Building and scaling network-based enterprise unicorns with James McGillicuddy

Foreign. Hey there. You're listening to Paradigm Shift, a podcast about people building the future and pivotal moments in their journey. I'm Ashish and I'm joined by my co host, Zain. And today we're super excited to speak with James McGillicuddy. James was previously head of strategy at Carta, where he brought products like Cartax to market. And before that, he was the COO and early team member at SourceGrapher, a universal code search tool company valued at $2.6 billion. Welcome, James.

Thanks for having me on the pod, guys.

So I want to start at kind of an interesting story for you, which is back to your Stanford days when you were playing football. I'm sure it feels like a whole lifetime ago, but I'm just kind of curious, like, for the audience, can you talk about, like, you know, what were you doing with football and kind of like, what, what were some interesting learnings or experience from that time that stick with you now?

Certainly. Well, it does feel like a lifetime ago, except for every few weeks when I feel some sharp pain in my knee. So I am reminded of the physical toll that it took, but nothing but fond memories about my time, you know, on the farm and, you know, and playing, playing sniffer football. I, I didn't have actually the easiest path as a collegiate athlete my freshman year. I came in, I had an injury and then had another injury and ended up being sidelined with a ruptured patella tendon my sophomore and junior year. And, you know, not to, not to sound too arrogant here, but I was pretty highly rated coming out of high school and a pretty athletic guy. So it was tough those first few years when my whole identity had been sports for much of my life, to not be able to kind of live and play that out, literally. And then we had a absolute incredible leader and I'd say maybe the fiercest, one of the fiercest competitors that I've ever seen take over as head coach, and that was Jim Harbaugh. And I think that my takeaways from my time at Stanford, and I should mention that I ended up playing my last three years. This is usually when people make jokes about me being a doctor for having been in school for six seasons, but I did get a master's out of it. But that was really incredible to kind of learn how to compete, learn how to win under, under Jim Harbaugh. And I think that one learning how to take a down and out group of people that have been kind of battered and beat down. We were one in 11 when he came in. And then within, you know, four seasons, we were 12 and one winning the Orange Orange Bowl. Excuse me. And ranked number four in the country that whole time, attracting incredible talent that will go on to live in the Football hall of Fame and also the Pro hall of Fame, folks like Andrew Locke and Toby Gearhard and Zach Hertz, et cetera, et cetera. So it was an incredible, incredible run.

That's amazing. You know, I went to school at the University of Michigan, and of course, Jim Harbaugh is, like, the head coach there, so I'm a huge fan. We'd love to dive into that a little more. What were some examples? Like, as you think back, right, you guys had this, like, bad record. I guess morale must have been low. So Jim Harbaugh signs on and what are some things he did that sort of like, you know, you think back at. Okay, those are the examples of someone who's like, a fierce competitor and like a great leader and so on.

I think first and foremost, he made people believe because he believed. And so much of a winning mindset is, do you actually believe in what you're doing? And that's kind of infectious. The old saying, like, fake it till you make it. It actually works. Like, if you're not feeling great, if your attitude isn't that great, but you see a guy next to you or a couple guys that are kind of feeling good and maybe they're faking it, you don't know. But Jim Harbaugh just truly believed that we were going to win and we were going to be great. So it was one thing. And I think the other thing is that he worked with the tools and the people and the constraints that were in place when he got there. And obviously some of those things got better and some of the constraints as well, but he really figured out a way to take with what he had been given and win. And what that meant is, hey, we can get really great, talented linemen, but our skill players might not be as good right now. So we're gonna just beat people down and batter them down. And, hey, like, it just so happened that we did have a great offensive line and defensive line, but we also had Toby Gearhart. And then Toby Gearhart leaves, you know, run over the Heisman, and everyone says, oh, we're going from eight and four. You're going to be terrible next year. Well, then this guy, Andrew Luck is able to bring us to the orange bowl or 12 and 1. So he's always found a way to take with what he had in maximize that he is the ultimate envelope pusher and just push, push, push, push, push. And I've seen that in a lot of great entrepreneurs. There's some great entrepreneurs that I've worked with where you come out of a conversation with them and during the conversation they might say, hey, do you know. Do you know anyone that's really good at X? You know, a good VP of marketing? Like, well, let me think about it. And the great entrepreneurs and I guess great business people, maybe even probably two days later, a day later, an hour later in your inbox is, hey, Kadiat, I saw that you're connected with this VP of marketing. Can you introduce me? And they just. They just, like, go that, like, little extra step to take everything that you will give them. And Jim Harbaugh will do that out of players. And Jim Harbaugh also will get that from his staff. So he just knows how to kind of light a fire under people. I give him a lot of credit a few years ago when he literally gutted the majority of his coaching staff. It's really hard to do. And then the next year, I think that was last season. Zane, you would know because you're the Michigan fan. They were in the playoffs.

