S9E3: Julianna Lamb and Reed McGinley-Stempel are Unlocking Secure Authentication for Businesses of all Sizes with Stytch

It was the single thing standing between us and being able to charge the customer. Every time you drop somebody on the floor, you might lose a dollar. And when you think about tens of millions of Americans going through Plaid on a yearly basis, there was a massive monetary cost to us dropping users on the floor due to friction.

Welcome back to Season 9 of The Room Podcast. Claudia, happy Tuesday.

Happy Tuesday, Madison. Thrilled to be back behind the mic with you. Since last season, you've had a few updates on your end. You're now at Harvard Business School. Congratulations.

Thank you so much, Claudia. It's been a dream of mine for some time to attend, and I'm thrilled to be back on the East Coast this fall. You'll have to keep me updated on what's going on in the Bay Area news and all things Pryve, where you're still co-CEO and co-founder.

I absolutely will.

Well, if you're new here, we're two best friends building our careers around tech and entrepreneurship. Since August 2020, we've interviewed over 80 guests, including the likes of Michelle Zatlin of Cloudflare, Vlad Magdalen of Webflow, Ciara, the Grammy Award-winning R&B vocalist, Spencer Raskoff of Zillow, and many more. Through these conversations, we open the door to the room where it happens.

Our guest companies share a combined valuation of over $47 billion and have raised north of $6.5 billion in venture funding. And last year, Spotify named us a top 5% most shared global podcast. This season, we're back with 8 new stories touching on everything from open source, trust management, generative AI, and more.

If you're based in San Francisco or Boston, catch us IRL this fall. The best way to keep up is to subscribe to both the podcast and our newsletter, which you can find at theroompodcast.com. Before we dive into today's story, we have a short message from our sponsors. Silicon Valley Bank, now a division of First Citizens, remains fully committed to serving founders, executives, and investors across the innovation ecosystem. As the largest banking team focused on technology, life sciences, healthcare, private equity, and venture capital, SVB is uniquely positioned to deliver specialized lending and financial solutions clients need to reach their ambitious goals. Find out more at svb.com.

Cooley is a global law firm built around startups and venture capital. The firm has been devoted to entrepreneurs and investors, partnering with both to transform breakthrough ideas into successful companies. Cooley works with thousands of entrepreneurs and newly formed companies to ensure that they are structured for growth, and long-term success. Since 2005, Cooley has been ranked the number one most active law firm representing VC-backed companies going public. Learn more about the firm at cooley.com and also at cooleygo.com, Cooley's award-winning free legal resource for startups. On today's episode of The Room Podcast, we sat down with the co-founders of Stitch, Juliana Lam and Reed McKinley Stemple. Imagine a world where the process of onboarding, authenticating, and engaging users is not only simplified but elevated to an entirely new, more seamless level. This is the promise and product of Stytch. Reid and Giuliana first met during their time at Plaid, where they encountered the shortcomings of conventional authentication methods. Witnessing the frustration faced by engineers and users alike, they were inspired to innovate and redefine the authentication landscape. So what is Stytch's core product? Through their API and SDKs, they offer a more secure rendition of password-based authentication, as well as an extensive suite of passwordless alternatives like biometrics, SSO, and email and phone verification. They're truly paving the way for a new era of secure digital interactions. We explore both Reed and Juliana's personal journey to becoming founders from growing up in places like Nevada and Idaho. Additionally, we dive into their distinct path to becoming CEO and CTO, and we discuss how they specifically think about making decisions as a founding team. Most recently valued at over $1 billion, Stitch is an industry leader in their vertical with an exciting road ahead. In this episode, we'll explore insights and themes such as building your early go-to-market strategy, the current M&A landscape, and how to approach a potential buyer from the perspective of a buyer and the future of authentication. Let's open the door. Juliana and Reed, thank you so much for joining us today here in The Room.

Thank you for having us.

Yeah, thanks for having us.

We're really excited to dive into your founding story of Stytch and how you both met on this co-founder journey. But before we go into that story, we like to start at the beginning with all of our guests and we're curious, where did you each grow up and how has that shaped your view of the world? Reid, maybe let's start with you.

Great. Thanks again for having us. Excited to chat with both of you. I actually— so I was born on the East Coast, but consider myself having grown up in Las Vegas, Nevada. I grew up in a town called Henderson, Nevada, moved there when I was 7, stayed there until I went to college. I think growing up in Southwest, outside of Las Vegas, I think it was interesting in that it is such an industry town, not too different from Silicon Valley, but very different industries when it comes to hospitality versus tech. Maybe there's some overlap in terms of how you think about customer obsession, user experience, things like that. I don't know if I ever took major learnings from how it actually changed my view of the world, but I will say it definitely spurred on a lot of the things I wanted to do differently from having grown up in Las Vegas. I remember not finding it to be a particularly exciting city for me because it, it's very much a playground for people going on vacation. It's less so. What I really like about Silicon Valley and SF and living here is how much it is about inventing the future, ideas, et cetera. And so I don't know if it necessarily shaped my worldview, but it definitely shaped what I wanted to do and somewhere I didn't necessarily want to end up long-term and what I really appreciate about the Bay Area.

