit. And so we had spent some time together, started to make a lot of sense on paper, but if this was going to make sense for us, like we needed to get get super comfortable that the founders and their key employees were going to want to stay and build with us. And we had to validate some other things as well. So we got together in London and we all like prepared an exercise. And again, like we needed to know these things about them, but having been a founder, I also was putting myself in their shoes and how emotional it is when you think about this thing that you, your baby is going to become part of something else. So I was also thinking about what they might need to understand about us to also feel comfortable going through with the deal. So we did this assignment. Agreement. We all agreed to write like a page on each of these questions up front. One was like some discussion about ourselves, like a lifeline exercise, you know, where we felt most alive and where things have been hard throughout our own lives. So we get to know each other, but then we also wrote a page on the way, if we were to come together, the way we would each individually think it should work, including like who would report to whom and how we would structure things to make it work. And then we did another exercise around, imagine we did come together and it was a disaster 18 months out, write that imagined retro about what went wrong. And we all came with these things and we shared 'em with each other and allowed us to really understand each other more deeply, each other's motivations. We began to see like where we were aligned and where we were not aligned. And, and there was a lot of alignment, but one of the things that allowed us to do was on the places where we weren't aligned out of the gate to see how it would feel to work through those things. Could we have hard conversations to the your past question, and that meeting was confirmatory for both sides. I think we both walked out and felt like, whoa, like we just left a room and we're leaving some of our company behind. And they felt that too. Same kind of thing with executive hiring. It's like you have a long dinner and at the end of the dinner you're like, oh, a good way for that dinner to end. Thank God I spent all that time with a person now, 'cause I know they're not a good fit. Or like, you're like, oh my gosh, I have to close. I have to get this person., and this was like a version of that. So we, we both decided to do the deal. We worked on it over the summer and they became part of the company a year and a half ago. And it's been really successful. Yeah. Yeah.

Probably, probably 'cause of all the work that you did in advance.

Well, I think it, the work we did in advance certainly put us on a foundation where success was more likely. Yeah. But I mean, so much obviously every day since to work through as you're building a new business. Totally. And you know what we're really doing, right, for small businesses is we're democratizing access to be able to build your workforce anywhere in the world and manage it all in one place. So all your US employees, all your international employees, you can see 'em in one place, same reports, same integration to your accounting system. And then for your employees in these other locations, they get the same experience, same benefits, same sense of love and care. They're not like an island off, they're like part of your team. And, and that all-in-one experience is that's, it's pretty awesome. And that's, that's what we are providing to customers now.

And it's so significant because that's what, that's what big companies get to have, right? Like little companies don't get to have that 'cause they can't afford that. So you're providing that to little companies. That's the idea. So it's amazing.

Yeah. That's the idea is like, and it's fascinating to see small businesses who I think for so long were like, yeah, I've always been interested maybe in hiring someone in Canada, but I don't even know where to start. Totally. And now like the, their, those barriers are coming down in their minds. They're like, wait a second, Wait a second, this might be actually much easier than I thought. Yeah. And there's talent there that I've never had access to. And through Justworks, I can access that talent and that increases my likelihood of success. Yeah, totally.

So, about the, the integration itself, how many people were in Via? How many employees came over?

About 40.

40. So, that's like, so it's this chunk. Yeah. It's not huge, but it's a chunk. What were there specific tactics that you did that you realized were helpful? Are there things that you're like, I wish we had done that when we integrated them? And also I would say Via and you all shared values, obviously, but you didn't have exact same values. So how did you then do that kind of enculture, enculturation? Yeah.

And I mean, so many things. They're a remote team globally. Ah. And we, you know, we still have somewhat of an in-office culture, you know, in the States. And so like how to balance those things. And so there's been a lot of things to work through, but a lot of it was, you know, their team reveres the founders. And by having the founders like believe and communicate belief, that was obviously very helpful. They created space for me to talk with the team and talk about why this was super strategic to us. And, you know, we were, we wanted Via for the people, for their expertise, for their passion, for their customers, not to change those things. We were also super clear though that we were going to together rebuild all their technology. Organically within Justworks because we weren't interested in having two different systems. We wanted an all-in-one system and I think there were maybe some feelings around that, but at least it was transparent upfront and the teams definitely have come together and we've retained that team. We paid 'em more than they were making because it made sense to, when your industry benchmarks, when you have 40 people versus 1,400, like we could afford to do some more things. And I think they appreciated that recognition. And, but yeah, but it's like, it might sound like there's just a little recipe. I think a lot of it is just day-to-day making space for people, being present, being transparent, walking people down the chain change curve. And ultimately it, it, it's been very successful.