So going back to your first point, which is he just, like, believed, and that was, like, infectious. How did he, like, communicate that belief? And I'm asking because, you know, I think that's such a big part of building a team. And, like, you've done a lot of this building teams, and we're going to talk about that. But how did, like, Harbaugh kind of like, you know, create that, you know, like, communicate that belief and have that sort of like, just like, take hold.

So a couple, like, anecdotal stories. There was my last season, we were going up to. We were going up to play University of Washington. And, you know, we were favored, I believe, maybe by like, three points. But everyone was saying, ah, Stanford's going to get upset, they're going to get beat. And we end up beating them 41 to 0 the night before. Once you get off the plane, you go to the hotel and before you eat dinner and then watch team video, Harbaugh would usually give, like, a little bit of a talk. Not a big one that was safe for the next day, but a little one. He goes, men, there's only one thing that matters this weekend, and it's beating Washington. In fact, I'm so focused on beating Washington that the only thing I brought was my playbook, my toothbrush and the clothing on my back. That's all you guys need to focus on is just beating Washington. Thinking about that he did this as well. And just the way that he spoke about his focus around Stanford football, I remember one funny story. He was like, man, my truck, it only knows two locations in Palo Alto. And that was my home, where my wife and children are and 641 East Campus Drive. And I get in my truck and it brings me back and forth. I think it drives itself. That's all I care about is my family, faith and football. And like you, I think that he convinced himself as well, like that he actually believed that. And then once he convinced himself that he did, he just did. He has like the ability for reality distortion abilities for himself, which is like pretty, pretty amazing. So those are a couple anecdotal stories. He also, he would become the coach that the team needed him to be at that given point in time. So, for example, oftentimes you'd get the toughest coaching after a win because you might not have played up to what, to what we had practiced, right? Like, we might not have actually executed in a manner that would give us credit for the work that we had put in versus, you know, when you lose. Most people think of a coach screaming and yelling after the fact, but that's sometimes when you wouldn't get the hardest coaching. So. And I think about that a lot as it pertains to, you know, building teams, building companies, you know, mentoring folks, which is, you know, at that given point in time, what does that person need? They might be riding high in their career, but they need to be kind of brought down a little bit. Or they might be doing a great job on projects, but they're getting sloppy on a piece of the project. And you have to acknowledge the great work that they're doing, but also make sure that you're protecting their flank from themselves.

That's a great nugget of wisdom. So fast forwarding a bit. After Stanford, you had a brief stint as an investor, but then you get on this, joined the startup and it, you know, one of the themes we want to talk about, which I think will be really great from this episode, is like zero to one, because you've done it several times and you've like, helped build these, like, very significant businesses and products within significant businesses. And so your first foray with that was like, relate iq, right? We'd love to hear a little bit about that journey. Like, what was the state? What is, what is for the people unfamiliar with Relate iq, like, what is the story of the business and what types of things were you working on when you joined?

