Pod Insights Acquired ACQ2: Building Web Apps with Just English and AI (with Vercel CEO Guillermo Rauch) About this episode Vercel has become the infrastructure platform powering modern web development over the past several years, with companies from Stripe to Adobe to Runway all building their front ends on them. Today we’re joined by founder and CEO Guillermo Rauch, who shares why Vercel has been uniquely successful in the fragmented (to say the least!) world of web development platforms. There are now more than 6 million Vercel users, 80,000 active teams, and users have grown 200% year-over-year. The company also crossed $100m in annualized revenue last May, and Guillermo shared with us that they’ve been growing at 80% since, and were recently valued at $3.25 billion.
This is also a particularly interesting moment for Vercel. Last year they launched a new product, “v0”, which lets anyone create and deploy a working website simply by describing it in English and letting AI take care of the rest. Guillermo shares its origin story within the company (and insanely that it reached $2m ARR in the first 14 days!), and how it’s changed their entire thinking about what’s possible now with AI products.
We also cover:
* How to build a business around an open source project (Next.js)
* How they balance both being a fast and nimble platform for startups with being a reliable platform for enterprises
* Guillermo's unconventional approach to staying deeply technical as CEO at scale
Links:
* Vercel ( https://vercel.com/ )
* V0.dev ( https://v0.dev/ )
* Next.js ( https://nextjs.org/ )
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Transcript 0:00 Speaker 1 Hello, acquired listeners, and welcome to another great episode of ACQ2. Today we have Guillermo Rausch, the founder, co-founder, and CEO, Guillermo. What's the right terminology here? All of the
0:13 Speaker 2 everything. The man behind Vercel.
0:15 Speaker 1 Aside from all the big fancy numbers valued at over $3 billion and amazing customer list and blah, blah, blah. We wanted to turn the question to you and say, how do you describe Vercel? Vercel
0:26 Speaker 0 is the infrastructure platform to build and deploy modern web applications. Something that's personal that is infused into the company is I'm obsessed with developer experience with performance and with design. So the platform is a way of deploying the best possible web applications with ease. For the average visitor of the internet, what it means is that every time you go to a link, if it's fast, if it's delightful, it's likely to be built on Vercel. Amazing. Yeah.
1:01 Speaker 1 That's quite the flex.
1:02 Speaker 0 Yes. So, but I'll give you an example. Think back to November 2024, US election, and you're checking out new sites, you're refreshing, you want to know the latest and greatest. You need real time data. And so whether you're going to Washington Post, whether you're going to, I don't know, Minnesota Start Tribune, or the innovators of the space, like polymarket, perplexity. All of those are built on Vercel. And so increasingly, whether it's a startup or whether it's established enterprise, they're leveraging Vercel to build innovative products. Or later in the month, right? Like Black Friday, e-commerce. You need to scale. You need to serve tons of traffic. You need to have really good experiences. So household names like Bose or Fanatics, Supreme, and the up and comers, the new brands like Axel Ari Gateau or Ragabold.
1:50 Speaker 0 So those companies are all building on Vercel and hopefully delivering products that people love.
1:56 Speaker 1 All right. Sounds today like very successful, widely deployed, everyone's sort of accepted it's this amazing product and platform that we should use. It was not always that way. So take us all the way back to 2015 or even before. And how did this start?
2:11 Speaker 0 Yeah, it's kind of crazy to go back in time. The company has grown so much now. But the original idea was simple. So there were a million ways to build a website or a web application. There still are a million waves to build uh website or web application. But none of them that met the quality bar of the giants of the web. It was almost like Vercell was that democratization effort. If you think about companies like Meta or Google or Amazon, they build really fast. They try lots of things, they experiment a lot, and their experiences are highly dynamic and tailored to every visitor. But the web at the time was actually super static. It was really difficult for customers to stay online. The cloud was coming up, but the cloud was exceedingly difficult to use.
2:59 Speaker 0 Like it felt like you needed a PhD. And this was my personal experience because when I started this company, I didn't set out to build exactly what you see now. I started trying to build a website, and I reached for the latest and greatest. Again, my aspirations were super bold, super ambitious. It has to be like Google or Amazon quality.
3:21 Speaker 1 And what is the latest and greatest at this point in 2014, 15 that you're you're thinking, oh, this might solve my problem. Yeah,
3:27 Speaker 0 so Google had just open sourced Kubernetes, an incredible sophisticated way of deploying infrastructure and managing it. And Meta had open sourced React, which is a UI library.
