EP 117: Parker Conrad (CEO, Rippling) His Opinion on Founder Mode, Fundraising, and VC Advice

Parker Conrad has spent the last 8 years building Rippling into a $13B company, marking his redemption after being ousted from Zenefits. In his second appearance on the podcast, Parker and I discussed Paul Graham's "founder mode" essay and how he operationalizes it at Rippling. He also reflected on the key lessons he's learned throughout his career, highlighting the differences in how he ran Zenefits compared to Rippling today. Additionally, Parker shared his candid views on the challenges of having investors as board members and why he believes much of VC "value add" is overrated. (00:00) Intro (01:31) Parker's Leadership Principles at Rippling (02:16) The Importance of Anecdotal Evidence (04:09) Balancing Founder Mode and Team Collaboration (05:08) The Risks of Over-Extrapolating Founder Mode (06:56) The Reality of Sales Compensation (08:15) Hiring Founders for New Products (11:10) The Pace of Execution in a Company (11:21) The 'C on a Box' Dilemma (12:07) The Speed vs. Quality Debate (13:56) The Viral Tweet Incident (16:51) Governance and Board Dynamics (20:04) Choosing the Right Investors (29:57) The Role of Career VCs as Board Members (33:43) Misaligned Incentives Between Founders and Investors (35:43) Navigating Business Challenges (36:27) Sam Altman's Crucial Support (38:45) The Role of Venture Capitalists (40:06) The Value of Y Combinator (43:16) Fundraising and Valuations (01:00:39) Lessons from Past Ventures (01:06:05) Building Compound Software (01:09:33) The Future of Compound Software Businesses (01:10:04) Microsoft's Unassailable Approach (01:10:40) Building Narrow vs. Compound Software (01:12:16) Investment Decisions in New vs. Existing Products (01:14:42) Platform Development and Resource Allocation (01:16:32) The Journey from Chem Major to Software Visionary (01:18:34) Challenges and Strategies in Multi-Product R&D (01:25:32) Improving Customer Support Metrics (01:28:50) The Role of a Founder in Product Management (01:31:23) Hiring and Cultivating Executive Talent (01:39:07) The Motivation Behind Rippling's Success (01:41:58) Conclusion and Final Thoughts 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 Logan Bartlett Show. In this episode, what you're going to hear is a conversation I had with co-founder and CEO of Rippling, Parker Conrad. Parker is a repeat guest at this show, and we talk about a number of new and different things, including one of the topic de jures these days, which is the Founder Mode essay that Paul Graham wrote and Parker's reflections on that and how he operationalizes the so-called Founder Mode within Rippling. We also talk about Parker's tweet in which he said David Sacks knows a lot about Koops reflections from Zenefits, including what he has done differently from an operational and governance standpoint,

• 0:46Logan Bartlett?

  as well as some of the peculiarities he finds with having investors also be board members and how he thinks that a lot of VC value add is bullshit. You'll hear that conversation with Parker here now. The topic de jour right now is around this Founder Mode essay that Paul Graham did, and I think the lessons from Brian Chesky. Having lived, you've been a founder now three times, sorry?

• 1:09Speaker 01

  Yeah.

• 1:10Logan Bartlett?

  What was your reaction to, to read? You weren't in the room when, when Brian gave the original talk. What was your reaction to, to hearing this?

• 1:17Speaker 01

  I mean, there, there's a, there's a thing that we, at Rippling, we call go and see, which is one of our like leadership principles, which is maybe like, you know, less, it's like any, for anyone in the organization, not just for, for founders, which is this idea that I think that like the best leaders tend to sort of solve problems by going just really deep and getting into the weeds. And, um, you know, like if something's wrong in customer support, I found like the way, you know, one, one approach to solving this is like, you look at like your, your, your team and you're like, do I have the right leader? Are they working on it? Okay, good. Well, you know, they'll figure it out. Um, and usually that I have found that doesn't work. Like you need to, if the problem gets to your level, wherever you sit in the organization, you've got to go all the way to ground.

• 2:00Speaker 01

  And so the way to solve that is you go look at the last 50 support interactions or you go look at the last 20 Gong calls. Or you, you know, you, you go and you inspect the anecdotes rather than like the data. Because it generally tends to get at, you, you can just get to an answer much more quickly by looking at like a stream of anecdata. And sort of understanding the problem in that way. And then, once you understand the problem, it's usually pretty clear like what, what you need to do about it. And you can sort of thrash for a long time if you're looking like too top down at it and trying to operate like through your direct reports and through your management team.

• 2:41Speaker 01

  And I think that's true, that's equally true for directors, VPs, you know, C-level execs as it is for founders. But I also, I don't think that that's like, it's, it's not unique to founders. I think like a lot of great companies and great, you know, managers would probably say the same thing. I don't, I don't claim to know Frank, Frank Slootman really well, but from what I gather, like Frank would, that's sort of a lot of how Frank runs.

• 3:05Logan Bartlett?

  Sure.

• 3:06Speaker 01

  His companies and even though he's not a founder there. So I think it's just like generally a good way to kind of.

• 3:11Logan Bartlett?

  Yeah, you know, it was interesting. I mean, the, the premise, I, I guess that Paul, I, I'd be interested what your, your biggest takeaways maybe were from it. There was subsequently a, a viral video kind of going around of, of Brian Chesky maybe articulating it on a different podcast. And there are some unique things that founders have of being like, knowing how everything came to be, being the biological father or mother of the, the entity itself that gives some context and decisioning capabilities that maybe like an inherent manager wouldn't have. I'm curious, does that, does that resonate? Is that motherhood and apple pie to you? Like, obviously that's the case.

• 3:54Speaker 01

  So the only, the only thing I would add to that is I do think that like the, the founders that, that I really respect also are like very, very curious and want to learn from, you know, other people at the company and their execs. And so I think the, the risk with, I, I don't think PG intended it this way, but some of the framing almost seemed like somewhat like, I don't know, confrontational, like, you know, sort of like founder mode means like steamroll everyone.

• 4:21Logan Bartlett?

  Yeah, don't trust middle management.

• 4:23Speaker 01

  Yeah, like who are these, you know, managers and like, I mean, that's certainly, that's not the way that I. Think about my company. I mean, I, I think that I really enjoy working with like the management team that I have at Ripley and, and I think I learn a lot from them. And I think most really good founders that I know, like also feel the same, you know, they, they're constantly like inquisitive and learning and sort of, you know, asking questions. And, and so you, I don't think it, it shouldn't be like a steamrolling type.

• 4:54Logan Bartlett?

  Do you have, I mean, one of the things, I feel like there's going to be so many, there'll be some power law on this, that like the validation this will provide for some founders that were maybe questioning, trusting other people's instincts will be great. And then it'll probably incentivize

• 5:09Speaker 01

  A lot of people that'll just be dicks.

• 5:11Logan Bartlett?

  A lot of bad behavior. It's like, yeah, no, I'm in founder mode and relearning a lot of lessons that like, you know, sales comp is one that I always feel like I need to, every fifth company I invest in, they want to re-litigate sales comp. And whether or not variable comp makes sense or not. And I'm like, this just doesn't need to be re-litigate. You're inventing the world on some other vector. We don't need to also reinvent the world on sales compensation. And so that's one of the concerns that I have in all of this is that it's going to be over extrapolated to justify bad behavior.

• 5:40Speaker 01

  I, I, I completely agree with that. And I'm sure I actually think that PG would agree with.

• 5:46Logan Bartlett?

  There will be a subsequent essay, like a follow up. It's been too in the zeitgeist. And I think there's going to be too many bad interpretations of it. I assume there'll be some follow ups.

• 5:55Speaker 01

  I think it's the, the way, because someone asked me about this at Ripley. And I think what I, what I told them is I was like, I think that you have to kind of ask like yourself, is it, is it broken? And like, is it important? And if it's broken and important, then like, you should probably go all the way to ground on it and try and come to your own conclusions about it. Because by definition, if it's broken, then it's sort of like, you know, the, it suggests that whoever's in charge of this, like, doesn't really fully have their arms around the problem, no matter what, what they're telling you about that. And so you kind of need to develop your own opinion about like, what is really going on and what the real issue is. And like, in those cases, like, yeah, by all means, go do it. But there are a lot of things that are not broken and not

• 6:39Speaker 01

  important. And like, sales compensation might be one of those things. Like, you know, like, the place where you might mess with sales compensation as a founder is like, You're not hitting your sales targets or you're not getting the sales that you think you should get.

• 6:56Logan Bartlett?

  Yeah, or in your case like.

• 6:57Speaker 01

  And you go dig in and it does seem like the incentives are messed up and like reps are making a lot of money, but like they're not closing a lot of business or they're not, they're not doing the things that actually align with the interests of the company. And, and then, and then yeah, maybe by all means you should be like, actually, we need to rethink the way we pay people. You know, it's not aligned with, you know, and that could be appropriate. But if it's just like, wait a second, you know, like, why do we, why do sales reps make more money than, you know, other people in the company? You know, then it's like, wait a second.

• 7:24Logan Bartlett?

  Yeah, I mean, I guess there is this, this angle in that of will it materially impact the business or, or not? And if it's, if it won't, then why, you know, there's no need to necessarily reinvent in some new vector. But for you guys, for example, like in selling new products and how do you incentivize the sale of 16, 20 different products within a big suite? Um, there's probably not a ton of precedent that I think people have done it at the scale you have. And so maybe from a first principle standpoint, it's worth thinking about that element of it.

• 7:58Speaker 01

  One of the things that's really important for us when we, when we have a new product, so we, we hire a lot of founders at Ripley. And one of, I think the reasons why, cause there's, there's always like this, a little bit of a debate when we're starting a new product on like, you know, sometimes you have a choice between two people, one of whom is more foundery, which might mean that they've started a company. It might, it might just be a temperamental thing.

• 8:21Logan Bartlett?

  Yeah.

• 8:23Speaker 01

  And, and someone that's more like a sort of paved road, you know, engineering management executive. And one sort of disadvantage of the latter, particularly when you're starting a new product, is that appropriately, I think, sort of experienced engineering managers. What, what they'll do is they'll sort of, you know, if they're kind of running a product, they'll come to you and they'll say, okay, look, there's this very long list of like things we need to do. We're going to like sort the list in sort of rough order of priority. And then we're going to go down the list and we're going to draw a line and in quarterly planning, we're going to be like, here's about one quarter's worth of work. And this is what we're going to get done in this quarter and we're going to do roughly the most important things.

• 9:05Speaker 01

  And the problem with that, and like what, what someone who's like more of like a founder will do in these situations, what you really need to get these things off the ground is you need someone to say like, look, You know, there is this gap between where we are and the reality that we find ourselves in where the market expectations are here. And like, we have to somehow by hook or by crook, find a way to bring, to make these things meet. And, and so the question is like, we need to get, this is what we need to get done in this quarter, or in the next two quarters, or in some period of time. And it, it doesn't matter what is like, the reasonable amount of work to get done in this quarter. It doesn't matter, you know, like, it can't,

• 9:47Speaker 01

  you can't start from like, like, asking people to scope out how many engineering weeks are you need to do sex.

• 9:52Logan Bartlett?

  How many hours are in your day? How many people do we have?

• 9:54Speaker 01

  This is like, we have to get these things done in this amount of time, or we're fucked.

• 9:59Logan Bartlett?

  Yeah.

• 9:59Speaker 01

  And like, this is what the reality that we're in. And it's, it doesn't, yeah, it's a shitty reality, but like, this is the situation, you know, this is the gap that needs to be crossed, or the, the chasm that needs to be crossed. And so, we got to find a way to do that.

• 10:16Logan Bartlett?

  What about, what about when people come to you with the CEO in the box framing? When they, when they say, they give you the false dichotomy of like, it can be, what is it? Good? Or it can be fast, right? And it's like, these are the trade offs. Which one do you want it to be? And forcing you into that consideration set?