Certainly so I started my career as a quote quote investor. I was an associate. So I can't say that I was doing much work besides the diligence and finding companies. But I'm really thankful for the time that I did spend at Summit because I learned an incredible amount of wisdom about how to look at businesses and markets and ultimately people. When I was at Summit we were using this old antiquated CRM called Siebel Systems. And I remember just every day you just be putting stuff into Siebel, logging emails. And by logging email I mean copying and pasting an email from an entrepreneur. Literally pasting in the system and calendar bytes and everything was manual data entry. And I was fortunate to get introduced to some of the folks at Relate IQ and they started telling me about what they were building and I started using it and I was like holy moly. Like this thing is magical. It eliminated the manual wrote data entry associated with managing relationships. So Relate IQ was a CRM built on top of automatic data capture. And the belief was that we were going to capture all of the emails and calendar events and contacts across your organization. So Zane could see that Ashish emailed Cuddy and vice versa. And that was really powerful because it saved people a ton of time. It made sure that people weren't duplicating efforts and that if you know you're telling someone that you're a really important relationship but then your colleagues reaching out to them it looks like you're just another prospect or number. And then you know, the long term vision was hey, we're building this relationship graph of all the people and all the activities and signals intelligence from all the different Systems. You have 360 degree of your customers and the relationships that you have with them. That was a really attractive vision and attractive early product to Marc Benioff and the Salesforce crew and they ultimately bought bought Relate IQ. Huge props to the founders at RelatedIQ. They did an incredible job building that business. A number of incredible people came out of that company that have started great companies and I think that one of the big learnings there was really kind of focus on the first principles of how do you make someone's day better as it pertains to productivity and workflow applications. I can tell you like the lens at which I viewed all the businesses that I've worked at. Broadly speaking, I think most application businesses become commodities over time. Doesn't mean they can't be big businesses but they become commodities and with the world that we're in now, which is very, very heavily kind of open APIs and the fungibility of data is building businesses that can kind of build a network or a graph of information or people. So related IQ, because we plugged into your email and your LinkedIn and other kind of social accounts, we can start to build a graph of who you knew and oh, we could update that graph in real time based on the strength of your relationship as determined by signals like emails, calendars, etc. The next jump was a source graph. Hey, there's a lot of code in the world, there's a lot of developers, but there's not enough developers. The world has to, you know, digitally transform. So we need more developers. So how do we make developers more efficient? And, and you kind of think about it like, well, one of the pieces of data like everyone loves referencing is knowledge workers spend 20% of their day looking for information. And it's like, well that's not knowledge workers, less developers, it includes developers. But the way that developers were finding code across large code bases, so open source and then let's call it mid market plus size companies was through literally pulling code down from the cloud, their code host on their local machine to then search in their id. And I was like, wait a second, you're moving things from the cloud to an on prem instance so you can understand it. And then that piece of code lives across an organization, you don't know where else it lives. And that just like as a business person that didn't make sense to me. I was like, the cobbler has no shoes. And when I went and I spoke with most developers who I was close with, they're like, ah, dude, it's no big deal, let's pull it down to my machine. Like my code base is small enough. Well, all my friends that were developers were and kind of the startup ecosystem. So yeah, with 25, 30, 50 developers, like it's not that it's not as big of a deal, but as code proliferates and as the age of the code base grows and as you have more people that come in and out of the code base, it actually is a kind of a huge, huge problem. And I also just made the bet that this is going to continue and that SOA and whatnot in the rise of open source, et cetera, was, was going to exacerbate this problem. And then obviously that's kind of been proven out. Source graph has about 1.8 million developers I think that use the product for the five Fang, use it. I don't know if the fang has changed lately with everything that's going on the market and people get a tremendous amount of value from it. I actually made my day a few weeks ago when a buddy of mine who worked at one of Sourcecraft's customers basically said, oh my God, I don't know how I'm paraphrasing. I don't know how I didn't think that this was valuable a few years ago. I can't imagine life without it. And you know, software at that point, software development and probably still is very pre industrialized if you think about software development. And I'm not sure if you guys have read the book or another book, Mythical Man Month, but you'll get more output by throwing more developers a problem the way that you do with the industrialized sales motion.

Yeah, well, so talking about source graph, right? So you've sort of been pulled to network businesses because you see that those are the ones that have staying power and less likely to get commoditized. What was the network hypothesis with sourcegraph? Sounds like a bunch of enterprise customers can use it to index their code and make it searchable. Where does the network.

The network hypothesis for sourcegraph was this, is that if you're writing code, there's a human that wrote that code and there's other humans that use that code and other machines that use that code. So if you understand technology at, you know, it's primitive, well, it's primitive would be machine code, but you know, human code, then oh my God, think about what else you can understand. So for example, if you're looking at cyber insurance, like how do you underwrite cyber insurance? If you're looking at security vulnerabilities, all of these businesses should be at the code level. And obviously there are license risk analysis tools and whatnot for vulnerability detection. But the thesis was if you want to know how all the world's technology should fit together and snap together, you got to, you gotta go to the source, which is code. And at that point in time, it really was. People thought about code at like the file and repository level, not at the kind of, at the, at the primitive level.

What was the business model?

So early on, when I joined sourcecraft, it was pretty much two founders in the proverbial garage. Quinn Slack and Beyond Liu, tremendous entrepreneurs. That was one of the big reasons why I went and worked there. And actually every time I've gone to a company, I think, is my career trajectory better off starting my own company or working for this person? That's how I make the decision. And yes, like Quinn was not. Quinn is a developer. Right. I wasn't going to Sourcecraft to learn how to be a developer from him. But I always think about that trade off because I have to believe that this person is going to take me farther than I can take myself in that given amount of time. In every business I've joined, whether it was RelateIQ, SourceGrapher, Carta, that has kind of been been the case. So when I joined Source Graph I was very much a compliment to Quinn and beyond because I had had the finance background, had just built Relate IQ which you know, back then a $430 million exit was like holy, holy moly. And you know, they, they trusted me and took a chance on me to help kind of build, build the go to market motion, build everything that wasn't product engineering and marketing. So early on our first customer was Twitter. Wow, that's a good question. Very timely.

Yeah, that's insane as a first customer. Amazing.

