How Kong Was Born: APIs, Hustle, and the Future of AI Infrastructure

Augusto Marietti, CEO and cofounder of Kong, has one of the most remarkable founder stories in Silicon Valley history. In this conversation with Martin Casado, Aghi shares how he went from a garage in Milan to building one of the world’s leading API infrastructure companies, surviving years of rejection, living in the U. S. on $1,000 a month, and raising his first $50K while sleeping on Travis Kalanick’s couch. They talk about the near-death moments that defined Kong’s journey, the seven-year grind before breakout success, and how APIs became the “assembly line of software.” Aghi also explains how Kong evolved into the backbone of modern API and AI connectivity, and why the coming wave of AI agents will make APIs more essential than ever. Timestamps: 00:00 Intro 01:27 The 90-Day Fundraising Mission 02:57 Cold Emailing 400 Investors Overnight 04:49 Negotiating at Travis Kalanick’s House 06:46 Living on $1,000 a Month in San Francisco 09:18 Pivoting to the API Marketplace 11:00 The Seed Round with NEA, Index, and Bezos 14:19 Getting U. S. Visas and Help from Sam Altman 17:14 Series A, CRV, and Proving the Model 19:22 The Pivot That Created Kong 20:59 Launching Open Source and Surviving on a Bridge Round 21:55 Raising the Series B with a16z 23:40 Hitting Growth Milestones and the Car Bet 25:57 Kong’s Breakout and API Leadership 28:52 AI, APIs, and the Future of Connectivity 34:27 Lessons for Founders Stay Updated: If you enjoyed this episode, be sure to like, subscribe, and share with your friends! Resources: Follow Aghi on X: x.com/sonicaghi Follow Martin on X: x.com/martin_casado Find a16z on X: https://x.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Listen to the a16z Podcast on Spotify: https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX Listen to the a16z Podcast on Apple Podcasts: https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711 Follow our host: https://x.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

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

• 0:00Speaker 00

  Opens a closet and there's like all the bananas falling off because it was one guy is all eating huge bananas. He opened another closet, there's another mattress with other guys sleeping in a second closet. I say, okay, this is real. We had no money. We just take 600 bucks last left to go to a United flight. And we had 90 days to just make it or break it. We knew that if we couldn't raise, we would go back to Italy broke and that was it.

• 0:24Martin Casado?

  I think a lot of people don't know or maybe don't appreciate how fast Kong grew when it actually happened. So there was seven years of start nation, right? I mean, it was just basically wasn't working.

• 0:35Speaker 00

  Every year we do the Founders Award. The Founders Award is 2,555 stock to the best employee of the company. Why that is 255 days of struggle. It's just symbolic, but to remember seven years of struggle, every year is a retake.

• 0:53Erik Torenberg?

  What if the backbone of modern software was forged on a thousand dollars a month in a borrowed couch? Today's guest is Augusto Aggi Marietti, CEO and co-founder of Kong. He joins A16Z general partner, Martin Casado, to trace an improbable path from a garage in Milan to building one of the world's leading API platforms. We get into the seven-year grind before breakout, the near-death moments that forced reinvention, and how APIs became the assembly line of software. Aggi also explains how Kong sits in the flow of everything from microservices to AI agents, and why the next wave of autonomous systems will make APIs more essential than ever. Let's get into it.

• 1:34Martin Casado?

  So Aggi is the founder and CEO of Kong, which was previously mass shape. And we're covering his background from a garage in Milan to now being the CEO of a at-scale company with, I dare say, IPO ambitions at some point?

• 1:52Speaker 00

  Long way, long way to go, but that's one of the steps along the way.

• 1:55Martin Casado?

  Ambitions. All right, so you're doing this kind of API thing. You come to the US on a tourist visa?

• 2:04Speaker 00

  Tourist visa, yeah. And the idea was to raise? Ninety days. The idea to raise funding? Yeah, we had no money. We just take 600 bucks last left to go to a United flight through Cincinnati. We went through secondary room. We landed up, sorry, Atlanta first time. Cincinnati was second secondary room. And then we went right to San Francisco and we had 90 days to just make it or break it. We knew that if we couldn't raise, we would go back to Italy broke and that was it. So did you raise in those? Yeah, we raised two weeks before departure. You raised in those? Angel rounds. We're talking about decade ago, right? Small checks. It was 50K angel round. Who was it from? It was the funding YouTube teams. Oh, really? And here's a funny story. How did you get introduced to them? There's two interesting thing that you say, can you redo it again? I won't be able to redo it again. Yeah.

• 2:46Speaker 00

  So number one is, we went to the Stanford Entrepreneurship Week. At that time, Stanford was doing the Stanford Entrepreneurship Week in February. And it was cool. You made all the entrepreneurs, all the VC were coming there. And there was this entrepreneurship mixer, big party. We arrived, we left late. At that point, it was all paper with all the email and the registration. We steal the things with all the email and the registration. And we walk home with that. And that night till 5:00 AM, I writes all the 400 emails. Wow. About, hey, you need to know about Mashaw. We didn't have time to catch up at the mixer, but I'm happy to give you a pitch tomorrow. Wow. I think 407 didn't reply, 30 reply, and 10 were kind of interested.