Yeah. What about that balancing in-person versus remote? How have you kind of come to terms with that?

Well, you know, it's, it's interesting that we're holding two things that sound different. Different. Well, they are different. Yeah. So at Justworks, we believe if you have like 5 engineers and they're together every day versus 5 engineers working remotely, same engineers, the people that are together every day are going to, I mean, you go along, you go along the in-person folks. There's just so much about learning, change management, conflict resolution, innovation, onboarding of new folks. It's easier when you're together in person. At the same time, if you're going to be a global company, you need people that live in these places where you're going to employ people. And these companies that we're serving have lots of remote people. So it also, it would benefit us to have folks that can deeply empathize with that remote experience. And so we're kind of doing two things that are really different. In the US, we are, you know, together in the office most days of the week. And then with our kind of global teams, it's remote and distributed with some hubs in Mexico City, in Toronto, and we're building one in London. And so those folks will be together in person more often, but we have individuals scattered now all over the globe, and it's important that we do so. So it's, you know, how do we have optimized for certain things in certain places, but also make sure that our remote employee in Lebanon and India's and in India and so forth, they feel as connected and as valuable part of Justworks as everybody else. And I think we still have some work to do there, but that's, we're, we're working to hold a couple different work modalities in balance.

Right. And how do you sort of get, make sure they feel managed? Because that's the other thing is remote management is its own thing by itself. Else. Definitely. Yeah. Yeah.

We're learning. We got room to be better. But if you look at the engagement of our international team, it's quite high. And, and so I think they know they're building something important.

Yeah. That's great. So in 2022, you almost filed for an IPO. You were days away from filing for an IPO, but you pulled back. I mean, how did you come to that decision and what was that like for you?

Yeah. I mean, you know, so we had, the S-1 was out there, so we were like just on the edge of going. We pulled back cuz it started to feel weird in the market. Like just everyone was feeling skittish and it was us and Instacart and we were like the, the last two to say we won't go. And then the whole market froze for a long time. It was a really hard decision to make in the moment. Our employees were all very excited and we were excited. We'd done a lot of work on it. And, but the next morning we had an all hands, whole company. We explained, hey, we're gonna put a pause on this. We're gonna do this. Here's the reasons why. And then as the weeks went on and the market was just cratering and all the news was pretty dire, we started, it started looking like a really smart decision. It wasn't obvious it was smart in the moment, but it was obvious as time went on.

How did you make that decision? Because it wasn't obvious and it was sort of a, it was just a feeling. You had a vibe. I understand that. And you know, the market's been a little crazy for a few years, right? So, but you can always say, well, it's crazy, but we're gonna go. Oh, it's crazy. We're not gonna go. We're gonna wait. Like who was in the room when you made that decision to pull back? Back? What was that like?

Yeah, I mean, the decision in part was we were generating cash as a business and we had cash. We didn't need to go public. We were going public because we believe that is a necessary and inevitable step to build a generational independent, long-term independent company. And we felt like we were ready operationally to do so. So when it became clear that some of the best investors out there were like wanting to wait and see about how the markets were gonna evolve, it started to feel like we weren't going to have the IPO perhaps that we deserved. And given that we were essentially going at our option and we didn't have any need to go, we decided to pause. I mean, we haven't raised capital since 2020. Yeah. So we didn't even need the capital of the IPO. It would've been an accelerant on certain things for sure. And so there was, I guess that's like all relevant context, but in terms of actually making the decision, yeah, it was our senior team with our bankers and I think our bankers were still on the margin encouraging us to go out. Of course they were. But like, you know, in a good way. I mean, I don't know. And, but we just said, nah, let's just take a break and we can look at this again a couple months. And then we stayed on file for a couple quarters and then we're like, nah, let's just pull this because our business was changing so fast that the offering document that was out there was starting to get out of date. Like, yeah, well, we'll just pause and, and so, just pause. But we'll look at that again in the future. I think we're moving towards all the metrics that that even in the context of the IPO market being closed, that we could have a successful offering. And, you know, when our time comes, we'll, we'll be ready.