Yes, it was our first customer. The neat thing was that we got brought into Twitter on a hack day project and there's a guy named Dave and Dave was on the, I think he's on the developer tools team and he had been a Googler. Yeah, Dave Naponski was our champion within Twitter and he reached out to either Quinn or Beyond or the helloorcecraft.com email account and said, hey, I want to implement this at Twitter. And Twitter was written Scala. I think we had like just okay support for Scala at the time because you know, Sourcecraft, you know, understands code at a language level. And so in a hack day, like we got him a binary. Yeah, we got him a binary. He deployed it and had to do some configuration. But by the end of the hack day, I think it was two or three days. Zane, you would know because you obviously worked there. Sourcegraph was up and running on an instance and people are using it. And then at this point we weren't actually open source. So we kind of went in and said, hey, people are using it. And then more people started using it and then they sent out a little survey and the developers loved it, especially the former, the former Googlers because they had code search at Google. And you know, one thing about a lot of these big tech companies like especially Google and Microsoft, is they build incredible tools for their team and they actually don't want the rest of the world to have those tools because it means that the competition is more efficient. So people loved it. And then after that they renewed for a one Year deal. And you know, I've been a, have been a customer. So you know, the really interesting thing there was, I believe at the time GitHub and Atlassian respectively had taken eight and nine years to get their first six figure deal. And that was, that was, you know, Searchgrass first, first deal.

Did you guys price it as like per seat or, or is it, I guess, I'm assuming it's per seat now. How did you guys like, you know, how did the pricing evolve over time?

Yeah, so it was Percy back then as well.

Okay.

Yeah.

You know, we had this guy Abhishek Nayak on the show who runs an open source internal tools product called appsmith. And it reminds me a lot of, I guess, Playbook you guys might have helped pioneer, which is like, you know, open source product gets a bunch of adoption and then as long as it's a big enough market, even if you can just monetize 5 or 10% of your companies or users, it's like a huge business. It sounds like that was basically the playbook here. Is that fair or am I missing something?

Yes. So one of the realizations from the Twitter deal and a few other kind of early deals was if we open source this, we're going to be able to sell through developers. We're going to let them bring it in, they're going to deploy it, they're going to invite their team and that can grow within a company and from there we can kind of come in and say, hey, like you need to buy this now. And early on there was not much value for management. There wasn't, you know, reporting like there's a. There was a business back then called Git Prime I believe, and get prime would let manager see commit history and who was doing it and kind of roll everything up with management dashboards. Quinn, to his absolute credit, was we were building a tool for developers that makes them more productive. And building a tool for developers that makes them really productive means that the app has to be incredibly snappy because you're competing against your ide, which has no latency. So Sourcecraft was incredible snappy from day one. It took a lot of time to get it there. Quinn also believed in really invading the workflow. Anywhere where there's code, you need code intelligence. So there's a. There was chrome extensions for the code host, there were editor extensions then obviously the internal application. And a big important part was the market segmentation was really, really important as well. The problem that we were solving of finding and understanding code was really helpful. If you were exploring an open source project, but then the usefulness of it dropped down when you knew the code base. So it started to pick back up when you were in a mid market plus size company, let's call it, because you were looking at code that you didn't know and you didn't know the code base. And that was a big reason why up until the last few months, Source Graph has always been deployed on company's own infrastructure. The cloud product just came out, which is also a contrarian approach over the past 10 years.

So James, something we'd love to dig into is how you've approached the go to market motion to go from one or a few early customers to something that can predictably get to hundreds or thousands of customers. You did that at RelateIQ and SourceGraphs. Maybe we can just talk about both of those at RelateIQ. How did you guys figure out the ICP? And then what was your approach to building like a robust go to market motion around it? And then how did that sort of translate to your approach at forcegraph?