• 3:25Speaker 00

  And at the end, five or six went to meet us. And then this one person, like Kevin Donahue, who was one of the VP or funding team of YouTube, came to our. What's his name? Kevin Donahue. Kevin. And then he started a company for baby books. He sold it. But he said, look, I think this is something. So we wrote a $17,000 check on a earmark. Seventeen? Thousands, yeah. And for us, 17,000 was life. Yeah. Versus debt. Yeah. Because we came from 600 bucks and a few hundred bucks. And so then he brought two other funding team to write us. It actually was 16,000, 16,000, 16,000. And we got 15,000. The problem with 15,000 divided three was six, six, six, six, six. It was too many sixes. Like, we don't want too many six in the captive. So we rounded up 17, 17, 17, and we got 51,000 check.

• 4:07Speaker 00

  Now, the second funny part is we negotiated and closed the deal at Travis Kalanick's house.

• 4:13Martin Casado?

  Travis Kalanick's house. I remember there was an article about you sleeping on his couch.

• 4:16Speaker 00

  Yes, and Airbnb guys as well. But what happened during the negotiation with these guys, we're negotiating and they didn't want. So Travis, at that time, was this house up in Castro, called it a jam pad, where everybody would go, Aaron Lee would go, and Drew from Drobal was there. We're all going there on the weekends, and I didn't have a place to stay. So actually, Travis gave me his place to stay a few weeks, as long as I would cook carbonara for his better half once a week. And I did that. And then we needed help. I said, "Come to my kitchen." We negotiated. So we sit on the table. It was myself and Travis Kalanick, and there were the three YouTube investors, negotiated these convertible notes at like 50% discount, something crazy. We were desperate. And so I say, "Okay, well, I don't want to take this deal. Screw that." And I say, "Okay, okay, we're gonna leave." And I was very naive,

• 4:58Speaker 00

  20 years old. "Okay, okay, he will come back." And Travis come to me, put the hands and say, "If this guy leave, you're never gonna see them again, and nor the money."

• 5:05Martin Casado?

  Wow.

• 5:06Speaker 00

  So let me do something else. So you guys stay here and figure it out, the counter offer. Aggie and I go to the bathroom. We close it Saturday, and we come back in 10 minutes. So Travis brought me to the bathroom, locked the door of the house so these guys don't leave.

• 5:21Speaker 00

  Went to the bathroom, and we sit there 10 minutes, go back, another round of negotiation, back to the bathroom. So three, four times. At the end, we handshake on the deal.

• 5:29Martin Casado?

  And what was it?

• 5:29Speaker 00

  Just timely better, like 42% convertible discount instead of 50. And it was a higher cap. And that's it. And then we shake the hand, and that was it.

• 5:38Martin Casado?

  That's crazy. So I remember you had the Quora, like the top Quora post for living on like 14,000 a year in San Francisco. You had raised 51,000. And now you had to make that last as long as possible. So maybe talk about the next stretch?

• 5:57Speaker 00

  What happened is, obviously, we got 50,000. We gotta go back. We are illegal in two weeks. So we went back to Italy, and we connect with a B1, which you can be there, we can be here six months. But how? We have no social security number. We have no credit score, nobody. So you have into this American system, very different than Italy system. You have to enter into a new system. And we had zero anything. So we couldn't pay our salary because we didn't have SSN. We didn't have a legal visa to pay ourselves, all that. So the company...

• 6:24Martin Casado?

  Did you have employees at this point?

• 6:25Speaker 00

  No.

• 6:26Martin Casado?

  It's just you two?

• 6:27Speaker 00

  It was three of us. It was, Michele was the Turkish co-founder back then. But we did about 1,100 monthly promissory note that the company would give us and we would have to leave in three with a thousand dollars a month.

• 6:39Martin Casado?

  So you were living off a thousand dollars a month?

• 6:42Speaker 00

  In three.

• 6:44Martin Casado?

  Three people were living off a thousand dollars?

• 6:46Speaker 00

  Yeah.

• 6:46Martin Casado?

  In San Francisco?

• 6:47Speaker 00

  Yeah.

• 6:47Martin Casado?

  How do you do that?

• 6:48Speaker 00

  It was cheaper.

• 6:49Martin Casado?

  Now, what year was this?

• 6:50Speaker 00

  2009, 2010.

• 6:52Martin Casado?

  Even then?

• 6:53Speaker 00

  2010.

• 6:53Martin Casado?

  Even then, it's impossible. A thousand dollars a month for three people?

• 6:56Speaker 00

  I'll tell you how we did it. So we live it in, on Airbnb, somewhere else at a hundred bucks. And all in the same mattress.

• 7:04Martin Casado?

  Wow.

• 7:04Speaker 00

  And we were going to Valencia. I don't know if you did this in Valencia.

• 7:08Martin Casado?

  Did you have an office?

• 7:09Speaker 00

  No, we were working out of Starbucks. And we were living Valencia and we were buying rice, beans and tuna and pasta. And the reason is that we had to find the right amount of carbs and probably at the cheapest way possible. And that was the combination of, I guess, amount of carbs and probably at the cheapest way possible. And that's how we made it. Like, we never eat out, we never buy anything. We did everything in-house. We cooked in the kitchen Airbnb, rice, beans or tuna pasta. In fact, we ate so much tuna pasta with tomato that Marco and I, when we seen how tuna pasta, we almost threw up because we're just running on tuna pasta every single day.

