EP 95: Tooey Courtemanche (CEO, Procore) Everything This Veteran CEO Would Tell Founders After Building To $11B

Tooey Courtemanche has been the CEO of Procore for over two decades, bringing the company from $0 to over $1B ARR and a $11B+ valuation today. In my latest episode, we explore how Tooey built the #1 Construction Management Software company, including his strategies for maintaining a talented team, his mindsets for tough times, lessons from mentors like Satya Nadella, Tooey’s advice for founders, and much more. (00:00) Intro (01:22) Valuation and Investor Relationships: A Founder's Perspective (04:57) Procore Explained: Revolutionizing Construction Management (06:07) The Early Struggles and Breakthroughs of Procore (06:40) Surviving the Global Financial Crisis and Pivoting to Success (17:53) Cultural Shifts and the Importance of Hiring Right (31:26) The Power of Being a Platform: Procore's Technical Edge (33:42) The Unconventional Path to Success (34:19) Navigating Early Business Challenges (35:31) The Power of Partnership and Mentorship (36:14) Securing Investment and Scaling the Business (38:12) Leadership and Organizational Growth (41:40) Evolving with the Business: A Founder's Journey (45:43) Maintaining Employee Engagement and Motivation (49:07) Strategic Capital Allocation and Product Innovation (53:53) Expanding Internationally: Lessons and Strategies (56:14) Decision-Making and Leadership Style (58:03) Balancing Growth and Profitability (01:01:30) Advice for Aspiring Entrepreneurs (01:05:37) Rethinking Education and Career Paths (01:11:56) Reflecting on Societal Transformation (01:13:11) From Encyclopedias to AI (01:13:56) AI's Impact on the Construction Industry (01:17:13) Personal Journey: From Carpentry to Tech Entrepreneur (01:19:45) The Genesis of Procore: Merging Construction and Technology (01:26:11) Mentoring Entrepreneurs (01:31:47) The Therapeutic World of Lego Building (01:38:16) Lessons from Lego Executive Producer: Rashad Assir Producer: Leah Clapper Mixing and editing: Justin Hrabovsky Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA 🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1 Follow on Socials 📸 Instagram - https://www.instagram.com/theloganbartlettshow 📱 X - https://twitter.com/loganbartshow 🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow About the Show Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member. Tap follow and enable notifications to stay ahead of the game.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04Logan Bartlett?

  Welcome to the Logan Bartlett Show. What you're going to hear on this episode is a conversation I have with Tuwee Corbunch. Now, Tuwee is the co-founder and CEO of Procore, a construction software company worth over $10 billion and doing almost $1 billion in revenue today. Tuwee and I talk about a bunch of different things, including the early days of Procore, which involved bootstrapping for 12 to 13 years before ultimately getting to $10 million in annual recurring revenue and raising outside capital. We then discussed the hockey stick growth that happened after that, growing to 4,000 people today. We talk about the need to manage people out of the organization when they're not scaling as quickly as the business, as well as what he's learned from mentors like Toby Lukey from Shopify,

• 0:46Logan Bartlett?

  as well as Satya Nadella from Microsoft. A really fun conversation with Tuwee, one of my favorite ones to date that you'll hear now. We were just talking before we started here, that the valuation point, and it's something that people get precious about, right? And on both sides, like it's not just VCs that are trying to, I mean, it's sort of talking my own book, being like, oh, well, valuations don't matter, pick the partner you want to work with. But the journey of who you have on the ride with you is so important from an investor standpoint. And so it's funny to hear, you don't even remember the traction or the ARR multiple or any of that stuff. No, you know, you remember the, by the way, I want to double tap on that. It is so important that you choose your, that you choose your investors, right?

• 1:30Logan Bartlett?

  I assume that was from the mistake you made picking Brian Feinstein? No, well, I'm more of an optimist. The fact that Brian and Will are both still investors in Procore and still on the board after 10 years or whatever, is a testament to how much, you know, it's working out. So yeah, choose wisely. But you're right, like, you know, I don't necessarily remember the details of like the negotiation particularly, but I, you know, I just remember the, you know, those milestones, like the billion-dollar valuation, which is, you know, just something as a founder, a billion dollars is like, you never imagined that that was ever going to be something that you would ever be able to do. And when

• 2:09Speaker 01

  We came to terms with that with a deal that was at a billion dollars. I was like, it was just, it was one of those moments where fortunately I was with my leadership team that we were, and we kind of had it on speakerphone, but didn't, you know, didn't really announce it was a speakerphone. When we put it on mute and then we all started like cheering and high fiving that we had gotten here. It's just those are the moments you remember.

• 2:31Logan Bartlett?

  Well, in the journey, if you get too caught up on the the end state, you'll lose sight of the the journey along the way. And I remember one of the best investments in my career. I was hung up on a 90 million dollar valuation and they won in 100. And we went back and forth and now I share Knicks season tickets with these guys. They came to my bachelor party and I was just wrapped around the axle. I was like, no, no, no, it's 90 million dollars. Like, that's the, that's the price I'm willing to pay. 100, I'm out, right? And I, I think about that at times when you're making the decision. It's sort of like, do you want to work with these people for the next 10 years or not? And sure, the valuations matter at the margin, but especially in the last 10 years,

• 3:15Logan Bartlett?

  we've seen all the oscillations of like error multiples and valuations and all that stuff. And so you need the through line of like what, you know, the journey is going to look like, right?

• 3:24Speaker 01

  Fortunately for me, I think I was luckier than smart on this one because though I'm, I'm pretty good with being a judge of people. I always say like, working with a venture capitalist is much more about the partner that you're going to work with than the, than the brand. Funny story, one of the largest brands out there, it was like in 2009, 2010, long before we actually raised real institutional money. Steve Zahn, my co-founder and I went up to Sand Hill Road and we walked into a firm and we pitched them. And they of course put us in like the far back room with the, you know, the 22 year old analyst or whatever that.

• 3:57Logan Bartlett?

  The lights are like swinging back and forth. It looks like a prison interrogation room or whatever.

• 4:01Speaker 01

  I'm like, is this a mop closet, you know, but, but and at the end of the meeting that they're like, you know, that's really interesting. But if you could just pivot your business model to be more like Facebook. And I was thinking to myself like, these people don't get it and they're not going to get it. But man, when I met Brian and when I met Will, they got it. And that's the other thing is I like people who are in love with the vision, right? And some other people were just in love with the, the business model and that's to me not enough.

• 4:29Logan Bartlett?

  It's hard. So, so maybe describe for people who sort of dove right in, what, what does Procore do?

• 4:33Speaker 01

  So we are a construction software company. We're a platform. And anybody who's ever done any construction themselves, like if they built something, remodeled a bathroom, whatever, realize that it's a highly complex and fraught with lots of challenges, mostly because it's a prototype. Your bathroom is never going to get rebuilt again. That nuclear power plant in Europe is never going to get built again. And so the complexity is just enormous. And now you have teams that are coming together. They've never worked together. So what Procore does is we provide this common layer, this common platform for data and managing these workflows that jump the different entities across these projects that just drive smooth project budgets and schedules, safety, a lot of other things. And we've, we've now become

• 5:15Speaker 01

  many more things than just that because we're a platform and we have tons of partners that help extend what we do.

• 5:21Logan Bartlett?

  Yeah, I want to talk about the different products and modules and all that stuff. But originally, I guess it was kind of project management and collaboration for, for building what was custom homes way back when and then became construction. And so I want to talk about that.

• 5:34Speaker 01

  There's a journey there.

• 5:34Logan Bartlett?

  That pivot there. But the slip of your line in the growth was unusual. So it took you 12 to 15 years or so to reach 10 million in ARR.

• 5:45Speaker 01

  Just south of it, yeah.

• 5:46Logan Bartlett?

  Yeah, then three or four to reach 100, then another, I don't know, four or five to reach 500. So definitely an acceleration there. I guess my question in that is there's, you can't ever start your company on the exact right day. Maybe you can. Maybe you're super lucky, but you're either too early or you're too late. And if you're too early, your job's to survive. And if you're too late, your job's to catch up. I think it's safe to say you guys are you guys are too early. So, so maybe, maybe take us through that, that journey of like 2000, early 2000s, starting the company and then hunkering down and trying to survive until the market caught up.

• 6:22Speaker 01

  Yeah. The idea was, the idea was not too early. The concept, so I'd been working in Silicon Valley, doing some other technology work. And what I saw was is the digitization of different industries. And so I saw the opportunity in construction to digitize. And look, I, I knew the Internet wasn't at the job site and I knew that the average construction management person graduating from a university is not going to be well versed in technology. But I also knew that the industry and the processes that drove construction were so broken that this needed to happen. So I just started on the journey and I knew it was early, but I and I was looking at the slope and I didn't know when we were going to hit that

• 7:06Speaker 01

  kind of tipping point. I thought it was going to happen faster, but I've just been this person that's I just saw something that I just knew had to happen. And to me, it was much more about solving the problem than it was about growing a big business. So there wasn't really a lot of like lamenting the wow, we haven't hit a tipping point yet moments along the way. Now, there were times when we couldn't make payroll and you know, times were tough, but like I still just believed in it. So I just kept doing it and thank goodness I had a wife who didn't divorce me.

• 7:40Logan Bartlett?

  Yeah, yeah. Well, so there's the here's the picking the inevitability of something and it's an interesting thing that I do as an exercise oftentimes is like, do I think this will happen? And you can get bogged down in the the timing of like, why now and all that stuff. But if you think it's an inevitability, then it probably makes sense to get on the the ride on that journey. So it sounds like you guys were early there, but you referenced not being able to make payroll. Were there times that you didn't think broker would survive? Or what was the closest

• 8:12Speaker 01

  No, I just needed to get out and raise some more money. Frankly, I would never believe that we weren't going to survive. Well, I should say, there was an existential crisis in 2008, 2009, where even our most loving investors were like, we're not putting any money into construction technology. This the world is falling apart. Except for one gentleman, Kevin O'Connor, who's the founder of DoubleClick. He he got it. And funny story about how I raised that money, but I was within hours of not being able to make payroll. And he was in the South China Sea on a cruise ship with his wife. And by the way, if you've ever had a challenge of trying to reach an investor, try calling a cruise ship, right? It's almost impossible.

• 8:55Speaker 01

  But I figured it out. I got him. He wired us some money. We made payroll. But he was my last call. I didn't know who else to call after him. And thank goodness, he answered and Thank goodness he was in the casino and it was midnight when he got the phone call because I think he was probably a little more open to the investment.

• 9:14Logan Bartlett?

  Yes, yeah, minimal to the circumstances. Yeah, thank God for, I don't know, the blackjack hands that he got to feel comfortable.

• 9:21Speaker 01

  He may have just won a few.

• 9:22Logan Bartlett?

  Yeah, exactly. The roulette wheel was spinning his direction. So there were things you did to try to move the market along, including like installing Wi-Fi on job sites. Was that for, when you look back, was that just for your sanity at the end of the day? And there's really willing the market into existence was just to keep moving forward? Or do you think anything actually helped moving the market?

• 9:44Speaker 01

  So I was having a hard time proving the business model because there was no internet at the job site. So my, my business idea wasn't about the internet at the job site. It was about providing data access to people at the job site. So in order for me to kind of prove my idea, like I just had to brute force getting the internet to the job site. But I will tell you when I, so when we flew into, it was, I think it was in South Carolina, when we flew in to South Carolina to go do that, that this is, this was the very first one we did. We went to Home Depot, got a toolbox, which was going to be the waterproof housing. Then we went to Cop USA and bought a router and a modem. And I remember climbing up the, borrowed a ladder from the electrician on the job site. Remember this is a, this is, this is a dirt lot that has a temporary power pole in it.

• 10:29Speaker 01

  So I'm climbing up this ladder and I'm thinking to myself, this probably looks really stupid. Like, you know, why, you know, we're charging like $95 a month and we're doing this. But I just had to be able to prove, and fortunately for us, we installed it on the job site of a gentleman who was really, really excited about the business model. He ended up investing in Procore and he told the world about it. So it was worth it, but boy, I felt silly at the time.

• 10:53Logan Bartlett?

  Yeah, going up there.

• 10:54Speaker 01

  And by the way, I mean, my, I really got to start on the south side of LA, working with some kind of Hollywood folks in the, in their residences. And we installed every single one of those. We installed the internet at the job site, you know, crawling underneath trailers and stuff.