3:41 Speaker 2 The narrative at this time is like, oh, the web is fast. Like there's React, there's Kubernetes, like all this stuff is open source, it's out there.
3:48 Speaker 0 Exactly. But think about the average developer, or think about the company that's going through digital transformation. What tools do they grab for? If they grabbed those tools, they would have to spend months, quarters configuring them, assembling them into their own platforms. But Vercel was born to basically automate all of that. We wanted to bridge that gap between the availability of open source technology and you creating delightful experiences that you could publish really fast. One distinction also was we started out very general. You could deploy anything on Vercel. But where I personally found sort of like this true DNA of my own personal journey was focusing on front-end development.
4:34 Speaker 0 So for many, many years, ever since I was like 12 or 13 years old, I kind of became obsessed with refining the side of applications that are customer facing. I built a platform that focused a lot on that. So I built the infra, it delivers your applications globally really fast, really well optimized. But also this framework Next.js, which now has 1.3 million monthly active developers. And Next.js is all about giving you the tools and the perfect guardrails to build those awesome front-end experiences. And it builds on React. So it's sort of the standard now for how a lot of developers build the fastest web applications. In fact, to give you some context, anytime you use any modern AI tool, whether it's Chat GPT operator, Claude, Sora, Mid-Journey, all of those are built on Next.js.
5:26 Speaker 0 So it's sort of become the gold standard for front end.
5:30 Speaker 1 And did you start Next.js? Yes. You wrote the first line of code.
5:34 Speaker 0 It was an open source thing. And absolutely. It was out of personal frustration, to be honest, because again, think of it this way. The ways of the future had already been discovered. The papers had been published. The open sourcing had happened thanks to Google Meta and many other companies. But to actually put that into practice, it felt like you needed a PhD. Sometimes the metaphor that I give people is look, like things like React are like the engine, and people need a car to go from A to B. And so Next.js and Vercel became that car or even like that space shuttle to the cloud, both the lighting developers, but also businesses, because for the business, if you use NextJS and Vercel, the website is faster. It makes you more money. It converts at higher rate. And I guess looking back, what made Vercel unique is that we we did both.
6:20 Speaker 0 It's like the vertical integration between software and hardware. We build the tools for the developers, and we build the highly optimized infrastructure in the cloud for it. And it was somewhat controversial. The way that people would use the cloud back then was, oh, okay, I'll choose AWS or I'll choose Google Cloud, and Vercel builds on top of AWS. But it was basically like choose your own adventure for how to build the app. It's kind of silly that you would tell companies, well, go shopping on GitHub for some open source framework and spend months binding into your infra. That's so funny. Yeah,
6:53 Speaker 2 I remember back in those days, like there were companies like, oh, we're gonna, you know, host Kubernetes for you. What I mean, we funded one when I was at Madroda, and it was actually a great outcome. But like, great. I'm gonna host Kubernetes for like what are you gonna do? You know, you're an e-commerce company, like, uh thanks, I've got Kubernetes. Like, that doesn't help me, you know.
7:12 Speaker 1 Well, Kubernetes engineers were fetching half a million to a million dollar salaries because they were so rare and so valuable, and all these companies were like, well, apparently we've got to figure out Kubernetes.
7:22 Speaker 0 Right. One way to think about it is Vercel hire them all so you don't have to. If you're building a cool web application or or if you're facing strong competition, right? Like you have to modernize really quick. You have to adopt AI features. You have to build new interfaces. You want to cut to the chase. You don't want to be managing clusters. You don't want to be writing your own frameworks. In fact, some of the companies that I mentioned, it was so interesting. Like they were developing their own Next JSs. We kind of developed the last framework so companies would not have to do their own adventure. In fact, the joke I would make at the time was by standardizing on Next.js, now you have access to all the stack overflow questions and answers that every other developer has run into.
8:09 Speaker 0 So for the enterprise, it made a lot of sense, like standardized on tooling, you can recruit talent that is up to speed with the tool, and it's all open source. And now it's even more so because the LLMs are experts in Next.js and React. So it's like you're joining this global zeitgeist of knowledge and wisdom.
8:28 Speaker 1 Okay, I'm obsessed with this idea of why did the opportunity for any given company exist? And hopefully this isn't too political of a question in the web development world, but why is it that the opportunity for Next.js was there. Did React miss the mark in creating the right level of abstraction? Did they create something way too powerful, way too configurable, way too heavy, and it required someone else to come along and build the actually usable interface for the masses?