• 7:44Martin Casado?

  So how, wait, so how long did this last?

• 7:48Speaker 00

  That last, so March, April 2010, a year, a year and a few months.

• 7:54Martin Casado?

  And what were you doing this time? I can, I know what Marco was doing this time. He's writing code. What were you doing?

• 7:58Speaker 00

  I was writing blog, building the website, calling, they sign up, talking with every sign up on the website that was talking to us and try for hours. Doing big stuff, B devs, HTML, CSS slicer, talking with investor to us, you start to build the seed rounds.

• 8:12Martin Casado?

  Yeah.

• 8:13Speaker 00

  Trying to do some recruiting that never worked because nobody wanted to work for illegal Italians that will disappears.

• 8:21Speaker 00

  So a lot of mistakes and... This yeah. All right.

• 8:24Martin Casado?

  All right, so take us to the seed round. So somebody decided to give you a proper round at some point?

• 8:30Speaker 00

  So then a year later, we rearchitects. So we went to Honolulu on the beach, Moana Beach. And we thought about, okay, all these APIs we're aggregating. I think the word is actually we see now, finally now, but 10, 15 years ago, it wasn't ready. They were to like build apps on the fly through APIs with drag and drop. We were too far ahead. We're missing pieces. But I say, hey, we are wrapping a lot of APIs. Actually, that assembly line visuals still hold. We just have to pivot it and build an API marketplace where all the APIs producer and consumers, they can come together. And so we pivot that, we relaunch it, then crunch all the stuff.

• 9:05Martin Casado?

  Okay, so originally, we're doing this kind of drag and drop composable.

• 9:08Speaker 00

  Apps builder.

• 9:09Martin Casado?

  Apps builder thing. It's so funny how many companies go through this exact journey. And then you're like, okay.

• 9:13Speaker 00

  With HTML5.

• 9:15Martin Casado?

  Wow. And then you're like, okay, no, we need to build a marketplace.

• 9:19Speaker 00

  Exactly. Because, okay, the economy, this API economy will come. It's not just apps, it will be APIs. And we build a marketplace, we launch it, we got disentractions on Long Tail. And that was already the summer of 2011. After pivoting away. So we launched very fast, boom, boom, boom. And then we raised.

• 9:35Martin Casado?

  Was that why on the last of the money from?

• 9:38Speaker 00

  No, no, because San Francisco to Honolulu, I think at that time it was like 300 bucks. So I say with our 51K, you know, we're living like on tuna pasta, rice and beans in Valencia, in Mission, in this historic building, middle of Northern Michigan.

• 9:51Martin Casado?

  And you guys, same mattress?

• 9:53Speaker 00

  Same mattress and things is like.

• 9:54Martin Casado?

  That's unbelievable.

• 9:55Speaker 00

  At some point, I remember, I remember a couple of morning, I need to go to Honolulu. We could do our walk on the beach and thinking about our future or no future, because we knew this was going no future. Our money were starting to drain and we needed to pivot. And that's where we had the idea, let's go for the pivot. And then we come back, we did crazy. I remember us building the website, Marco was crazy, the Turkish founder was building all the Java backends and the launch it fast. And I've got a little bit of tech crunch press. At that time was read, write web. This other one was mashable. And so somehow we got covered by all of them, which now like Chris. And then, boom, and then it started seed round phase.

• 10:30Martin Casado?

  From who?

• 10:31Speaker 00

  So that time. We went through a lot of lot of iterations, but where we ended up was NEA leading the seed round and then Index co-leading to NEA and then we got a bunch.

• 10:43Martin Casado?

  In the seed, so Volpi did the...

• 10:46Speaker 00

  Yeah, so what happened is actually the first checks were George Zakari from CRV back then. He didn't lead the round, but he was the first 100K commit. And so with that, he say, we have CRV 100K, got that point at a seed program, very unusual back then. Then we went to NEA and he say, we're gonna lead this round. At that point, also they start a seed program, 500K. And then I met Mike Volpi that just moved to San Francisco to launch Index US. It was like him and Danny Reimer should have somewhere. And they also started Angel, a seed program, and they wrote on other big checks. And then we got a long tail, which was likely Jeff Bezos and Eric Schmidt into the funds. And so we got this combination.

• 11:20Martin Casado?

  How did you get Bezos and Eric Schmidt?

• 11:21Speaker 00

  So again, that's a sitting deep that I don't know, we can't replicate. So what happened is Jeff Bezos, so Jeff Bezos, I knew he was special about marketplace as a business, APIs and developers. AWS was just starting to take off. It was this hidden secret.

• 11:38Martin Casado?

  This is 2011?

• 11:39Speaker 00

  Yeah. So Amazon was maybe a $50 billion company then, $80 billion company.

• 11:47Speaker 00

  So what happened is I hired the lawyer of his family office for call, for my shape. And after we hired for doing the seed round, as the seed round was going along, I say, by the way, since you are also the lawyer of the family office and Bezos expeditions, can you introduce me, introduce me to Jeff Bezos? That's what we do. So it's a PG call call. And then he was on the road with his brother, going around with his brother on the road in Texas. And you actually really want to put more and invest. Boom. So that was Jeff Bezos. What do you get from Jeff Bezos? You get the brand, so we get a diners a year strategy of things. But obviously it was the big brand. And then second, Eric Schmidt, we were working this coworking space.