• 11:10Logan Bartlett?

  Well, and it was Ben Stiller and Barbra Streisand, right? Like it was that, the next?

• 11:14Speaker 01

  First one was Ben Stiller, second was Eddie Murphy, and then it was a whole cascade. The Barbra Streisand one stood out because she was so cool.

• 11:22Logan Bartlett?

  Yeah.

• 11:23Speaker 01

  Like, and you know.

• 11:24Logan Bartlett?

  She was cool on site.

• 11:25Speaker 01

  Yeah, like, like she has kind of a. A reputation for maybe not being so easy. She was the coolest person I'd ever worked with. And I was like, I just remember that one because she sat us by the pool and served us ICN cookies.

• 11:37Logan Bartlett?

  Oh, wow.

• 11:37Speaker 01

  Yeah.

• 11:37Logan Bartlett?

  So, so the business model evolution, so you were doing these custom homes for celebrities essentially, right? I'm sure not, that wasn't your TAM, but it was a lot of big houses, I assume?

• 11:47Speaker 01

  Well, what it was, was there's a, there was, there still is today, a handful of large custom home builders in Los Angeles that, that cater to the celebrities and the high net worth people down there. So I was working with those general contractors who would bring me to these celebrity sites.

• 12:01Logan Bartlett?

  And what year was this?

• 12:03Speaker 01

  2001.

• 12:04Logan Bartlett?

  2001.

• 12:05Speaker 01

  Yeah.

• 12:05Logan Bartlett?

  So, so after the internet bubble popped and, and so what, what was the evolution in going from these custom homes in LA to construction?

• 12:14Speaker 01

  Well, the first, well, that is construction.

• 12:17Logan Bartlett?

  Commercial, commercial construction.

• 12:18Speaker 01

  Yeah. So the first kind of aha moment I had was, I remember standing up on the roof of Eddie Murphy's house in Beverly Park. And I looked, he had two structures and I looked down on one structure. And I don't know if you've ever been, well, you have, you're in New York. If you look down on the building below you, you'll see that there's a whole bunch of air conditioning unit on the roof of all those high rises, right? I looked down at Eddie Murphy's house and what I was looking at was what I thought would look like, you know, enough air conditioning unit for a casino. And I'm like, wow, this is, this is not a residential project by any stretch. This is definitely, and it was all commercial grade equipment. I'm like, we're actually doing commercial construction and I didn't really think we were. And that's when the kind of the bit flipped and I'm like, wait, no, we don't have to be limited to high end residential.

• 13:01Speaker 01

  And there was a few missteps along the way, but we finally were able to enter.

• 13:05Logan Bartlett?

  It's funny, Eddie Murphy's house was equipped like a commercial.

• 13:08Speaker 01

  Building.

• 13:09Logan Bartlett?

  Building.

• 13:09Speaker 01

  Yeah, yeah. I think he had 23 air handlers on his roof.

• 13:12Logan Bartlett?

  Wow.

• 13:12Speaker 01

  Yeah. I mean, most people have one.

• 13:14Logan Bartlett?

  Yes, yes, yeah. So, so you saw that and then it was the global financial crisis that you, you're actually kind of forced to, to find your way into that market in a more meaningful way?

• 13:25Speaker 01

  Yeah, we had a customer that was building a, what's called mixed use, but it was residential upstairs and commercial downstairs. And we were really focused on the residential part of it. And then we realized, well, wait a minute, they're doing all this commercial work. And I'll never forget Steve Zahn, my co-founder and I were in a, we were talking about like, what are we going to do? All of our custom home builders are going out of business like, and it was. I don't know how much you remember of all this, but it was, nothing happened slowly in that time. Like people were, you know, every day, five customers would call and be like, you know, sorry, but I'm out of business. And so we're like, kind of like, what are we going to do? And we're like, let's just start calling commercial contractors. And we did, and we fortunately found a lot of early adopters that wanted to go with us.

• 14:07Speaker 01

  That was another one of those where we were just skimming the wave tops.

• 14:11Logan Bartlett?

  Yeah.

• 14:11Speaker 01

  But I'll never forget too. So our pricing model was $95 a month per project. And of course, that doesn't, that doesn't make payroll very well. So Steve Zom looked at me and he's like, look, if we don't get $30,000 right now, we are going to go out of business. So we're in this little tiny rental, office rental, and we're probably like 12 employees. And Mark Lyons, our sales rep, our one and only sales rep, called a lead that was in Salesforce. And at the end of the demo, we're all standing around this computer. This is before you did WebEx or whatever. It was just a phone call. He was talking about the benefits of Procore. The person said, how much does Procore cost? And Mark, and Steve goes, so Mark goes, $30,000 a year. And then we all sat back and the

• 14:56Speaker 01

  guy's like, all right, send me an invoice. We're going to make payroll. So that's actually how we kind of, we actually changed our pricing model at that moment.

• 15:05Logan Bartlett?

  On the fly?

• 15:06Speaker 01

  On the fly.

• 15:06Logan Bartlett?

  Yeah. So the global financial crisis proved to be, I'm sure at the time, it felt like a major headwind to your business and you were kind of iterating, but twofold, I guess it helped you find your way to commercial construction in a more meaningful way. Like, what is it? Opportunity is the mother of invention or whatever?

• 15:24Speaker 01

  It is. Yeah.

• 15:25Logan Bartlett?

  On the other hand, it also, a lot of competitors didn't survive there. Was there a recognition at that moment that this was actually an opportunity? Or was it just?

• 15:37Speaker 01

  No, because we were trying to survive. But what was interesting was the, before we went into the global financial crisis, we were, we were in a sea of a lot of people had the same idea. And there was a lot of them. And there were, there were companies that were bigger than us, more established. They had bigger customer brands associated with them. And it was really interesting because when you really are focused on what you're doing, trying to save the business, trying to survive, you don't really take a lot of time to poke your head up and look around. And on the backside, when we came up, literally the landscape was empty. I don't, do you surf at all?

• 16:10Logan Bartlett?

  I don't.

• 16:11Speaker 01

  So there's a thing called duck diving, which is you, you know, you dive your board under a wave that's broken and you come up the backside, up the other side. I always just had this mental image is like, you know, the sea is full of surfers. We all duck dive. I come up the other side, I look around and no one else is there. Right. And that's kind of how the, the landscape looked at the time. It was barren.

• 16:28Logan Bartlett?

  Probably an interesting internalization for people that are burrowing down right now as founders and trying to get through what, this is an interesting market to say the least right now. It's definitely been manic over the last couple of years, but the incremental venture backed startup that has been funded in the last couple of years that you're competing with going away could actually really present the opportunity if you can survive this period of time, right?

• 16:55Speaker 01

  By the way, I think that's probably a great thing for founders to think about, which is all of the, all of the biggest inflection points in Procore came at our darkest hours. And you don't really think of it that way as a founder. You think it's a dark hour. But the reality is things are changing so rapidly that if you can actually adjust to the new world very quickly, you will accelerate your, all of your vision that much faster.

• 17:19Logan Bartlett?

  Are there any other ones other than the global financial crisis that stand out? I assume COVID maybe is another one.

• 17:24Speaker 01

  COVID was definitely one. You know, there was also one around, it's kind of. Somewhat adjacent to this, but it was around culture, right? We, we got to a certain point, uh, when we moved to this campus in, I think 2013 or 14, we were like 60 or 80 employees, enough that it was like too much for me to know everybody really, really well. And, you know, a certain point, you know, early on, you know, not only the, the person that's working for you, but you know, their spouse and their dog's name and everything else. At that point, I was starting to kind of, uh, not being able to know everybody as well as I could. And so we were deciding that we were going to, um, that we were going to, um, establish our mission, vision and values so we can actually scale the business. And, um, it was during that time that we, you know, uh, we made some hiring mistakes

• 18:08Speaker 01

  because we hadn't really established all of that yet. As a founder, you really have to develop very early on the skills of hiring great talent, but also being able to get rid of talent that's not effective. And I remember we were kind of in a crisis mode. We'd hired some wrong people and I needed to make some, some drastic changes. Um, and when I did, lots of great things happened, right? So you, you, you, you struggle with making these decisions and having these conversations, but all of a sudden you come up the other side and you realize you're running faster than you were before. Everyone is way more engaged because these people are actually slowing you down. And then you have that aha moment that that was not actually a dark time. That was actually a very, very important time for this business.

• 18:49Logan Bartlett?

  Because any bad, I mean, this is obvious to any founder, but I'm sure you lived this, any single bad employee, it spreads. It's like cancer. They then hire the next person and the culture starts to drift away. You guys went as far as to, Steve became, or his title now is Chief Cultural Officer, right?

• 19:05Speaker 01

  Yeah, he's Chief Culture Officer, but he also, he does so much more for Procore, but he's kind of my head sales guy these days, but he's a, yeah, but yes, that is, he's primarily, I, I, yeah, but I want to make sure that everyone's clear. He is not the owner of culture, uh, but what he does is he's the ambassador for culture to ensure that everyone has the tools that they need to carry our culture forward. But yes.

• 19:26Logan Bartlett?

  So did you go through and at that point in time, codify like what the values were and what had drifted from it? Or what did you do other than managing those people out?

• 19:34Speaker 01

  Yeah.

• 19:35Logan Bartlett?

  Like what, what, what was the, uh, post-mortem changes you made?

• 19:39Speaker 01

  So we we uh we shut the business down for two whole days, which by the way, uh when you were 60 people and you're barely making payroll, that's a big, but I'm like, I want to get this right. I used to work in Silicon Valley for uh in HR software, which had nothing to do with this industry. And I would just see these businesses that had horrible cultures. And I'm like, I don't want to, I don't want to ever grow that. I want to make sure we get this right. So we went off site and we we facilitated a a meeting with our, I think our leaders at the time was like 10 people. And we went through our mission, our vision and our values and um and it basically codified who we were. Uh and it's a process, but it's really important. In fact, we do a thing called Culture Academy here where we bring our people that build on our platform, our partners. Um, we bring in the the ones that

• 20:24Speaker 01

  are most engaged and adopted by our customers onto campus, like I think twice a year. And we help them build their mission, vision and values, uh because it's so critical at the early stage to get that right.

• 20:36Logan Bartlett?

  Hiring against it, do you end up breaking people into different teams that assess certain elements of the culture? Or is there a single person that's responsible for holistically? Will they fit into the culture? Or how do you actually actualize it?

• 20:48Speaker 01

  At different stages, uh we did different things. Early on, you know, Steve and I were doing all of it. And as we grew, we would find folks that were really good at certain aspects of it. But you also, you know, early on, you have to still test for aptitude. So you really, you know, at our scale today, if you're, you know, if a resume makes it to our desk, you you pretty much have the skill set to do the job. So we really now focus mostly on the the kind of the values hiring. Uh but as we grew, uh it became more and more um uh kind of, it was really more like, hey, Gabe, who is running our our customer success group, he is really, really good with openness and ownership, like he's really good at. And so we would put him on it. And it was a gang tackle. But we would even do

• 21:30Speaker 01

  things like, um, when we had a candidate come into LAX to come up to Santa Barbara to interview for a job, um, the the car service that would pick them up is actually a friend of mine. And so he would drive them up and he would overhear their conversations and he would hear how he would, he would tell me how they treated him as the driver. Um, and so long before that candidate actually got here, I knew all about how like what they were really like, and if they were really living our values or if they weren't. So we tried every tactic in the book to make sure we didn't get it wrong.

• 22:01Logan Bartlett?

  What specifically broke? Like, what was the red blinking light at that point in time?

• 22:06Speaker 01

  I don't think, well, like I said, we had made some, some challenging hires. But it was less what broke, it was more about, I had so much faith in where this business was going, that I knew if we didn't get the foundation right, we were gonna have a real hard time. Those businesses I was working for in the Bay Area when I was doing HR software, were Fortune 50 companies. Most of them had fundamentally broken cultures, and they couldn't put Humpty Dumpty back together again. And I'm like, I don't want to get to the point where I'm fixing my culture. So if we just start with people, because people are the root of all your culture, and get that right, then we won't have to fix the problem later.

• 22:41Logan Bartlett?