I grew up in Sun Valley, Idaho. My outlook on the world today, a lot of it came probably not from growing up there, but from other experiences that I had. I think my mom knew that it was a complete bubble growing up there, and I think that in some ways helped me focus on— I was a figure skater, so I spent a lot of time on athletics. I spent a lot of time on school, and there's not much else going on, and so you can really focus. But she also knew that was not very representative of the world, and so I was fortunate to get to travel a bunch growing up and see and experience a lot of different cultures. And so similar to Reid. I knew that there was a lot more out there, and so I wanted to go and explore and see what I could do in the world. And so I think it, it was a good balance of having a very sheltered childhood, but then getting exposure to realizing that I was very privileged to have that life and that's not the norm for the rest of the world.

I grew up in Seattle, so definitely relate to the adjacency of being in the West Coast and also having a bit of a bubble and what that experience does ultimately do for how you think about what is possible. And I'm curious, for both of you having grown up in spaces that are not traditionally associated with technology, associated with being a founder, Juliana, did you ever think that becoming a founder would be something you pursued?

Definitely not. Growing up, my mom always told me I should explore engineering because I really loved math and I liked a lot of building things. I was really into trains and cars and that type of thing growing up, and so she thought I should become a mechanical engineer. But I had no idea what it even meant to be an engineer. All I could think of was like, oh, maybe you like work on cars. I don't really think that's actually what I wanna do. And I had no idea what computer science was like. That was not in my vocabulary in high school. And so I actually went to Georgetown my freshman year of college to study finance because I thought that was a good sort of matching of my love of math and just desire to experience the world, do something in business. Wasn't too sure what that actually meant. And so I got there and they were like, oh, congrats, you've tested out of all the math classes. I was like, wait, what am I learning over the next 4 years? Math was what I was excited to, to do, but do it in a more applied way. And I just happened to end up working in the technology center at the business school. And so a bunch of people there were really into computer science. And so that was my introduction to tech and what that was going to potentially open up if I explored that path. This was like 2011 and there were people that were interning at Uber and Google and like doing these cool things that I'd literally never heard of before. And so I decided that I wanted to do computer science and figured it would continue to enable me to go down the finance path in the future if that's what I chose to do, but also let me learn something that I was only gonna learn in college. Probably I wouldn't have the opportunity to. Necessarily learn computer science post-grad, and it felt like a good use of 4 years of studying. And so I ended up transferring to Stanford and doing computer science there. And so I think I got there and immediately startups are everywhere and being a founder is something classmates are doing. And so that's when I started to actually think about exploring that journey.

So there's like DNA to be a builder, but not really sure the application of what you'd be building and in what capacity that would come together. And then in contrast, Reid, you studied in undergrad public policy at Duke, which I also don't think of traditionally going into a founding journey coming with that degree. And so curious, how was your identity related to being a founder? And then how was that path coming out of undergrad for you distinct from Juliana's?

Probably similar to Juliana. Growing up and then in undergrad, being a founder was not really on my radar as something that, A, I really understood what it is or what it entailed, but B, also not something I had chalked up as one of my future goals. I actually, when I entered college, I was pretty dead set. And even after, even when I was leaving college, I still thought this was going to be the path that I was going to go on, was going to law school and becoming a lawyer. For context, my parents are both law professors at UNLV. That's why we grew up in Las Vegas. My older brother is a lawyer. He did law school out here in the Bay at Stanford and stayed out here in SF. My wife is a lawyer. She also went to Stanford. And so there's a lot of lawyers in my family, and I would definitely say I guess I am the black sheep as a founder now these days, but I think one of the things that was actually helpful is, I don't know if either of you have older siblings, but you usually get a better perspective on the world from them in terms of, my brother's 6 years older than me, so it's not just like a year or two. He had gone through a lot of formative experiences and could reflect on what he would do differently if he got to redo his undergrad choice or rethink what type of first job he wanted outside of college. So when I was, I actually took the LSAT my senior year of college. Was planning on applying to law school, going straight in. My brother is kind of the person that reasoned with me, begged with me not to become a lawyer. And his main perspective was like, I think he really does, he's a partner now, and I think he really likes a lot of things he does, but he realizes that there's a lot of creativity you don't necessarily get to flex. There's a lot of elements that you might not expect become your daily life in law. And so his big thing was like, at least go try something else before you go to law school. And at the time, what I ended up doing was I went and joined Bain for management consulting. Just because it was one of those, I have no idea what I want to do types of jobs. You're like, oh, I'll learn a skill. I'll get exposure to a lot of things. I probably didn't still think I was on the founder path, but I became very interested in businesses and in particular tech businesses. Main reason being like, is that at Bain, you actually would work with a lot of old school legacy companies where a lot of the work was more on tweaking small things or cutting costs. And I was much more interested in like the zero to one or the bigger bets that people were making in other industries. So that led me out to SF back in 2017 when I joined Plaid. And I think it wasn't until I was at Plaid around that environment on a very frequent basis where the idea of potentially being a founder became a little bit more real.