• 12:32Speaker 00

  And what happened is we were the only startup that stay the latest in the night after this other startup that was doing Expedia for cruise ships that just raised from NEA and Eric Schmidt. And at the end, they saw us work until 3am, 4am, they will leave a shoe. They knew we were fundraising and the investors asked, who is the hardest worker than you? And I said, this guy is next to us. And so they introduced us to the Eric Schmidt Fund and that's how Eric Schmidt invest.

• 12:58Martin Casado?

  Wow.

• 13:00Speaker 00

  Totally unrelated.

• 13:01Martin Casado?

  All right, so now this brings us to 2011.

• 13:03Speaker 00

  A lot of luck.

• 13:04Martin Casado?

  So what was your total, what was the total seed fund you raised?

• 13:06Speaker 00

  At that time, it was very big, it was 1.5. It's like, wow, huge seed round.

• 13:12Martin Casado?

  I gotta say.

• 13:12Speaker 00

  2010, 11.

• 13:14Martin Casado?

  I gotta say, there's a lot of optimism. It's an optimistic retrospective view to be like, there was three of you on a mattress for a year and then you say you were lucky.

• 13:23Speaker 00

  Illegally.

• 13:24Martin Casado?

  That sounds pretty unlucky.

• 13:25Speaker 00

  Illegally, going to jail.

• 13:28Martin Casado?

  All right, so now you have your seed fund, Mashapes going.

• 13:30Speaker 00

  So then we raised a seed. All right, now it's real. We gotta get this visa. We got a visa. So we went back to Italy, go to the American Embassy, blah, blah, blah. Do the letter of recommendations. Actually, Sam Altman was one of the guys that wrote me a letter of recommendation when he was CEO of Loop.

• 13:47Martin Casado?

  No kidding.

• 13:48Speaker 00

  Which I met, we were going to the NEA retreat and I see next to him in the bus and we go to Pebble Beach to the NEA retreat and we spent three hours together. And I said, by the way, I'm illegal here. Can you write me a letter of recommendation for my O1 visa?

• 13:59Martin Casado?

  No kidding.

• 14:00Speaker 00

  And he wrote me, so I have this big thing of how great I am.

• 14:03Martin Casado?

  From Sam Altman, that's great.

• 14:04Speaker 00

  From Sam Altman, a letter of recommendation. You gotta get this guy in the country no matter what. So we got these five letters and I get this O1 visa and finally I got the visa. So finally I can come here, I can get a WeWork space and we start to hire. And we had seven people and Mark also get the visa. Mark is also, because of the law book, he never got to college or nothing. So it was the hardest visa to do. So we figured it out, more letter of recommendations for him. We brought him there, we stay here, blah, blah, blah. We build a year, we grow. Now, but you know, at that time, like you needed like a million, let's say a million revenue to take a good C2Z. For a marketplace, you need a million in gross volume. We were like at 50K, so a lot of traction, but not a lot of revenue. But we went through.

• 14:49Speaker 00

  A three, four month Series A race and CRV led and then Index led the run.

• 14:56Martin Casado?

  Was it Dev that?

• 14:57Speaker 00

  Yeah, yeah, because George Zachary was more a consumer, so he passed the thing to Dev that just joined more on the enterprise side. I remember Dev told me like a Sunday at 6:00 AM to go for a walk to decide to invest or not. And he knows I'm a night owl and he just Sunday 6:00 AM to go down to Palo Alto. So I had to rent that Zipcar, the Zipcar, there was no Uber and go down there and then go for a few walks and I decided to invest. Cause he was always actually a big believer on APIs as an assembly line, you could see that.

• 15:30Martin Casado?

  Yeah.

• 15:31Speaker 00

  Maybe wasn't sure Marketplace was the right execution, but the theme he was a big believer. And I think he liked us, like he came to see us sleeping in the same mattress. He wanted to really see that we're not like bullshitting the big drama story, it was really drama. Actually, he opens, he came to the Accra House, because we moved to Accra House in South Park at that time, where we're sleeping and working there with the 70p. And he opens a closet and there's like all the bananas falling off because it was one guy is all eating huge bananas. He opened another closet, there's another mattress with other guys sleeping in a second closet. It's okay, this is real.

• 16:02Martin Casado?

  Wow. How big was your A?

• 16:06Speaker 00

  6.5 million.

• 16:08Martin Casado?

  Oh, so for you, that must be, must have been a lot of money.

• 16:12Speaker 00

  6.5 million. Yeah, I went out with this PowerPoint, let's raise a 10 million Series A. At that point, I was like the big thing. We ended up at 6.5 and I say, that's science. It was like, when we saw it, it was like, yeah, like maybe we got a shot.

• 16:27Martin Casado?

  So at some point, you decided that the market wasn't working.

• 16:31Speaker 00

  The market wasn't working and I think, so we raised this and we hired more, we moved to a new office, 25 people. Like the usual post-race honeymoon. And I remember this thing like six months after.