  If you're a founder and maybe you feel that there's some element of this, or you're asking yourself, hey, there's five or eight people that, I don't know if they totally fit in, but they're, you know, they're doing a good job, and they're high performing, or whatever. Is there any question you would ask yourself? Like, hey, if you're asking the question, the answer is probably yes? Or something along those lines that you would recommend?

• 23:04Speaker 01

  So I mentor some founders. And across the board, everyone is, especially the younger ones, have not developed the skills of how to assess and jettison people that aren't working. And they will make all of these mental gymnastics around why they should keep the person. That is a fundamental flaw, because across the board, they will eventually fail. And so really what you're doing is you're just extending the amount of damage that this person is gonna do to your business. Because ultimately, what you want is you want, you want a force multiplier in that seat. That's not gonna just, obviously, you don't want to slow you down. You want them to actually accelerate you and make you better. So yeah, I tell founders all the time, like, do not make excuses.

• 23:48Speaker 01

  By the way, we all know, and they all know, what the right answer is. It's just hard to do the work. You know, it's funny, and I've had to say goodbye to lots and lots of people over the years, as this company grew. But I've always told myself that ultimately, Procore is bigger than me, and it's bigger than them. And if we are going to deliver on the promise, we have to make difficult choices. And, you know, I'm not excluded from that. If I'm not doing my job, or there's somebody that's better to do this job than I am, I trust and I know the board will make that change and it's not personal.

• 24:20Logan Bartlett?

  I've heard you say specifically that you hire for a certain set of traits which are hungry, humble and smart. How do you think about this and are there interview questions that you've operationalized?

• 24:32Speaker 01

  Well, so as I mentioned, the driver, by the way, I'm giving all my tactics away. So now people that hire me.

• 24:37Logan Bartlett?

  There's only a primer to trick you at this point.

• 24:39Speaker 01

  The driver is definitely on the humble side. Like is this person actually who they kind of come across to be?

• 24:45Logan Bartlett?

  The driver's assessing that.

• 24:46Speaker 01

  The driver's giving me all of that on the way up. Generally, the smart's not a problem because again, if you're coming into ProCore, you've demonstrated that you've had success somewhere. But the hunger too is really important. And what I've found is you can find hungry and smart, but you're going to probably get an asshole, right? You need the humble in there. And you can get the hungry and humble, but if they're not smart enough to do it. So in other words, that triumvirate, you have to have all three of them and you can't compromise on them ever. But it really works and I love, I just love simple paradigms like that that you can kind of live by. And by the way, I actually, that's how I choose my friends too, frankly. There's something about it that just works.

• 25:31Logan Bartlett?

  Yeah. So smart is a certain level of competency and you could probably look at, you know, whatever different resume related things on that. Or maybe it just comes out in the conversation. The humble side, you've got your driver that helps on that. What about, what about hungry like?

• 25:45Speaker 01

  That's the hardest one. It's funny. I was having this conversation at dinner last night with one of our customers. But yeah, how, everyone claims to be hungry, but are they? And it's very hard to assess that. What I normally do is I spend a lot of time on curiosity because the more.

• 26:05Speaker 01

  The more curious somebody is, usually the more kind of energy they're going to bring to their job because they just are curious. So I spend a lot of time in the interview process, just talking about what people are passionate about and see if they, if they are, have a hunger around something outside of Procore. And usually that comes out pretty quickly.

• 26:25Logan Bartlett?

  Yeah, I've sort of found that there's, there's football players and basketball players and football players, you tell them what to do and they execute on it and that has a good role. Basketball players, you need to be able to move and create and all that. And within an organization, especially in the early days, if you, if you can't create and juke and jive and go with the flow on stuff, it's going to be really hard for that person to be successful. And so one of the questions I'll always ask is like, what is an entrepreneurial thing that you took from zero to one? And it doesn't matter if you're an investment banking, first year analyst, or you're whatever, you're an executive. If you've never taken something from zero to one, organizationally in some way, you're probably not going to make it in a startup or a venture job as well. Venture like, you know, our calendar is blank every day and you need to justify

• 27:11Logan Bartlett?

  something to keep going. It could be a podcast. It could be, you know, meeting the incremental founder and all that. But if you don't have that, it's really hard to start.

• 27:17Speaker 01

  Yeah, it's funny. We, we were fortunate when we first started as we found a lot of, by the way, motivate, there's, there's a lot of things that motivate people to kind of have that hunger in them. And also wanting to kind of prove that they can do something. They have a little bit of a chip on their shoulder. So we're sitting here in Santa Barbara, California, right? The ocean's right there. UCSB is where we hired most of our early people from. And a lot of those folks come from towns like Fresno, California, Bakersfield, California. You know, places where these kids who've gone to school here for four years, learned how to surf, love the beach or whatever, they graduate and they had the fear of God comes over and they're like, oh my God, I gotta go back to Fresno or Bakersfield. I don't want to go. And so we would find these people that would do anything.

• 27:59Speaker 01

  To stay in this town and so you find that by itself just separates people, which is these are the people that will fight and scrape to make something happen in the absence of any help from outside.

• 28:15Logan Bartlett?

  I heard you say something interesting about the risk in starting a company. And I think what you said, and correct me if I'm wrong, but you need to have a unique insight and an non-consensus view of something that's going to happen. But that the number of things you need to believe will happen is exponentially correlated with the risk of the opportunity. It's sort of a, it's intuitive when you think about it, but like the number of things you need to believe, there's this Andy Ratcliffe quote about like, or view that there's an onion and each time you're trying to peel layers off the onion to de-risk the opportunity. How do you think about that and how does it relate to Procore?

• 28:49Speaker 01

  Well, a lot of things had to go right, right? By the way, I heard, I stole that from a, I don't know if you listen to the acquired podcast.

• 28:57Logan Bartlett?

  Yeah, of course.

• 28:58Speaker 01

  I forget if it was Charlie Munger, maybe some, by the way, I'm such a huge Charlie Munger fan.

• 29:04Logan Bartlett?

  Yeah, who isn't, yeah.

• 29:05Speaker 01

  So sad that he passed away. But, but taking that concept, it really kind of struck a chord with me because so many things would had to have happened in order to make Procore, you know, actually work. The fact that there was no internet at the job site was a huge deal for, you know, you think about it, 3G was really what actually allowed the internet to get to the job site. That didn't happen for like, I don't know, eight years until after we started the company. So, so many things had to happen. You had, you had to have that, you had to have, you know, kids that graduate from college that were kind of pressing and adopting for technology. You really had to have the iPhone, you had to in 2007, you had to have the iPad 2011. All these things had to happen. We had to survive, we had to make payroll.

• 29:50Speaker 01

  It's kind of a little scary when you kind of rewind the tape, the game tape and you're like, wow, like we had to fly through so many, you know, small apertures in order to make this, this, this work. And so I guess I think of it that way. I'm kind of glad I didn't think of it that way back then. Cause I might, it might have been too daunting for me.

• 30:12Logan Bartlett?

  Yeah.

• 30:12Speaker 01

  You know?

• 30:13Logan Bartlett?

  Yeah, a lot of different things had to go right along the way. Thank you for listening to this episode of the Logan Bartlett Show with Tui Kortmacht. If you enjoyed this conversation with Tui or other episodes like it, we really appreciate you sharing with other people you think might find this interesting. We're trying to grow the show, so each incremental share or subscription on whatever platform you're listening on really helps. We talked a little bit about the number of competitors you guys had in the early days. Some did survive, I assume, and some new ones entered the market. From an execution standpoint, how did you beat the other people in the market?

• 30:47Speaker 01

  Well, a couple of things. One was, we got really lucky to be, to be a platform in 2002. If you think about it, like SaaS wasn't even, there wasn't even a word called SaaS, right? But we kind of ended up being a platform by accident. When I started Procore, I was used to in Silicon Valley in these Fortune 500, Fortune 50 companies. We would show up on site and we would install an Oracle database, right? Well, this is, these are Fortune 50 companies. They can afford Oracle databases. But when I started Procore, the thought of, well, I couldn't afford to spin up an Oracle database for every one of our new customers that was paying this $95 a month. So what I had to do was create a single instance of a codebase in a, in a single, on a single server.

• 31:32Speaker 01

  And I did that by just putting a company ID in front of every database table that I had created in the database. And so we got kind of, kind of lucky that, that that actually happened very early on in our journey. And so being a platform allowed us to scale.

• 31:49Logan Bartlett?

  So the, sorry to interrupt you, but what does a platform actually mean in this regard? Right? It's a single backend database or a bunch of constituents in it or ability to build applications?

• 31:58Speaker 01

  It's a single codebase, multi-tenant architecture that really allowed me to run the entire business off, off of a single server at the time. So if my next incremental customer, all I had to do was add an incremental count to the company ID in the database and, you know, I could spin them up. So the incremental cost to bringing them online was next to zero.

• 32:17Logan Bartlett?

  And there's probably something about like the core operating system as well that that allows you to then build modules on the extension.

• 32:25Speaker 01

  Yes, yeah. And, and, you know, I certainly am not the best engineer in the world. But I got it right. I got it right enough, I guess, is the right way to put it. So that allows, so being, you know, being able to spin up a customer quickly, very inexpensively, was a competitive advantage that are most of the people that were doing what we're doing, we're not doing that. They were, you know, they were doing a hosted solution where each customer would get their own instance of the of the code base. And I think that was a big boat anchor on on our competitors.

• 32:53Logan Bartlett?

  And by the way, not to, sometimes people are dismissive of competitors and that. But that probably made sense from their vantage point because they were servicing, I assume, maybe a higher end of the market. And so they could build the custom stuff.

• 33:05Speaker 01

  No, actually, by the way, I actually think that was just what you did, right? There was no other motion. Nobody at that time, I shouldn't say nobody. I think there was a couple of companies in the Bay Area that were doing this. I mean, obviously Salesforce had had done this. But it, the, the, the pattern for this particular business model had not really been established yet. So, and again, I, I, I did it only because that was the only thing I could afford to do. If I had more money and I had more momentum with the business early on, I probably would have chosen the other architecture. Because it was the, it was the predominant architecture of the time.

• 33:39Logan Bartlett?

  So you raised, you raised from angels and Kevin O'Connor and a few other folks along the way. But your first institutional round came from Bessemer in what year was that?

• 33:49Speaker 01

  2015, I think.

• 33:50Logan Bartlett?

  2015, and you were at about 9.6 million in about, I say. I, I think you were, I have down here very precisely 9.6 billion in revenue at that point in time. What led you to pursuing outside investment from an institutional investor?

• 34:04Speaker 01

  I'll never forget, we were, Steve Zama and I were, we were talking about the fact that we actually, there's a, hopefully, there's a time in all founders' experience where their passion starts to see, like, green shoots, where you're like, wait a minute, you know, not only do I believe in this, but like other people believe in this and they're actually, you know, paying me money. And I think Steve kind of made fun of me because I'm a product CEO first and foremost. And I'm just, I love the customer and the product. You know, Steve kind of made fun of me one day where he's like, you know, we ought to probably try to sell this software. Like, you know, you're building this software and you're, you know, driving in your Jeep Grand Cherokee down knocking on trailer doors and, you know, we, whatever, but I think it's time that we actually start doing this.

• 34:48Speaker 01

  And, um, and so I'm like, okay, well, I've never done this before. Steve had taken his last company public, a company called Digital Think. So fortunately for me, I paired myself with somebody who was far smarter than me and had a lot more experience in this world than I did. And so Steve basically laid the groundwork for this process. Um, and we thought, you know what, if we could ladle some capital onto this business, we have proven that the folks that are buying our software love it. But no one knows about it. So like the, the, the obvious investment need was to kind of spread the word. And, and I think that's, that's where like Bessemer and Iconic both came in and they're like, wow, this is, you know, they would do customer calls and whatever. They're like, this is a company that just really needs a go to market engine.

• 35:32Speaker 01

  And if they do, this might be something big.

• 35:35Logan Bartlett?

  So, so at that point in time, um, I, I think I heard you say Bessemer underwrote the outcome or like the upside case to 300 million, like as an acquisition or something. And now, uh, whatever, eight years later, you're doing 2X that and recurring revenue alone or something close.

• 35:52Speaker 01

  Three.

• 35:53Logan Bartlett?

  Three, excuse me. Yeah. 3X that. And, um, as you sort of zoomed out and went and got poked and prodded by, uh, different investors at that point in time, like what? When you dreamed the dream, was 300 million the, the number that made sense or what were you, I'm sure it wasn't 900 million in recurring revenue, but.