Yep. So speaking of crazy markets, we're here in April 2025, and I have you here, and you work with a lot of small businesses, and we're in the middle of, you know, the, the tariff situation or whatever. And I really have to ask you, what's it like for your customers to be in this phase of uncertainty? What's it been like for you? What thoughts do you have about the current craziness?

Yeah. Well, I mean, so what it's like for me and what it's like for our customers with the current craziness, I mean, it's unclear to me what will happen. I don't even know how— You are not alone. Yeah. I mean, I could like hypothesize, but I think that, you know, predictions tell you more about the predictor than the future. Right. So, so for me as a leader of a company, it's all about making sure that no matter what happens in the future, we're going to be be fine or better than fine. And so, you know, some of the actions that we took last year to simplify things and reduce expenses were about fixing our roof when it was sunny outside. And we made those decisions when there was a lot of enthusiasm with the new administration. And now that the skies are darkening, it feels really good to have made those decisions. We have, you know, over $150 million of liquidity. We've been investing some cash to bring these new things to market, but we'll be returning to generating cash in about 18 months' time. So we have infinite runway. And what that means for us is that if we were to go into a big recession, then as a company, we can go to sleep, sleep 8 hours, wake up and be fully present for all these small businesses who may be feeling very vulnerable at that moment because we have ensured our own house is in order. That's a great position to be in. When I talk to small businesses, I think they are, you know, some people are definitely already concerned and impacted by tariffs. Others are just worried about follow-on effects. They're not directly impacted. At the same time, there's a certain confidence that I pick up on that is maybe unexpected, but you have to remember a lot of these businesses, last couple years has been hard. So a lot of them have already done a lot of hard work to improve their companies and they've been through a lot. So there's a certain like steel old, like we could get through anything sense. But I also think that they are not assuming it's gonna be particularly easy going forward. I think they just perceive that they're ready for it. Whereas in the middle of '22 when things started to kind of change a little bit for white collar businesses in particular, I think that was more shocking for folks 'cause things had been so good for so long except for that little blip at the start of COVID Yeah.

And so that's what, so it sounds Would you say on the whole that that's how people are feeling? Like, I'm surprised to hear you tell me like on the whole people are feeling sort of optimistic or confident or ready to weather the storm.

Optimistic and confident. I'm like, optimism would maybe imply that they're going to be like full-bore investing. I'm not saying that. I think that I do pick up though confidence that they can withstand whatever comes their way. That's different because they've been through a couple hard years already. I I don't think that there's any general optimism or pessimism about how this is going to play out. I think some people are one and the other, but I think there's just a lot of uncertainty. Yeah. People can imagine us being in a recession in 6 months. People can imagine 10 trade deals being done in the next 3 weeks and we're off to the races in 6 months. Like I think they can imagine both extremes. And as a leader, you just got to make sure that you're ready to, to succeed regardless, right? Totally. Yeah.

You know, you've been a leader now, I guess I wanna say 30 years.

Is that right? Geez, if we can cut that out. I mean, yeah, I started off when I was 22. Yeah. Uh, in '90s. Start off. Yeah. Yeah. So yeah, that's it.

So how has your leadership style changed?