• 16:47Speaker 00

  The business wasn't really doing anything. So it was one board mini that we just cooked pasta for the board members at that time. Because that was like two years before you join us. And there was nothing to talk about from business.

• 16:57Martin Casado?

  The issue was is you couldn't monetize or there was a graduation problem. Like I mean, these marketplaces are very tough.

• 17:04Speaker 00

  So the idea of the marketplace, when I was staying with Airbnb founders, I learned that the marketplace could be the biggest, more powerful business in the world. Now, you don't even have to innovate once you get liquidity. It's just you can't disrupt. Look at eBay, you can't kill. So I thought like, there's all this API, you can build a marketplace liquidity, it'll be like the AWS. And so we noticed though that in our case, it was a developer API marketplace. So to have, to a marketplace to work, you need to have a long tail of low-power people. If you have concentrated in a few high-power, marketplace doesn't work. Like Airbnb houses like millions of people with low-power. So that was one. Two, you need to have exclusivity somewhat, like the door to access that marketplace supply

• 17:49Speaker 00

  has to be through the marketplace. APIs, you could Google and go through the website, you wouldn't go through the marketplace. APIs at that time, power of law for public APIs was on the Twitter, the stride, there were thirty that matters and three thousand that didn't matter much. So it was also this long-tail power. And third thing is was quality, like you couldn't, you were running a cloud marketplace, you couldn't actually maintain the quality of the supply. You would always get blamed for it and there was no trust. And so I think because of that, it got to a million and a half in gross revenue, but it never became this Airbnb of Uber of APIs. That is like 10%, yeah. And it was also losing margin on AWS. So I could never make the economics in that model, I could never make the economics work, even if this thing would have scaled. So then we go there, it's like, okay, this is where we're burning out, we're running out of money.

• 18:34Speaker 00

  And so we built this massive API engine behind the marketplace, API gateway, that was firing 20,000 APIs of this long tail, doing billing, rate limiting, routing, caching, authentication, authorization, logging, all of that. We built it three times and the third time was the great one. And we say, wait, every company will become an API company. Why we don't take this engine and we give it to the whole world? And that was the beginning of open source, Mongo. And so boom, we open source. Kong.

• 19:03Martin Casado?

  What was your runway at the time that you open sourced Kong?

• 19:07Speaker 00

  Uh, so we open sourced in April 15. We had to take a bridge of uh 2 million to go another year.

• 19:15Martin Casado?

  Was it an insider bridge?

• 19:17Speaker 00

  Yeah, we had to take an extensions because we were out of gas.

• 19:21Martin Casado?

  From from DapD and Mike?

• 19:23Speaker 00

  Yeah, they give us an extension on the 2 millions because we were out of gas, like we were would have died otherwise.

• 19:28Martin Casado?

  Wow. So you released, I remember when Kong released, it was actually a really big deal. When was that? 2015?

• 19:35Speaker 00

  Yes.

• 19:36Martin Casado?

  It was a really big deal. I remember. Yeah. So this is when you and I started talking about your raise, you're raising the B.

• 19:42Speaker 00

  You came at the right time. Before like this guys make no sense. Okay, now it starts to make sense.

• 19:48Martin Casado?

  Well, that wasn't even a tough raise for you just because the company had been around for seven years. Like a marketplace, like Kong had just come out and it was taking off, but like it'd only been a couple of weeks. Maybe a couple of months. And so honestly, I'll tell you what, what did it for me is um, you know, we were doing all the work and like the GitHub stars checked out, your story is phenomenal, your command of the business is great, but it just wasn't enough. But then while we were doing the diligence, like I kept getting these kind of serendipitous, like somebody had used Kong and loved it. I remember, didn't like somebody stay in like your Airbnb and like loved Kong and like, and then you forwarded that to me.

• 20:30Martin Casado?

  And so there's just kind of like all of this zeitgeist around Kong. And as a result of that, I'm like, oh, this is clearly a phenomenon.

• 20:38Speaker 00

  Yeah, I remember it was spamming you with emails of every prospel customer user that we're saying. It's just, you say Kong, Kong usage, Kong usage, just nonstop. Like it was blowing up the inbox.

• 20:48Martin Casado?

  Yeah, yeah, yeah. So how close, how close we to running out of money for the B?

• 20:53Speaker 00

  Uh, so after the bridge, there were a

• 20:57Speaker 00

  Weeks.

• 20:58Martin Casado?

  Jeez.

• 20:59Speaker 00

  Yeah, but I was very.

• 21:00Martin Casado?

  Nothing, nothing is ever gonna stress you again in your entire life because you've been so close to at least business so many times. Cause I, I actually remember when we went to the office, it felt dead. It felt like basically.

• 21:15Speaker 00

  No, no, we were dead. We just didn't know about it.

• 21:17Martin Casado?

  You were like two weeks from being dead. I mean, it felt.

• 21:19Speaker 00

  We were like banglebee, you know, that it flies, but it's not supposed to fly. And we keep, we keep going.

• 21:24Martin Casado?

  No, I remember that very, very well.

• 21:26Speaker 00

  Yeah. You, you were like, you're like, guys, guys been there a while. I think they're gonna, you know, whatever. They raise money, then they're gonna give up. You work. I said, I say, it was tough. Uh, and I, I think, I think if, if we go back and say, I don't know, we were able to replicate all the sequence that happens, all, all the things that happens. And then I remember we went, uh, yeah. And then, uh, then we had that, that great sushi with, uh, with Mark and Drissa and you and I, and we sealed the deal and Marco.