I really hope my little brother is— I'm the oldest actually, but I have a brother who's 7 years younger than me— says this on a podcast someday, that I was the reason he thought about taking this path, because that's amazing and a very special relationship with siblings. So thanks to your brother and some existential searching through the lovely job that is management consulting, you did find yourself at Plaid, where ultimately you met Juliana. Tell us a little bit more about your time in that season working in what is still today a very well-known, prominent company, but how you guys connected together.

Juliana, do you remember the first time we met at Plaid? I don't know if we've talked about this.

I feel like you've told this story before, but I don't know that I necessarily remember it happening. Tell the story.

It was actually my first day at Plaid, and I maybe met Juliana, but I was in a circle of people at the dinner table at Plaid as everyone was eating, and I was getting to know your coworkers, getting to understand the company that you had just joined. And Juliana was talking about, she was building the PayPal integration for Plaid, which is how do you effectively connect to PayPal, get data out, etc. And I want to say that was my first like, oh wow, this is Silicon Valley experience. Because when I joined Plaid, I certainly had the expectation that Plaid had all these very large official bank agreements, and that's how integrations were working. It was a very formal process, and it was a very, like, skunkworks experience hearing people talk about the actual way that you were building these connections on top of legacy infrastructure, legacy data access, etc. And so I credit Giuliano with, like, my first, oh wow, moment about A, what Plaid actually did, and then B, I understood why Plaid had a moat after that point, because I was like, that is really complicated. I understand why there aren't 10 Plaids.

I'm also picturing Giuliana be the engineer in the room and have this new business hire just like saucer eyes.

API what? Like, what are you doing? That discussion I think was me and maybe one other engineer that had worked on this, maybe a few other people. But I think it's illustrative of where Plaid was when we joined. This is summer 2017, and I think Plaid had a lot of traction, was powering companies like Venmo and Cash App, etc. But at the same time, what was going on behind the scenes was a lot of trying to figure out how to make things work and how to establish relationships with the banks. And so the PayPal scenario was we built an integration with PayPal and then started to form a BD relationship with them, and they were starting to roll out an API. And so we were trying to navigate with their team, like, how do we think about migrating to the API that doesn't have all of the data that we're able to get from just using the APIs that power their own applications. And so trying to navigate that sort of changing environment, going from Plaid just figuring out how to make things work to starting to build actual relationships with the banks and starting to migrate towards a very different world today that's powered by OAuth and APIs for the most part, which is not what the state of the world was in 2017.

Certainly hearing some early threads, which is incredibly relevant to what the two of you are building at Stitch. But before we kind of dive into 2020 and the moment where you and Reid decided, okay, hey, let's go ahead and do this thing. Walk us through that journey to realizing that you two were going to co-found something together, which of course is a massive decision.

I left Plaid in spring of 2019 to go to another company called Very Good Security. And I think my second to last week at the company, it was Platter Days, which is Plaid's hackathon. And Reid and I worked together on a project. It was around fraud and risk. And so, maybe in some ways related to what we're doing today. And I think that was a really fun project to work on. We'd worked on other things together as well throughout our time there, but I think that was a really good bookend to our experience together at Plaid. And so we'd become friends and we wanted to stay in touch after I left. And so we put a monthly coffee chat on the calendar and we would catch up and just talk about what we were working on. One catch-up, we had just gotten a puppy, and so we just hung out with the puppy. So it's a range of things. I don't think either of us was trying to start a company or trying to find an idea together, but we just enjoyed talking about the problems we were facing, et cetera. And one of those coffee chats, we were both talking about authentication problems. I was working on ripping out Auth0 at VGS, and Reed was working on building some authentication features in-house at Plaid. And so we were like, this is crazy. We're both building auth in-house at two separate companies because we can't find a vendor on the market that fits our needs, that's really flexible, easy to integrate, developer-friendly, all of those things that we've come to expect from dev tools like Applaud or Stripe. And so that was December 2019, and we didn't start the company until June of 2020. And so we ended up spending that time convincing ourselves that this was a unique perspective, that nobody was out there actually solving this problem, and that it was a wise decision to quit our jobs in the middle of a pandemic and go start a company.

It's always incredible to hear when independent companies are spending tons of resources to solve a key problem that should probably be a platform solution. And you both had unique insights as to how auth was thought about at companies that would hopefully be your buyers at Stytch. Reed, maybe walk us through what your aha moment was when you realized, okay, yes, we've identified this problem. Let's take the leap to actually start Stytch.