Certainly well, first and foremost at both those companies, I was working with incredible people, incredible teams at both of them and really hand in glove with product and engineering. So that's like, you know, one thing is early on it's so important to have people out in the field sitting down with customers, watching their workflow. Now you can obviously do that via Zoom, but I used to actually at Relate IQ, take my iPad and film bugs and problems behind customers and I'd bring it back and show it to the engineering organ, the Product Org, like, hey, this is how they're doing it. And I literally sit there and film it. I had videos. But you have to have a tremendous degree of empathy. I think early on to listen to the customer and be not user driven but user informed, that's a big part of it. Here's our vision of the world. We kind of fix these things for you. You don't like all of them, but you like enough of it. That then makes your life easier, gets us closer to our vision and you kind of walk it up. But first and foremost, specifically you need to pick different segments of the market for your product and also different Personas. So for example, with sourcegraph, a segment of the market was what language do you use? We had support For Go and TypeScript and other languages, but for the languages that we didn't support with code intelligence, we had to be disciplined up front and say, sorry, we can't support you, but we'll come back when we do Being really disciplined around that. The same was true with Relate IQ. Hey, sorry, we don't support Microsoft Office 1995 or Exchange 95. We only support 28 or later because of your email permissioning. So though, like, there's so much discipline early on you have to cast a wide net, say, okay, here's the different, you know, people and businesses that can use us. So back to Relate iq. We know that high touch relationship management is what we can provide today. So who does that? Commercial real estate, Business Development Corp. Devoted venture capital, private equity, et cetera, et cetera. We knew that because we didn't have the robust APIs and automation that exists today, that we couldn't be a high velocity inside sales tool despite saving people five, six hours a week by not having to log emails. So once you figure that out and you align that with the product roadmap, you can then take that broad view and scope it down, get 10 customers there. So 10 customers in BD, 10 customers in Venture capital or private equity. You can say, okay, I think we have product market fit and message market fit, which is also equally important in venture. So let's just go deep on venture and get a lot of business there. But then you think, oh, like venture capital and commercial real estate, like those are pretty similar, right? High touch relationship management. Well then you start working on commercial real estate and you actually find out that people love the workflow they love. They don't have to log emails. But the way that the firm works is people have to buy and manage their own applications. And oftentimes the same people on the same team don't want their colleagues knowing who their relationships are. Because commercial real estate is very relationship based. So a system that shows who you're connected with and who you're emailing with could actually be detrimental to your business. So it's really about segmentation, testing the hypotheses against them, rinsing and repeating. It's not glorious, it's not sexy, but once you nail one of them, then you can kind of start scaling it.

Taking that example of like the first 10 customers, how did that work at Sourcegraph? Like who were. Twitter was the first customer. You had a great, like proof of concept, great like anchor on the price. What'd you do with that? Like, who were the following nine customers? And like how did you reach them?

Uber was one of the next big contracts. There's a bunch of former Googlers started a cancer detection business. There were kind of a few other businesses that were like that. And I, and I'd say that one thing that they all had in common was really Googlers. Code search is one of these products where once you've used it, you kind of can't live without it, but you don't wake up out of bed and say I need a code search product. And that's it. And that's a hard, it's kind of like a hard problem. So there's a bunch of marketing around Google code search. We retained some advisors from Google and kind of went down the Google train. And then the Chrome extension was actually huge. So people would use it and it would Basically take this GitHub Chrome extension and it would give you the power of your IDE when you're, you know, looking at open source code. So people would use it and then it might be a few weeks and they come back and they're looking at open source code and like, oh yeah, this thing, this thing, you know, this thing. Source graph. That's pretty cool. And then it's like a little button like get on your private code and then click it. So it was this kind of long tail of invade their workflow. We were, we were kind of like just sitting there like especially the Chrome extension and it would just kind of come to life and it was way better and way cheaper than retargeting ad that you could use for sure. But that's kind of how we got the first 10 was really excited users of our open source product that wanted to bring it in house. And those first 10 customers, not one of them was management saying deploy this for our team. It was all I'm a developer, I want to be more efficient and more productive at work. I want to stand this up and use it.

One point that's like an interesting contrast between these two examples between SourceGraph and RelateIQ is Source Graph was a net new category and product. In a sense you weren't really selling against an alternative, you were just selling against nothing else of not having it. Whereas with RelateIQ it's sort of like an established category. There's a lot of CRM solutions. How did you think about, you know, the ideal customer? Was it like someone who hadn't set up a CRM yet or was it someone who was not happy and like willing to like put in the effort to switch? How did you guys sort of like approach that?

So a couple things. So first from a, from a branding and positioning statement, we were not a CRM, we were relationship intelligence. And I say that a little like tongue in cheek but like we were literally like when someone Say, oh, you're a CRM. We're like, no, no, no, we're. No, we're not a CRM. We're relationship intelligence. So you kind of start training people that are even thinking about you as a CRM that like, no, we're more than a CRM. So that was one thing. The second thing is that where we were, where we were strongest was in this kind of simple but highly complex sales motion, which means that you have an opportunity or prospect relationship that involves many stakeholders on your side and their side and organizing the collaboration and communication around them can be challenging. And oftentimes those types of motions don't have a CRM because they implement a CRM. It's kind of heavy. And a managing director at a venture fund isn't going to go log an email into Salesforce or Zoho or pipedrive or anything else. So when it really came down to the value prop, it was we automatically capture your email. That way you can save time and the rest of your team can see what you are doing. To the point where there were a couple of deals that really loved our spreadsheet in the cloud and this is when like Google Sheets was like pretty nascent and they just wanted to use RelateIQ as a deal tracking tool. But you needed an email account and you need to authenticate the email account to sign up. And if you didn't have email, it just wasn't really that valuable. So it's. It was hitting a market that didn't really have anything and our biggest competitor then was spreadsheets and just by.