8:57 Speaker 0 What a great question. There's a couple of things that happened. One was that the community took this weird detour towards a static applications, which always befuddled me. I'm not saying I'm some kind of genius that saw the future, but I was so puzzled because when I grew up, one thing I loved doing was reverse engineer how the greatest things on the internet were built. I remember when Gmail first came out, I just nerded out for months trying to understand how it works. And so I mentioned that Vercel exists to give you the super. So
9:28 Speaker 1 yeah, didn't you build like a WebSockets library prior to Vercel?
9:32 Speaker 0 Socket.io. I became obsessed with real time communication. I became obsessed with democratizing, how this greatest applications worked. If you know how Google works, if you know how Facebook.com news feed works, and they're highly dynamic. That's how they attract and retain users. Why were people building static frameworks for React? It puzzled me because investors were chasing a lot of those frameworks. I was like, why are you funding that? And I quietly kept building this Next.js thing that was focused on dynamic. It was focused on rendering in the cloud as opposed to on the device. And I also knew very firmly that if you rendered in the cloud, you were taking the burden of experiencing a website off of the device.
10:17 Speaker 0 Mobile kept getting bigger and bigger and bigger. And you just want to give people the thing that they want on mobile as fast as possible. I wanted to sort of offload all that rendering and compute to the cloud. And so that's the first alpha opportunity that I found. Everybody else is focusing on static and sort of like the very, very fat client approach. And I focus more on cloud and I focus more on dynamic, which was, by the way, way harder for me. So scaling up the infrastructure and making it secure, making it multi-tenant, doing all of that took years to perfect. So it was a very long bet. And to your point, React was also very low level, and that also helped us. I remember talking to a lot of really large sites at the time.
11:04 Speaker 0 I think it was RedFin. They were creating like really cool abstractions on top of React for their needs. So there was also that opportunity to bridge the gap and give you the complete tool set to actually be productive.
11:18 Speaker 1 It's interesting. Should React have had a Next.js like layer built in from the start.
11:25 Speaker 0 Absolutely. And Facebook actually had it. It was just how they actually use the tool. And this is something that happens in open source, which is, and it happens a lot with papers. Like the company will, and to their credits, like doing a great service to humanity, like they'll give you some details, and then others that are super important ingredients are left out. Not intentionally. And if you think about how Facebook actually used React, they had their own Next.js internally. It's a lot of work to actually maintain massive open source projects like this. So yeah, I think ultimately the market spoke. And what they wanted was dynamic over static and a complete end-to-end framework with server-side rendering over just the low-level component.
12:08 Speaker 1 And so then did you conceive of these two things at the same time? The library of Next.js and then the very complex infrastructure for hosting it that would become Vercel.
12:20 Speaker 0 I started with the infra because I was obsessed with the idea that all a developer should do is push code, receive web application. Anything that sits in between in the form of configuration, creating clusters, filing tickets with IT was nonsense. It was pure alpha for me to grab. And so first came the infra. The mistake that I made initially was it was too general. I was trying to deploy everything under the sun. And when I actually made it true to my story of like focus on the front end, Guillermo. Like that's where you know your expertise lies. In some way, you can credit a meme to the genesis of this story. There was this meme going around that using front end was like solving this massive blackboard of math equations.
13:07 Speaker 0 The front-end ecosystem loves to be very self-deprecating. So they make a lot of jokes about like their own job. And if you paid attention to the memes, you would arrive to Next.js because it was so difficult to actually get started building these projects. That's when like the idea later arrived to like, hey, I can create a front-end framework, and it's gonna play really, really well with this infrastructure.
13:34 Speaker 1 To concretize this idea for listeners of the show of just getting some of the crap out of the way where you write code, you deploy it, you receive application back. I asked a developer friend in prep for this episode. What was the first sort of magical experience you had with Vercell? And he said he specifically remembered the moment where he realized all of his Git branches were automatically deployed as previews, and he could just go and in real time play with the code he had just written, even though he didn't actually spin up a whole environment and deploy it. Can you tell me about the origin of that feature? And did you conceive that to be as needle moving as he experienced it as a user? I didn't
14:17 Speaker 0 realize that it was gonna be so powerful to give people URLs even before they hit production. So what I knew for a fact is that obsession of I told you like keystroke to live application, like even down to like a mathematical measurement, like how many milliseconds should it take? And I was gonna bring it down from weeks, which I had experienced in my previous job, from weeks and conversations with humans to a developer pressing enter on a terminal or running git push. That was my obsession. What I underestimated, and it's been a wonderful gift for our business is that companies value even more the ability for their developers to collaborate with other personas in the organization. So when that Git branch gets automatically deployed and you have that URL, now everybody in the company can participate in building software.