• 36:09Speaker 01

  No. Um, if I rewind the game tape a little bit, like two years prior to that, I'll never forget, we were in a really small office in Montecito where, um, we were before this campus and Steve Zahn was standing in this office. I think we probably had. Maybe 12 employees or whatever. And I walked in and he was like writing on his whiteboard a whole bunch of numbers. And he said to me, he goes, hey, Tui, I really think that this business someday could be worth $100 million. And I was like, you're shitting me. There's no way. Like, you know, and he's like, no. And by the way, I always look to Steve as he's the Stanford grad. He's, you know, he went to Haas. He's like, he knows the answers, right? I'm like, wow, that's really cool. And so then fast forward a couple of years. Now we're up talking to Bessemer and everyone else. And by the way, I didn't know about

• 36:51Speaker 01

  this $300 million story, which I got in trouble, by the way, for saying this. I wasn't supposed to know this. And so somebody on the inside told me this. And so, anyway, but I've said it. So I'm gonna say it.

• 37:01Logan Bartlett?

  Yeah, it's in public record.

• 37:01Speaker 01

  It's in public record now, so I'm gonna say it, but.

• 37:03Logan Bartlett?

  I'm gonna edit out all the nice things about Bessemer and Iconic. And I'm gonna put in all the, you know, the underestimating of you guys in there. So.

• 37:10Speaker 01

  So anyhow, you know, I didn't really know what their investment thesis was, of course, because that's not really shared with us. But I had a feeling this could be big. I never in my wildest dreams envisioned this. So, you know, good, good on them. If they thought we were worth, you know, the possible $300 million in the future, then, you know, they had a good, they had a good eye.

• 37:33Logan Bartlett?

  Yeah. Well, I want to come back to the founder journey in a bit, but operating the business. Now, how many people do you guys have?

• 37:41Speaker 01

  South of 4,000.

• 37:42Logan Bartlett?

  South of 4,000. And in 2015, it was.

• 37:46Speaker 01

  I think it was like 90, between 60 and 90.

• 37:48Logan Bartlett?

  Yeah. So in nine years, quite an exponential growth. So I, one of the things, I guess there's two different approaches to leadership and style. One is that you try to shore up your weaknesses. And one is you hire people to augment your weaknesses. Which, which one of those two do you, do you believe in more?

• 38:10Speaker 01

  It's not a binary answer. I think it's an 80 20 rule, but I think 80% you have to hire for to augment your weaknesses. I do think that if you're going to be successful as an individual in life and in business and everything else, you have to have a desire to grow personally. So I think you can, it can't be 100. But I, I do believe that one of my strengths is recognizing my weaknesses and knowing who to surround, finding Steve Zom, for instance, I'm, I'm, Procore would have been out of business long ago if I was in charge of the checkbook, right? Because I was, all I want to do is build product and satisfy customers. So no, I think it's really important that you surround yourself with people that actually

• 38:51Speaker 01

  do augment that. And you know, the biggest privilege, Logan, is that I have at this scale, I come to work every day and I'm literally humbled and kind of blown away by the caliber of the talent that I'm able to surround myself with because of the success we've had. It's really rewarding and I'm learning every single day and I love it.

• 39:15Logan Bartlett?

  Yeah. One of the things I also heard is you've removed yourself from deal negotiations with customers. When did that happen and why did you do it?

• 39:22Speaker 01

  There's two stories. There's the, there's behind that. One is that it was probably about five, actually, you know what? It's probably more, it's probably like seven or eight years ago.

• 39:36Speaker 01

  I was the primary deal negotiator, right? And I think I had been in too many difficult negotiations where at the end, I didn't have a great relationship with my buyer. And so I was in partner. And so I had the revelation. Plus, I had brought on Dennis LeAndres, the head of head of sales, and he was so good. And you know, he understood the whole process of the the science behind selling and mine was much more relationship building. So I saw him do it. I'm like, I want him to do that. Plus, I really wanted to develop a, a strong personal partnership connection with my peer and not have it be a transactional relationship. And the model then,

• 40:20Speaker 01

  and very similar to today, was we renew most of our customers on an annual basis. I didn't want to have to like, put on my sales hat and go do it. I have a much deeper relationship with our customers because I don't do this. Because they know when I call them, I'm not trying to sell them something. And it's Yeah. And by the way, the business doesn't suffer for it. Now, I did they, they do actually let me spike the ball, which is fun. So they'll do all this hard work and these long deal cycles or whatever. Towards the end, I'm building relationships with their executives and they'll let me come in and like, you know, ring the bell.

• 40:54Logan Bartlett?

  You're holding the jumbo check.

• 40:56Speaker 01

  Yeah, exactly. Exactly. And I feel like I did all the work and of course, all the people did the other, the rest of the work.

• 41:01Logan Bartlett?

  That's good. You've been fortunate enough to have some very impressive mentors in the technology ecosystem, one of which Toby Lukey from Shopify. And I'd heard he imparted some advice that I'd be curious your perspective on, but involving, and you alluded to this earlier, that you're not immune from, if you're not performing, potentially being replaced, but there's a slope of the line of the company. And then there's a slope of the line that you need to grow at as the leader of the business. How do you think about that? And how has that advice impacted you?

• 41:32Speaker 01

  It's funny, it's not just a leader. Everybody at the business has got to grow with the, actually, his, his advice was too, if the business grows 100% a year, you and your team's skillset has to grow beyond that, right? That's not going to be enough to grow at 100%, which by the way is, is hard. And so that really struck, stuck with me as the time went on, that there's never a time to be complacent in your growth. And so I, till this day, I look at myself every day and, you know, what am I doing to, you know, be a better leader? And so you never, you're never done with it. The sad part about it is, is that you end up having to say goodbye to a lot of people along the way that, that got you here. And I think there's a real art to how you make those separations.

• 42:17Speaker 01

  And I think we're pretty good at it, but you have to be real and, you know, some people, some founders think that they're going to kind of, keep people around and just give them a kind of a soft landing. It is a, the worst thing you can do. You, you need to be direct and honest and open with your employees. If they're not scaling, just say, hey, I'm going to help you find another job somewhere else. And we call them graduates. People are going to graduate from here and go somewhere else and. You know, but yes, you have to be prepared to make those changes because not everybody. I mean, frankly, most people can't scale at that pace. Somebody said to me the other, the other day, like, there's not a lot of founders out there that are running a billion dollar business that they founded because it takes such a completely different skill set. And so I've spent a lot of time trying to develop those skills.

• 43:02Speaker 01

  And really, part of it is not only the skills you develop, but the skills that you leave behind, right? What got me here in the early days is kinetic energy of doing everybody's job for them and running at a million miles an hour in different directions. It is not effective at scale.

• 43:16Logan Bartlett?

  The tactical insight from that point, because it's a very hard moment in the journey that you're talking about of the executives that got you there aren't going to be who get you there in the, in the future. So it sounds like being real with them about it, not trying to, you know, dance around it and actually moving on, graduating them from the company rather than trying to repurpose them. Are those the, the fair insights? Is there anything else that you guys have learned about how to do it?

• 43:43Speaker 01

  Well, I, I got, so yes, one piece that kind of helps me with this was, um, I have the opportunity once a quarter to talk to Satya Nadella as a mentor. And I, one of the very first pieces of advice, I was kind of struggling with my leadership team and thinking about like, how do I think about my leadership team? I mean, at the time we were a much smaller company, but we're here in Santa Barbara and I don't have, I don't have exposure to a lot of different kind of peers in the same scale and situation that I was in. And I said, how do you think about this? How do you think about your team? And he goes, it's really hard to, um, you know, really assess your team because you're so close to them. He said, so what I, what he does, and he goes, what I think you should do is always be in conversations with peers of your leaders.

• 44:28Speaker 01

  So like once a quarter, have a conversation with the head people officer somewhere else that you respect and admire, uh, chief revenue officer somewhere else that you respect and admire. Um, and it really helps create a, and by the way, this is, I wish I, I wish I had known him many, many years ago and had done this earlier.

• 44:43Speaker 01

  It's really helps to create a contrast between who you have in the seat versus what's available out in the market, or maybe not even available, but what's out there in the market. Uh, and it helps you get, um, to, uh, a real decision very quickly as to the, the skill and the scale of your talent that you have on hand. So having that piece, uh, that tool to my toolbox really, really works.

• 45:03Logan Bartlett?

  How do you keep your employees motivated to the ambition of where the company is and where it needs to go? Because if you're in San Francisco, you have OpenAI over there and you have Stripe over here and you have Facebook down the corner and Apple and all that. But

• 45:21Logan Bartlett?

  here, Procore in Santa Barbara is the huge fish. And I'm sure when they go home to their or go out to drinking with their buddies, like, you know, they've made it. They're at a far bigger scale of a business than a lot of the other local companies. Not to say there aren't other good businesses here, but keeping them aware that the mission is beyond, you know, what they see in Santa Barbara, but it's a global ambition. Is there any way that you found to do that?

• 45:48Speaker 01

  Well, it's probably the hardest thing you can do. But in the early days, it's easier because everyone feels it's us against the world, right? So but driving a sense of purpose into your organization where, you know, the average tenure at Procore is, you know, less than five years, right? So how do you get how do you get these folks, you know, engaged? And it's there's not one trick, right? But it does start with hiring the right people. Steve has this thing, which is the team hires and fires. So you really do, you have to assemble the right groups of people in order to make it to be a place that people want to come to every day. And so hiring to the values really matters. But driving a sense of purpose into the organization through your mission and vision. We have a

• 46:33Speaker 01

  lot of people here that really do believe in what we're trying to do here, improve the lives of everyone in construction, as well as just being engaged. And the engagement, one of the big tricks that we have is we encourage every Procore employee to go to job sites. Just go sit in the job site trailer for a half day and learn, you know, see the whites of the eyes of the person whose problems you're solving for, and you will The people that we hire tend to be like, I'm in this. I'm going to solve for this. A great, a couple of great examples. One is we send engineers to job sites. You know, instead of sitting in the darkness of their engineering room, they're sitting around job sites, watching the people use the software that they build every day. We tend to get engineers that will, there may be a feature enhancement that customers have been asking for for a while.

• 47:18Speaker 01

  Engineer sees it in real life. They will code and ship that code on an airplane on the way home from that job site. Right. Cause they're so, because that level of engagement is so high. Today, we have 36 of our largest customers here on site. And I'm encouraging everybody that possibly can be here at Procore to be in that room to really get a sense of what they are. So driving a sense of purpose and engagement is, it's hard. And you know, it's like I said, it's easy in the early days. The real trick is when you're shifting from first into the second gear, which is we are now big enough where people might not get it or whatever. So you have to really do everything you can to drive that kind of engagement and not assume that there's a better job offer right down the road that somebody might, might take.

• 48:03Logan Bartlett?

  Yeah. It's sort of like families with generational wealth. Like the first one makes it, second one saw how hard they worked and the third one messes it up and blows it. You know, it's one of those things you gotta be cognizant of.

• 48:14Speaker 01

  My grandfather used to say shirt sleeves to shirt sleeves and three generations, you know? You work in the field, you know, make some money and then, you know, the next generation spins it. And then the next generation has to go back to work in the field.

• 48:26Logan Bartlett?

  That's good. That's a good lesson. What are the important jobs of being a CEO is capital allocator across the business? How do you think about new initiatives and where to put money, what to invest in, all that?

• 48:37Speaker 01

  Yeah. So there's obviously lots of frameworks out there you can use to use, to do that. I'm a, you know, we do the Horizons framework. So that, that helps a lot when we, when we think about where to make investments.

• 48:48Logan Bartlett?

  Maybe for people that don't know, like, can you give the brief?

• 48:51Speaker 01

  So yeah, crossing the chasm zones to win Jeffrey Moore, Jeffrey's come and spoken to us about it. It's just a good framework, the the four zones. And it's basically from the, you know, the, the, the core of your business that you can't break all the way through these future investments that you want to make and how you allocate capital across those four zones. And for us, we are very disciplined over, you know, which zone we're going to put capital into. So we kind of start with our capital allocation at that level. How much do we have to invest and where are we going to put it? So we don't, you, you want to avoid over investing in the long term, over the horizon opportunities, but you want to make sure that you put the proper investments in the ones that are really going to pay dividends today.