One, Giuliana already talked about, which is how we were both talking about similar problems building auth and developer frustration. And so I think during that coffee chat, we had said like, why is there not a Stripe for authentication? And what we meant by that was very composable, flexible, but also really good developer experience. We did not believe Auth0/OCTA was that based on our experience having tried to use the product at both Plaid and at VGS, and then from talking with other people. That was one. I think the other one was Giuliana mentioned that I was working on some authentication features at Plaid. And what we were working on effectively was Plaid had scaled really well at this point. So it was 2019 and we had a ton of users on the platform, a ton of new users connecting bank accounts every day. And we started getting to the point of optimization as a company, which is like, how do you optimize your funnel for users connecting their bank account? Like we started hiring growth PMs, et cetera. And we would think about this funnel of users trying to connect their bank account within an application like Coinbase or Venmo or Robinhood. And that funnel and conversion rate mattered a lot to us because it was the single thing standing between us and being able to charge the customer for that user. And so every time you drop somebody on the floor, you might lose $0.50, $1. And when you think about the tens of millions of Americans going through Plaid on a yearly basis, there was a massive monetary cost to us dropping users on the floor due to friction. And so one of the things that we realized as we were identifying or going through our funnel is that the single largest point of drop-off for us was people forgetting their password because most people did not want to go through a password reset flow that took them 3 to 5 minutes, took them out of the app experience, made them type on mobile, and they might fat finger something and just have a frustrating experience. So a lot of people just say, eh, I don't need to try to buy Bitcoin today, or I don't need to try this budgeting app. Like, I just don't care enough about it. And so we saw that huge drop-off directly hit our top line. At Plaid. The other piece I think where it went from, this is annoying from a customer acquisition cost, user lifetime value perspective to like, wow, this is probably a problem that every app on the internet could have a better solution to, is that half of my work was on pieces around this conversion optimization. The other half was actually on the security of the authentication itself. And the main objective there was make it as hard as possible for fraudsters to steal someone's bank account credentials. And then use them on the Plaid interface when they were trying to connect a bank account. Because what some people would do would be, there'd be a large data breach at Target, they'd immediately take those breached credentials and try to log into Venmo via like Bank of America or Wells Fargo with those credentials to see if it worked. And if so, they would try to transfer money. And so what we realized was the number one way that fraud was happening on the platform was because users were reusing passwords across different services. and then one of those services would get breached, and then you have this chain of liability and risk. One aha moment was what Giuliano was talking about of like, there just wasn't the right solution on the market for what we wanted to build authentication-wise. The other one was there's actually probably a modality change coming in authentication where we now have things like biometrics, Magic Links, OAuth had taken off, Sign with Google, et cetera. And all of the legacy incumbents had been architected around passwords as the base assumption that was always going to exist. And we started to realize a lot of the things that frustrated us about those legacy providers was that they had built their architecture anticipating one authentication method, the password, and not really anticipated the ways that auth was going to become much more complex and need modern solutions over time. So I'd say it was probably those two pieces were the bigger, biggest aha moments for us.

Those are pretty big aha moments. So you took those frustrations that you've noticed in the market and went to build a product and take it to market, which is really the first key step in product market fit. So as you mentioned, Stytch's APIs make it simple to seamlessly onboard, authenticate, and engage users. In turn, as you mentioned, the company using Stytch can improve security and the user experience with passwordless authentication. There must be tons of stakeholders involved who benefit from Stytch, not just the consumer, but also the companies when initially going to market, walk us through who the core buyer was and how you discovered this sales motion essentially, as you started piecing together these problems and building the initial product that is Stytch.

When we were thinking through the early go-to-market, we thought there were two stakeholders or buyers that mattered. One was the product growth persona that cared a lot about the UX conversion. They had a, metric to hit effectively, where this was one of their levers for it. And the second one is probably more predictable, which is like the developer, the one, the person that's actually making the technical decision of what authentication provider do I want to use? Is it Stitch or Okta or Auth0? And I think what we found was we actually care in retrospect over like learnings over the last couple of years, much more about the technical decision maker than the product growth person. Cause the product growth people are actually great stakeholders that can promote Stitch. They can bring us into conversations, but you're not going to get anywhere if you don't get the technical buyer sign off that like, I want to migrate to this, or I like the way this API is designed. And then the other thing I'll note is that the product growth person doesn't have a preexisting budget for this type of solution on average, but the technical buyer that's already paying Auth0 a quarter million dollars or $100,000, they already have some budget ascribed to authentication. And so while our early thesis was that there's two different personas, we're actually very cognizant now that one of them is more of a stakeholder than the actual buying persona, and that's the product growth person. The primary buying persona we've discovered through our experience is that technical buyer. And so the interesting thing there is that you actually compete a lot of times on faster integration times, better developer experience, handling more headaches for the developer as some of the things that they get excited about when they compare and contrast Auth0 and Stytch. And we'll talk about things like conversion, better UX, et cetera. But I do think those are secondary for that group. It's when we get introduced to like a CEO or CPO that we have to change the way that we talk about what is the thing that they care about, whether it is metrics driven, et cetera, because the developer is always going to, most likely going to choose what makes their life easiest and what they think is going to be the most scalable option for them from a technical infrastructure perspective, which is typically a little bit divorced from how they're thinking about UX.