• 21:51Martin Casado?

  Yeah. The end of 2016, we closed. And since then, the company's just been remarkable. I mean, there was kind of an announcement recently that across a hundred million, which is now actually quite a while back.

• 21:59Speaker 00

  A year and a half ago. Yeah.

• 22:00Martin Casado?

  A year and a half ago. So.

• 22:02Speaker 00

  We, we, yeah, it was in, in a year and a half is 10 years where we were like, when you invested, we were ARR less than a million.

• 22:11Martin Casado?

  Yeah.

• 22:12Speaker 00

  Less than a million of ARR. Not even a million ARR, 500K probably.

• 22:16Martin Casado?

  Do you remember once, I remember. So, yeah. So you had a great first year. And then I told you, I said, listen, if you, if, if you hit 10 million or whatever it was, I'll buy you a car. Remember that?

• 22:26Speaker 00

  I did. Oh, actually I, we have the new office now. I need to send you a picture.

• 22:29Martin Casado?

  Well, there's a funny story about this. And so like, you know, you, um, you do it. So like, I think you grow like 10X that year.

• 22:37Speaker 00

  So that year we went from 2 million of ARR.

• 22:40Martin Casado?

  Yeah.

• 22:41Speaker 00

  To 10.

• 22:42Martin Casado?

  That was right.

• 22:42Speaker 00

  And the planning was six or seven.

• 22:44Martin Casado?

  Yeah, yeah, yeah, yeah, yeah. And then I went, I went, I checked with compliance and I'm like, can I buy Auggie a cheap car? And they said, the maximum for a gift is whatever it is. And so I'm like crap. So I ended up buying you the best model car I could find.

• 22:59Speaker 00

  From Japan, I think.

• 23:00Martin Casado?

  Yeah, yeah, yeah. I spent a long time actually looking for this model car.

• 23:03Speaker 00

  Is there a, a 280 GT?

• 23:05Martin Casado?

  Yeah, yeah, that's right. So great. So I would love to shift. I think this is the most remarkable Silicon Valley startup story that I know of, that I'm close to, and I kind of having one.

• 23:16Speaker 00

  That will make a movie one day.

• 23:18Martin Casado?

  They will have to make a movie one day. Yeah. I would love to like kind of shift towards how you think about product, how you think about markets, and then kind of move towards AI. So you actually have seen a number of shifts now, right? You saw the cloud come. You saw the shift to APIs. So maybe just talk a little bit about how you view this current shift for the AI. Is it fundamentally different? Is it the same? Does it change how you think about yourself as a leader? Like, how is your view at a high level?

• 23:48Speaker 00

  So the big thing is I start with API first. So obviously, we've become this API infrastructure company.

• 23:55Martin Casado?

  Yeah, maybe we should just describe what Kong is right now before we actually do that.

• 23:58Speaker 00

  So we left with this pivot and we open sourced Kong API gateway, took off and we become an enterprise company, became, we rebranded Kong Inc. And we start to build all sort of API infrastructure to run, manage and secure your internal or external APIs. So you have software, you have microservices, you have 10, 100,000 of APIs. We're kind of this highways that makes them run. And you have rate limiting, like if APIs were the cars, you got guardrails, speed bump, speed cameras, gas stations, stalls, bumps, guardrails, everything, ambulance. And we provide all the infrastructure to make sure that API connectivity runs for small company, big company, all of that.

• 24:42Speaker 00

  Now, in this transition you mentioned, what really drove, I think, this explosion of cloud APIs was the workload moving from on-prem through the cloud. The second transition is breaking down the monolith to microservice. It creates more and more APIs, the big data and all that. It creates even streaming, all that. So this just data emotion is much higher than, it's becoming much higher than like data rest or data news than before.

• 25:05Martin Casado?

  But in a way, when you were starting the company, you were drafting on a big transition, right? Which was the breaking down of the monolith and the shift to cloud, right?

• 25:13Speaker 00

  That was the key.

• 25:14Martin Casado?

  Yeah.

• 25:15Speaker 00

  I think before there were all these archive legacy solutions in APIs, but they were not built for the. Transition to the cloud and breaking down the model, it's into microservices and high scale decentralized architecture. I mean, you know, from your time on this here, like we kind of invented the control plane, data plane separation at the API management API control plane level. Nobody was doing it before.

• 25:36Martin Casado?

  I gotta say, I think a lot of people don't know, or maybe don't appreciate how fast Kong grew when it actually happened. So there was seven years of starvation, right? I mean, it was just basically wasn't working.

• 25:48Speaker 00

  No, actually, I find, and you don't, you know, despite like every year we do the founders award.

• 25:53Martin Casado?

  Yeah.

• 25:54Speaker 00

  The founders award is 2,555 stock to the best employee of the company.

• 25:59Martin Casado?

  Yeah.

• 26:00Speaker 00

  Why that? It's 255 days of struggle.

• 26:04Martin Casado?

  No kidding.

• 26:05Speaker 00

  Which is seven years.

• 26:05Martin Casado?

  That's amazing.