• 10:32Speaker 01

  Well, there are a number, I mean, so one problem is when people are doing the other thing, when they're just kind of listing out, sort of like, we're going to get about a quarter's worth of work done. What happens is it then becomes like, you know, my problem to sort of figure out how to make the ends meet. And I can't do that across, you know, 20 different products, or whatever it is. And so that's why you need people who can kind of do that for, for their product. There is this like, element, you know, that, that I, that I, that you encounter sometimes as, as, as a CEO, or as a founder, about really the pace of execution in the company. And, and people come to you with what I, what I've called CEO in a box, which is like, it could be X, or we could do A or B, X or

• 11:15Speaker 01

  Y. There's some sort of inexorable trade off. What do you want it to be? And my reaction is usually like, where is it written? That like you can't have A and B. Like, why can't we have both of these things? You know, usually there, there's kind of a built in assumption that that, that person has already decided that this is the trade off that they are going to impose on you by and sort of manage you as this, as the CEO to sort of accept this trade off. And, you know, like, the question is usually like, where, you know, where does this violate the second law of thermodynamics? If we get A and B at the same time? Sometimes the trade off is phrased as speed versus quality, not always.

• 11:58Speaker 01

  And I think the thing, whenever someone talks about, one of the things I like to do when I'm talking to like a group is, and, and, and people ask about, how do you do multiple, like, how do you trade off speed and quality? When you're trying to keep the sort of pace of the organization going quickly? One of the things I'll ask is I'll ask people to sort of raise their hands. I'll say like, how many of you have worked with engineering teams? That you thought were, were pretty slow? And there's like a whole bunch of hands that go up, like usually two thirds of the audience is like had that experience. And then I'm like, okay, how many of you found that the teams that you're thinking of right now? Also were like very high quality? And it's like, every hand goes down, like there's never, and it's just like the correlation between

• 12:40Speaker 01

  moving slowly and building high quality software is like, there's, it's like zero, like there's, there's, there are teams that move fast and, and build low quality products. And there are teams that move fast and build high quality products. But like every team that moves slowly, every team builds low quality software. Like it just does not exist. And like mentally, like the phrase, like, well, you know, when, when you, when you think about it rationally, you might think that moving slowly would yield high quality outcomes. But then like in everyone's experience, like that's never the case. And the reason is, is because like building high quality software is usually not really about the pace at which you're moving. It's really about how deeply you understand the problem? How thoughtful you've been about like what the solution needs to be?

• 13:24Speaker 01

  How it needs to work, the architecture, the data model? And those things like. You know, they don't, they don't necessarily take a lot more time, but you have to be like a lot smarter and you have to have a much better understanding of what you're doing and why in order to get it right.

• 13:41Logan Bartlett?

  I'm curious, I want to get into more operating stuff here in a minute, but I'm curious how long you were sitting on the, uh, this man knows a lot about Coop's joke. Was that an in the moment thing or did you?

• 13:52Speaker 01

  It was very much in the moment thing. I actually, um, one of my investors who I will, who will remain nameless to protect, protect him, uh, texted me, uh, David's, David's tweet, cause I, I blocked the entire all in podcast on, on Twitter for, you know, whatever reason. And, um, and so he texted this to me and he was like, there's a joke about Zenefits somewhere in here. And I didn't think much of it. It was like, I was literally walking out the door to go to work after breakfast and sort of like, as I was walking out the hallway, just kind of typed it out and hit send. Definitely did not expect, uh, the, the sort of reaction, the uptake that it.

• 14:27Logan Bartlett?

  It was, it was a fantastic joke and, uh, I, I, it's, was there a moment over the course of that, uh, day that you like went back about your, you know, doing whatever you were and you're like, oh shit, this is actually entered.

• 14:40Speaker 01

  Oh, definitely.

• 14:40Logan Bartlett?

  The zeitgeist of.

• 14:41Speaker 01

  I mean, I sort of thought of it as sort of like a kind of techie, like.

• 14:45Logan Bartlett?

  Yeah, it was cheeky.

• 14:46Speaker 01

  Mildly insucient kind of thing. And then it just, I mean, David's reaction to it was so like overpowered. And then there was like lots of back and forth.

• 14:55Logan Bartlett?

  People coming in and, uh, yeah, it just, uh, it's, it's funny because the story, we talked about it last time in full and, and, uh, the social radars with Jessica Livingston, you sort of told the story. And so the story was kind of out there and this was a fairly, I don't know. I, I thought it was just like good humor. It was just a good joke. And so it was funny to see how much it blew up and then everyone getting involved in it.

• 15:18Speaker 01

  And it was, it was fun to see David talk to his sort of like the following for his, like the political following for his like podcast about his just like deep conviction about the sanctity of occupational licensing, you know, in the insurance industry.

• 15:35Logan Bartlett?

  Yes.

• 15:35Speaker 01

  Like, you know, how important that was to, to him personally.

• 15:38Logan Bartlett?

  The, the, the scripting or whatever, the bot, uh, you know, for compliance in different states is, uh, that's, that's actually, I don't know if you know this, but that's a JD Vance's like fifth pillar he's running on is licensing in, in different states for insurances. Um, one of the things I guess, uh, I'm curious, um, you, you did a really interesting podcast, uh,

• 16:00Logan Bartlett?

  I don't know when it was Parker Thompson, Samuel L. Startup L. Jackson.

• 16:05Speaker 01

  Startup L. Jackson.

• 16:05Logan Bartlett?

  Yeah. When did you guys do that?

• 16:07Speaker 01

  It was a long time ago. It was right when I was getting started with Rippling.

• 16:10Logan Bartlett?

  Oh, really? So, so how long ago was that? Six years ago?

• 16:13Speaker 01

  Uh, I think closer to eight.

• 16:15Logan Bartlett?

  Oh, wow.

• 16:16Speaker 01

  It would have been, I think it was maybe 2016 or early 2017.

• 16:20Logan Bartlett?

  Oh, okay. I'll link it in the show notes, uh, because it's a really interesting conversation about, um, I don't know. You guys go into a bunch of philosophical things about the role that VCs play in the ecosystem as board members, as fiduciaries to limited partners, as, you know, capital providers and all that. One of the things that I'm curious, I've never heard you talk about, um, just structurally, were there things that you did different, um, for Zenefits from a like actual governance standpoint, uh, with Rippling?

• 16:50Speaker 01

  Not much. I mean, I think there's, um, there are small things like there are, you know, there's some super voting on, on shares that I have that I didn't, I didn't have then. And, um, you know, I have like my board seat is a few more votes kind of, kind of thing. But, um, like one, one of the things that like, that sort of I thought about, like, you know, at Zenefits, I had like control of the board. But when like my investors wanted me out, it like, you know, it took from like Friday to Monday. Like it barely took more than a weekend.

• 17:25Logan Bartlett?

  And you had literal control, governance of the board, like from a seat standpoint or from a voting standpoint?

• 17:31Speaker 01

  I mean, to vote, like, I mean, I, I had a seat with one vote, but you know, I theoretically controlled, like had the voting power to control three of the four.

• 17:41Logan Bartlett?

  Got it. So, so you, you affect, you literally had the, but from a, uh, effective standpoint, you, you were sort of powerless in the situation.

• 17:50Speaker 01

  Yeah, it's very hard. And I think, because I think that like the, the, the power that investors have over, over companies and founders, it's like, it's really like more than anything else, a moral authority. And, um, you know, it's about, um, You know, when I, you know, met with, you know, A16Z about this, you know, there was, there was definitely this moment where they were like, if you don't step down, um, you know, we're going to go to war with the company and, you know, we're going to disavow the investment and, you know, sort of, you'll never work in this town again. Kind of in the, and, and like, and actually interestingly, like since then, I've talked

• 18:34Speaker 01

  to a lot of other founders who have had that experience with, with that exact thing with their investors where they've said, if you don't do this thing or step down, like it will, it will lead to like a schism with the firm and irreparable reputational damage to you because we're going to go to war with the company and with you and you've got a long career that you need to think of. And it's, it's very hard to sort of stare that down in that sort of situation. Um, um, and so that, that's, I think, like the real source of like a lot of, and so I think a lot of, I don't think there's a way legally to really protect yourself on this stuff. Like, I think it's just fundamentally, there's

• 19:16Speaker 01

  a lot of power that board members have in these types of situations.

• 19:20Logan Bartlett?

  So your venture investors, you ran it back in the seed with, uh, the people that had been supportive of you, YC, uh, well, I guess Gary Tan's now YC as well, but, but at the time he wasn't. Who, who else was at bullpen?

• 19:34Speaker 01

  Um, so in the seed round, it was, it was like Gary, it was, uh, Sam, um, were the, were the two really big investors.

• 19:41Logan Bartlett?

  Yep.

• 19:41Speaker 01

  There were like about 20 different seed investors from Zenefits that came in and did the, the rippling seed.

• 19:48Logan Bartlett?

  Yep.

• 19:49Speaker 01

  Um, and that was about it.

• 19:51Logan Bartlett?

  So the first time you really picked new investors was in the series A essentially with Mamoon. And then the B was Founder's Fund. How did you go about picking investors then, knowing that there isn't like some structural thing that you can really do? It sounds like you did some little stuff, but like, what, what were you solving for and picking folks to work with?

• 20:15Speaker 01

  I mean, some of it like, I mean, I was sort of, uh, I, I, so some of it is I, I think that like, there was just a very unusual situation with like A16Z and Lars specifically that was like somewhat combustible kind of personalities, um, that, um, you know, I sort of look back on that and, and like, I mean, like eight years later, I look back on that and I'm like, that was probably a really weird setup that, you know, was kind of primed for some bad outcomes and in different ways, like, like all of the investments that, that that GP made at ASIC, they all blew up in different ways, um, for different reasons. And so, um, and, and not to say that like, like Lars was like responsible

• 21:00Speaker 01

  for like what happened at that, like absolutely not, but, um, but it was, you know, I was temperamentally at Zenefits, like having, having gone through this previous experience at a company where nothing ever worked. You know, we were just spent seven years, you know, failing pivot after failing pivot after failing pivot, so desperate to have something work. And that when suddenly things were working at Zenefits top of funnel, like from a sales and marketing perspective, it was so precious and wonderful and amazing. And you just wanted to just preserve it at all costs. And so I was, I was already like, you know, pushed the pedal on the gas all the way. And I think it was at a moment

• 21:45Speaker 01

  where a lot of investors were looking back on SaaS companies and believed that, that entrepreneurs had really fundamentally under invested in sales and marketing, that the model supported much more aggressive ramps on go to market than, than had existed. And so people, you know, including Lars, were reflexively coming in and just saying, whatever you want to do, whatever you want to grow, you should be growing 10x as much. Like, why aren't you doing more? Why aren't you doing more? And it was just weird because I don't think Lars really actually understood. Which is a problem with most investors. Most investors, no matter how smart they are, they have no fucking idea what's going on inside of the company. And every company is so different.

• 22:23Logan Bartlett?

  It would be weird if they did, actually.

• 22:25Speaker 01

  Because they're only spending, you know, one day a quarter at most.

• 22:29Logan Bartlett?

  Thinking about.

• 22:30Speaker 01

  Thinking about the company. And so when you don't have that inside perspective, and it's one of the reasons why I think most investors like destroy a lot of value at companies, because the advice, whatever advice they're giving is almost certainly wrong for the company. And yet, like, as an entrepreneur, like, you sort of like want to, you know, listen, you like, this is someone who gave you a lot of money, like, seems like, you know, like, they usually have a really good pedigree. You sort of expect that they have a lot of the answers. And so, you know, like, like, like, it would probably would have been a lot better to have someone who is like a little more of a moderating influence on the board, rather than sort of pulling me in a direction that I was already kind of heading in.