Yeah. Well, it's been informed by experience and informed cycles and hard times and good times and having kids and all those things. So, you know, when I started out, it was all figuring out stuff from the seat of our pants. We made lots of mistakes, unfortunately survived them all. But like one easy example is like for the first 7 years of that first business, I didn't take like a, any time off ever. And I worked weekends and eventually after about 7 years, I started to break into pieces. 'cause I needed a break and I eventually took 2 weeks off and I had this crazy realization when I came back, which is that the whole company grew more in the 2 weeks I was gone than they had in any 2-week period before. Because my mental model of what a great manager, great leader was, was like, respond to the email like at, you know, instantly when you receive it and join the sales call and help close the deal and sit in the product review and opine and be everywhere. Everywhere. But when you do that as a leader, you're really stunting everyone else's growth. And so by disappearing for a couple weeks and people finally had to start completing their own sentences and not having access to me, while maybe it was hard for them at first, 'cause it was different from what it had been, they all like grew. And that like something that it's so obvious to state it in retrospect was kind of embarrassing to when I finally realized it. But sometimes as a leader, you have to be super present. Sometimes as a leader you need to disappear and let people struggle if you want things to scale and people to grow and to really understand like where people are at in their growth journey. That was a real important learning. Navigating the dot-com bust was important. Like the first 3 years, all I learned about was how to evangelize, how to raise money, how to like tell a story that attracted talent. The second 3 years from the dot-com bust was like learning how to survive and then learning this obvious fact that oxygen to a human is like the same as capital to a business. When capital is easy and free, you don't think about it. Just like we're not thinking about breathing right in this room, but if the oxygen was getting sucked out of the room, all you would think about is how you're going to get a breath of oxygen. And I had that very scary experience in 2001 and 2002, and then ultimately got our business to where we could generate our own oxygen, generate our own cash., and that was super formative. But I don't know, there's thousands of these lessons. Yeah.

I mean, I would love to hear a few more. I mean, specifically you said about having kids. Yeah. How did that change your leadership style?

Oh yeah. Well, so I have 3 daughters. They're amazing. They're all really different, all very expressive as you might expect from high school girls. I have a wife who has very little filter. She's super expressive. And so my house is like loud and and never boring. And, you know, I began to learn as I was a younger father that like when I would be really calm, the whole family could like get a little crazy, but we would come back to calm and it was peaceful. But when I might lose my temper or get off my moorings, the whole family would flail cuz like there was no foundation there. And so, you know, that and other kinds of things, like just reflecting on my own reactions to things. I learned over time that being the calmest person in the room can be a superpower and being super intentional about maybe when you're not calm, but doing that like in an intentional way, as opposed to a reactive way, is really effective way of like moving people and helping people see things. I don't know if that totally makes sense, but there is, it's not like a paternalistic thing, but when you're working with folks who are earlier in their career, career, you're going through scary things, market cycles, being able to like be the calm voice in the room, help people see the opportunities that may exist in what, what people perceive to be a scary time, but also the risks that they may not be seeing when everything feels great. Bookings are up, people are investing in us at high valuations. That sounds great, but it's also sometimes good to like help people see on the other side of that how some things in, you know, some of the risks that they might not be thinking about. So, I don't know.

Well, I feel like what you're saying is in part is that you have to be intentional about your role as a leader, that you're not walking in the room as like, hey guys, I'm me, but you're actually walking into the room as a leader. Yeah.

And so, you've gotta choose your behaviors. Well, right. And everyone's watching all the time. Right. So, like, that was another learning early on was like, when I would walk through the office and I would like be visibly anxious, the whole company would become anxious. When I was walking through the office being optimistic and excited and enthusiastic, the company would become enthusiastic. Enthusiastic and excited. And so that energy flow is real within our family, within our company. It's real. And so the moment you realize that, then you realize, wow, I have some obligation if I'm going to be a leader to think about what is the energy I'm putting out there and what's the effect of that going to be? And am I going to be happy with that? You know, as individuals in life, this true leadership is also just true as individuals. A lot of times, like, you'll be dealing with something and you'll be like, why is everyone like this? And then you realize, oh, I'm just looking in the mirror. They're just reflecting my energy right back at me. And so if you want your company to be a certain way, your relationships to be a certain way, I think it's generally helpful to stare into oneself first a bit and think about the role that you might be playing that you were ignorant to that is actually triggering these reactions that you're either liking or disliking.

True. So true. It's something you've learned over time. How do you have tools or strategies that you use to do more introspection or just self-reflection?