• 26:06Speaker 00

  It's seven years.

• 26:07Martin Casado?

  I didn't know that.

• 26:07Speaker 00

  Every year the company has to go, you get 2,055. It's just, it's just symbolic.

• 26:11Martin Casado?

  Yeah, of course.

• 26:12Speaker 00

  To remember seven years of struggle, every year is a ritual.

• 26:15Martin Casado?

  And there was this crazy diving cash, which, you know, Marco does the greatest Kong. He throws it out on the market and it catches off. But once it did, the company grew incredibly quickly.

• 26:27Speaker 00

  And we had 45 competitors when we started.

• 26:29Martin Casado?

  I remember that. Yeah.

• 26:30Speaker 00

  Now there's probably 30.

• 26:33Martin Casado?

  But even then at the time, yeah, well, Kong broke away pretty quickly. So I mean, you know, in recent years, it's just clearly been the leader on this.

• 26:40Speaker 00

  Yeah.

• 26:40Martin Casado?

  And that only happens, I think, if there's just clearly a market need. The market also kind of did you a favor in that like MuleSoft got acquired and Apigee got acquired too.

• 26:48Speaker 00

  Yeah.

• 26:49Martin Casado?

  Right?

• 26:49Speaker 00

  It was right. Yeah. Seventeen MuleSoft got acquired. Apigee got acquired in 16.

• 26:54Martin Casado?

  That's right. Yeah. So like in a way, kind of like there was consolidation and you broke out this later. So you kind of navigated this transition from, you know, cloud to break up the microservices, you know, you built the control plane for APIs. You're considered now like the, you know, the leader independent for sure. In the API space, Kong is the leader independent. There's no question of that. But now you're facing another market shift, which is kind of this movement to AI. And so do you view this as directly impactful, adjacent, accretive? Like, how are you as CEO viewing this?

• 27:27Speaker 00

  Yeah. I think, again, it's not like was like any me those things, but the market came at us in AI by creating more APIs, what that means. Agents are going to consume internet in a very different way than how humans did. There's not anymore websites, scroll, click, up and down, applications. They're going to be there, but not as relevant as before. Agents are going to programmatically exchange labor, get us down through programming interface, whether it's classic APIs, MCP protocols, which is like Duolingo for APIs, makes them speak English, whatever it is, the protocol. But machines consuming internet is going to be very different than human consuming internet. Human consuming internet would be through UI.

• 28:09Speaker 00

  Machine consuming internet is through programming interface. That's the huge shift that we are now capturing and powering and making sure the enterprise think about AI connectivity. And at the end of the day, behind the scene, it's all APIs.

• 28:26Martin Casado?

  We, you know, we had that board meeting, what was it, yesterday?

• 28:30Speaker 00

  Yes.

• 28:30Martin Casado?

  And what I found actually pretty remarkable is how many more banal use cases there are around AI, right? We can talk about agents, and I think it's worth talking about, and I agree with you. But it also feels like there's like a lot of just basic stuff like, like key management for, you know, like a lot of companies are spending a lot of money on these AI models, right? So it's great to be able to have like, you know, monitoring, billing, key rotations, all of that stuff. So are you actually seeing like a non-agentic draft now?

• 29:03Speaker 00

  Yeah. And so what I think the world is a bit of stack, okay? You have these AI companies like Poo that are just building models, yada, yada. And then, then you have this wrapper company that are trying to solve, you know, HR issue, whatever, through AI. Then you have these LLMs that have APIs to talks, companies like Anthropic, a lot of revenue through APIs, all that. What is missing is the infrastructure to make those AI talks and run. And that's, that's what we do now with AI gate, a lot of products. But at the core, the boarding problem, like you mentioned, authentication, authorization. You can be AGI as much as you want, but at the end, an agent gets stuck if he has to authenticate. And to authenticate, you're going to get an API key. You need a human in the loop to get the API key authenticated.

• 29:44Speaker 00

  But if you can provide infrastructure at the beginning, you can provision and automate key provision in key rotation, authentication. So once you're there, you can unleash your LLM, your agents, who just roam free.

• 29:59Speaker 00

  Without getting stuck every time for authentication authorization because you're already provisioning all these keys. I think that's where we that's where we want to our customers.

• 30:07Martin Casado?

  So maybe just just assume for this this this part of our discussion that whoever's listening is is pretty familiar with AI API infrastructure, right? Do you think that the way API infrastructure looks in six months or a year or two years is dramatically different because of AI? Or is it that the infrastructure that we have in place that we understand today evolves to also service agents in ways that are pretty obvious? Like, to what extent do you think this is like transformational in the infrastructure layer versus like more of a transition?

• 30:39Speaker 00

  I think you cannot do AI if you're not API first. It's just you don't have the mouth and the ears to a model. And so that's how AI talks. So the way we know about API API infrastructure, it will evolve and won't and change. But API traffic and AI traffic, they're converging. So the classic API calls, yes, but also when you move tokens is an API call. And intelligent, let's say intelligence will be sold through tokens. Every earning release is about tokens. But behind and each tokens are calls that payloads move tokens. So they're kind of converging. And what we are calling or building is a unified API and AI connectivity platform that it helps you navigate this transition as you're managing

• 31:24Speaker 00

  classic API traffic, as you're managing agent traffic, as you manage MCP traffic, as you manage LLM traffic. I think it will all converge into a unified like program. And that's how I think intelligence will move and it's an evolutionary steps in like two, three years. But we already see MCP traffic growing every quarter.