• 23:12Speaker 01

  And, and so there's a certain element where, you know, I thought that, like, you know, Mamoon was kind of like the antithesis of like my last sort of experience with a board member, where Mamoon is like the most mellow. You know, I mean, you, and not everyone who's watching will, will have met him, but he is like the most mellow, really gentle human being. And like, not just like, not sort of like an explosive big personality. And so I thought that he was like, you know, maybe one of the things I really liked about him was that sense that, you know, we were sort of better matched in that way. But also, there is a sense where I was just kind of like, and I think I spoke about this in the Parker Thompson thing, where it was just kind of like, look, you know, at the end of the day,

• 23:58Speaker 01

  it is, I don't, I wish that there was a way to raise money, you know, where the, the financing of a company was a purely financial transaction. And there wasn't, you weren't handing the investor a big red button that would sit on their desk, that they would sort of look at every day and be like, should I, should I press this button today? Like, how am I feeling about the business? You know, like, because like, that's the sort of power that investors have, is there's only one kind of thing that they can do.

• 24:27Logan Bartlett?

  Which is, the red button is fire the CEO.

• 24:29Speaker 01

  It's fire, it's the nuclear explosion, fire the CEO, blow up the company, sort of see where the, and it usually doesn't work very well. But I mean, it is sort of weird when you think about it. It's like, You know, if you were raising debt, you would never, I mean, your lender, you know, you have to pay them, make their payment. But if you make the payment, they don't, they don't get to come in and be like, actually, I think you should be, you really need to hire different executives. Or like, I don't, you know, I want to bring in a new CEO or like, you know, if you bought a house and you get a mortgage, y- y- your bank doesn't like come in and say, and have opinions about the, the decorator that you hire. You know, it's just like, it's just a financial transaction.

• 25:10Speaker 01

  And so I, it's definitely something that I kind of was like, man, I wish there was a way to do that. I, I don't think there really is though. I think it's like, you know, the model is that, you know, people, if someone's a board, board member, there is always this thing. Um, and this sort of moral authority, if not like legal authority, um, about the company. Um, and so I think you just kind of need to look past that because like, you know, you've got to deal with the world as it is. And so if you, you know, I sort of looked at it and I was like, look, I'm, because some people were like, well, why don't you just like not raise VC? I was like, well, you know, the thing I'm trying to build like requires a lot of capital and like, you know, engineers aren't cheap. And, um, you know, so it's just kind of like, you kind of like, I mean, at the end of the day, I think the answer is like,

• 25:55Speaker 01

  don't ever let the business not be working and like have the business always be working. And if, and if the business is always working, like nothing can hit you. Like you're completely invincible if the business is really working. And if the business is not working, nothing can save you, you know, like nothing. It does not matter what type of control provisions you have, like you're just completely screwed.

• 26:25Logan Bartlett?

  I, I want to unpack a bunch of different things in that, but I guess if you were to do it, let's take Mamun out of the picture. Cause I'm sure you guys have an amazing relationship and I'm sure he's been super helpful to the business. But if you were to run it back at a point in time that would have been two or three years ago, where there was much less strings attached to capital and. Tiger Global or whoever it was, a bunch of hedge funds were giving large sums of money. Would you have, would you, would you have wanted a independent or not, would you have wanted a financially incented investor board member if Mamoon didn't exist and you know, that relationship wasn't there? Would you have pursued someone that was much more passive and put in, you know, an independent advisor in that seat instead?

• 27:07Speaker 01

  I mean, I think there's a certain, there's a certain attraction to just like, um, or maybe at one point there was a certain attraction I had, like, I think actually if you had asked me before I raised my series A, if I would have wanted that, I probably would have been like, yes. I think in retrospect, I don't know, it might be like a little bit lonely to sort of, you know, like, I mean, I, I like the people that, you know, I like the investors that we work with at Ripley. Like, I really like Mamoon, I like Napoleon, I like, um, you know, sort of everyone that, um, you know, Mike from all formerly from Sequoia and COTU. And, and I think it's nice to have people that are smart and thoughtful.

• 27:51Speaker 01

  Whether or not, you know, like, how much, you know, actual, like, you know, there was like, I know, I know, we might, we might talk a little bit about investor value add and stuff like that. But like, I think it's just like, I would rather work with people who are like that than not. I think it's frustrating to deal with people who are not like that.

• 28:11Logan Bartlett?

  Not like?

• 28:12Speaker 01

  Not smart and thoughtful and like, so actually, I mean, not, you know, there was an investor that was sort of like what you described, I won't, I won't say who exactly, but like in one of the rounds, like put down just like a crazy term sheet, like much higher than it was the round, actually that Sequoia ended up leading. That was like, uh, someone that, you know, they had done like no diligence on the company, like zero. And, and we, we actually took like the lower term sheet at that point because it just seemed like. It seemed like a dangerous situation that here was an investor that was putting a price that was very far outside of what everyone else was doing, that also seemed to know very little about the business, other than like that it was like a hot deal. And it just,

• 28:56Speaker 01

  it gave me a little bit of like nightmares about like what would happen if they invested? And then the business went south and they felt like, you know, like, like I felt like they didn't understand what they were doing and they didn't understand what they were doing. And so we just didn't want, I just didn't want any part of it.

• 29:11Logan Bartlett?

  Yeah. You want people going in eyes wide open to this.

• 29:14Speaker 01

  Eyes wide open and not, you know, no issues after, after the term sheet. And I don't want to have to lose sleep over that. And, and, and you want people who like, understand the good and the bad about it. Um, and so there were definitely some like crazy things that happened in that time.

• 29:29Logan Bartlett?

  A bunch of the names, I guess, Frenel is a operator by background, but not a founder, if I remember correctly. I'm sort of thinking off the top of my head. Napoleon's not, Mamoun's not.

• 29:39Speaker 01

  Yeah.

• 29:40Logan Bartlett?

  Uh, do you think, and this is, this is a, if you, if you think this, a very controversial thought, but like actually having, uh, career VCs as board members in a, in a weird way, because they're not going to drop in and be like, I can do this better than you.

• 29:54Speaker 01

  I think there's something to be said for that. I mean, so I think actually the thing that's most, that is, that I believe in the most is you want, you want people who have, you know, a pretty long tenure as an investor. Um, I think there's something very dangerous about a, someone who's like a newly minted venture capitalist, whether they were previously a founder or previously something else. Um, because like, there's just that dynamic where when things go wrong, suddenly they feel like their back is up against the wall, you know, and like, oh no, like my, my career is at risk. Like I'm going to get fired, you know, because this investment's gone south. And suddenly people start to behave unpredictably

• 30:38Speaker 01

  and, and that, that gets like really dangerous.

• 30:43Logan Bartlett?

  Yeah.

• 30:43Speaker 01

  Versus like, you go, you go as an investor who's been doing this for 20 years and has had a bunch of big outcomes. If your thing goes to zero, they're fine. You know, like they're going to be, they can absorb that. And as a result of that, there's going to be less emotional and less irrational.

• 31:01Speaker 01

  Behavior. And so one of the things that was, I think, appealing about the moon is that, you know, his, I mean, his name isn't literally on the door, but sort of, you know,

• 31:11Logan Bartlett?

  Effectively.

• 31:12Speaker 01

  Effectively. And that was, so that was like, definitely appealing.

• 31:15Logan Bartlett?

  Yeah, it's interesting. It's sort of, I've sort of thought about this two by two of like, how hard it would be for the person to get fired from their firm as a result of your investment. And then how prescriptive they're going to be about the, the, the feedback they give you on stuff. And so I've always been in the advice giving business. I've never really been a founder, like operationally tasked with doing these things. So generally I side on, I err on the, hey, here's some options. Here's what I'd recommend you do. But at the end of the day, you're the founder, you make the decision. And I, I found at times that the dangerous thing with successful founders as venture investors is that they've seen a version

• 31:55Logan Bartlett?

  of success. And they draw on those experiences, sometimes very appropriately, but sometimes dated and situational.

• 32:03Speaker 01

  They're fighting the war like five years ago.

• 32:06Logan Bartlett?

  The five years ago war. And so, no, it's like, no, no, this is how we did it at XYZ business. And you're like, well, that was 10 years ago.

• 32:12Speaker 01

  And everything's changed. And actually, one of the really weird things for me with Riplane is like, it, the, the business is so close in terms of the, to Zenefits, in terms of like, the, I mean, totally different, way better. And, you know, all that kind of, but like, it was, you know, effectively felt like rebuilding the company. You know, I felt like I'd been building the same business for the last, you know, whatever it is, 15 years or something. And it's just the cap tables shifted around me. And it was, but it was so different in terms of like, the market dynamics and where it was when I started Riplane. And just like, a lot of the stuff that worked early on in Zenefits didn't work at Rip. And we had to sort of reinvent a lot of the playbook. And, you know, it was crazy, you know, seeing that, like how different it was with just, you know, slight changes

• 32:55Speaker 01

  to the sort of starting circumstances, that you could sort of see how, yeah, like a lot of operator VCs are going to really over extrapolate from past experience.

• 33:06Logan Bartlett?

  And there's enough pressure on the job on its own, let alone another person exerting pressure on you for their own job. And I guess you got the, maybe the perfect storm of all these manifestations with Lars Dahlgaard, the last go around. And, but it's, it's, I don't know, there's something there of board members and like the role that they play.

• 33:27Speaker 01

  Yeah, I just think, I mean, One of the things I've told people is like that I think that, you know, as a founder, your investors' incentives and your incentives are like aligned like most 99% of the time. But like, life is long and they're, I think that most founders really genuinely are like they're putting the company first. I mean, maybe not in every situation, but I think most of the time, there's just an emotional attachment that is like you're kind of like you want the thing to work more than anything. And I think investors also want the thing to work, but there's usually, you know, there are a few things above that. And usually it's like, well, you know, there's, there's like, you know, the first thing is actually

• 34:12Speaker 01

  their personal brand. And then, you know, there's the brand of their firm. And then, and then there's like, you know, the returns of the firm's portfolio. And then there's the returns on this one investment. And, you know, 99% of the time, everything is aligned. But there are these cases where particularly when they, if someone feels like their back is up against the wall, where things get weird and things get gnarly. And like, that's where sort of the incentives get misaligned. And that's where, where sort of, you know, bad stuff happens.

• 34:42Logan Bartlett?

  You were afforded to tell the story of ZetaFitz because of the success of Rippling. Had you, had you told the story immediately after, I think your narrative would have been squashed in part by the very powerful PR narrative. And so now it's like something people will listen to. I know that as you've, you've talked about this, there's been more people that have come to you and said, I mean, you even referenced it a second ago, people have had these experiences of the, over the weekend, you need, you'll never work in this town again if you don't step back. Is there anything that can be? Done from a transparency standpoint within Silicon Valley.

• 35:24Logan Bartlett?

  It feels like all of this stuff, there's all these glass door for VCs that always inevitably fail, but people try. But I'm curious, is there any, or is it just a whisper network that ultimately exists off paper because of incentives and stuff?

• 35:38Speaker 01

  Look, I mean, I think like my general advice people is like, look, I think the, the best defense is like, don't ever not have the business be working and like, always have the business be working. And it's, it's really hard, you know, because it's, there are going to be periods where it's not working and it's just very dangerous to be in that situation.

• 35:59Logan Bartlett?

  Yeah.

• 36:00Speaker 01

  And so, you know, have backup plans for your backup plans for your backup plans and be like paranoid about, and like, that's the best defense for, you know, I think both your role within the company and, and the company itself.

• 36:13Logan Bartlett?

  One, one story that I sort of teased out is that, and you referenced this a little bit earlier, but Sam Altman actually played a really important role in the, was it post, was it the series A of Rippling or was it immediately after Zenefits? When did he sort of step in and maybe, maybe for people that don't know?

• 36:34Speaker 01

  It was really, it was, it was really just right after, it was in the sort of about six months post Zenefits, long before, you know, I hadn't, I hadn't really started Rippling yet. Or I had started, but it was just like, you know, we weren't like raising money or anything. And it was, it was, it was, I, there was no reason for Sam to do it other than, you know, like he wasn't an investor or anything, it was just, it was just kind of like his belief that like this was, was wrong. And it was just, there had been like six months of like really unrelenting like attacks that most of which were, you know, they're coming from some combination of like David and Lanny Davis, his, his sort of PR guy.