15:11 Speaker 1 Oh, it ends that horrible thing that I remember going through when I worked as a developer where you're like, yeah, I can only show you on my machine. And actually, my machine is doing something weird right now. Let me come over to your desk in an hour, holding my laptop hovering over your desk so you can see what I'm talking about.
15:28 Speaker 0 There's a lot of silly things that it still happen. Like developers fighting one staging machine. There's a huge security risk, by the way, to dev and test environments in the cloud that they're like computers that are like just there with developers running tests in them, whereas Vercel's preview environments, this is what we call these URLs, are completely ephemeral and secure. And so you have all these horror stories of developers having to wait for hours in order to show somebody. Sometimes it's the developer shows their client as a freelancer. Sometimes it's companies co-operating internally, collaborating internally. The other one that's crazy is you know, I had a conversation last week with a CIO of one of the largest banks in the world, and they don't have this technology.
16:16 Speaker 0 So instead, what they do is they set up meetings. They say, okay, next week, let's coordinate the calendar of like 12 people. And someone will screen share their machine to show the feature they're working on. Yeah, it's nuts. And they don't even get to test it on the real thing that they should be testing on. You can take this URLs, I can put it on my phone, and now I can experience what the end user will experience, which is you know, most people on the internet are on their phones. Most developers are on their desktop. It's kind of silly. One of our largest e-com customers was telling me like 90% of my traffic is mobile. Thank God for those URLs, I can load up the site before it goes out on that phone and have the developers face reality.
17:02 Speaker 0 Developers sometimes like we are the most coddled people on the planet sometimes, besides the you know, corporate lunches and whatnot. We have this massive mega computers. You know, the M4M5 power super Mac, and then okay, are you actually relating to that end user that's gonna visit your campaign, your application, your internal tool, most likely on a mobile device, and Vercel is basically solving that problem as well.
17:29 Speaker 1 That's great. Okay, so we've been living in this like early Vercel company history land. There's always a few magic moments in a company's history as we move through the progression to today, where you really went from feeling like, I don't know if this is going to work to oh my God, people love it, and I now believe this is going to work. What were some of those along the way for you?
17:52 Speaker 0 I think the most prescient one that blows my mind still to this day is the launch of V0, which is our AI assistant for web development.
18:01 Speaker 1 It's crazy. You're giving me an example nine years into the company's history. Yeah,
18:05 Speaker 0 when did this happen? Yeah, so v0 is truly like a startup within a startup. The way that it happened is this large language models became really good at coding. They became really good at our tools, as I mentioned. They've been trained on our tools, they've been trained on Next.js, React is truly a blessing. But we saw an opportunity to sort of disrupt how web applications are built. So V0 transforms prompts, so English descriptions into working applications and user interfaces. And it's a true disruption in that it's not code first, it's code last. Anyone with an idea can cook. You come to V0, you type in what you want, it's time to cook. And so to give you context on this, right? Like we launched it as a research preview in September 23.
18:54 Speaker 0 We're very early because we're so excited about what language models were able to do with code. It took us 10 months to get to 1 million in AR, and then 14 days to get to 2 million, and then 20 more days to get to 4 million, and that pace continues, and the trajectory is just something that I've never seen in my life before. And I've been involved with successes like NextJS and whatnot. I mean, this is to the point where we are that company that is making the hyperscalers run out of GPU capacity in the world's largest regions. So it's been fascinating to be a part of this.
19:32 Speaker 1 Okay, so how does it work? Why are you running out of GPU capacity?
19:36 Speaker 0 So think of it this way: to create an X.js application, we just made it as easy as possible for developers. But it still takes what, like several steps, setting up tools, whatever. Now you just open a website. You go to V0.dev, you type in a prompt, and all of that process that before was reserved to a couple million developers that exist on the planet. Now the tuple final is hundreds of millions and billions of people. Anyone can create software with this. And the kicker is this. And this is what was my ha moment with this tool, by the way. I've been doing front end since I'm almost in diapers. Like that's how crazy. Like I've been in the arena for a while. It can create code better than what I can do by hand. One of the ha moments was I recreated my own personal blog, which of course I wrote with NextJS.