And so were there also customers that had like a Salesforce and a Relate to iq because you did kind of like frame it as its own different category and use case. Right.

There were customers that would try and stand it up alongside, but it just. If you have a CRM, it means that you're using that to track opportunities and you have a, you have a process and it's just hard to do dual entry. People might say it's that they want to do it, but when it comes down to it, they don't.

I have to say, like, I'm very impressed by how thoughtful you are about Go to market but also the threads between like Relate IQ and Source Graph. When you hear the story looking back it completely makes sense. Like the Source graph go to market was. It's like you knew exactly who the customer was and you like you knew exactly the product they would want and how to sell it to them and like how to get it in the org and you kind of skipped. It sounds like you skipped the whole two years of like building for seed companies and then series A and then series B and then like then finally getting to Twitter. You just like short had to shortcut and you were just like, oh no, I know how to do this. Like, let's just skip over all this. So it's, it's a pretty fascinating.

So it's not.

That's not.

Yeah. Or that's a miss. That's a misrepresentation.

No, no.

No, no.

Let's not be, let's be very clear. There was a lot of trial and error. But what we realized was that it's great when developers are building a product for developers in many ways, right? Like when you have Quinn Slack and beyond Lou that can, that can kind of see outside of the tedious way they, they were doing things and say this doesn't make sense. That was I think a big unlock because every other developer that I was speaking with were like, let's fucking search around, right? So what I will say is that we knew that the more code, the more individuals within an org, the greater the complexity of your code bases, the more this tool mattered, right?

So there's more pull from bigger orgs.

We knew that. But then the question is like, well, how do you get to those bigger orgs? Code is one of your most sensitive assets. So you just can't authenticate to a cloud service at Twitter or at any of these large customers, right? So it's like, well then how do you get that in there? And it's like, all right, well first it was just you could pull down a Docker image and then we're like, well like then like we need to work with them and do some config. And it's like, all right, let's just open source it. And you know the nice thing about, about building a product and then open sourcing the pieces that you want to open source is that you can control the parts that you want to control versus building a commercial business around the pre existing open source project, which I think is also kind of a little bit of a nuanced point. But yeah, there's a lot of trial and error and the market kind of pulled it out of us. And all the kudos goes to Coin and Beyond. They've built an incredible technology and team and it was really fun working with them, kind of solving those problems. But I will say like the pattern recognition is like solve 80% of the problem for 1% of the market and then go solve 80% of the problem for 2% of the market and then go Solve 80% of the problem for 3%. And like, then that's how you just kind of like layer on value for kind of customers.

I love that.

And honestly, the big thing is what I have learned now with Relate IQ and Source Graph and building new businesses within Carta is that you just kind of have to have a hypothesis and go test against it. And if you're working from a first principle perspective of solving a pain point, you're going to figure out a way to solve that pain point.

That's actually a perfect segue because I would love to talk about Carta. I think we spoke to Nolan Church, who led people at Carta. I think a lot of the listeners, myself included, are familiar with Carda have used it at some point. So I know you joined in 2018, which was kind of an interesting point in the Carta journey. So we'd love to hear about the state of affairs at Carta when you joined. And then I know you worked and you helped start Carta X. So I'd love to hear about the founding story of that and what the. The strategy behind that was.