• 37:16Speaker 01

  And, and, and, and, you know, I had talked to Sam about this, you know, it was just saw him and he was sort of asking me like, how are you doing? And I was like, not good. And sort of running him through it. And I got a call from him like through, didn't know that he was going to do anything, got a call a few weeks later and he was like, I talked to Mark Andreessen, Mark talked to David. Um, you know, I, I told Mark that he was risking his relationship with Y C if this continued. And Mark talked to David and said he's risking his relationship with A 16 Z if it continued. And, and it stopped and it stopped like overnight. And there was still, you know, like, it's not like, you know, my reputation was all that great.

• 37:59Speaker 01

  Like, I mean, like, it was sort of, you know, I was still kind of in, in the dirt for a long time. But, um, at least there was the sort of, the, the, the sort of, the pressure on it.

• 38:09Logan Bartlett?

  They stopped putting more dirt.

• 38:10Speaker 01

  Yeah, there was like, there's no more dirt being shoveled on top of me at that point.

• 38:13Logan Bartlett?

  They didn't clean the dirt off.

• 38:14Speaker 01

  It was like, it was like overnight. It was unbelievable.

• 38:18Logan Bartlett?

  Yeah.

• 38:18Speaker 01

  How it, how it stopped. And, and so, I mean, I was just like, we'll always be grateful to Sam. And, and O Y C for that. Cause like, you know, like, you know, they were, you know, big, uh, big defenders of mine at a time when it was like not popular.

• 38:31Logan Bartlett?

  It's, it's interesting because it sort of ties to like, what, what is a V C? And what is the value at? And in that case, it was very much the, the brand slash, um, influence, I guess, that they, they kind of uniquely wield because they sort of sit upstream from everyone else. And so like, they don't, Y C doesn't really need favors from people down from them. There's more than enough series A, B, C, D funders out there that any one individual firm, they could, you know, they could tell them that it's okay if you don't like it. But what, what do you think about like the, the value of a V C? Or like, what is the, you know?

• 39:15Speaker 01

  Of V C or of like Y, Combinator?

• 39:17Logan Bartlett?

  I guess both, but I, I sort of think of Y Combinator as maybe the highest value brand in V C. I'm curious if you, if you agree with that.

• 39:27Speaker 01

  I don't know. I mean, I think that, um, look, I love, I love Y C. I think people should do it. I think that there are, there are brands that were valuable just because there are brands that are more exclusive.

• 39:36Logan Bartlett?

  Yeah. I guess they're the only ones that people put in their. Company description, right? I never see Sequoia 2023, you know.

• 39:46Speaker 01

  Yeah, there's no, yeah, you don't have to class.

• 39:48Logan Bartlett?

  You know, but it's just an interesting, but I guess neither here or there.

• 39:53Speaker 01

  With Y C specifically, the reason that I that I did Y C. So the first time I did Y C, I did it because I had spent seven years trying to get raise money from VCs and pitched 75 different firms and everyone turned us down and we spent two years.

• 40:08Logan Bartlett?

  This is Sigfig, not Zenefits.

• 40:09Speaker 01

  Yeah, just desperately. And like every time we would meet with someone, you know, it would, they would sort of, you know, we were built, there were various incarnations, but we were mostly building this like investing app.

• 40:20Logan Bartlett?

  Sort of a wealth front.

• 40:22Speaker 01

  Yeah, well, eventually became that before that was more like a Yahoo Finance kind of, you know. And people would be like, well, you know, there was always, every six months, there was a different sort of theme of the moment, like, you know, it was like, well, what's the, what's your social, local, mobile angle on this? Or is there, do you guys have a Facebook app strategy? Or like, you know, and those were like the kind of generative AI, like Web three augmented reality themes of the day. And, and we just never were able, you know, and they would change every six months. I was like, man, that's just impossible to get VCs to give you money. And so I did Y C the first time around because I was like, man, this demo day thing, it seems like a good way to just raise a few hundred thousand dollars. And like, if I can do that, if I could just do that, like, maybe we could find a way

• 41:06Speaker 01

  to make this work. And, and it turned out that like, actually raising money was really easy for us at Zenefits for a lot, for a lot of reasons. But, but looking back on it, the thing that actually made a difference is that when you start a company, it's so superficially hard to get the right sense of urgency on day one, because like you kind of sit on the couch in your underwear, screw around the internet each day. And if you don't get anything done, like nothing bad happens.

• 41:32Logan Bartlett?

  The line between founder and unemployed is pretty thin in the early days.

• 41:37Speaker 01

  And like Y C has kind of got this down to an art that you sort of, you go in there and they have these dinners and it's once a week and it's not every day because then it would be like a little too, breed a little too much familiarity. But once a week is enough that like you go there and every week it feels like everyone else has got something to show for themselves except for you. And it's just this pressure cooker environment. In like the best possible way and in ways that you really need, it's not fun, but it really just gets you set up on this like pace of execution. And so like honestly, the biggest reason I did it the second time around was I felt like, man, if we're gonna, if I'm gonna get back in the saddle and like try and do build this back from zero, I've got to like recapture that and like recreate that.

• 42:22Speaker 01

  And you can't, you can't kind of come at this being like, ah, I've done this before. And like, you know, you just need to be completely desperate. Um, or you don't have a chance.

• 42:31Logan Bartlett?

  Do you think the brand or the re-upping from, I guess I'm sort of bucketing Gary and Y C into one from that. But I have to assume that that stamp of validation.

• 42:44Speaker 01

  Well, and it was, it was good to have some friends.

• 42:46Logan Bartlett?

  Yeah.

• 42:47Speaker 01

  Some, some people who would be like, yeah, like Parker's a good guy.

• 42:50Logan Bartlett?

  Yeah.

• 42:51Speaker 01

  And like, that was, that was super important, too.

• 42:53Logan Bartlett?

  Yeah.

• 42:54Speaker 01

  But that was a very like Y C specific thing. I think like, you know, I think of investor, you know, V C value add like very differently.

• 43:01Logan Bartlett?

  So, so maybe, maybe go to that. What do you actually think? Let's, let's put Y C to the side, like the, the pantomiming for LPs a little bit. And like what you think of V C value add or like what, what, what is a V C firm when you deconstruct?

• 43:14Speaker 01

  I mean, I think there's some, I mean, it's not that there's zero. I think that like, there's, there's certainly something on the brand side that, you know, if you get money from, you know, Redpoint or, or Sequoia or, you know, Kleiner Perkins or something, it, there's this brand in primature that you get that, you know, it just, you're, when you ping a recruit on LinkedIn or, you know, they're more likely to respond to you. A customer is going to ask fewer questions about whether you're going to be around in six months or like, what's your security like? Or, um, you know, the reporters are gonna talk to you or they're more likely to. The next round investor is going to be less skeptical. All of that stuff is real. I'm like, I don't like the fact that that's real, but it is very real.

• 43:58Logan Bartlett?

  Yeah.

• 43:59Speaker 01

  And that's, I think, the, the biggest part of it. And then there's like, there's definitely something like, I think there are firms that like, You know, most firms can refer in people and that that's useful, but it's like mostly, I think the the GPs themselves and their networks that are most valuable. And I think I found the sort of, you know, the the sort of like portfolio services kind of setups are like less impactful than like what what the GPs themselves can do. I mean, certainly, there's great people there as well. And I think there's also like a little bit, you know, so I think a lot of that is like I I think I call it like a pantomime for LPs because like, you know, a lot, a lot, a lot of firms like

• 44:41Speaker 01

  need to sort of demonstrate that they're, you know, the value has been added, which is also can be dangerous. And so because like, you know, if if your investor feels the need to like demonstrate some value, they're sticking their finger in the company and stirring.

• 44:54Logan Bartlett?

  When you're a hammer, everything looks like a nail, right?

• 44:56Speaker 01

  Yeah, exactly. And I sometimes think there's also kind of like a multi-touch attribution problem with this where like I'm in a WhatsApp group where there was an investor who I won't name that was recently saying like, you know, I think that like investors can, you know, impact the outcome of a company by 30%. And his rationale was like, well, you know, you refer in like a great executive at the right time, and that that's going to like change the trajectory and like, and like impact the outcome by 30%. And on the one hand, it's like, okay, yeah, sure, maybe that sounds reasonable. But then I was thinking about, I was like, that's ridiculous. Because like, first of all, like, okay, so you made this email introduction, right? But then there were like

• 45:37Speaker 01

  seven people that interviewed that person and like made a decision and pitched him or her on joining and sold them on the company. And then like, there's that actual executive that now worked for six years at the business and like surely they bear some, some of the sort of, you know, like the the results that they own if there's a 30% difference in outcome for them joining the company. And and they hired a bunch of people and those people were recruited by someone and then those people worked there for a bunch of years. And so it's like, it's sort of like when you look at in in marketing where you're like, hey, there's this One of like 27 marketing activities that were done against this customer that ended up becoming a customer. It's like that thing is responsible. You know, it's like, no, it's like a lot of

• 46:18Speaker 01

  things are responsible for that. And so I just think that the, you know, if you added up all of, all of the sort of things that are like, oh, well, that was a 30% difference, you get to much more than 100% of the outcome. And so it's gotta be like much, much smaller than that. And so my, my view on this is like investors, there's something that they bring, but it's more like having a great director level hire that joins the company and something much less than like what having a really great VP on your executive team brings to the table.

• 46:50Logan Bartlett?

  Yeah, the, the, the thing that at least the way I sleep at night, thinking about my ability to, to help, and feel free to call bullshit on this, but is if, if you do the work and you're close enough to understanding the business and the personalities and all that stuff, there, there end up being, maybe it's one decision over the lifetime of the company. Maybe it's once a year, maybe it's once a board meeting. I don't know what the right number is. It's probably closer to once in the lifetime of the company than it is to once a board meeting. But like a really impactful fork in the road that you can hopefully by the work you've put in, the credibility you've built, the experiences you've had and seeing not, not the tactical

• 47:31Logan Bartlett?

  level ones, because you're spending one, you're right, one day a quarter on it, but some thing of to sell or to not, right? Some co-founder breakup situation and helping figure out keeping the company above water in some way, shape or form through that sub subsequent financing that you help broker the introduction and your relationship or credibility with the subsequent investor really helps finance. There's some outcome that bends the curve somewhat. And otherwise, I think the role is therapist or whatever, some, some.

• 48:05Speaker 01

  By the way, actually, I would argue the therapist role is probably the most meaningful.

• 48:08Logan Bartlett?

  Yeah.

• 48:09Speaker 01

  You know, like, you know, maybe. The only I would balance that with is like, okay, you know, maybe there's one decision a year where, you know, it comes to you and you can help influence sort of the company making the right decision. And that might be a really important decision.

• 48:23Logan Bartlett?

  Yeah.

• 48:23Speaker 01

  But like, there might also be 10 decisions like that every week at the company that, that don't come to you. That need to be made, that also like, you know, influence the, the path.

• 48:33Logan Bartlett?

  Hundred percent. Which, which may, so maybe it's a director level. Uh, I, I don't know what it is. I hope.

• 48:38Speaker 01

  And so it's not, and again, so it's like, I don't think it's, I don't think it's nothing.

• 48:41Logan Bartlett?

  Yeah.

• 48:42Speaker 01

  But I, I think it was, it was sort of weird, the idea that one person who is spending one day a quarter is like.

• 48:50Logan Bartlett?

  Thirty percent.

• 48:51Speaker 01

  Thirty percent of the outcome of like, like I just, it doesn't, it's just, it was sort of laughable when you thought about it. Where it's like, really? Like the one email that you sent is like, you know, that one email is like, man, we just increased the value of the business from, you know, like 10 billion to 13 billion or so, you know, like, like, I, like.

• 49:10Logan Bartlett?

  I saw, I saw someone tweeted recently and I saw you respond to it that like, it was this, this dichotomy of do I, do I spend time with my portfolio company to help increase the success from a two to three X to a four to six X? Or do I go focus on new investments? Which is the better like decision for the venture firm? And it's like, you think you can, you think you can bend the curve of the business from a two to three X to a four to six X by your involvement in it? It's a very, uh.