20:25 Speaker 0 And the output of what VZero created was better. It was better in a responsive way. So like it was better in both desktop and mobile. And it had better accessibility capabilities. I had forgotten to set up some configurations and some tags and some code that came naturally to VZ. VZero knows everything and remembers everything. The rate of application creation is something that has maybe like quadrupled for Vercel. Sign-ups are through the roof. And it's also because this top of the funnel is people that before couldn't make sense of Vercel. Vercell is infrastructure at the end of the day, right? It's really great for developers. This is great for everybody.
21:06 Speaker 1 So funny. So Vercell, you have a corporate journey ahead of you of going from a developer brand to almost like a consumer brand.
21:15 Speaker 0 I think developers will become this more common skill, if you will, development itself. Think of it as like anything that was done by humans that then machines took over, like translation. Google translates is a really good example for me because, first of all, Google Translate sort of originated Transformer Architecture as an interesting side effect. But taking something in language A, like Argentinian Spanish and converting it into English no longer requires human specialization. A lot of software processes, software development processes are like that. They're like translating intent into working code. And my take is that development will go from being a role, like translator was a role to a skill that AIs will increasingly dominate.
22:04 Speaker 0 AIs are awesome at summarization, translation, and they're awesome at writing code. Now what's really cool too is that the taste of the human being, the direction that the human being sets, and the creativity of the problems that they want V0 to solve, those are still intact. Those are extremely valuable. And the other thing we're seeing at Vercell is that we've inspired other companies to pursue and create their own VZ. Literally just a couple days ago, I heard about the VZero for CAD. It's going viral in social right now. Computer automated design. Correct. So like for architects and for 3D printing and whatnot. That company is using Versell because we've open sourced the secret sauce of how we built VZero.
22:51 Speaker 0 So VZero has been this double interesting disruption, right? On one level, it's making Versell so approachable to everybody. And on the other hand, because it's infrastructure components are open source, it's inspiring other companies and startups to go after the disruption of other industries.
23:10 Speaker 2 You tweeted the other day about eZero, email zero, and I was like, I
23:13 Speaker 0 saw that tweet earlier. Oh hell yeah. VZero for email, VZero for CAD, VZero for medicine. In fact, there's a VZero for Medicine called open evidence that is built with NextJS and Vercell. There's this open source framework that we created called AI SDK. So think of it as the tools to build your own VZ. And so it massively benefits Vercell if the world gravitates towards this expert AIs. And by the way, this is not just business strategy of sorts. I remember when Jensen said most companies will refactor themselves into token factories. You have some expertise, you have some taste, you have some opinion of the world within your organization. For us, that was web development, design engineering. So we created VZero. There's gonna be e0 for email.
24:00 Speaker 0 There's gonna be finance v0. So I'm really really excited about what's happening right now. And it's not just our success, it's a sure success of the community.
24:10 Speaker 2 What is VZero? Did you guys create your own foundational model? What is your infrastructure and what actually is the product that you're providing?
24:19 Speaker 0 Yeah. So many years ago, I tried a product that failed. And it's called Next.js Live. So NextJS Live was the idea of helping you run the entire development environment of Next.js inside a web browser. And my aspiration was because front end is all about what the user sees. Can we actually cut out the design process? Can we design with code? And it turned out not to work so well because even though we're targeting this persona that is very visual, you still needed to learn a lot of code. So VZero is like us learning from the past or us trying Next.js Live again. It was like our Newton, and this is our iPhone, right? Part of VZero that's very unique is that we can run the rendering environment.
25:04 Speaker 0 We can run sort of the foundations of Next.js and Vercell inside the web browser. And we combine that with state of the art foundation models that we steer towards becoming experts in web development. So I mentioned how VZero is an expert in web accessibility. VZero, people tell us has good taste. Like the design that it outputs looks better than the average thing that sometimes people call slop. Instead of outputting slop, we created all these guardrails in the form of evals and benchmarks and prompts and rag. We are even creating custom design systems that are tailored for AI. And by the way, this speaks to the disruptions can happen even in the framework space. Rouch G, myself from 10 years ago.
25:49 Speaker 0 Maybe it wouldn't be so successful today because I was creating frameworks for humans. What we're doing now is starting to create frameworks for AIs. Design systems for AIs.