• 31:42Martin Casado?

  I mean, I see even like really basic things like for developers, this is evolving very quickly. So for example, you know, for fun, I developed using Cursor. You know, I used to be a professional developer, you know, in a in a previous life, even knowing What APIs existed in a company required a ton of reading through docs or some weird search and it feels like now, especially like if you have something like Kong, which, you know, has all the metadata and has the catalog and then you can integrate into something like Cursor. And so not only does the agent itself know about the APIs, but you can expose it to you. I mean, it feels like a lot of, like even the development paradigm is shifting

• 32:24Martin Casado?

  now because we can start to surface these, these things to developers.

• 32:28Speaker 00

  Yeah, I think, I think you can, you can think you can, we can be an enabler to help large companies, small companies to, to get into the hands of more developers or more Cursor. Because it's also a API, we can provide you that infrastructures and, and all of that. We, as you see from yesterday, we have a, a very exciting roadmap that is going in all in that direction. So those are all the, I think, here's the big bet. The big bet is,

• 32:53Speaker 00

  what happened in micro, because I grew up in Italy and you don't really study a lot of math, you just study history. But what you learn from it is that Italy does exactly a repeat, but he reads. It's just, there's always an analogy. So you, you, so what we see with microservices, what happened? We, we first build relimining and authentication 10 times, 100 times, 50 times into the Python framework, or the JavaScript framework, or the TypeScript framework, or the Java framework, whatever, PHP, blah, blah, blah. At some point, it didn't make any sense. Let, let's abstract everything into a gateway pattern. And we move all this connectivity logic to the gateway and then dispatch to the right service, no matter what language. The same thing, I think, is going to happen in LLMs. At first, you have one enterprise use one mega LLMs. Now they're going to use five, 10, hundreds,

• 33:36Speaker 00

  small LLM, medium, large, whatever. Once you get to, you don't do tokens relimining, token authentication in each LLM using the frame or the langchain, whatever. Eventually, same thing happened in Microsoft, you will abstract that to a gateway pattern, once again. And that's where I think AI Gateway will have the, the same analogy and dispatcher to write connectivity logic to the right LLM, that's just rewriting. In each LLM, I think that's the big bet that we make that happens in microservices, happens in how enterprise will run and govern hundreds of LLMs.

• 34:11Martin Casado?

  Great. Well, listen, as we wrap this up, I think it'd be great to kind of end with like any sort of recommendations for people that are listening to learn a bit more about how kind of AI shifting the API landscape, or maybe, you know, some advice on

• 34:25Speaker 00

  Don't start a company.

• 34:32Martin Casado?

  Maybe advice on kind of like, you know, how to start thinking about getting ready for that.

• 34:39Speaker 00

  I think I said before, like, there is a lot of focus on model pre-training, tuning, all of that. But a key thing is the connectivity layer, how LLMs, agents, whatever, will talk to each other, how you run. I think a lot of the traffic will be very strategic, and you have to build in the startups of enterprise to manage that AI connectivity into your next apps, your next internal tools, your next customers.

• 35:07Martin Casado?

  And for the, listen, the budding founders that are listening to like the most hardcore Silicon Valley struggle story ever, what advice do you give to them?

• 35:19Speaker 00

  I think what I learned over a decade of life

• 35:21Martin Casado?

  Do you ever think, I just have to, do you ever think that like, maybe you should have cut your losses and tried to start it over again? Like, do you ever think that that would have been the right thing?

• 35:29Speaker 00

  Never. Never. Never. The reason is, I could never visualize myself going back to the airport in Italy, and my dad picking me up and say, how's it going? And it's just like, would fail with my tails and my legs, like I could never, I would have died here without food, like I cannot do that. And so that never crossed through the heads.

• 35:50Martin Casado?

  I got shivers, that was so good.

• 35:52Speaker 00

  But never, like, that's the visual that every time I even start to, I had that visual and immediately say, I'm not going back like that. And so, and then, but the thing to advise is It always takes longer than what we think. It is good to take a trend the last 10 years, 20 years because you have time to grow into and do a lot of mistakes and building. And just you have to generally believe it in this trend versus falling glitters because it's going to take longer than what you think. As a leader, as a human, as a market, as a product, as a revenue, it's always going to take longer. So take something that lasts and just put 110% on it every day and then it will compounds, keep the burn rate low in the early days.

• 36:34Martin Casado?

  Don't die.

• 36:35Speaker 00

  Don't die, like, don't quit. Those are, I think, the things I learned along the way.

• 36:42Martin Casado?

  Agi, it's been a privilege and an honor working with you these past few years and thanks so much for coming on the podcast.

• 36:48Speaker 00

  Likewise. Thank you, Martin.

• 36:51Erik Torenberg?

  Thanks for listening to this episode of the A16Z Podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z and subscribe to our Substack at a16z.substack.com. Thanks again for listening and I'll see you in the next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies

• 37:36Erik Torenberg?

  discussed in this podcast. For more details, including a link to our investments, please see a16z.com/disclosures.