• 49:36Speaker 01

  So, and so you, we use that as a framework where to start putting our capital. But it's, it's, it gets harder and harder the bigger you get with capital allocation because, you know, we service a global economy and there's, you know, owners, general contractors and subcontractors, there's the enterprise, there've been market, the SMB, there's a US market and these other markets that we're in, all of which have needs for resources in order to solve their needs. So it gets more and more challenging as you do so. But as long as you use a framework and we use that framework, you will get the big pieces right. The other thing as a capital allocator for a CEO is, is not just the capital you're going to, you know, that you're going to put into the business today, but like for Procore,

• 50:18Speaker 01

  we have to think about the capital that we have, that's, that we have to, you know, invest, right? So it's not, it's the, it's the capital that we have on the balance sheet that's not going to go into the business today. So it actually even gets more complicated as you get bigger. The, the good news is, is that if you, if you're disciplined, you will, you will probably be right. And the other thing is, is that we have, I do two things. I come up with the capital allocation and the strategy with input from my leaders. And then I have them do a bottoms up and then challenge me on that. And within that challenge comes out the answer. And that tends to be the right answer. So we do find ourselves throughout the year, making small tweaks to that because you learn things and some things don't work.

• 51:03Speaker 01

  But also in the, in the horizon, four items that are over the horizon, that are the, the big bets, you tend to make shifts on those pretty quickly because they're, they're essentially startups in your organization. You're learning something new every single day.

• 51:16Logan Bartlett?

  So as you guys have built more and more product surface area and how many products do you guys have today?

• 51:22Speaker 01

  Eleven.

• 51:23Logan Bartlett?

  Eleven. So as you get those off the ground and empowering innovation and people to be entrepreneurial in what they're going after while maintaining the consistency of what is the Procore platform, do you end up empowering like a GM type role to go after that and they get some cross-functional resources? Or what have you found about launching new products?

• 51:46Speaker 01

  So the business, our business itself is very matrix. So we do have people that are focused on owners in the product organization, general contractors and specialty contractors. But the challenges that we're solving for across those three stakeholders, there's in the Venn diagram, there's about an 80% overlap. So it doesn't make sense to have them focus on the commonalities and the platform features that kind of cross those things. So we do have, it's very matrix, but yes, we do have people that focus on the different stakeholders because the differences between each one of those stakeholders can be pretty big. You know, what an owner needs is far different than what a subcontractor needs. So, so we do, but they're not, it's not really a GM model. It's more of a specialized focus model.

• 52:28Speaker 01

  And you know, the, was it the Conway's Law that you ship the, you ship the code that represents, that mimics your org design? We've learned that lesson over the years too. If you, if you over engineer your org design incorrectly, you'll end up with a very inefficient product that is not going to market effectively. So we've learned that it's, it's really important to get your org design right. That's one of the areas where I spend a lot of time thinking because as a business evolves, org design matters. When you go from a US business to an international business, how you organize your teams gets really, really complicated. So, you know, anyway, so I advise org design matters.

• 53:06Logan Bartlett?

  On the international point, like what, what are the lessons in that and the org design point you were alluding to there?

• 53:14Speaker 01

  So it's really interesting, but from Procore's standpoint, when we were in 2017, we went to Australia, New Zealand and Canada. What we thought was going to happen was not what happened. It was a new motion for Procore. Obviously we're a US company. We hadn't done this before. And what we learned was We were kind of spoiled by being a known brand in the US market. And we kind of showed up, and this is being euphemistic. We kind of showed up in these new regions thinking like, we're here, you know? And everyone's like, that's great. Who are you?

• 53:47Logan Bartlett?

  Yeah.

• 53:48Speaker 01

  So what we learned along the way was the team that does the beachhead landing org design has got to be a very small, tight, autonomous team that basically can find the referenceable customers, do the brand marketing, build, build the brand and start building this organization. But much like when you invest in a small startup, it is very quickly, it gets to the point where you actually need a more of a formal design because that's not going to get you to the next level. So you have to be, as a leader, you have to remember that though you have a mature organization here in the US, that little startup has got to be, their, their talent has to evolve and probably has to change out as you grow.

• 54:32Speaker 01

  So you, that's the talent side. And on the org design side, you definitely need somebody back at corporate headquarters that is, that is

• 54:41Speaker 01

  helping them get the resources that they need in order to be successful. And we learned that somewhat of the hard way because if they don't get the resources they need, they can't be successful. But it's also hard to listen to a five person team when you're running hard and fast in this market.

• 54:56Logan Bartlett?

  So, so do you send someone from HQ to the local market and then higher end people with the cultural expertise as well? Or how do you make that work?

• 55:03Speaker 01

  That has been the, that has worked really well for us, primarily because of the people in the culture aspect of it. We, we basically are transplanting a, you know, a portion of Procore down there. That has worked very, very well for us, both in Australia, New Zealand and, and in UK, Ireland and Canada. Yeah. So that, that works.

• 55:22Logan Bartlett?

  There, there's a, there's a trade off that exists with expediency of decision making. And on the other hand, there's refinement of inputs and those two things are at odds with one another. How do you think about this trade off in being assertive and decisive, but also methodical and thoughtful?

• 55:43Speaker 01

  It's, it's not an exact. Science at all. My style is I like to gather is I like to gather probably more information than most before I make a decision, but I'm also very principled. So I kind of I know where I stand on the important pieces and on the pieces that are newer to me or the blast radius is smaller, I'm going to take more time trying to understand. It's not really consensus building, but like, like, you know, as you grow, you hire people who know more about their function than you do. So I really try to just ask the right questions and listen. I have this whole thing around inquiry

• 56:23Speaker 01

  over advocacy. I would much rather sit in a meeting as a leader and ask for input as opposed to tell everybody what the answer is. And some leaders, some leaders actually are the opposite. They just they know that they know the answer. They go in and tell everybody how to do their job. And we've hired people from large companies that you would know the brand of that the CEO runs the business that way, who are very uncomfortable with my leadership style because I'm very, very open and I want to hear people's input before I, you know, before I commit to a decision. Now, as my wife likes to say, the indecision is the decision. So you can't, you can't not make a decision. And actually, it's funny, Steve and I used to always say, people would ask us why we're successful. And we would say, we make one better decision every single day

• 57:08Speaker 01

  than all the bad decisions we make, you know. But the key is, is that we make the decisions.

• 57:12Logan Bartlett?

  Yeah.

• 57:13Speaker 01

  And we also look at problem spaces with the blast radius in mind. So we very much consider what the what the challenge, what the impact's going to be.

• 57:22Logan Bartlett?

  Yeah.

• 57:23Speaker 01

  And that's critical.

• 57:24Logan Bartlett?

  What about balancing growth and profitability? You've seen this pendulum swing back and forth, and you've gone from more bootstrappy to more high growth. How do you think about that?

• 57:32Speaker 01

  Yeah. So when you we, we actually are very fortunate to have. Lived through the phase of the market the way we have, which was for the first, what? 20, 19 years of Procore's history, it was grow, grow, grow, market share, market share, market share. And for a business, a vertical SaaS business like Procore, that's in an industry where it's going to be winner takes most, that really matters. So we had the latitude to grow kind of at all costs, right? Now, two things happened to Procore. One was in 2009, we ran out of money and nobody was going to invest any more money in Procore. So we had to get really scrappy, really, by the way, in the early days, we had no money too, but we, Steve and I have know how to

• 58:17Speaker 01

  be capital efficient because we had to, right? And so over the years, we've, we've had to have that. So it's kind of in our DNA to be capital efficient. But then we were growing, growing, growing. And then it was around three or four years ago where we started saying, okay, well, there are significant operational efficiencies that we can wring out of this business and not hamper our growth. And so we started doing that. Now, we started at like negative 35% operating margins. We had a long way to go. And then we were marching along there. And then along the way, the world that you live in changed their mind and decided that it was, all that mattered was, was profitability. And the good news was we already had started on that journey and we had been marching away and giving

• 58:58Speaker 01

  back operating margin more and more over time. And so, and here we are and delivering significant operating margin last year and again this year. But we never do it at the expense of growth. So to answer your question, we prioritize growth over operating margin slightly. So if we ever see an opportunity to grow this business, we are going to make the investment if we, if we feel confident in it. And fortunately for us, there's a lot of things we can do. But we also know that the more we focus, allocating less capital can actually speed you up. And that is very unintuitive to a lot of founders, but it's

• 59:38Speaker 01

  actually true. Scarcity actually drives velocity and it's just something that we, we know. And so we don't feel like we're sacrificing. Anything. And you know, we came up with this term efficient growth, which is kind of just what we run the business off of. And when I said that to the leadership team, like, look, our new mantra here is efficient growth. We need to make every decision kind of through that lens. I was wondering, like, am I going to be fighting my leaders on this? Because they're going to be like, no, no, you know, the good news was at Procore, they adopted it. And then it went throughout the entire organization. So we had people making decisions around not doing a catered lunch, right? Which we normally would do and just go in and do it a regular lunch and doing things like

• 1:00:23Speaker 01

  that, that actually matter all the way through the organization.

• 1:00:27Logan Bartlett?

  Was there a single all hands or something that you like really galvanized around it and did, was it, I assume, hard for some people to shift that that mindset?

• 1:00:35Speaker 01

  Well, I think, and that's my takeaway was, it was surprisingly easy for this organization. I'm not 100% certain why I'm grateful that it was. But yeah, I mean, we, I don't, I can't think of one difficult conversation I had with one leader around the fact that they weren't getting it.

• 1:00:49Logan Bartlett?

  That's interesting.

• 1:00:50Speaker 01

  Yeah.

• 1:00:51Logan Bartlett?

  What advice do you wish you had about running a business that you would give to founders today? Or that you do give to founders today in the role of being a mentor to early stage companies?

• 1:01:01Speaker 01

  It's all, there's nothing that matters. Well, first, you have to have a good product and you have to have big TAM, right? But beyond that, it, nothing matters more than people. And so you can be fixated on, I know founders, they get very fixated on their mission and they don't, they don't spend enough time thinking about the people. But it's all about talent. And you just have to get really, really good at that. And you have to get real fast. So I, I wish I, I've developed a very strong muscle over the years and how to, you know, attract and retain top talent and also to jettison poor talent. But I wish I had, I wish I had had a mentor early on who kind of taught me that. Because I, everything I learned, I learned somewhat the hard way.

• 1:01:42Logan Bartlett?

  Yeah.

• 1:01:42Speaker 01

  I wish somebody would have helped me with that. So I spend a lot of time with founders and trying to figure out how to teach them that.

• 1:01:48Logan Bartlett?

  Pricing is an important derivative of all things related to the business. And you guys made a conscious decision in the early days to pursue volume based pricing versus seat based pricing, I guess, as a, this is maybe a little bit of a, the specifics of it might be a little niche and bespoke to your industry or how you guys think about it. But can you talk through that, that decision and how that downstream sort of impacted a bunch of business considerations as well?

• 1:02:16Speaker 01

  Yeah, so this is will will sound strange to most people that aren't in our business, but we have volume-based pricing. So if you're a general contractor doing $100 million a year, you'll pay a certain basis points based on the number of products of ours that you run on an annual basis. But let me back up and tell you how we got there. First and foremost, this business is all about connecting everyone in construction on a global platform. Owners, GCs, and subs, and material and equipment suppliers, insurers, and lenders, everybody on a that's involved in a project, everybody has got to be in the same ecosystem, sharing the same workflows and the same data. I knew when I started Procore that if I did a per-seat license model, which is was that was really the only pricing model that existed at

• 1:02:59Speaker 01

  the time, that our customers were going to start making value decisions around Logan doesn't need a license, he's only going to be on the job for whatever. And then all these workflows would break and my vision wasn't going to happen. So I knew early on that that wasn't going to work. So I remember talking to an early customer who was using a client-server solution that was dominant in the industry at the time, and they were a seat license business. And he's like, well, I'm going to leave this this this platform, not platform, this client-server environment, I'm coming to Procore. And, you know, how much is it going to cost? And I'm like, well, I'm still trying to come up with the yardstick, right? So I said, how much, you know, how much volume are you doing every year? I actually didn't, I think I said, how much construction are you doing every

• 1:03:44Speaker 01

  year? And he goes, oh, that's really interesting. You ask that because I buy my insurance based on my construction volume that I do. And he said, you know, if you're thinking about how to measure my business versus a competitor or another business, construction volume is a really good indicator of the size and scale of the business. And so all I did at that point was I took his per-seat licensing model for, and it was like $35,000 for X number of seats, and then his volume. And I'm like, okay, I'm going to come up, I'm going to back into an equation that comes up with the number of basis points that equates to what he's paying per seats. And that was the genesis of our of our pricing model. And it was hard in the beginning. Frankly, it's even hard sometimes today for customers to buy into that.