• 49:38Speaker 01

  And by the way, I love, so that person who sent that tweet was, is someone who I have enormous respect.

• 49:43Logan Bartlett?

  Oh, yeah. Fantastic.

• 49:44Speaker 01

  And like actually introduced me to my first VP of sales.

• 49:48Logan Bartlett?

  Oh, yeah.

• 49:48Speaker 01

  When he was not an investor, you know, like, uh, and that's been a really important, so I have a lot of huge amount of respect for him. But yeah, no, I don't, I don't really believe that, that, uh, I think that investors influence over the outcome of companies is, is smaller on the upside.

• 50:04Logan Bartlett?

  Well, so you tweeted, there's three, uh, different favorite subgenres that you like, and I'd be interested in, uh, in your, your thoughts on them. The best founders know that raising at lower valuations is actually better.

• 50:16Speaker 01

  So this, so just for context, this was like twice a year, there's this sort of semi-annual holiday that comes up, which, which I call like complain about Y C valuations day, which is like, really like right a demo day where suddenly everyone takes to Twitter and is like, the kids these days want, you know, much too high prices on their businesses. And like, this is ridiculous.

• 50:38Logan Bartlett?

  That was point number two. No one invests in Y C companies anymore. The valuations are too high.

• 50:42Speaker 01

  And so then, you know, there are these subgenres of it, which are like, you know, the, the best founders know that it's better to like, sell equity for less money. And then, you know, like, you know, no one invests in these companies anymore because they're, you know, they're too expensive.

• 50:55Logan Bartlett?

  Yeah, yeah. No one goes there anymore. What is that Yogi Berra quote? It's like, no one goes in there anymore.

• 51:00Speaker 01

  Yes, it's too crowded. Yeah, exactly.

• 51:02Logan Bartlett?

  No one invests in Y C anymore. It's too expensive.

• 51:04Speaker 01

  Yeah. And so, and it's literally what you see all over Twitter, like twice a year, right at Y C demo day. And so obviously, yeah, there's some internal contradictions to a lot of those complaints. And, and I also think like, I'm very skeptical of the idea that like bad, that high valuations are bad for, for companies and for founders. And I think that a lot of investors, they just, they need that to be true so badly that they're just collectively like wishing it into existence. You know, it's just, and everyone's sort of talk, all the investors are talking to each other about how clearly bad high valuations are, that, you know, it just becomes like a thing that they all

• 51:47Speaker 01

  agree about because like, that's what all the investors have said to each other. And, and my view is like, look, it just on some basic level, if you're going to sell a certain percentage of the equity in your company, you're better off if you can get more resources for it. And people will say like, well, but you know, like, but then you're going to spend more money and you're going to build an unsustainable business. And I'm like, well, first of all, like, you don't have to spend it. You know, like,

• 52:13Logan Bartlett?

  I feel like people inevitably, as someone that's said some version of this before in the past, I feel like the, the money has a, has a way of being spent when it's there a little bit more than not, at least by my experience. Maybe that means I'm backing the wrong people that don't.

• 52:30Speaker 01

  I think it's super infantilizing. I think it's like, look, you know, if, if you're building a company and you're, you're getting so, you're building a company, building a business successfully is like, Somewhere, and I'm quoting David Wyden on this, but like one of the things he told me is he's like, building a business is somewhere between completely impossible and very, very, very hard. And there's such a narrow ray of light between those two extremes that passes through. And so like, my view on this is like, if you're investing in someone that you think can actually sort of pass through those narrows, you know, do you really think that you can't trust them to sort of,

• 53:12Speaker 01

  you know, decide how to allocate $5 million worth of capital?

• 53:16Logan Bartlett?

  Yeah.

• 53:16Speaker 01

  You know, like, I just don't, I just don't think, you know, yeah, are there a lot of people that are going to misspend it? Absolutely. Were they probably not going to be successful anyway? Like, totally true.

• 53:25Logan Bartlett?

  Yeah, the situations I see more often are the taking, like, you can take less dilution and raise a smaller amount of money, or take more dilution and raise more money. That, that often seems like the, hey, do we want 30 million bucks at a $500 million valuation? Or do we want 100 million bucks at a $600 million valuation? Or, I mean, whatever, that's, that's.

• 53:51Speaker 01

  But that's actually usually not the way, I'd like, I think in general, VCs have historically been much more sensitive about their ownership targets.

• 54:00Logan Bartlett?

  Pollution fixed.

• 54:00Speaker 01

  Than the amount, you know, than the amount of capital deployed. And so, you know, if, if you're talking with an investor and you know that like, they, they, they are going to fight like hell to own 10% or 15% or whatever it is. You know, you might as well try and get more capital so that you can get a little bit farther, so that the next time around, you're in slightly better position at last, you know, because like if every investor is going to take 10%, like, you want to do as few of those as possible.

• 54:34Logan Bartlett?

  Yeah.

• 54:35Speaker 01

  You know, which means that sort of the optimization is to raise more money and not spend it, or spend it wisely, you know, and, and invest it meaningfully.

• 54:43Logan Bartlett?

  Well, let me go down the next, because I'm going to get yelled at by other VCs for not following through on at least two of the other points, and I'd be curious your perspective on them. But subsequent fundraising, and so like potential for down round and all that stuff as you raise higher and higher valuations. And then the other one is like the 409A implications and, you know, raising at lower valuations provides more potential upside for.

• 55:08Logan Bartlett?

  Employees.

• 55:09Speaker 01

  Well, I mean, the latter one you can solve by doing RSUs. I mean, there are a number of different solves for that. You know, generally like 409A, you know, that tends to not be like it. It tends to be like pretty far below the preferred price early on.

• 55:24Logan Bartlett?

  Sure.

• 55:24Speaker 01

  You know, eventually it can.

• 55:24Logan Bartlett?

  Yeah, yeah, yeah.

• 55:26Speaker 01

  Look, I mean, on this sort of subsequent fundraising, I look at it as like you've got to hit some really big milestones. Usually having more capital makes it easier to get there. It buys you a little more time. It allows you to like double down on a few different things. It like, you know, I mean, I think at Ripley, we raised about $17 million in seed financing. So we did this sort of $7 million seed, like initially with like, you know, Gary and Sam and mostly like honestly, mostly former Zenefits investors and YC partners. And that was it.

• 56:06Speaker 01

  But then we raised $10 million like on in this uncapped note above that that in that money, it made a really, and so it was a massive seed round. I mean, it was way more capital than any company should raise at seed. But what it did is it allowed us like we had this really ambitious idea that you're there. It's certainly a very expensive idea that, you know, you actually, all of the conventional wisdom around starting with this small thing, this narrow thing and sort of growing out from there over time was wrong. And that actually what you wanted to do is just build like a much broader product suite right from day one, design for that, go for

• 56:49Speaker 01

  that. Like that was what customers wanted. That was the thing that was going to trump card that was going to win in these deals. And to do that, it was going to take a lot longer and a much bigger team. And it was like, you know, for us, it was like 40 engineers in like two years to kind of get to like a real launch. And, you know, and for for two years, we were not, you know, like, you know, we were not really growing, you know, we had sort of, you know, some beta customers and we'd close a few thousand dollars a month and like, you know, but there was not like the metrics did not look great until we kind of like. Finished the thing and there was like, you know, the, the final sort of piece for us was getting, you know, we had built device management and apps and single sign on and payroll and HCM.

• 57:35Speaker 01

  And the final thing was like, we needed weirdly it ended up being benefits administration and like coming out as benefits. I like did not want to build that. I was like, oh, like no, it's terrible. It's a horrible product and a horrible industry to get your nose in and like, just like, let's just work with brokers directly. And we don't want to build this software at all. And, and then it was just never worked until we had that piece. Cause the market had changed and like people expected it, um, cause Gusto had built it and like, so we needed to have it too. And then it was like, the month that, you know, we, that went live, we went from closing 10K a month to a hundred K a month. And then it kept growing from there, but it took like two years.

• 58:12Logan Bartlett?

  Yeah.

• 58:13Speaker 01

  And like, we would not have been able to do that if we didn't have like, we, we, I don't, we had not spent, we didn't spend $17 million getting there, but I, you know, I'm trying to remember, I think we did spend like five or six.

• 58:25Logan Bartlett?

  And you spent like you had the balance there if you needed to keep going.

• 58:30Speaker 01

  Like to spend five or six, I sort of needed to have 17.

• 58:33Logan Bartlett?

  Yeah, exactly. Yeah. Psychologically.

• 58:35Speaker 01

  Psychologically, it just like, wouldn't have worked. Um, you know, and, and like, it gave us this ability to like, make the opportunistic higher, double down on the thing that was working. You know, like, um, and, and like, look as, as a, as a CEO and as a founder, you need to, you need to be able to make those investments. And like, you're absolutely right that many founders are going to be bad at making those investments and they're going to be poor capital allocators. But like, then you're fucked because like, that's part of the job. Like part of the job is like, you, you know, particularly,

• 59:13Speaker 01

  like on the sales and marketing side, you get pretty quick feedback on sort of the ROI on the investments that you're making. Like if you have like, if you're tracking it well, which, you know, that's hard actually early on, like most people are not tracking it well for a long time. But if you're tracking it well, you get pretty good feedback on the ROI of the investments that you're making as a capital allocator in sales and marketing. But on R and D, you really don't like, that's why I think ultimately you need founders in these companies. And maybe is like the sort of secretive like founder mode is that on, on the R and D side. You know, at Rippling today, we're making investments today on the R and D side

• 59:55Speaker 01

  that ultimately are gonna buy us, you know, higher retention and better sales and marketing efficiency three years down the line. You know, and it's really hard to see the arc of those. Like, you don't see, the feedback takes too long. And so you kind of just have to be right. And like, that's ultimately why I think like, as a CEO, like you're, you ultimately are a capital allocator on this stuff. And you can be good at it or bad at it. But if you're bad at it, you're kind of screwed.

• 1:00:26Logan Bartlett?

  I've heard you say, uh, and maybe you said it on our last podcast, that you, you actually didn't learn anything from Sigfig or Zenefits and the, the experience of failure, other than like, failure sucks. And, uh, I'm curious, I guess, as I thought about that,

• 1:00:44Logan Bartlett?

  is that really the case? There had to have been so many different, like, little lessons along the way that makes you a better entrepreneur at Rippling than you were at Zenefits?

• 1:00:55Speaker 01

  I don't know. I mean, I think you, you, you, I think you learn in any job. I think you learn a lot by just doing the job. You know, you can't, just the repetition of it. Like, you end up, um, but I think you learn a lot less from failure than you learn from success.

• 1:01:13Speaker 01

  Cause companies can fail for a million different reasons. And like, you don't necessarily really understand, like, whether

• 1:01:21Speaker 01

  this thing that you did was right or wrong.

• 1:01:22Logan Bartlett?

  The counterfactual of.

• 1:01:24Speaker 01

  You know, and like, and, and like, success kind of requires you to sort of nail a lot of things. And so you sort of, you sort of kind of see that kind of all of them sort of worked.

• 1:01:36Speaker 01

  So I think it's, you, I think you just, and you see that, like, you know, there's a reason that companies want to hire executives that have, you know, sort of had a good run at. You know Stripe or Databricks or you know Facebook or what you know and like you know you you if you kind of um if you're like hey I was the VP of whatever at this company that failed miserably. No investor is like that's that's the guy you should that that's the person that really knows how to do it.

• 1:02:06Logan Bartlett?

  That's what I always tell people when they're like title conscious at companies. I'm like, listen, it's all for the company. No one cares if you're like the president of shit company like no one's gonna care. It's actually gonna be dilutive to your resume going forward because it's gonna be like, oh, this person wants a high title.

• 1:02:20Speaker 01

  People are like, maybe maybe this is why you know he or she's the reason the company failed.

• 1:02:23Logan Bartlett?