You're speaking about this really important moment in an early startup sales process, which is having an assumption around who the buyer is, going through the sales process, realizing that maybe you should be targeting someone else, but ultimately needing to have different value props to make sure that the entire organization, especially in an enterprise sale, is brought along and they're bought in for the benefit. What advice would you give other early-stage startup founders, especially building in the enterprise SaaS space? For figuring out who that initial buyer is and what that go-to-market looks like.

I have one thing I'll mention to start, and then I'm curious, Giuliana, what else you'd add here. I think one of the things that's tough when you're really early stage is your sample size is quite low, so you can over-index. So for example, we actually got some large 6-figure deals with that product growth persona, which is not to say you can't sell into it, but I actually think you could over-index on how repeatable that sale was or how if there's maybe dozens of those types of people with the juice internally at their organization to bring us in, but there are thousands of technical buyers with the juice internally to make that switch from Auth0. So I think that's one of the things I would caution people about is like, it's pretty hard to know if your sample size is representative or not when you're dealing with handfuls early on, early stages. So that's the biggest thing where like, I don't know, like the silver bullet to make sure that you're holding yourself accountable to the right answer there. But it's at least a point of caution that I would provide. I'm curious what else you would add, Giuliana, from early day learnings.

I think really sweating why people don't go with you. You expect a lot of people when you're really early to not end up choosing you, especially for something like authentication where there's just a ton of features that someone might need and we're sometimes going to lose those deals in the early days on not having a certain feature, etc. But I think really digging in and understanding the why. The reason I think that's important is that as we started to dig in a little bit more with those deals, deals that we were losing, we heard pretty repeatedly that it was because the engineering team didn't have buy-in or wasn't a priority for them to migrate off. And like, it's nice that you get the conversion boost, but like, that's not a core priority. And so I think we uncovered pretty quickly as we started to really dig in there and understand what was happening with some of those deals. I think you also have to like take everything with a grain of salt where there's going to be some people that you talk to that just weren't a good fit. But I think we were a little too permissive in disqualifying people early on where it was like, oh, we don't have this feature. And maybe that ends up being the reason, but really dig in and understand the buying process internally of how sort of the deal is getting maybe like conveyed within the company.

And that's something that I've also personally faced, right? Like I think as an early-stage founder, it's easy to be like, oh, we don't have enough features. It's all about the features. And then when you actually dig in, you realize you lost a deal for something completely orthogonal that was probably political. And lo and behold, your product is actually much better than all of these other products folks are buying. So I think that's also an important, like, mental realignment for a lot of technical founders. Not to switch gears too much, but I'd also love to dig in on another really important piece of the startup journey in general is that both you, Juliana, and you, Reid, are on the call today. You're both co-founders, but figuring out the best way to work together, how to properly co-found something together. Is often a lot more difficult and nuanced than merely picking a co-founder and building a company. Juliana, maybe do you have any tips on how to think about stress testing your partnership before hitting go?

We definitely benefited a lot from having experience working together and seeing what that relationship might look like. The hackathon project we did, for example, Reid had gotten feedback from customers that this was a feature that they wanted. I was like, great, I can build that. Built it. And we did a really good demo and presentation articulating the value prop and what we're building. And in a lot of ways, that's a very, very small sample of what it's like to build a company and a product together. We're also fortunate to have both different skill sets, but also some alignment in terms of how we think about the product in particular and how we think about building product. And we have clear areas of ownership. I think that's really important, making sure what those boundaries are. But we also spend a lot of time together talking about product. I run engineering, design, et cetera. Reid runs go-to-market, and so we let each other go and get in the weeds there. And obviously if there's something we wanna talk through and workshop with each other, we spend time on that occasionally. But I would say the bulk of the time we spend together is talking about what we're building. And now that's evolved some where it's more around team building too in, in some ways. But I think that foundation of being able to brainstorm together and maybe come from diverging perspectives, but I think we're both very logical in how we work through problems and with the right sort of data or investigation, I think that's how we approach getting alignment between ourselves. Something that's been interesting for us is that we're often 90% aligned on things, and so we spend some amount of time convincing the other on something, but it's not that much time, which I think is good in that it enables us to move quickly and really be on the same page about a lot of things. But I think there was a learning as we went from a really small team where we were talking to everyone to a larger team of 30+ us people where we thought a lot of things were obvious for people cuz they were obvious to both of us and then realized that it was because of our shared experience or how much time we've spent together talking about these things and we needed to be more intentional about how we were articulating that to the company. So I think there's pros and cons to being very aligned. It's worked for us, but definitely had to learn how to articulate some of the thinking that's gone into decisions that we've made.