• 1:04:28Speaker 01

  But CFOs love it because it actually, they only buy what they're going to use. And it gives them the ability to kind of manage their consumption as opposed to it just being a bunch of licenses that aren't getting used.

• 1:04:42Logan Bartlett?

  And it's aligned with their success, right? Or their scale and their growth rather than headcount, I assume is a little bit orthogonal in some ways to the outcome.

• 1:04:51Speaker 01

  It's exactly aligned with their scale of their business. Their success and our success are very much aligned.

• 1:04:57Logan Bartlett?

  I want to back all the way up to your path to starting ProCore. I would say, we talked about Steve. Steve had a very traditional, probably Silicon Valley, Stanford experience. You did not. It wasn't the traditional educational path to being an entrepreneur. Can you talk about early days in college and what led you to the ProCore?

• 1:05:24Speaker 01

  Yeah. It's interesting as you kind of get to this point in life where you reflect on everything that happened to you. When I was in high school, it was very clear that I was not a good student. I was curious, but I was only curious about the things I was curious about. And so it turns out, you know, I have a reading disability and also that what you would call like an autodidact. You give me something that I'm passionate about and I will become an expert on it in just a number of days. In fact, right now, I'm going through a course right now to become a timber frame carpenter. So I'm going to build a timber frame barn.

• 1:06:08Speaker 01

  And so I'm learning all of the joinery and everything else. So like, that's my personality type. There was not, society wasn't built for people like us, right? We didn't fit the mold. You know, my guidance counselor in high school was like, I don't know what to do with you. Anyway, I go to University of Arizona and I get distracted and I essentially get kicked out. And so then I have to figure out what I'm gonna do. And so I go and become a security guard at my grandfather's building where he lived in an assisted living situation, and decided that I didn't want to do that. So I went back to community college and I got a 4.0 because I realized, it wasn't anything other than the fact I wanted to

• 1:06:50Speaker 01

  prove to the world that I was frickin' smart. So I just brute forced my way through some community college classes and I did pretty well. Ended up being accepted into University of San Francisco's pre-med program, went up to the Bay Area to do that. I had a few months before the fall semester began, got a job working in construction. I'd grown up in construction, I knew construction and I'm passionate about construction. Anyway, the fall came and I decided that it wasn't time for me to go to school because I was having so much fun building. I essentially never went back. So I'm essentially a college dropout without any of that experience. And, you know, but I found Steve and Steve had

• 1:07:32Speaker 01

  all the credentials and he was, you know, he was just a great partner to kind of bring all of that kind of credibility and learnings.

• 1:07:41Logan Bartlett?

  Is there a, I mean, I guess follow your passion and find what you're uniquely interested in, but is there any lesson you would impart, you have a son, that you have shared in that whole thing that's interesting for people?

• 1:07:54Speaker 01

  Well, I think it's, again, it's know thyself, right? I know my weaknesses. If you're not gonna be a doctor or a lawyer or an accountant or whatever, and you don't need to get a four-year degree, you should, the sooner you recognize that, the better. Because now it's, now you're in the camp of, I have to develop a skill of some sort. And hopefully you have some passion around something that you can develop a skill around. But I think it's really important that we find a place for the people that have as much passion and horsepower as I have, to have a place in the society where they can actually contribute. And you look, you know, a lot of, a lot of founders are similar to me. They're You know, they don't fit into the normal mold.

• 1:08:36Speaker 01

  But if you if you empower those people to actually go do what they're meant to do, you can get a lot out of them.

• 1:08:42Logan Bartlett?

  It seems like we've we've maybe over rotated or definitely rotated pretty far to the four-year liberal arts school degrees instead of the more practical, applicable things that translate to direct jobs in there. I know you you are passionate about this, but can you speak about like that?

• 1:09:03Speaker 01

  Well, yeah, so I'm so passionate about this. Like, for instance, one of the biggest crimes in America is the fact that we took shop class out of high school. I remember, you know, shop class was just, you know, it taught me so much about how to work with my hands and gave me so much confidence that I could do things. So, you know, there's that aspect of it. There's there's, you know, the trade schools that are out there. There's there's so many different ways you can make a living in this world that isn't a liberal arts degree. Yeah, so I was just talking to all of our customers that are here on campus and we were talking about the the labor shortage in construction.

• 1:09:44Speaker 01

  And, you know, high school guidance counselors do not get credit for sending kids to trade schools. So they get and by the way, there's this perverse kind of incentive program, which is, you know, the I think they get more points on their on their on their card if they send somebody to Stanford than if they send somebody to Santa Barbara City College and they get zero points for sending them to trade school. So there's this this inverse incentive program that keeps people out of trades, which is which is a huge crime. And so that's an area where I really want to focus. And then it's the stigma of entering a job that doesn't have the kind of the shine and polish of a, you know, doctor, lawyer, accountant associated with it that we still have to overcome.

• 1:10:27Speaker 01

  So we live in a society that I think doesn't quite understand that a pipe fitter can make six figures a year being a pipe fitter and a college degree program, a person that has an accounting degree might make $65,000 the first year with four years of debt behind him.

• 1:10:43Logan Bartlett?

  And maybe AI is going to come for in some way, who knows, right?

• 1:10:46Speaker 01

  And by the way, AI is not installing pipe anytime soon.

• 1:10:49Logan Bartlett?

  No, yes, we're a long way away from that. Back up to the Charlie Munger thing, I think he had a quote that like, I underestimate, I consider myself top 1% in, in taking into consideration incentives and I still underestimate it every day or something. It's interesting like how many societal ways we're, we're shepherding people to this path that I had no idea on the guidance counselor placement point system that's like discouraging, you know, trade schools and stuff.

• 1:11:17Speaker 01

  Yeah, yeah, yeah, we do live in an interesting time. I was talking to one of our customers about that, which is for hundreds or thousands of years, society worked pretty much the same way. Like I was talking about when I was a kid, I had to be home when the streetlights went out, right? If I wasn't home before the streetlights went out, I was going to catch all mighty hell from my mom. And then you think, you know, that was 75 years of that probably. Prior to that was you had to be home before the sun came down. And then we lived through this era where now everybody's connected, right? And they're, they're always going to be connected forever. So we, we are going through a massive transformation of how the society runs and operates that we get this vantage point of seeing that nobody, no other generation before us was ever going to see. And it's both, both a blessing and a curse.

• 1:12:02Logan Bartlett?

  Oh, it's crazy. I mean, there's, there's, if you think about like 1600 to 1750, if you drop someone from 1600 into 1750, they, the world would look mostly the same to them. If you take someone from 1870 and drop them into today, I mean, just to think about the amount of change we've, we've had in our lifetime and it feels like we're just on the, it's exponential, right? It's definitely compounding in a meaningful way.

• 1:12:24Speaker 01

  Like if somehow I had gone to sleep in 1986 when I graduated high school and you woke me up today, I would be shocked. By the way, we were talking about it, we all had Encyclopedia Britannica, that's where we got our information and we were all, I was talking to my customers about this and that, you know, if, if you had to do a book report on animals, all the boys wanted to do it on lions and all the girls wanted to do it on horses, right? So essentially the next day when you, you turned in your book report, everybody gave the same book report essentially because you only had five paragraphs. Encyclopedia Britannica to gather the data on your subject and like what a world we live in today where.

• 1:13:00Logan Bartlett?

  It's it's yeah, it's fascinating every single day and the manifestations of it. I guess I'm curious the artificial intelligence point that you guys you guys are witnessing. Are there specific workflows or processes or things that you're observing? Or you see the opportunity for AI with with brokers business?

• 1:13:17Speaker 01

  I just got a great example of one from one of our customers who's a subcontractor.

• 1:13:23Speaker 01

  Subcontractors, the majority of their costs are people, right? You know, the people fitting pipes or whatever. And so if you can save, if you can get the same job done with one less person, that drops into the bottom line and you're, you know, you're doing well. This one company has figured out how to basically get more done with less people using AI. Essentially getting the right person to the right job on the right day with the right material, right? Right, equipment. It's a really hard thing to do. And they they're using patterns in their data to get people to do that. And they're they're saving so many man hours. It's it's shocking. It was actually, you know, I think her example was they're taking the job that would take 12 people yesterday.

• 1:14:05Speaker 01

  And now they're doing the same job with the same quality, same velocity with six people.

• 1:14:09Logan Bartlett?

  Have you guys started to input it into your product itself?

• 1:14:12Speaker 01

  Most definitely. Yeah. So for so the beauty of Procore, again, being a being a platform is we have this corpus of data, right? And construction, though, everything is a prototype. The the processes within construction are the same over and over again. So if you're building a 120 bed hospital in Miami-Dade County, we have in our database, we have, you know, 3,000 of those around the US or globally that we can then look for pattern recognitions and try to help identify challenges before they happen or next best actions for people to take in the field. So we were just all talking as a group with our customers about what we're going to look back on today. And we're going to say, wow, this is this is the time where this industry changed dramatically.

• 1:14:55Speaker 01

  It's going to be much less of a lone wolf at the job site, kind of trying to assemble and figure stuff out to a data driven. Business.

• 1:15:04Logan Bartlett?

  Yeah, and I guess you guys benefit from being back to the platform point, but you have the centricity of data to make those recommendations on this is deviating from the standard pricing of that pipe, or here's, you know, you're missing this part that checks a box from a compliance or safety standpoint or whatever. So.

• 1:15:21Speaker 01

  Great. Here, I'll give you a great example. Everyone knows about the supply chain challenges. Supply chain challenges really hit the construction industry hard during COVID. And most of that has worked its way out, but except for complex electronic equipment. And so if you're building a building that requires a, you know, a lighting control system or something that has complex electronic equipment in it, certain manufacturers are taking about 24 months to deliver the, the, the, the equipment. Well, that's, that's forever. That will stop a job from moving forward and that's, that's critical. We know in our system which air handlers or which lighting control systems are actually getting delivered quickly and which ones are being delivered late. So if a contractor is putting together

• 1:16:06Speaker 01

  the, the plan and pro core for their next project and they put in a lighting control unit that we know has a 24 month lead time, we can pop up and tell them, hey, you might not want to do that. You might want to look at these three other ones that are actually coming much faster. It's that level of detail that will, and by the way, that, that means that a project that would normally take 36 months can now take 22 months and that's real money for everyone.

• 1:16:28Logan Bartlett?

  It's fascinating. How, how did an eighth grade job at a cabinet shop influence your founding journey?

• 1:16:34Speaker 01

  So I was a, prior to that, someone of a privileged kid in a privileged society down in La Jolla, California. And I hadn't really seen much of the world. When I walked into that cabinet shop that day and they welcomed me, I was working with carpenters. And these were people that lived in a different part of town than I'd ever been to before. But they also had a different mentality than everybody else. These were like people that were crafts people that took pride in what they were able to do. And they did things that were awe inspiring to me with their hands. And so all of a sudden I was like, I found my people. It kind of sounds funny I say it that way, but I did. I'm like,

• 1:17:13Speaker 01

  Want to be like these people. And by the way, my dad was a banker and I'd gone to like the big corporate boardrooms and, you know, and the bring your kid to work stuff. I had no interest in any of that. I wanted to be a crafts person. So that got me excited about it and all I wanted to do was learn. And fortunately for me, Woody,

• 1:17:31Speaker 01

  Jefferson put me, who ran the company, put me into the Journeyman Apprentice Carpenter's Program at the local union hall when I was in high school. And gave me the opportunity to become an apprentice carpenter. And that just kind of sealed my fate. Funny thing was too, in 19, like, whenever they came out, like 83 or whatever, I got a TRSAD computer and I loved BASIC. I loved programming. My dad was saying not that long ago to me, we were talking about like my childhood and stuff like, if you looked at my passions, right, they collided into Procore, it's technology and construction. So.