  Yeah, 100%. It's like go work at a good company and have a much more reasonable title or um one of the things we talked about uh before is um I I think it sounds like one of the lessons you really did take away from from uh Zenefits to Rippling is like automating the processes from a first principle standpoint early on. Uh I I don't know if you agree that that was one of the big differences from an operating standpoint.

• 1:02:48Speaker 01

  Well, that was the big thing that I took away that we really screwed up at Zenefits that was you know, aside from like the headlines and all that stuff.

• 1:02:56Logan Bartlett?

  The sex in the stairwells.

• 1:02:57Speaker 01

  Yeah, um, uh, yeah, no, look, I mean, yeah.

• 1:03:02Logan Bartlett?

  That's a joke.

• 1:03:03Speaker 01

  I never got to have sex in the stairwell, but it's like branded with like, you know, like an S, a scarlet S on me forever.

• 1:03:10Logan Bartlett?

  For people that are listening, we talked about this last time. It was it was that was not what happened. Uh so.

• 1:03:15Speaker 01

  Um, yeah, I mean, like, uh, sir, what was the question?

• 1:03:19Logan Bartlett?

  Automating uh on the way.

• 1:03:20Speaker 01

  Yeah, I mean, so the thing the thing like, you know, that we just like I made this very conscious decision that the top of funnel, the sales and marketing is working so well that we and that we were gonna, we needed to take all the oxygen out of the room and scale the business ahead of the underlying engineering capabilities. And that ended up, I think, being just the wrong decision. And it was one of the things that kind of killed the company. And um and it led to a lot of the subsequent like sort of commercial decline that that sort of precipitated then sort of a lot of the a lot of, you know, I think the compliance issues would have been resolved in a less public and a more kind of, you know,

• 1:04:02Speaker 01

  let's fix it, move on kind of way if it weren't for the commercial challenges in the business that really came from this problem. So that was definitely one of the big things that we were like, this is what we're gonna do differently. At Rippling, but I think the, you know, the other thing was, um, you know, like at, when I left Zenefits, there was like, you know, one really big disagreement, substantive disagreement that David and I had the entire time that we were working together. And it was really about this idea of like focus, where, you know, David's view was that we should be doing fewer things and like focusing on doing like a, you know, a more narrow ICP, a more narrow product. There were too many things we were building,

• 1:04:44Speaker 01

  like, let's just do one thing and do it really well. And, and I sort of left believing that that was just completely wrong and that actually it was the opposite. We should be doing more things and like building more products and that, that, and that the thing that, um, I think people misunderstood about why Zenefits worked when it worked was that we kind of gave people this one place where they could click a button to hire someone and just everything would kind of work automatically. And that was the thing that was just like mind blowing and like, yeah, the insurance piece, like, yeah, yeah, yeah. But that was sort of like, you needed to have the insurance online in order to make that work. Um, because if the insurance was like done via the fax machine, then the whole kind of thing fell apart. But it was really

• 1:05:28Speaker 01

  this automagical kind of sort of you, you, things change about employees and you could just change them in one place and then it would sort of magically propagate out. And that, and that became like the name of the next company, like Rippling was like very much about that process of like how this stuff propagates across all the different business systems. Um, and so that, that was the sort of other thing was like, you know, that, that at Rippling, we were like, what, what, what I ended up calling like compound software businesses was like, you know, that was their original idea. It was like, no, we're gonna, we're gonna try and take on a whole series of these things in one place.

• 1:06:08Logan Bartlett?

  There was a, that, that focus point was like a Silicon Valley truism, maybe it still is a Silicon Valley truism that like, hey, narrow ICP, lean startup, let's iterate, find minimum, you know, minimum viable product and get it out there in the ether. Um, and I'm curious, like compound startup, you, the employee record or the employee, the identity within the organization, that's sort of the canonical. Atomic data unit for Rippling, is that fair?

• 1:06:40Speaker 01

  I think it's historic, I mean, I think it's, it's, I would say it's a, it's a, it's a point of view that software should be built in this particular way where, you know, you have data fundamentally at the bottom and that's, you know, has mostly been employee data for Rippling, although increasingly I think it's just like business data. And then you have like a really thick set of platform capabilities where you, you know, so much of software is like turtles all the way down, where it's like every software company ends up re-implementing the same things, often poorly. You know, things like permissions and analytics and workflow automations and approvals and custom objects and policies and,

• 1:07:24Speaker 01

  you know, if you can build all that in one place centrally, you can go much deeper and invest much more deeply on those things. And then you build thin applications on top that have the benefit of, you know, being built out of this better underlying stuff out of the platform layer and that have access to all of the underlying data in the data layer and that you, that's a way that you can get better product outcomes for customers if you can build software in that way. And it's not, it's not like a new idea, like there, there are companies that believe in building software in this way. And it's like, you know, like ServiceNow and, you know, Salesforce at one point, although they've sort of struggled to execute on it recently and, you know, Microsoft certainly like

• 1:08:09Speaker 01

  built software that way. And I think that that is, and a lot of times people believe like, oh, what you're doing is you're building good enough products with better sales and marketing efficiency. Like then, no, that's not it at all. Like I genuinely believe that that is the way to build better products and better software. And, and so some, I think some of it's about

• 1:08:32Speaker 01

  The data, but you get the advantages that you get from building multiple. There are a lot of reasons, there are a lot of disadvantages to building, you know, to having a company with 20 different SKUs. The advantages that you get are, you know, one about the integration with the data layer. But two, just the integration between the applications themselves. And then the biggest one by far is I think the ability to sort of pull out these abstractions that are repeated across applications and just go much deeper on sort of those things that are common across the applications.

• 1:09:06Logan Bartlett?

  How many, how many markets

• 1:09:11Logan Bartlett?

  are there for compound startups today? Or do you think every business, every application software business should be built like this?

• 1:09:20Speaker 01

  Like how many compound software businesses can be built?

• 1:09:23Logan Bartlett?

  How many in the venture market today?

• 1:09:27Logan Bartlett?

  Do you think that there is one a year that can become a material business at scale, a rippling?

• 1:09:35Speaker 01

  It's gonna sound crazy, but I think that there is a market of one company. I think that that's like ultimately like.

• 1:09:41Logan Bartlett?

  The end state is there's one compound startup.

• 1:09:46Speaker 01

  I think it's like, you know, it's why you see, you know, Microsoft is so unassailable.

• 1:09:53Logan Bartlett?

  Yeah.

• 1:09:54Speaker 01

  You know, because that is fundamentally their approach, coming at it from a very different side of the pie than Rippling, you know, with really like starting from, well, I mean, in some ways coming at it from a very different side of the pie because building a lot of collaboration software. But in some ways very similar because the beating heart of Microsoft's enterprise software business is Active Directory.

• 1:10:15Logan Bartlett?

  Yeah, identity.

• 1:10:16Speaker 01

  Which is identity and really a shitty system of record for employee data that is used by the IT department.

• 1:10:25Speaker 01

  And, and it's, and it's the same, the, and I think that like fundamentally. Look, there are so many advantages to building narrow focused products, but there are a couple of really critical disadvantages to building software in that way. And I just think that the the advantage, the limited set of advantages that you have building compound software are so large that they trump everything else. And it like, if I'm right about that, I do think that it takes you very far. I think you end up with, you know, there's no fundamental reason why it stops. I think that like, you ultimately get like a very small number, maybe just even one,

• 1:11:09Speaker 01

  you know, sort of a company that that kind of does everything. And I think that that is like, um, you know, like you could build better software in that way for for businesses.

• 1:11:22Logan Bartlett?

  So do you think about ServiceNow and I guess ultimately Microsoft as like the long term competitors for Rippling?

• 1:11:28Speaker 01

  Well, I mean, there's like something about that that seems kind of crazy, right? We don't, we don't compete with them in deals today.

• 1:11:34Logan Bartlett?

  Yeah.

• 1:11:34Speaker 01

  You know?

• 1:11:35Logan Bartlett?

  But the aspirational, I mean, it makes sense what you what you said. I don't think there's, before we were recording, we were talking about, I was sort of half jokingly asking when you stop building new products and start focusing on rounding out all the, I mean, I don't know how many you have. Do you have 20 today?

• 1:11:56Speaker 01

  Yeah, probably some, you know, 20 or 30.

• 1:11:59Logan Bartlett?

  And it sounds like the answer is you don't, maybe.

• 1:12:01Speaker 01

  Well, I, so I think that that those are completely independent investment decisions that you make, that there's, there's a level of resourcing that makes sense for existing products, and there's a level of resourcing that makes sense for building new products. And those things really should not compete with each other, except at the level of like solvency and like capital availability. And so, and if both of those investment decisions make sense, then it's kind of like, well, you should, you should raise money, you know, like that's, that's why you raise capital, you know, is to make sure that you can make both of those investments while maintaining. You know, sort of, you know, solvency for, for the company. And so it's like, you know, like at Rippling,

• 1:12:46Speaker 01

  you know, and actually like the, the new products like take up much less resources than the existing, like we have at Rippling, like 200 engineers working on our payroll products. You know, global payroll products. So they're, they're building payroll in, you know, 15 different countries. But, um, but it's a much smaller, you know, new, new products we build with much smaller teams. And, and you could weirdly, you can get much farther, like the, the new, like the newest products at Rippling are always the highest quality because they're built on top of a more evolved platform. And so they're just, the CSAT scores are higher, the, um, the competitiveness is higher.

• 1:13:32Speaker 01

  The sort of time, we, we look at each product, like the time to hit revenue milestones. It's much faster for the newest products, like.

• 1:13:39Logan Bartlett?

  And you think that's a product thing, not a distribution thing? I mean, I'm sure it's.

• 1:13:42Speaker 01

  Well, so it's faster in ways that are disproportionate to the size of our existing customer base. So you might say, well, your, your customer base is larger, but like, you know, if the customer base is twice as large, but you hit these milestones like five times faster, it's like more than just.

• 1:14:01Logan Bartlett?

  Yeah.

• 1:14:01Speaker 01

  You know, the size of the installed customer base, which is, which is sort of, sort of what we see.

• 1:14:07Logan Bartlett?

  And so, so you, you think it's, uh, I mean, I'm sure there's a lot of lessons learned on how to build, how to ship products and organize teams and all that, but you think it's a lot of the, the primitives that you've, the reusable, composable infrastructure that are shared across all the applications.

• 1:14:24Speaker 01

  If there is like one thing that we like really believe in internally and it just obsessed about, it's this like capital P platform development, which a lot of companies talk about, you know, platforms, like what the hell does that mean? And for us, it means something very specific, which is about constantly trying to decompose business software into its underlying constituent parts and taking those, building them, building really great Lego blocks. And then reassembling those into software applications, but constantly trying to find ways to pull things down into the platform layer.

• 1:15:02Logan Bartlett?

  The, how much of the resourcing, uh, I guess, Eng, let's use that as an example, does platform get versus applications?

• 1:15:09Speaker 01

  It depends on how you measure it. And so it's hard because there are, there are many things where it's like not totally clear. Like, so like, right now, we have like our platform team, and then we have like authentication, which lives in a different team that, you know, but it's kind of a platform team. So I think depending on how you look at it, it ends up being like 30 to 40%, but it's also

• 1:15:31Logan Bartlett?

  It's platform.

• 1:15:32Speaker 01

  It's platform of the R and D expense.

• 1:15:33Logan Bartlett?

  Yeah.

• 1:15:34Speaker 01

  But it's also growing much more quickly. And so, you know, like next year, like, you know, I think 50% of the incremental dollars are going to like platform. In R and D, it's just a constant, and it makes sense because like every dollar that I spend on platform investment accrues to like every application in the company. And so that, you know, that's sort of, we're sort of like, I think, very unusually committed to just like more

• 1:16:04Logan Bartlett?

  Pouring more into

• 1:16:05Speaker 01

  Platform development.

• 1:16:07Logan Bartlett?

  Going from, uh, we actually journalism major?

• 1:16:12Speaker 01

  No.

• 1:16:13Logan Bartlett?