Yeah. I mean, really in starting that second company, Euclidean, And you know, we had 3 young girls. We were going to be building that business in New York City and Seattle. I had previously been in Atlanta. Long story why we were there. New York City's a lot more expensive. Euclidean had a really strong first couple years, then we had a tough third year and raising 3 girls, moving to Manhattan, having a business that had a lot of momentum that all of a sudden had its first tough moment. Like I felt real anxieties and I found myself like being more reactive. And, and starting to notice that. And I had some friends, other entrepreneurs in Atlanta that I spent a lot of time with that had in different aspects of their life realized that they needed to work on things in themselves, just to state it like that. And there was a certain level, like we got to know each other pretty well. There was a certain level of comfort and vulnerability where I was able to talk to them about some of the things I was not happy with myself about. And they shared with me things that had been helpful to them. And there were books by Pema Chödrön and others that I read and certain meditative practices that I started leaning into that I started to realize were very helpful in getting out of reactive mode and creating space between like my instinctual reactions and then my actions. And I started to be a lot more proud of how I was parenting and how I was leading and living. And once I started to feel that, a self-reinforcing mechanism kicked in where it just created a lot of enthusiasm to spend more time on those kinds of things.

Yeah, totally. That's, I think that's so powerful to really find your own practice that works for you. And it's so helpful to have a group of people you can be honest with who can, who can understand it because they're on the journey with you.

That's also, I was very fortunate. I mean, so like in that like dot-com bust era, I felt very alone. I felt like I couldn't really talk to John about things because I, you know, he had his own anxieties. We're both just trying to keep the company going. You know, our investors like are, you know, all their businesses are blowing up. Who could I talk to? And so I found this group of entrepreneurs in Atlanta that we started spending time together monthly and it was like 9 guys and this one woman. And we all, you met and, and you know, we started helping each other and think through things. Then we became friends and we started going on trips together and everyone has had pretty interesting successes and exits and starting other businesses. But, but what we created together was a group where you could celebrate success and you could talk about things that were challenging that was really enriching. And I think, um, a lot of guys grow up without that. Yes. My sense is that women are, I don't know, it's a stereotype, but more often create those relationships naturally where you can like talk about those things. And I felt it was like the first time in my life where I had a group like that, that Yeah. To talk about the things that were both amazing and hard in really open ways, and then have a group of people that was also striving to do important things and to pose questions like, hey, you know, thinking about doing this. And everyone would be like, well, I haven't exactly done that, but the closest thing in my experience I did was this. Here's what I did. Here's what I learned. And then, you know, you'd get the, that feedback and then go all have dinner and have a drink. And it was kind of enriching.

Yeah. That sounds great. Yeah. And I wonder, you know, as part of your own exploration, if you ever experienced imposter syndrome or severe self-doubt.

Self-doubt? I self-doubt for sure. I don't know, all the time in some ways. But yeah, I mean, I don't know, you try to do things and they're not working. I mean, you know, like I said, in '99, I met my wife in like '99. She wasn't my wife then. And I think she almost didn't want to date me because I was like too arrogant because everything had come so easy in that first phase of the business. And then by 2000, 2001, I was humbled enough where she's Okay. He's probably good enough. He's, you know, better now. So, but the amount of self-doubt in that period was real. I mean, it was like everything we were trying, you couldn't grow as fast as you were growing before. Every month there was more bad news. And so to endure that period and come out the other side, I think was both, I mean, definitely impacted me, but also like created a certain strength around, oh, okay. I've been through hard things before. Before that have taken years to fully navigate and had really substantial success on the other side by enduring them. So I think that with those moments of self-doubt, I have enough examples of enduring them to good ends.

And that, I don't know. Do you have faith in yourself? Yeah. Like you sort of reinforced over and over, like, yes, I have doubts and yes, it'll work out.

Yeah. I think I always had faith in myself, but you know, when you haven't gone through through really severe challenges before, the doubts are greater. And then when you successfully get to the other side, it kind of informs the next set of cycles that you're gonna have to navigate around. Oh, I've been through things as hard before. And it's really powerful as a leader to be able to tell high-resolution stories about those moments in my past that might help them relate to things that they're struggling with and see that there's real value in staying and not running away from from those things that can feel hard because sometimes while they're not pleasant, you'll look back on those periods as like the most valuable moments and the greatest periods of self-growth. And if you're constantly running away from where things, when things feel hard, I don't, I don't think you ever really get the amazing strength from overcoming those things.