• 1:18:04Logan Bartlett?

  Fascinating. And your mom also got you a book, How Things Work or something, which I assume was around the same time, pretty formative period.

• 1:18:10Speaker 01

  She actually, funny enough, she got it for me, but she kept it on her bedside table as I was growing up. And we would just spend lots of time going through it and just, and then, oh, and I'll never forget. So then I got to be fascinated with how things work. So I started dismantling stuff around the house. I'll never forget, I dismantled my dad's corded drill. And I couldn't get it back together again. And so I kind of like put it in a drawer where he couldn't find it. I was just waiting for him to come, you know, and kind of rip me apart. And he finally was looking for it. I had to fess up to the fact that I, I did it too with a carbureator. I did, my, one of my first girlfriends had a car that back in the day, he had a carbureator. And she's like, I have a problem with my carbureator. I'm like, I could fix it.

• 1:18:52Speaker 01

  I took, I took it apart and it was like probably, I don't know, 140 pieces. When I put it back together, there was like 17 pieces left over.

• 1:18:58Logan Bartlett?

  Missing from the, yeah.

• 1:18:59Speaker 01

  And I'm like, oh, I am so much, I am so much.

• 1:19:02Logan Bartlett?

  I assume ex-girlfriend after that.

• 1:19:04Speaker 01

  She was not, she was not very happy with me.

• 1:19:06Logan Bartlett?

  The, the early days of like the original insider, the kernel for Procore was, was it actually rooted in your own home? And sort of seeing how inefficient the process was, like what was that? You, you guys moved from San Francisco down here to Santa Barbara. And your wife said, you can come with. Me or not, but I'm going there. So maybe take us through the the actual kernel of insight.

• 1:19:28Speaker 01

  Yeah. So she did. So I was at the time doing this HR consultancy. So I was on planes all the time. I was in Charlotte and I was in Dallas. I was never home.

• 1:19:35Logan Bartlett?

  Was it? Was it like PeopleSoft, like?

• 1:19:38Speaker 01

  Actually putting web front ends on PeopleSoft. So PeopleSoft time was at the time was client server. And we, I was in the interactive voice response business. Do you know what that is?

• 1:19:47Logan Bartlett?

  Yeah, yeah.

• 1:19:47Speaker 01

  So I was putting telephony front ends on PeopleSoft. This is before the internet.

• 1:19:52Logan Bartlett?

  For people that don't know, very, very sexy stuff, but IVR. So PeopleSoft is an HR company that was started by Dave Duffield, the new Boosery, which they've now started Workday, right? Which is the cloud version of it. But IVR is like when you, when you call a phone and it's basically like press one for this, two for this and that kind of stuff.

• 1:20:10Speaker 01

  Yes, for all the old timers, you used to have to call your bank to get your bank balance and put in 900 numbers to get to it. That's IVR. And so it's really a technology interface to analog phones. And how I got into that is a whole nother story, but I, yeah, so I was doing, I was, I was doing that with these kind of Fortune 100 companies and traveling all over the world, putting these telephone front ends on. So you can enroll in your benefits program at Bank of America or whatever, because that was the way you did it. They had call centers too at the time, because if you couldn't figure out your numbers, you had to hit zero and you go to a call center. Bank of America had a call center. I think they had like 300 people in it, only for Bank of America employees.

• 1:20:52Logan Bartlett?

  So if I'm an employee of Bank of America and I need to enroll, it's open enrollment, I need to get my new. And so I'm calling in, now it's obviously all on the internet, but, but I'm calling in and saying, press one for this, press two for this. And that was how you did the triaging of what plan you wanted to pick.

• 1:21:07Speaker 01

  Yeah. And then I also became the, the voice. So I was like the voice of Applied Materials University.

• 1:21:12Logan Bartlett?

  Oh, wow.

• 1:21:13Speaker 01

  Like, so I would, I would program the call tree and I'd be like, you know, press one for, and then I'd hit save and then I'd program the call. Anyway, it was very weird. And, but at the same time, the, the industry evolved and all of these companies started coming to me saying, hey, um, I was working for somebody. Hey, do you want to, uh, there's this new thing called the internet. Can we, can you put a web front end instead of a telephony front end on front of this? And I'm like, Sure. So that's kind of how I I made that transition into that part of my world. So and I got good at writing software for the Internet.

• 1:21:44Logan Bartlett?

  And so then you moved down here in 2000, 2001?

• 1:21:48Speaker 01

  Yeah, yeah. So I eventually was it was it was in 1999, actually.

• 1:21:52Logan Bartlett?

  Okay.

• 1:21:53Speaker 01

  When I got the phone call, she's like, we're moving to Santa Barbara. I was in Charlotte at the time. And I'm like, no, we're not. And she said, no, yes, my your son and I are moving there.

• 1:22:00Logan Bartlett?

  Yeah, I don't know how we define we, but.

• 1:22:02Speaker 01

  Yeah, we is really not you. She's like, I don't see you ever anyways. And, you know. Anyway, so we ended up coming down here, bought a house. She wanted to remodel it. And that's kind of where so then I would fly in on Thursday nights. And I the first thing I do is go to Kinko's because I'm really passionate about scheduling. So I was doing all the scheduling on this job with Microsoft Project. And so I would go to Kinko's and print out a big Gantt chart. I'd go back to the job site trailer and I'd meet all the subs. I'm like, OK, last week you said you're going to do this. What did you do? And whatever, you know, and next week, what are you going to do? And so I'd write on the thing and then I'd put it back into Microsoft Project. And then, anyway, what I learned was a lot of times when I showed up, a lot of things that they said that they were going to do that week didn't get done.

• 1:22:46Speaker 01

  What I really found out was, by the way, right there is a surf spot called Rincon, which is one of the most famous surf spots in California. What I found was when there was a point break out there, nobody would go to work, right? And so I was I created a correlation between my schedule and the surf report. And anyway, so I'm like, wow, there's there's no certainty in the schedule. But these people all know what they need to do. So if I can web enable this, I will. So essentially, I took the that's a funny story too, but essentially, I took the the needs I had as a person building a house, watching my money fly out the door with no accountability and no no telemetry into how it was going. To I'm going to corral this whole chaos and I'm going to put together a system that's

• 1:23:31Speaker 01

  going to actually allow me to manage my project.

• 1:23:33Logan Bartlett?

  And there's probably a lot of dependencies of if this person needs to do this on that time and a bunch of derivative considerations. And so the logic building all that stuff out.

• 1:23:41Speaker 01

  Yeah. And if the carpenter, you know, Jim and the drywall, drywaller, whatever bark are sharing information about the, it's a six foot break in Ringcon, they're both not going to show up.

• 1:23:51Logan Bartlett?

  Yeah, that's funny. In your mind, what's the coolest construction project that Pro Corps worked on? Anything that stands out?

• 1:23:57Speaker 01

  So many cool ones. It's such a privilege. By the way, last week I went to go see a data center that I'd never been in a, data centers are highly secure facilities. It's like government facility. So I got somebody kind of essentially sneak me into a data center under construction. But I will say, without a doubt is, it's a project called ITER, I-T-E-R. It's in the south of France. It's a, I think 35 nations have coming together to build a nuclear fusion reactor. And it is, first of all, it's in the middle of South of France. So it's, it's vineyards as far as the eye can see. And then there's this machine that's the size of a city that they're building there. And just, just to be able to walk through and be on the inside of a nuclear fusion, I was like literally inside the, the

• 1:24:41Speaker 01

  fusion reactor itself. It's not done yet.

• 1:24:44Logan Bartlett?

  Yeah, yeah.

• 1:24:45Speaker 01

  You know, you're like, I can't believe I'm able to do that. And the scale is just remarkable.

• 1:24:49Logan Bartlett?

  You say a city. I mean, how big is it? Is it actually?

• 1:24:52Speaker 01

  It's, um, it's a, it's a whole complex of buildings of the size of, in some cases, like multiple sports arenas put together.

• 1:25:01Logan Bartlett?

  Wow.

• 1:25:02Speaker 01

  And, you know, ceilings that are, you know, I don't know, 150 feet high. Like, it's, it's, yeah. And bolts that are this big around. Like it's, this stuff's big. But by the way, if you think about it, when they conquer this fusion, the world's going to change, right? The dependency on energy is going to.

• 1:25:23Speaker 01

  I hopefully go away and I just look at it like, man, the things that we're building are going to change the world and it's a privilege to be able to see, you know?

• 1:25:31Logan Bartlett?

  That's super cool. We talked about you mentoring founders and getting to meet early stage founders, but I heard you say that you have gotten good at figuring out who has the fire in the belly to like go the distance on that. I guess that's partially my job as well, but I'm curious, are there any things that you've you've found either question wise or deterministic, like things you can figure out from that?

• 1:25:55Speaker 01

  You know, it's funny, the best, the best way I I kind of test it is I challenge them on their beliefs around their product and their mission and their vision. And the ones that just take the punch and come right back and how, you know, and basically are bought in are the ones that I believe are going to have the, the, the kind of the kinetic energy necessary to get through. It's funny. So there's a technology program at UCSB for people. It's like an entrepreneurial program. And so I've talked to them several times and they'll, they'll come down here. And I'll get, I'll often get the question, which is like, you know, I'll ask people like, what do you want to do? And when people answer, I want to be an entrepreneur. I'm like, that's not a thing, right? Like, you don't become an entrepreneur.

• 1:26:40Logan Bartlett?

  That's a basket of like a category. There's like specific things underpinning that.

• 1:26:44Speaker 01

  Right. And really what it is, is that you're going to do something that this is, is novel and unique more than somebody else. And you're going to deliver value that hasn't been discovered yet in a way that's going to make you differentiated in the marketplace. Then people say you're an entrepreneur. But so I always say to them, like, I'm like, you want to be careful because people that say they want to be an entrepreneur, they haven't found the thing. So you just want to be careful that you're not, you're not just doing this because you admire people who are successful entrepreneurs and you want to, you want to be Mark Cuban, right?

• 1:27:17Logan Bartlett?

  Yeah, yeah, yeah.

• 1:27:17Speaker 01

  You can't be Mark Cuban, right? Like you can go do something and you can, but, but I, I'm very cautious of founders that are doing it for the wrong reasons.

• 1:27:26Logan Bartlett?

  Interesting. And so, so does that mean that they need, there needs to be a unique insight and resonance with the problem that they're going after, rather than just wanting to solve something and finding the opportunity within it?

• 1:27:37Speaker 01

  Absolutely. And better, and hopefully they actually really understand the problem space that they're getting into. And that means that they've either Been exposed to it. It's something they're knowledgeable about. And it's also funny with these entrepreneurs programs, which is most of the products that they're building up there are related to student issues.

• 1:27:58Logan Bartlett?

  Of course.

• 1:27:59Speaker 01

  Like, oh, textbook aggregation, or student housing, or whatever. And I'm like, you realize students have very little money.

• 1:28:05Logan Bartlett?

  Yeah, exactly. But it's their only exposure. It's their worldview. Yeah.

• 1:28:11Speaker 01

  They didn't have the privilege of being in the eighth grade and working in a cabinet shop.

• 1:28:14Logan Bartlett?

  That's right. That's right. Yeah. It's a funny thing that it's hard without working to some extent, especially B to B problems. Consumer, you can have a unique insight just as a person in the world. But with B to B, you're not really entitled to an opinion about construction platforms unless you are somewhere in the industry or have some exposure to it.

• 1:28:34Speaker 01

  Right.

• 1:28:34Logan Bartlett?

  So it's interesting.

• 1:28:35Speaker 01

  Well, the beauty of our industry, too, is a lot of people, the construction industry is huge. A lot of people grow up, you know, their families. And I mean, everyone seems to be in construction or knows somebody in construction. So, but it's even more, you know, out there. Like, I don't think a college grad is going to write legal software.

• 1:28:53Logan Bartlett?

  Yes.

• 1:28:54Speaker 01

  But they might be able to, you know, compete with Procore because there's a lot of people that understand construction.

• 1:28:58Logan Bartlett?

  Yeah, that's interesting. We were just talking about, you know, random points of serendipity along the journey of people that intervened and sort of changed the course of your life as we wrapped. I'm curious. It sounds like someone comes to mind.