  You weren't a journalism major?

• 1:16:14Speaker 01

  No, I was a chem major.

• 1:16:15Logan Bartlett?

  Chem major, okay.

• 1:16:16Speaker 01

  But effectively spent all my time working on the newspaper.

• 1:16:19Logan Bartlett?

  Yeah. So going from, I guess, the Crimson chem major to Sigfig to Zenefits to like Rippling now. At some point along the way, it seems like you developed like a very deep appreciation about the business of software. And just going back and understanding how Microsoft got started in the early days or understanding like how software has been built historically. Was that, was there a moment in time that you really went back and reflected on all these things? Cause this is such a first principled perspective on like building

• 1:16:55Speaker 01

  On how to build software?

• 1:16:56Logan Bartlett?

  How to build applications. And so I'm curious, I assume it wasn't there at Sigfig.

• 1:17:01Speaker 01

  Uh. No, I think it was like, I think it it came like, so a lot of this, my conviction around the platform stuff like that, that is something that we sort of discovered at like, or I discovered, you know, not was not a lot of other people knew understood this before I did at Rippling. And it was really like, you know, we started Rippling with this deep commitment and sort of like, really like some of it was like, well, you know, fuck it, we're gonna win. We're not just gonna win, we're gonna win by doing the opposite of what like David Sacks and Bill Gurley think we should do. But like, some of it was actually like genuinely like a belief that that was, you know, the right approach for the market. Yeah. But a lot of it, you know, that was always in the early days when we were raising money,

• 1:17:44Speaker 01

  you know, people would ask us, well, what's like, you know, what could go wrong? Or like, what's the, what's the downside? And it was like, look, you know, we're doing, we're the, the, the knock on the company is that we're doing all of these things and it's impossible and it's not gonna work, you know, for all the reasons that everyone says you shouldn't do that. And like, you know, but if it does work, you know, then it, but that was always the thing that we believed was like, the thing that was gonna kill us. And the major disadvantage of the company was like, they were, you know, maybe doing too much. But as a result of that, it became like, to the extent that there's like, like, you know, like, like real focus of the business, it's always been about how to make this sort of paralyzed, multi-product

• 1:18:26Speaker 01

  R and D development work. And it was, it was ended up being this thing where there, the, there's this roving bottleneck in the organization where it, it breaks in different places. And, you know, at one point, it was like, well, how do you, how do you parallelize the R and D execution? And like, you know, we ended up, ended up just working to have, you know, founders kind of run these sort of, you know, you really needed to shard the organization, the R and D org to kind of effectively move in parallel across these initiatives. And then, you know, the bottleneck ended up in sales and marketing, you know, it was like, you know, there were different solves for that that we had around how do you make it work when it breaks in sales or breaks over here? And it's sort of, you know, and, and sort of along the way, there,

• 1:19:07Speaker 01

  there was this problem on like, you know, as you're building these different applications. Do you just have like infinitely sort of scaling R and D expense? You know, and like, how do you and what gives you the right? Like, are you just, you know, what gives you the right to compete as a product against point solutions where this is the only thing that they do? And you have sort of these artisanal point solution products that just do this one thing and, you know, and like the solution of that really ended up becoming about finding the things that are conserved across all of these different applications and and winning

• 1:19:48Speaker 01

  on those things, you know, having better analytics and better workflows and better permissions and better documents and better approvals and better and like, you know, you get enough of those things and it ends up being like, well, that's like 80% of the product experience anyway. And like, those are the things that are most important to buyers because that's where a lot of the configurability on these systems lives. And it's where they can kind of tune the product to match their their business process internally at their organization. And so that was like a solve that, you know, we sort of, or that I stumbled upon on sort of like, how do you make this work in the face of, you know, this set of challenges?

• 1:20:27Logan Bartlett?

  Yeah, it's a distinct, which is, I assume why you don't like the bundled term because at the end of the day, you want to build best to breed applications. It's not, it's not that these happen to be integrated that you are winning on. I'm sure that's a nice benefit, but ultimately you want each application to be as good as a best to breed quote unquote, uh, product in the market.

• 1:20:52Speaker 01

  Well, I think we'd like the, I would say we'd like it to be much better. And the, the argument I would make is that, you know, if you buy artisanal SaaS software, one of the disadvantages is you have, you know, 25 different things instead of one. There's just lots of disadvantages of that on its own. But the other disadvantage of sort of of artisanal software products is that there are just some core things that you care about that these companies cannot afford to go deep on. And like, one great example of this is like analytics where, you know, most, every software company. They end up building some type of reporting capabilities.

• 1:21:33Speaker 01

  But most software businesses, when they build that, they build it as an afterthought and they build it because their customer wants fucking reports. And so they build some CSV extracts so that they can like do some reporting. You know, but it's like an afterthought. It's not the thing that that team wants to work on. It doesn't feel core to what they're doing. But like customers really care about that stuff. And at Rippling, when we build, when we're building analytics, like we're trying to compete with like the modern data stack and Tableau. And we're trying to go head to head with like BI systems and all, you know, and like that, you know, that accrues benefits to every application, the system that you can, you know, that you have,

• 1:22:17Speaker 01

  you know, not just reporting capabilities, but a full BI system and data pipelines and data transformations and, you know, custom connectors that you can build and dashboards, you know, all that kind of stuff like that ends up just makes you super powerful in, for IT products and for, you know, finance and spend products and certainly, you know, for HCM products and like, you know, all of that stuff.

• 1:22:42Logan Bartlett?

  I want to hit on some operating stuff. We talked about the go see leadership principle that you guys have. I had heard you talk about like, one of the most important things is to shorten the feedback loop within a business. Having the principle of go sees obviously an important component of it, but are there things you do to stay abreast with what's going on within the organization?

• 1:23:05Speaker 01

  I mean, the thing that I've always found really useful is I've always found that like anecdotes are a lot more powerful than than data. Cause if you look at, if you look at data, it like, it answers a question that you know to ask. You know, usually like you have some report that is like designed to answer a specific question that you're already asking. And sometimes when things go south, it's like not totally clear like why. And you can get a lot more, you can pack a lot more context into individual anecdotes. And if you can go look at the anecdotes, and so we have, we have things like, like Slack channels where we echo,

• 1:23:44Speaker 01

  like every time someone gives us like thumbs down on like a CSAT score or like a low NPS or like some, you know, our assessment of a customer's likelihood to churn changes, you know, like either up or down. And just like the entire context of that customer gets echoed to that channel. And so then you can go in and you can just look at that and you start to notice things where you're like, oh, well, you know, what's the, maybe the issue we're having is all with a particular profile of exec. It's like all the, you know, all the, I don't know, the more junior HR people or the more senior IT people or, you know, or it's a particular type of customer size, or it's people who are using this product, or it's like, you know, whatever it is, and it's like, you start to see across 20 different examples,

• 1:24:29Speaker 01

  some patterns that allow you to sort of then dive in and be like, maybe this is the issue. Or you can, you can go read the support tickets, you know, that led people to sort of be unhappy. And you can, you know, sometimes it's like painful to do and you're like, ugh, like, yeah, no, that is, you know, and then, but then you can sort of, you have a theory now about what the problem is. And like why it's not working that you can start to address that if you're just, if all you understand is that CSAT scores are down, it's like, what do you, what do you do about that?

• 1:24:58Logan Bartlett?

  Yeah, there's, there's.

• 1:24:59Speaker 01

  You just don't know, like.

• 1:24:59Logan Bartlett?

  And, and data has predefined constraints to it in some way, shape or form. You're, you're searching for something and getting a result back. And oftentimes it doesn't afford the opportunity of shades of gray or nuance that I guess anecdotes do.

• 1:25:18Speaker 01

  One of the things that Rippling does that's unusual is we publish a lot of support metrics publicly. So you can go look up every day we publish like time to first response, percentage of tickets resolved like in one, two, or three touches. You know, CSAT scores, like all this stuff for our customer support, for our customer support team. And we started doing this. And one of the things that, that when we were trying to improve these metrics, right now, our time to first response, the time to actually get you, a first response from an agent, like from a person, not like time to first automated response, is, is the 90th percentile is under 30 seconds. And I think when we first started doing this,

• 1:26:03Speaker 01

  it was like closer to 10 minutes. And we just kept trying to move, and I think, I think actually the median was like closer to 10 minutes. And we kept trying to move the median down and make the median better. And we couldn't do it. It was like, you know, each time it was like, hey, guys, like, make the median better next week. And like, of course, that didn't happen. And the thing that like really worked is we banned the team from looking at medians, and we forced them to look at 90th percentile. So the only thing they could look at was like the 10% worst cases, not like the middle of the road stuff. What happened is when you looked at the 90th percentile, it was super bad. It was like, it was like an hour. It was like, literally, there were people that would try

• 1:26:47Speaker 01

  and chat with our support team. And it would take an hour for them to connect with an agent. And but what it also did is you were like, holy shit, an hour. And it was a small enough number of cases that you could really go and see what was happening. And you would notice things like, oh, we opened the chat up at 9am or 8am or whatever it is. And we have, you know, three reps that are supposed to be helping with like this type of ticket. And all three of them have one on ones with their manager scheduled, like at that time. So there's literally no one on the chat for the first hour. And like, that's super bad, obviously. And like, that makes no sense. And like, let's do the one on ones at a different time. And like, you start solving the like worst, most embarrassing problems. And it was like, in the course of two weeks,

• 1:27:33Speaker 01

  You know, the 90th percentiles went way down, but like the medians also all went, you know, it was like literally in a two week time, we went from medians that were like 10 minutes to like a minute. It was crazy how fast it's and I think it was because the, the problem was more tractable when you were working with a smaller number of the more extreme examples that you could actually wrap your, your sort of your head around a little bit.

• 1:27:56Logan Bartlett?

  I'm curious, how do you think about your time allocation i- in a given moment, like how you sort of go about organizing your day or prioritizing these different things?

• 1:28:06Speaker 01

  I don't know, man, I'm not sure that I, that I'm like a great, that I have like any great insights on that. I definitely feel like I like, uh, it sort of goes in waves. Like I think there are periods of time at the company where like, you know, things are working really well and you know, executives have everything covered and I'm like, I, you know, really have can sort of control my calendar and what I do. And then there are times when I feel like super overwhelmed with like everything that's going on. And it, it kind of goes in cycles, I think, as, as the company grows.

• 1:28:35Speaker 01

  So I'm not sure I have any great insights. I think one thing that keeps me pretty grounded, that's, that's important to me is that I'm, I'm the, the only admin for Rippling on Rippling. So we're now I think about 3,200 employees across 15 or 20 different countries. And I'm the only person that runs payroll, manage all the benefits. We actually, we had, we're switching insurance carriers. And so I was, ran our open enrollment meeting earlier today and

• 1:29:07Speaker 01

  you know, approve every expense reimbursement over $10 in the system. And, and so I'm like using the, there's actually like a lot of work just using the product. But I think it's the thing that gives me like a right to an opinion about, about the product is like, you know, like doing, doing that, I feel like I, I have like a visceral sense of like what, um, and I don't, I don't, you know, the, the parts of the product that I use are candidly like much stronger than the parts of the product that I see less frequently.

• 1:29:35Logan Bartlett?

  Yeah.

• 1:29:36Speaker 01

  Um, as a result of that. Um, but I think it's like a really important thing for the business that I, that I do that. That takes up a decent amount of time.

• 1:29:42Logan Bartlett?

  I can imagine. How many admin, 32 person employee customer? How many admins would be on like, is there any rule of thumb for, I don't know, 32 admins for 3,200 people or is it unusual? I assume to have one admin for 3,200.

• 1:29:59Speaker 01

  Oh, it'd be maybe hundreds.

• 1:30:00Logan Bartlett?

  Yeah, that's what I figured.

• 1:30:01Speaker 01

  I mean, there, I mean, there are people.

• 1:30:02Logan Bartlett?

  I assume there are some admins.

• 1:30:03Speaker 01

  There are people who can do things in the system. And so like, you know, managers can like request changes to their employees.