Yeah. So true. Mike, just a couple more questions. What do you wish you had known earlier on your journey?

The first thing that comes to mind, I don't know how this is even going to sound. The unfortunate thing for me is I've never been that good about just learning from people. I've had to like learn the lessons myself and feel the pain. And so I don't know. I feel like people told me a lot of things and they probably could have told me more things. Like Ann Winblad told me that thing and it was so obviously true and I kind of knew it enough that it was likely to be true, but it didn't really it only helped me make sense of things in retrospect. Didn't help me avoid anything. And I think that's a shortcoming of myself. I wish I could proactively just, you know, read people's stories and not make their same mistakes or repeat about people's successes and then just go copy them. But that hasn't been my experience.

Well, you gotta keep going. I don't think you're alone in needing to like make your own mistakes, but it sounds like the advice you got, for example, from Anne and others probably resonated in retrospect. Yeah. Yeah.

One thing I would say, and this, you know, I don't know, I think that when you're really young, we started our first company right before I turned, I was 22, turning 23, I think, you know, and that, and my parents were like, what are you doing? That's crazy. You just got promoted. You're making like 20 grand a year. I mean, you know, I was like, no, whatever it was, but it was like, they couldn't believe I was gonna do this. And it seemed really risky to to them. And I think that's such a flawed conception of risk. I think when you're in your 20s, doing things when you're early where you're swinging and you're going after something, in retrospect, there was no downside. The worst case was going to be that it wouldn't have worked out, but I would've had some real differentiated experience in which I would've looked like a unique candidate for a job or for a school. And so there was very little downside. Downside to being entrepreneurial in my 20s and such up potential upside. And I think as you go through life and you have expenses and families and so forth, I think that equation starts to change. And so swinging big and going after things before you have that big burn rate or other obligations, I think a lot of people perceive things that are risky, but they're not. I mean, particularly if you reframe it and say, well, but the risk of having an ordinary when you could like have do something extraordinary that I think I lived. But if I were to give myself advice, you know, back to my 18-year-old self, I would, that's what I would say. I'd say, just go for it. It's gonna be fine and might actually be amazing, but it's not gonna be bad. Totally. I love that.

And the last question, what advice do you have for other founders as they embark on their journey to grow into leaders?

Yeah. The That gets a little bit to the board conversation, the culture conversation. I, after being a founder myself a couple times, being around founders my whole career, I have a mental model of that every founder accumulates some amount of self-inflicted wounds, and I call it like a self-inflicted wound quotient. And these wounds happen at formative moments, like the co-founder that you team up with, the first investor that you welcome into the business. The way you construct or don't construct your board, how you respond to customer feedback early on. Sometimes it can be good to do that. Sometimes your customers will take you into a place of building a business that you didn't intend to, right? So these early decisions echo throughout eternity and I don't think a lot of people realize that when you're teaming up with the co-founder, that could be like a business marriage and it can be as enriching as a great marriage could be and it can be as like terrible as a bad marriage. Can be. Same thing with early investors and so on. So I would just encourage people to think about these early decisions, the structure of like when they raise capital, how much capital they raise. There's David Packard, if you look at Packard's famous comment, more companies die from indigestion than starvation. So to think, wait, I was only going to raise $5 million, but they're offering me $50 million. Of course I'll take $50 million. Well, there's a lot of things that come with taking $50 million that could be suboptimal, lack of focus and all those things, but also expectations It's also the fact that then there's no exit unless you get at least to $200, $250. Whereas if you only raise the $5, you got all this other option now. I mean, like people I think could, could really think about how some of these early decisions are gonna narrow their future options. And that would be my advice. Beautiful.

Mike, what can I tell you? So wise, so rich. I think people are really gonna benefit a lot from this conversation.

So thank you. Well, I really appreciate you wanting to talk with me.

It's been Fun. Thanks for listening to From Startup to Grownup. If you like what you heard, give it a review on Apple Podcasts so other people can find it. And if you know of a founder or someone else who is meant to be on this podcast, drop me a line through my website, alisacohn.com.