The one thing I would add there is, Juliana, you probably recall this, that we were asked by Elad Gil, one of our angel investors, when we were pitching him, he asked this question. I don't know if he necessarily expected a response on the call or if it was a test that he gives founders, which was, when you both disagree on something, who makes the final decision? And we were like, I think we'd talk it out. We'd converse. He's like, but who makes the decision when you're disagreeing, like you can't get to resolution, et cetera. And I really like that as an example that I'll sometimes talk about with people, which is how do you resolve different opinions with your co-founder? Because actually, after we hopped off that call, we're like, yeah, I don't think we're going to appoint one of us the person that can just ram through the wall when there's a disagreement. It's like, how do I convince the other person? And I would agree with Juliana, 90% of the time we already agree on something. The 10% of the time we don't agree, I would say from talking about it for 15, 30 minutes, one of us convinces the other one. Of the path to go down. And so I mostly mentioned that because like, I think that's even different than resolving conflict because I do not think you should really have conflict in a co-founder relationship. You will have different opinions and maybe disagreements, but if you have conflict, that means it's progressing to something that's not fruitful. And so that's probably the biggest thing I would advise people on is like, do you think you can resolve different opinions effectively with this co-founder? If not, frustration is going to creep up and that will lead to actual conflict, which will make it harder for you to execute on things.

We can have a whole conversation about the importance of disagreeing well and how our education system in America perhaps has not taught us that. And I love that you're drawing this out as something that's invaluable in business and co-founder moments. I know it's something Claudia and I in a smaller scale way have experienced through the podcast, and of course she has with her co-founder of her startup. And I love this tension that you're bringing up and the importance of it. You also alluded to an early angel investor and believer in you, Elad Gil, and I know he's invested in other guests we've had on the podcast. Fast too. But taking a step back, you've raised capital at scale from top-tier VCs, an elite cohort here, to name a few, right? You have everyone from Benchmark to Thrive to Coatue. So first of all, congratulations on those incredible milestones. I believe the latest one was a billion-dollar valuation, which is just incredible. But we're curious, who was the first person who said yes to investing in you both and Stitch?

Charlie Ma, who is someone that was a really early employee at Plaid, maybe like first 10 or 15 people, really great human being, person and investor now too. He was head of growth either at Ramp at the time. I think he's now head of partnerships or growth at Alloy. Charlie is great, big believer in us. He was the first angel check committed to us. I think the one that I remember the most and the reason I sometimes struggle to like remember if it was exactly Charlie or someone else. Is the most memorable one was when the Plaid CEO put money into us because I remember I had given my notice a week or two earlier and then we had started talking to VCs and they had started backchanneling with him. And so I got a call from him on a Saturday as we were doing VC conversations and stuff, and I thought I was going to get yelled at, but instead he was like, oh hey, I invest. And so that was a great experience, but that one always sticks in my mind the most, which is sometimes why I forget the first, but Charlie was the first believer in Stitch.

So you've had a pretty iconic list of investors back you financially as you've continued to fundraise. And this is the success story we always love to hear. But of course, you know, what you see in a TechCrunch press release is often never the true reality. I've certainly felt that. And so I'm curious, Julianna and Reed, what's a moment where things did not go as planned in the early days of Stitch?

There's like a million examples of this, and I was thinking about this question and I feel like there's none that really stick out in my mind. And I think that's good cuz I think there are so many little ones that we've had to face and overcome and we've chunked things out, right? Where you're constantly learning and improving that there's definitely moments that have been really big learning experiences and we've had to like struggle through things and we had to learn from it. And I think we've gotten really good at developing this muscle of of continuous reflection and not accepting status quo just because it is that way today and continuing to improve and evolve. And I think that's something that is really challenging to navigate sometimes, communicate to the team that like things are gonna change, right? Even if things are going really well, we're gonna continue to get better. And sometimes that might feel like we have to like go through something that isn't maybe the most fun, but that's going to set us on a better path. For the long run. So that's my cop-out answer.

No, it's so relevant. And we have those little micro moments that add up that sometimes at the time feel like large decisions and big choices, and then sometimes actually turn out to be not, or are really pivotal to what the journey of the business becomes. And I think from an outside perspective looking in, was a bigger moment in your guys' journey was actually post-Series B, making an acquisition of another company, Cotter, which is a complimentary platform in the no-code passwordless authentication space. And we're curious because we've talked to other founders, Superhuman founder Rahul, for example, who mentioned his journey to selling his early company to LinkedIn, and that set him up for success with Superhuman. So from the seller side, but for you guys to have been a buyer of another startup with the M&A market being what it is today, Could you share some insights into that strategic decision for you and some learnings you had about being the buyer persona for another startup that is looking to sell to another startup?