Yeah. So the overlay, I'll say as well, is that every time I've joined a company, people have told me I'm like, crazy. So when I went and joined Relate iq, I left a great job behind. And people like Salesforce owns that market. Like, why are you going to it? And to their defense, like, Salesforce does own the market still. But it worked out well. And when I went to Sourcecraft, same thing. Well, like, I can grab around like, like developers. Actually, when I started Summit, everyone was like, don't spend any time in dev tools. It's like a small nascent market, except for that giant company named Microsoft. And the same thing was true with Carta. People told me that Carta's overvalued. It's too late. Like, why are you going there? Because when I joined, it was post Series C and valued about $300 million. But the way that I met Ricardo was when it was E Shares. And I distinctly remember the story, and it's one of my favorite stories to tell when people ask me about Henry Ward is it was, I believe it was like May 15, 2015. And I know that sounds kind of ocd, but we had just closed our Series A at Sourcegraph and I was trying to figure out what to do with this cap table thing. And I remember this thing called E Shares and I went to, you know, eshares.com whatever it was. And I emailed sales at eshares at like 4:45 on a Friday afternoon. And at you know, 10 minutes later I got an email back. Hey James, nice to meet you. Are you free at 5:30? It's like 5, you know, 5:30 on a Friday. Said sure, I'm free. I was, I was working and it was in know Henry Ward, the co founder and CEO jumped on and took me through the product and I was like geez, like this is awesome. Like managing a spreadsheet or sorry, managing a cocktail on a spreadsheet is terrible and this is fantastic. And we ended up, you know, there's a one call close. I tell Henry that was not because of his salesmanship, it was because of product market fit. And we ended up you know, being you know, relatively an early Carta customer. And I think that I must have sent 10 to 15, maybe even 20 early stage companies their way because it just took away the administrative burden. But, and it's something that people don't talk about but it took away the mental burden like when you're running a, you know, a company when you're running a cap table at least I feel this way, like people are ensuring that the, that you don't mess up what could be a life changing event for them. And that's the thing I loved about Carta early on is if someone had a question about equity I could just send them the cart. If they wanted to know what their schedule was, if they wanted to know what their strike price was, it's in your Carta account. And it took that burden off of me. So I knew after Sourcecraft I wanted to go to a growth stage company. I wanted to go to a company where I could really kind of experience a multitude of projects and work and it led me to Carta. I actually called outreach to them and came in, talked to the team. I was brought in to build actually a business called Formations at the time which was focused on allowing entrepreneurs to rapidly start a company and then have all the tooling pre incorporated. So the idea would be you're starting a company, we would actually pre incorporate your business. So you'd show up to your law firm and say hey, I want to incorporate. Like hey, here's you know, Carta 1, 5, 6, 7, 810 C Corp. We'll do a name change. Oh and by the way it's pre wired with all the tools that you need from an administrative perspective to start building. So that was what I came in to start. There's many businesses within Carta. So I was pretty quickly pulled into another bu that kind of needed some help. It was our public equity plan administration business. There was a one of our largest customers going public and we were trying to build the product and ultimately the motion to keep them as a public company. So I worked on that for a little bit and then we found someone that was way more qualified to work on that problem than I was. And I transitioned off and was, you know, the first real member of the, of the strategy team, which is now the strategy and biz ops team. And I, I worked on a bunch of zero to one initiatives. So the things that I had the real pleasure of starting was the policy work. I had no idea about policy. It's super interesting. I had the opportunity to sit down with folks in Washington and kind of see how that whole machinery works. I figured out really quickly, as interesting as it was, that I wasn't the person to run it. And we hired this incredible VP of policy, Anthony Cimino, who had been running legislative affairs at the Banking Policy Institute to run policy. Got the Corp dev team off the ground and then the whole time I was working on car to act as a project. So that was probably 50 of my time some weeks, all the way up to 100 of my time for weeks at a time while I was in the strategy org and helped kind of build and recruit that team. The team that you know, built that was a team that a public markets background team from IEX and they didn't really know much about these crazy cats out here in Silicon Valley and private markets. So spend a bunch of time with them back and forth from New York to the Valley sitting down, doing customer discovery, customer work to see if we could get the public markets to look more like the private markets and the private markets to look more like the public markets. And the whole notion is that the private markets have obviously grown. That's why Carta has been successful. Huge macro tailwinds. But how do you enable more liquidity for these companies that have gone from on average just a few years from incorporation to being public to now 10, 11, 12 years. How do you return capital to not just employees but to investors? And if you look at structurally funds have a 10 year fund cycle. A lot of these investors want to get out as well. So that was a really fun, challenging problem to kind of work on. I'll stop there for a second. There's like going on.

Yeah, I guess my main follow up was, my main follow up would be like how did you get it off the ground. How did you start? It's such a like highly regulated and kind of multi constituency product.

Yeah.

How would what was like the first version of it, how did you ship it?

There was a pre existing tender offer business that, that existed and a tender offer for folks that don't know what that is. It's. It's typically offered by a company when they want to provide shareholders with some liquidity and oftentimes it's used as a mechanism for employees that have been there for some time and they offer to investors that might not have got into primary financing rounds. So it's a pure secondaries product. So we kind of built on the back of that of why is this trend emerging? It's because companies are staying private for too long and we start with a clean sheet of paper. So there are securities laws in that like a tender offer has certain regulatory requirements on how long it needs to be open for, who can participate, etc. Etc. The Cardax model and when I say Cartax, it's. Cartax is the liquidity business unit. And the auction in particular was something that we were building out to test and try and we tried to mirror the dynamics that exist in the private markets of you get a term sheet from someone, you get a term sheet from someone else, then you kind of make them off against each other. We didn't, we wanted that dynamic to win or sorry, that dynamic to be modeled in the software. But we also wanted to take care of the supply and demand challenges that come with that. So if, if, if you, if you're an investor and you want to own 50 million, you want to put $50 million to work. Well, if no one wants to sell, then that's not good for you. But someone might want to sell 50 million at a certain price. So it was, you know, how do you, how do you basically get the supply and demand to match up at the, at the right place? I'd say that there was a lift on thinking through that and it was a great team that we all worked together to think through this. Like I said, the team from New York that had an extensive public markets background and we obviously had our legal team involved and we had regulators and it was a big lift. Cartax is an alternative trading system. How do we get off the ground? We had to convince a couple folks that it was kind of, kind of the thing and we got a couple auctions done and then the pandemic hit. So things kind of slowed down on the pure auction. Sorry. Then the. I should Say recession hit.