• 1:30:11Logan Bartlett?

  Got it.

• 1:30:11Speaker 01

  That like then I approve.

• 1:30:12Logan Bartlett?

  Got it.

• 1:30:12Speaker 01

  For example, and so it's not like literally no one else can do anything. But in terms of like, you know, the only full admin and certainly there are a lot of, a lot of there, you know, many things that only go through me like, you know, um, you know, setting up, setting up applications, controlling, you know, the, you know, submitting to pay run, you know, like that kind of stuff.

• 1:30:36Logan Bartlett?

  Yeah, yeah, yeah. I guess it is, this is sort of product management as well. I mean, this is sort of being the product leader of the organization as tedious as, you know, this.

• 1:30:46Speaker 01

  Totally, because it, whenever, you know, it's always leading to sort of feedback.

• 1:30:50Logan Bartlett?

  Product, yeah. I wouldn't recommend most companies do the expense thing.

• 1:30:53Speaker 01

  The product leader, I mean, I don't think of myself as like the product leader in the company. I think of myself as like customer zero on that stuff. And it's probably much, that's probably much more than dynamic.

• 1:31:06Logan Bartlett?

  And maybe the title is, is one that you wouldn't do otherwise, but would you, is there a set of considerations that you, under which you would recommend a founder hiring a COO?

• 1:31:20Speaker 01

  I think a lot of founders find this. If I think about the execs who are like the best, it's like there's, there's, there's people that you bring in from your personal network that you're just like, I've worked with this person. They're awesome. And that usually tends to work really well. And then there's, you know, people that, you know, you get referred from usually like, you know, your board members and those can often be great as well.

• 1:31:44Speaker 01

  And, you know, and then it start, it starts to kind of like drop. I mean, like there are also like some very good people that like came in, like my GC was someone who cold emailed me about, about Rippling and Vanessa's awesome. But I think it's like, you know, usually the people that, you know, you bring in from like recruiting firms, like, you know, exec recruiters, they specialize in like.

• 1:32:08Speaker 01

  People who it's like their turn, you know, like, god damn it, like, they've been, they've been working and working their way up the ladder for 20 years and it's their turn for the top job. And, you know, they often end up being kind of B, B plus kind of candidates. Because like the people who are really good are often not, you know, not going through the exact recruiting firm. You know, they, they sort of hinted to one of their friends that they're maybe thinking about leaving their job and like, they have like four offers the next day because people are jumping all over them, or, or it's, it's, it's explicitly not their turn. You know, like, they're not really qualified for that job, but they're so good that people are giving it to them. And so those people tend to be people that you find through your personal network rather than like through an exec recruiter.

• 1:32:53Logan Bartlett?

  Do you, do you, to cultivate those types of people internally, how do you recognize when you have those stars that are maybe deeper in the organization? Is there anything you do to help cultivate and bring those people up?

• 1:33:07Speaker 01

  There are some, sometimes there are people that I interface with, but a lot of times now it's, you know, there's, there's enough hierarchy that like, you know, people are bringing, you know, like you, you have the right VPs that are bringing people up like that or the right directors. And then eventually they get to a level where, you know, I'm interfacing with them like, ooh, like that person's, that person's great.

• 1:33:25Logan Bartlett?

  Yeah.

• 1:33:25Speaker 01

  Brandon is a good example. He runs marketing today. You know, he started as an IC,

• 1:33:32Speaker 01

  you know, a couple of years ago and just moved up very quickly. But he was, you know, he, he joined as a individual contributor under Mepstein when the marketing team was already probably like 30 people or something.

• 1:33:44Logan Bartlett?

  Was David the COO of Zenefits?

• 1:33:46Speaker 01

  Yeah.

• 1:33:47Logan Bartlett?

  Sure. The irony is not lost on you, or I'm sure it's something you've thought, but you went from that to like one of your oldest friends as in the same title between two companies. I'm sure that was.

• 1:33:58Speaker 01

  No, it was, it was very purposefully like, I think that. You know, I, um, when I, you know, when I hired David, it was, it was because he was the celebrity exec. Yeah. You know, it was like, I was in this place where I felt like, oh my God, these challenges are insurmountable. And like, you know, all these things are going wrong and like, oh, this guy, like, he must know the answer here. Like, he's gonna solve all of our problems. And, and like, you know, it turned out like David wasn't really interested in solving our problems. Like, he was sort of like bored with the job the day he joined and wasn't really that engaged in, in any of it. But even, even if he was, I don't think that he could have solved these issues.

• 1:34:38Speaker 01

  And like, one of, um, you know, there's this advice that founders sometimes get about sort of how to split up roles within the company. That, um, you know, there's one executive coach in particular that, that sort of gives this advice a lot, who, who I think is generally really good. But I think this one thing he's wrong about, which is his advice is like, you should do what you love. Like, you should find, find the thing that you really love and like, you should do that. And the things that you don't love, like, find people who love those things and have them do that. And that was certainly what I was trying to do with David. I was like, oh, we got all these problems over here with ops and issues and like, you know, it's painful to even think about. I don't, you know, like, let me just, you know, have someone else do it.

• 1:35:22Speaker 01

  And it's exactly the wrong thing to do. Like, you know, what, what I would tell people is like, find the thing that you hate, really hate doing in the company. Fucking bear hug that thing because like, that's the thing that's probably gonna kill you. That's the thing that you're probably avoiding. And it's probably the thing that like only you can fix. That really does require that type of like founder mode style intervention.

• 1:35:49Speaker 01

  And so that, um, and that's, I think, one of the reasons why celebrity execs are dangerous. It's like, one, you know, they have a reputation to protect. So, you know, when things get kind of gnarly, their, you know, incentives get very misaligned. You know, two, they're often, you know, they're already famous and successful. They're not in it in the same way that your non-celebrity execs might be who like, they need this thing to work. To make to make them into celebrity executives. And then often you end up hiring a celebrity exec because like you think they have all the answers and like they don't. You know, they usually don't. And so it's like this false comfort.

• 1:36:26Logan Bartlett?

  It's an interesting thing of like previously successful founders as well, like people that have had some success and I don't know, sold their company before. When they decide to start another business, people inevitably rush to give them money. And oftentimes there's not the same chip on the shoulder that there was when they got going in the initial business. And even if they fail at that, I also see it with founders, successful CEOs turned venture investors where

• 1:37:01Logan Bartlett?

  at the end of the day, if I'm not good at this job.

• 1:37:03Speaker 01

  They don't need the investment thing to work for them.

• 1:37:05Logan Bartlett?

  At all.

• 1:37:06Speaker 01

  Yeah.

• 1:37:06Logan Bartlett?

  And like I won't, if I fail at this job, then that's, that's my only career. I don't, I don't know what I would go do otherwise. And so like I stay up at night agonizing about it versus when you had a very nice run at a company or as a founder, it's an afterthought to your

• 1:37:22Speaker 01

  Yeah.

• 1:37:22Logan Bartlett?

  resume, your Wikipedia page or whatever it's going to be, your tombstone will read very nicely and this will be a footnote to it.

• 1:37:29Speaker 01

  Yeah, I mean, I don't like that. That's the way that this is the way the world works, but it is, it is, I think, true that there is something about this just incredible desperation. And like what, what certainly it's brought out in me and like in, in, in, in my career and like, you know, like I don't, like I desperately did not want to start another company. Like I've done, I've done it three times and after the first one, I really didn't want to start a second one. But it was sort of like, there weren't like a lot of other options and I felt like that at each step of each sort of step of the way. That it was sort of like the only, the only available path. And like, there's something to that, unfortunately, that, you know, it kind of like.

• 1:38:10Logan Bartlett?

  At some point, you're committed. Your skill set is that of a CEO and

• 1:38:15Speaker 01

  Yeah, there's no, there's no bridge to retreat back over. You know, it's kind of like this is the only, this is the path.

• 1:38:20Logan Bartlett?

  Yeah, you see it when, when people spin out of like, you know, whatever, Google or Facebook or whatever successful job.

• 1:38:27Speaker 01

  Yeah, you're gonna always go back to Google.

• 1:38:28Logan Bartlett?

  It's like, it's a two way door. There's, there's two options there when you're, you're sort of burning the boats in some ways. What, um, I guess to that, like, as you keep marching and working long nights and all that, like, what, what keeps you motivated today? Uh, you've had success. You built a, a big business today, but like to keep pushing and grinding. What, what kind of gnaws at you?

• 1:38:53Speaker 01

  I don't, you know, it's changed a lot because like I definitely, you know, when I started Ripley, like the first couple of years, it was like this like forced march of revenge. And that was the thing that got me up, you know, every day, you know, like it was the first thing I thought about every morning and the last thing I thought about every night. And I think that's kind of, um, you know, at one point, yeah, there's this exec coach that I was talking with who was like, really wanted to change that. And he went around and did a 360 degree review and talked to all of my direct reports. It was like, you know, how do you feel about the fact that Parker's in this for like revenge? And like, everyone was like, I hope he never loses it. You know, it was like exact, not the answer he was expecting, I think.

• 1:39:33Speaker 01

  But over time, like, you know, it has like against, you know, sort of, you know, counter to like my every effort to like hone that kind of revenge thing. I think that like, it's not something that I spend as much time thinking about. And it's like, it's much more, um, like, I really do like the people that I work with, you know, it's, it's like, it's a lot of fun. I think I work with a great team of people and, and people multiple levels down from me in the organization as well. So that, that is just probably the most fun thing for me is that I really like the product that we're building. I'm excited about it. Um, I use it. I get to use it every day. I'm probably the only, the only person at the company that really does use it like every day. I mean, it's, you know, um, so,

• 1:40:18Speaker 01

  You know, that that part's really fun. And like, that's the stuff, you know, that's probably the stuff that really it's more like it's weird because like it started out with such a negative set of motivations that like sort of these more positive ones have kind of sort of found their way in over time.

• 1:40:35Logan Bartlett?

  Yeah, it's a I hope you keep some of that revenge. I we can't have Parker going all soft.

• 1:40:41Speaker 01

  Going all soft?

• 1:40:42Logan Bartlett?

  Yeah, yeah.

• 1:40:43Speaker 01

  I think you could be intense about a different set of I don't know. I mean, there's some there. I think you can only like you can only sort of stay on that that road for so long.

• 1:40:54Logan Bartlett?

  Yeah.

• 1:40:55Speaker 01

  You know?

• 1:40:55Logan Bartlett?

  Well, and this is a much healthier, I think, motivation and

• 1:41:00Speaker 01

  It just kind of fades with time, you know?

• 1:41:01Logan Bartlett?

  And I think you've for for the past slights and circumstances, I think your narrative has has gotten out there. And I think people are now aware well aware of, you know, thanks to other media platforms of, you know, different personalities.

• 1:41:23Speaker 01

  Thanks to Logan Bartlett.

• 1:41:23Logan Bartlett?

  Yeah, exactly. Logan Bartlett and, you know, other shows that there's there's different personalities at play in all this. And now you've so far gone past the point of Zenefits that I think it's a healthy.

• 1:41:35Speaker 01

  Well, knock on wood. I mean, we'll see.

• 1:41:37Logan Bartlett?

  Thank you.

• 1:41:37Speaker 01

  It's not it's not

• 1:41:38Logan Bartlett?

  You're past Zenefits. I think we can we can acknowledge acknowledge that, although the story's not written. So, yeah.

• 1:41:44Speaker 01

  Yeah, for sure.

• 1:41:44Logan Bartlett?

  Well, thanks for doing this.

• 1:41:45Speaker 01

  Cool. Thanks for having me.

• 1:41:49Logan Bartlett?

  Thank you for joining this episode of the Logan Bartlett Show with co-founder and CEO of Rippling, Parker Conrad. If you enjoyed this discussion, we'd really appreciate it if you subscribed on whatever podcast platform you're listening to us on, as well as share with anyone else that you think might find this episode interesting. We look forward to seeing you back here soon on another great episode of the Logan Bartlett Show. Have a great weekend, everyone.