• 1:29:10Speaker 01

  Yeah, well, by the way, there's a handful because I think we all have them. But the one that really comes to mind is someone I wish I could find, and I don't think I'll ever be able to find this person again. But it was when I was a carpenter in the Bay Area before I was supposed to go back to USF. And it was late in the afternoon on a Friday. I was working on building a deck for some high net worth person under the Sutro Tower in the Bay Area. And the personal assistant to the owner of the house would come out every day. We'd have lunch together and just talk. And it was a Friday, and it was the end of the day. And I was putting my tools away. And she walked out, and she goes, she goes, you know, Tumi, I think I'm just gonna, I want to say something to you. And I said, what? She goes, you seem like you're

• 1:29:52Speaker 01

  In the wrong job. You seem like, you know, you grew up in a good family. You seem pretty intelligent. You seem like you could be doing more than what you're doing or building a deck right now. And I went home that day, I quit my job. The next day, a guy named Skip Steeble, who was running a technology company in the Bay Area, literally knocked on my front door and offered me a technology job out of another story, which should have never happened, but I just happened to be home because I quit my job. And that would have not happened if this person hadn't had given me that thought.

• 1:30:21Logan Bartlett?

  That's fascinating.

• 1:30:22Speaker 01

  Yeah, and I wish, I don't remember her name, and I, but yeah.

• 1:30:26Logan Bartlett?

  But changed the course of, of, and, yeah, I mean, the randomness and the serendipity of some of these interventions, I, yeah, we were saying, like, the folks at Lead Edge, Nime Meta, who is one of your investors, like, sort of connected me with Battery, which otherwise, I wouldn't have gotten hired in the venture. I had nothing that jumped out from my resume that said, oh, yeah, this person is gonna make it, which is, yeah, I'm indebted to them for having done it, as they remind me occasionally.

• 1:30:53Speaker 01

  So we all have these people, and we all have to be, take a moment, and I always say, like, sometimes I'm shaving in the morning, and I have a moment where I'm just like, there's like, four or five people that, without their kind of belief in me, I don't know if I would be doing what I'm doing today.

• 1:31:07Logan Bartlett?

  Yeah, it's cool. You've taken to building complex Lego structures as like a therapeutic exercise. Can you speak to why you enjoy this so much?

• 1:31:17Speaker 01

  It's funny how uncomfortable of a subject this used to be for me.

• 1:31:20Logan Bartlett?

  Oh, really?

• 1:31:20Speaker 01

  Because, well, because it's like, I had somebody make fun of me one time, like, I'm a grown adult, and they were making fun of me, like, about it, and I was like, I'm like, I can't believe that I'm reacting like a sixth grader on this one.

• 1:31:31Logan Bartlett?

  Yeah, the bullies from, yeah.

• 1:31:33Speaker 01

  Yeah, but, I'm a builder at heart.

• 1:31:37Logan Bartlett?

  Yeah.

• 1:31:37Speaker 01

  You know, like I said, I'm doing this whole carpentry program right now to become a timber frame carpenter. And so I'm always wanting to build something. It's not always practical to put your tool bags on and go out and build stuff. What I like about Lego are twofold. One is you get the satisfaction of building. By the way, same as a business, right? Every day I'm building Procore. Like I look at that. That's probably one of the reasons why I'm so engaged with Procore is I'm never done building it. But with a Lego set, like you start with something and when you're done, an hour later, you've actually done something, even if it's a component of something bigger. And you get this sense of satisfaction of actually doing something, building something. So for me, it's that.

• 1:32:19Speaker 01

  The other is that, and my wife will attest to this, Procore consumes me, right? She always goes, God, I hope someday, if you're not at Procore, you figure out, like, you figure something else out.

• 1:32:32Logan Bartlett?

  Yeah, another passion.

• 1:32:33Speaker 01

  Yeah, because this is like, this is all you do. And so it really does help me shut off the kind of never-ending problem-solving Procore engine that's in my head and allows me to like, not think about it. I also like to hike a lot and I find that if I go off the trail and I rock hop up the riverbed, it's the same sensation. You can't stop and you can't mid-hop stop and think about Procore. If you get your footing wrong, you're going to fall and you're going to kill yourself.

• 1:33:01Logan Bartlett?

  Yeah.

• 1:33:01Speaker 01

  So like, I find like doing things like that are great distractions as well.

• 1:33:05Logan Bartlett?

  Interesting, yeah. Have you ever looked at Lego's business?

• 1:33:09Speaker 01

  Oh, yeah. By the way, I just listened to a podcast, three-part. It is fascinating.

• 1:33:14Logan Bartlett?

  It's insane.

• 1:33:15Speaker 01

  And how they started off with like, they were a toy company and they were failing and...

• 1:33:19Logan Bartlett?

  Yeah. Yeah. It's a fascinating company and structure and all of that.

• 1:33:24Speaker 01

  I really want to meet the current CEO. I'm very, very interested in the way he thinks about the world.

• 1:33:30Logan Bartlett?

  How do you use Lego in the business?

• 1:33:32Speaker 01

  So we have a, we have a program where we educate students. We want to really get them excited about construction early on. And we partner with Apple to do some stuff and we were very interested in solving the labor problem. And we think what's the best way to do that? Let's get them young. So we have a Lego game that we have put together. In fact, and so the students use Procore to build a Lego building. And there's, you know, RFIs that have to happen, there's submittals and there's change orders that have to happen along the way. And actually, the building that they're building is this building.

• 1:34:05Logan Bartlett?

  Oh, no way.

• 1:34:06Speaker 01

  It's an exact replica. So it's a full board game with an instruction manual and as well as an access to Procore.

• 1:34:11Logan Bartlett?

  How old are these students?

• 1:34:12Speaker 01

  We do K through 12. We also... I've done it.

• 1:34:16Logan Bartlett?

  Yeah.

• 1:34:18Speaker 01

  All of us kids.

• 1:34:19Logan Bartlett?

  Yeah.

• 1:34:20Speaker 01

  But yeah, it's a really good way to get people to kind of understand what Broken Word does.

• 1:34:24Logan Bartlett?

  Can you custom commission things from Lego to build designs of your building?

• 1:34:30Speaker 01

  Certainly can. There's a whole industry out there around this where, yeah, you can go and have, you can send a set of blueprints of your house and they'll, they'll make you a replica of it.

• 1:34:40Logan Bartlett?

  That's fascinating. And it's actually Lego proper. It's not like some offshoot derivative brand.

• 1:34:44Speaker 01

  I don't believe in the offshoot.

• 1:34:46Logan Bartlett?

  Yeah, we have a purist at heart here.

• 1:34:48Speaker 01

  If it's not Lego, it's not Lego.

• 1:34:50Logan Bartlett?

  What's your, what's your, what's your favorite structure that you've actually built?

• 1:34:54Speaker 01

  I just finished Notre Dame.

• 1:34:57Logan Bartlett?

  Oh, cool.

• 1:34:57Speaker 01

  And it's like a 9,000 piece and it weighs 40 some odd pounds.

• 1:35:01Logan Bartlett?

  And how long does that take?

• 1:35:02Speaker 01

  Well, it's funny. People keep asking that and I do it in fits and starts.

• 1:35:05Logan Bartlett?

  Yeah, got it.

• 1:35:05Speaker 01

  So like I'll do it at like an hour and a half after dinner or whatever.

• 1:35:07Logan Bartlett?

  Sort of episodic.

• 1:35:08Speaker 01

  So yeah, it's, you know, if I added it all up, it's probably 30 hours.

• 1:35:13Logan Bartlett?

  Wow. And what do you do with them? Are they displayed around your house? Do you break them, break them down?

• 1:35:17Speaker 01

  No, well, the two, two quick stories. My wife will not let them stay in the house. She refuses to. So we send them.

• 1:35:24Logan Bartlett?

  Sounds like she's a, she's a tough customer. She runs a tough ship in how.

• 1:35:28Speaker 01

  There's something to be said for having a, having a strong wife, right?

• 1:35:31Logan Bartlett?

  Yeah.

• 1:35:32Speaker 01

  By the way, talk about humble, like she keeps me as humble.

• 1:35:35Logan Bartlett?

  That's good. That's what you need.

• 1:35:36Speaker 01

  She is so unimpressed with me, Logan. It is absolutely remarkable. So we send these things to our regional offices. So like our Dublin office has the Titanic.

• 1:35:46Logan Bartlett?

  Oh, cool.

• 1:35:46Speaker 01

  And, you know, the, the Paris office has Eiffel Tower and like, you know, so I do that. Plus I, I selfishly keep, I have a kind of a man cave up at my ranch. And so I keep the construction equipment ones I built. Like I built a D11 bulldozer and I just built a construction crane that's, and you can control it with your iPhone. You know, the hook, the, the crawler and every, it's really pretty cool.

• 1:36:09Logan Bartlett?

  That's fascinating. It's a, so, so, uh, you finished Notre Dame recently, but is that the favorite?

• 1:36:16Speaker 01

  Well, yes. The funny one on the favorite was I built the Millennium Falcon, uh, which was, uh, it's probably 8,000 pieces.

• 1:36:22Logan Bartlett?

  Totally.

• 1:36:22Speaker 01

  Also huge and big and.

• 1:36:23Logan Bartlett?

  I actually bought that. One of my partners is, uh, kids are really into it. And so as a thank you, he got me to come over to, uh, Red Point. And as a thank you, I bought the Millennium Falcon for his son to do. So.

• 1:36:34Speaker 01

  It's, it's, it's, it was probably my favorite. It was really intricate. But the funny thing was I'd been working on it for a long time and it was on the dining room table. And it was done and my wife's like, okay, well that thing's got to get out of here. And I'm like, okay, well, I don't, I can't really do it now. And she's like, well, we have people coming over. And so she's, we had this, like a piece of furniture in the dining room. It was really tall. She's like, well, why don't you put it up there? No one will see it. Right? So we pushed a chair up against the piece of furniture and I went over to the table and I, I held it. I put it up above my head and I'm step up on the stair, on the one foot up on this, on the chair. And the chair fell and I fell over backwards.

• 1:37:09Logan Bartlett?

  No way.

• 1:37:10Speaker 01

  And, you know, 8,000 pieces exploded, right? And it was funny.

• 1:37:13Logan Bartlett?

  You're stirring around, picking it up before people come over.

• 1:37:16Speaker 01

  Well, the first thing that happened was my wife started crying because she had seen me put like 40 hours of my life into this thing. And she's like, I just made him break this thing. But it was the moment where we both realized, I don't care about that much about them after they're done.

• 1:37:30Logan Bartlett?

  Totally.

• 1:37:30Speaker 01

  It's the project I care about. So like swept it up, put in the garbage bag, gave it to my friend's kid and let him go off and do it again.

• 1:37:36Logan Bartlett?

  There's an interesting lesson there to bring it all the way back to the picking the board members you work with and the people on the journey. Like the process, if you're not enjoying the process, the outcome isn't that satisfactory, right? There's not like some hills you climb and you get to the other side and you're like, I've, I've totally made it. You find new hills or things to compare yourself to along the way.

• 1:38:00Speaker 01

  I had never thought of it this way, but you are a hundred percent right, which is I am much more interested in the journey than the destination. Though I like, the destination has this Nirvana state, but I also realistic is never going to happen. But there are certain people that are only fixated on the, on the Nirvana state. But yeah, I, I take a perverse, a passion that kind of enjoyment out of the chaos that's today.

• 1:38:25Logan Bartlett?

  The process of it all. It's interesting because I'm sure you've now found that you just recalibrate to new expectations. And so when you're talking to Satya Nadella or Toby from Shopify or whatever, now you have a new peer set. Once upon a time, your peer set was just the people in the construction industry trying to get by. And so if you're too fixated on the, the outcome, you're just going to recalibrate to new people. And so you'll always feel unsatisfactory of where you're going because Satya is running a bigger business or Toby or whatever it is, right? It's just like, you have to enjoy the journey of it all because otherwise you recalibrate in some ways.

• 1:39:00Speaker 01

  Yeah, no, it's a, I live in this very interesting world where I'm solving a problem that most people don't know or care about, but. Yeah, this is my world and I'm having a blast.

• 1:39:12Logan Bartlett?

  It's a fun one. Well, thank you for doing this. This was great.

• 1:39:15Speaker 01

  Fun conversation, Logan, always. Yeah, so thank you.