So, James, we have a couple of. I know we're running over time, but we have a couple of closeout questions we'd love to jump into. The first is what's the most challenging or difficult feedback you've received and how have you processed it and incorporated it moving forward?

Yeah. So going back to the beginning of the conversation, I've always been on teams and the thing that I loved about teams is you knew exactly where you stood at any given point in time. Every Sunday after a game, you'd go into Kissinger auditorium and the 125 people sitting there watching you miss a block and get, you know, Andrew Locke or Toby Gerhard or Stefan killed. And they're like, hey, Cuddy, like, you missed this block. Actually, sorry, never missed a block. Never mind. Must have been someone else, my buddy Chris Marinelli, you know, why did this happen? And oh, like, well, you just got beat and that happens. You just get beat sometimes and that's the same in business. But other times, like, hey, like you took the wrong technique or God forbid, you didn't know the playbook, that was unacceptable. But you know, you would, you would, you would get that feedback and literally everything was graded so you know exactly where you stand. And this is a long winded answer to your question. The most difficult feedback that I've received is actually the lack of feedback that leads to an outcome that I'm not excited or happy about. And the way that manifests itself is if your boss, for instance, has kind of blindsided you with news about not getting promoted or demoted or taking something away from you and you kind of look at them and we didn't ever discuss this in any of our one on ones or any of my performance reviews or things of that nature, like what's, like, like what's going on? And that's the type of feedback that is usually the most disappointing for me is, you know, I'm a big boy. Like I said earlier, I've been watched myself get embarrassed on film in front of people, but it doesn't feel good when there's not a lead up to that. And especially when certain organizations espouse things like, you know, meritocracy. And I generally say that this is me probably speaking for many people and across many companies, but that's always not a good feeling. The lack of feedback that leads to an outcome. And the second, actually specific example was a mentor of mine who since passed is kind of a Silicon Valley legend. I was involved with one of the companies, I was involved with Know, one time basically sat me down and said, you're being arrogant, you're not thinking like a team player and I'm really disappointed in you. And like, it was a real gut punch because I always prided myself on being a team player. So that was, that was difficult to hear and that was when I was younger and you know, in my career. But that was, yeah, that was, that was difficult.

Yeah, understandably so. So second question's around superpowers, everyone has a set of skills that feels like play to them but work to others. And it's, it's something that you kind of eerily good at and lean on day to day. Are there any superpowers that you've identified in yourself that you like to, you know, lean on?

I've always loved building teams and, you know, taking those teams to hopefully always accomplish, always, because I'm saying forward looking, kind of, kind of great outcomes. So I really love recruiting. I really love kind of the mentorship around that and the responsibility of that around building, managing and leading teams. So I think that is probably one of my, one of my superpowers. That's something that I've innately always been attracted to, which is leading and you know, being a, being a people person. But on the institutionalization of that and like the process and management product that comes out of that, that is something that has come with time and that is something that has come with being diligent in the way that I think about hiring people onto my teams, thinking about coaching them, and ultimately understanding why they are there. When I interview folks, the first question I ask is, why are you talking to me? Like, you're super, you're super impressive. Like, why do you want to work at company X and why do you want to work for me? Like, what do we do for you? And it's. I'm just trying to figure out someone's why. And if you can figure out someone's why, you can align their work, you can align your feedback towards where they want to be and where they want to go. And that I think is really important. And it's, it's things that people miss and it leads to kind of bad outcomes for everyone involved. And that's when employees feel like they've been over promised, under delivered. It's when you feel like they've over promised and they've under delivered. I think if you just take a little bit of time, literally in the first interview to know what their why is, what you do for them, what the company does for them, you can get really great outcomes and you can have a really enjoyable, enjoyable but kind of hard time building a business together.

That's a fantastic answer and what a great question to ask in interviews. James, this has been such a great conversation. We really enjoyed your thoughts on go to market, on building businesses, on building teams and we appreciate you coming on and I know you're working on something new and so when that's when you're able to talk about that and talk about the strategy, the go to market and 0 to 1, all the stories, war stories from that, we'd love to have you back on.

Totally. I love to come back on. I really enjoyed the thoughtfulness and depth of your questions and the conversation and it is another graph network faced enterprise business. So looking forward to coming back on in a few months and thank you for the time as well.

Sounds great.

Thanks James.