If we did another M&A, just so there's full transparency for the audience, I would go ask another founder for their tips on how to do M&A, because I think we have a very, like, we have a very small sample size, and I wouldn't say it's the conventional M&A that is probably more needle-moving for a company, which is a completely adjacent product. Or you're buying an organization and a lot of people, and that maybe that's both a talent acquisition, but also maybe there's a cash flow acquisition as part of that. It was interesting where this acquisition wasn't particularly complex. It had to do with buying the IP of someone that was pivoting to another company. So there wasn't actually any talent that flowed over to Stitch. They stayed and went and built something else. And we also didn't actually buy the full customer set. There was a migration. Customers could do, but it was a fairly simple M&A transaction if I had to describe it as such. One thing I would say though is from the seller side at least, and I'm sure there are a lot of startups that are thinking about this now because it's not a great fundraising environment, you're maybe thinking about M&A. It's only possible for someone to consider buying you if they know that you're for sale. And like, for example, I heard through the grapevine yesterday that a competitor is for sale. And like, I don't know if that would make sense for Stitch, but it's like, I just would never have approached them if I hadn't had that hint. When we acquired Cotter, they were proactive in coming to us, which ended up making a good deal of sense for a few different reasons. But I think that's one of the things to, to think through is actually how do you enable these conversations? Because it's not always natural for a buyer if they don't have a corp dev team to be pursuing these aggressively outside of the normal course business.

That's such a good point. Who's to say you're for sale if no one knows that you are? And in this moment of frequently this industry of signaling strength always. How do you approach showing what is perceived as weakness well, such that it perhaps can ultimately result in an outcome that is better for everyone, the buying party, the seller, and their investors? So thanks for teasing that out a little bit and kind of that call to action. If you're a company listening who's thinking about, wow, gosh, how do I approach this moment? You guys have certainly scaled into growth, both from a product perspective and from a customer perspective. We touched at the beginning of this call around your product market fit and who the core buyer became once you were in market. And as a result of that, you shared publicly in 2021 that you went from 350 developers on the platform to over 4,000 in just a 6-month period, which is explosive growth by definition. I was poking around your website. It seems like you guys still do a lot of incredible content around authentication and security. That's one tension we see in a SaaS go-to-market around inbound versus outbound. Curious, that scale that you achieved, what would you attribute to have been the most successful growth channel and how have you thought about outbound versus inbound marketing as a result?

It's still vast majority is inbound, maybe 80 to 90% is inbound. One of the things that's a little bit tough is you don't always have attribution on that inbound, so you don't always know how they heard about you. Like there's word of mouth. And obviously, you know, if somebody comes from a paid search query, but you don't know if somebody saw a billboard or if a friend told them unless you ask in your onboarding form. And I know that's always like a debate between marketing and product engineering teams is like, do we force someone to answer how they found out about us? We, it's something we've gone back and forth on and is how to do that. So all to say is like, I think, uh, for us, what we found is vast majority still come from inbound. We spun up outbound a couple quarters ago. And are starting to see more traction there. But I'd say we're still pretty early in our journey figuring out what is the right type of outbound for developers in particular who don't like to get outbounded. We don't cold call or anything like that because it doesn't seem like something that as an avenue somebody would want to hear about us from if you're a technical buyer. But I'd say we're still figuring that out. I think on the inbound piece, the biggest thing we've learned is probably like trying to get a more fine-grained understanding of where those people are coming from. Because if you look at the stacked bar, of your organic inbound, there are very different reasons people heard about you or found you. Sometimes it's SEO content where a particular article stood out. Sometimes it is going to be word of mouth. Sometimes it's going to be an example app that went viral in a certain community. And so that's one of the things that both we are actively always interested in, but it's also something to think about as an early-stage founder is if you know that inbound for a lot of companies for a while is their like biggest, driver of net leads, how do you make sure you understand what is the composition of that inbound so that you can throw fuel on the fire for the parts that are working the best?

We've chatted a little bit about your incredible journey of meeting each other at Plaid, starting Stitch, and just the growth that you guys have seen over the past couple of years. And we're excited about the future, especially as you continue to grow the team. But I'd love to switch gears a little bit as we come on time for today's conversation. Juliana, maybe we'll start with you. What's next for you personally? What are you looking forward to this year?

We're at a really interesting place in our org development where we have some people who are heads of orgs and really stepping up and leading those functions. And so fortunate to have a great head of engineering, great head of product that run those teams today, which was something that the first like 2+ years was my number one focus, probably day to day. Now starting to go into other areas that we haven't been maybe investing as much in and start to build out sort of those orgs. So something that I'm spending a lot of time on right now is how we think about like developer relations and building out that function at scale. I think Reed touched on, we know that some of that sort of word of mouth and organic developer traction is some of our best leads. And so how do we continue to amplify that and scale that? So that's something that I really enjoy doing and I'm excited to invest more in, in that this year.

So just personally, I get a lot of energy from playing around with random, like, side things. I don't want to call them all projects because sometimes they are just rabbit holes I'm going down. And so for context, it's probably no surprise that AI is the big rabbit hole a lot of people are going down, but I get a lot of joy from trying to build, like, I'm a big basketball fan, like trying to build a side basketball app on a Saturday. That is powered by AI elements. I was inspired by someone that made a HoopsGPT application and I was trying to make it for college basketball. Even when I fail at a lot of that stuff, I just find it very fun to play around with those types of things. I find that to be a creative outlet for me is just always trying to figure out how to do something new. I built my first app for our last hackathon and it was a chatbot trained on one of our internal employees who's a very opinionated but fun personality. And so now we can ask JudBot in our Slack various questions. He'll respond. Those are types of things I've had a lot of fun, like had a ton of fun learning how to use Replit and a few other tools as part of that. For me personally, that's a sideshow, but those are the types of things that give me energy outside of work.

That's awesome. Madison, I think we need a Mad Spot in our Slack.

Oh gosh, I'd be a little concerned.

Maybe I can commercialize it.

Reid, let us know.

As we come up on time today, I'm going to ask our hero question that we ask every guest that we have on the podcast. And let's start with you, Reid. Who's a woman in your life that has had a profound impact on you and your career?

Two people, actually. I worked with both of them at Plaid, though I met one of them beforehand. The one person that I met at Plaid who actually occupies a similar status in my mind to like Charlie as a really early Plaid person that was foundational to building the company and then became someone senior at the company, even though this person was also still very young, became someone senior that you could go to for learning the history of the company, learning why decisions were made, what strategic decisions were being made now at the C-suite level is Kate Adamson. And she was someone that was actually early on the go-to-market team, then transitioned to product and led one of the product lines at Plaid. Just is a genuinely wonderful human and really smart and creative and was always someone that was very fun to like I soundboard new ideas with either about like the Plaid product or other startups or things like that. So someone that I continue to stay in touch with, she actually texted me the other day giving advice on distribution of Stitch, some partnership programs that we should look at. So someone that is always super helpful and forthcoming. The other person is actually someone I also worked with at Plaid that's now the CEO, COO of a company called Check. Her name is Corinne Beksha. She's someone that it was kind of interesting because I recruited her. I referred her into Plaid. And it was so interesting to see, like, I mean, she's a few years older than me. I think she's 5 years older, but she was just so much more mature professionally than me where, like, she rose up the ranks very quickly at Plaid to, like, I think she was chief of staff at one point. And then she led a product line, even though she was a newcomer from Goldman Sachs, a previously, like, non-startup experience. And there's a lot of— I continue to talk about a lot of various business things with her now, of course, since she's the CEO of another company. Because she has a really interesting, like, structured way to approach problem solving and has great intuition, which is another thing that I really value. So those are probably two people in my life I've gone to in the past, but continue to have a strong relationship with in terms of asking for advice, bouncing off ideas, things like that.

I'm going to answer my mom, but I'm going to tell you a really fun story about how she saved us from SVB's blowup. So my mom was an investment banker in the '70s and '80s, and so I think just her sort of resiliency and willingness to go out there and forge her path when there weren't a ton of women in investment banking, I think really set the foundation for me and what I could imagine being possible for my career. I think there's not many female CTOs out there, and so I think she gave me that confidence to like go and do something where you don't necessarily have a ton of role models and you might have to be that role model for other people. And so she continues to be really valuable. I, I call her almost every day on my way home from work, and usually we talk about work and what I'm facing problem-wise, and she helps me work through those things. And about a year ago when crypto started to blow up, she sent an email to Reid and me that was basically like, you can't trust SVB. You don't know what their exposure might be. Like, there's a lot of uncertainty out there. Make sure that you're being really smart about where you're storing your money. Like, look at treasuries. You don't wanna be putting all of your eggs in one basket with a bank. You might not know what their exposure might SVB. So crypto didn't end up being the thing that blew SVB up, so she was wrong on that, but she was right to think about where we were putting our money. And so we ended up spending time coming up with a treasury management plan and figuring out with our board where we should be putting that money. And so she's sort of informal hero at Stitch because we were using SVB. And so when it was all blowing up, thank you to Joan for saving us from potential issues there.

Thank you so much for sharing that, Juliana. And thank you so much, Juliana and Reed, for joining us on the room today. It's been incredible to be able to share your founding story, and we're so excited for all that's to come for Stitch and both of you personally. So thank you for joining us today.

Thank you for having us.

Yeah, thanks for having us on.

Thank you so much for joining us at The Room Podcast. If you want more from The Room every week, subscribe to our newsletter at theroompodcast.com/newsletter. We'll be back next week with a new episode Tuesday, 10:00 AM Eastern. 7:00 AM Pacific. See you in the room.

Silicon Valley Bank, now a division of First Citizens, remains fully committed to serving founders, executives, and investors across the innovation ecosystem. As the largest banking team focused on technology, life sciences, healthcare, private equity, and venture capital, SVB is uniquely positioned to deliver specialized lending and financial solutions clients need to reach their ambitious goals. Find out more at svb.com.

Cooley is a global law firm built around startups and venture capital. The firm has been devoted to entrepreneurs and investors, partnering with both to transform breakthrough ideas into successful companies. Cooley works with thousands of entrepreneurs and newly formed companies to ensure that they are structured for growth and long-term success. Since 2005, Cooley has been ranked the number one most active law firm representing VC-backed companies going public.