26:01 Speaker 1 Just to make sure I understand, through these rules and evals and prompts and trying to remember everything else you said. RAG, are you imbuing Vercell employees' taste into it to make sure that the output always adheres to the taste level of your company?
26:18 Speaker 0 When I created Next and it became so successful, literally every company on the planet was begging me for support, support and training, support and training, support and training. And
26:27 Speaker 1 I was
26:28 Speaker 0 like, guys, I'm creating infrastructure over here.
26:31 Speaker 1 I
26:31 Speaker 0 want to scale myself. I don't want to go and teach everybody one by one how to hold this thing. And that dream remained elusive for many years. The idea that I could go myself to every company. And you've probably seen that. I still go to a lot of conferences. I meet with a lot of developers, I meet with enterprises, but it just doesn't scale. I want to send my best engineers to this company. You know, we employ the tech lead of React. We employed the Next.js team, the Zveld team, all these open source projects. And these people have pretty full inboxes, as you can imagine. They support tens of millions of developers. And so you're exactly right. We are imbuing the preference data, the demonstration data of what they think is the best way to build software.
27:22 Speaker 0 So it's our answer to how you actually make support, advice, audits, migrations at scale, sustainable and efficient. A lot of people are using VZero because it's really good as an emergent property to migrate from legacy frameworks to NextJS and modern technology.
27:40 Speaker 1 Oh, which I imagine had to be a sales hurdle for you for
27:43 Speaker 0 a long time.
27:45 Speaker 1 They really want to, but gosh, they just can't find this dev schedule time to actually rebuild the whole thing on Vercel.
27:51 Speaker 0 Another ha moment, and I literally made a fellow industry practitioners jaw drop the other day is that you can get on a call with a prospect, and you can build the web application of their dreams in that call. It's just nuts. We take a screenshot of their current website, built on legacy technology, we throw it into VZero, and out comes the high performance version that otherwise would have been a sales pitch. It would have been a trust me, bro. We can do this together. We can bring in an agency. Literally is happening within calls. So sales cycles for Vercel are shortening, customer delight and trust is going up. They share this links. The way that people work is changing. A lot of our customers are now sending this VZero links.
28:38 Speaker 0 The groundhog day of myself is like, how can I make people collaborate with links instead of words or documents or whatever, right? So this VZero links are how the conversations are happening. Oh, can you change this? Can you change that? Okay, here's the new VZero for this. So for the sales team, solutions engineering team, those people they feel so empowered. They feel like they can actually cook as opposed to wait until you know arrangements are made and contracts are signed. We get to software much, much faster.
29:12 Speaker 1 It's such an interesting fork in the universe of your company. Because what if LLMs hadn't happened at the moment that they happened? Are you guys would still be a plenty successful company, but your time would be spent differently. The company would be moving in a different direction right now. This opened up this whole different world for you.
29:30 Speaker 0 I think if LLMs hadn't happened, you know, I almost felt like we're gonna hit diminishing returns on all those developer experience ideas that we had. So when you think about developer experience to make it very crisp to listeners, developers need very fast feedback loops. If not, they're the most the HD people on the planet. They get distracted, they get out of the zone, they lose that flow, you know, mythical flow zone that they love. And so NextJS and Vercel obsessed with like, okay, what are the classical software engineering techniques that we can use to optimize those processes? For example, we partnered deeply with AWS's serverless infrastructure team for those deployment previews. Instead of creating massive amounts of redundant infrastructure and clusters that cost millions of dollars, we create serverless functions under the hood.
30:21 Speaker 0 It's a very specialized infrastructure innovation. But at some point we're going to hit the limits literally of the speed of light. That's how fast we're going to give developers feedback. And we're still far away from that, by the way. Like hitting those limits is like we saw that supersonic plane yesterday. It's hard engineering to get to the limits of physical reality. But I saw the writing on the wall. And I was very excited about it, by the way, because it was like I talked to a cutting-edge database company the other day. The feedback loops for their developers today are 60 minutes. They're doing a Vercel POC. It cuts them down to two. So to make something that fast for some of the highest leverage individuals on the planet, best paid individuals on the planet is incredible returns for the organization.
31:09 Speaker 0 But the writing was on the wall that we can bring it down to two. We can bring it down to two seconds. And then at that point, the limiting factor becomes how many humans on the planet can do this job. And this is what VZero is revolutionizing. We can bring so many more people into the world of building software, and now they can pick it back on this infrastructure has been battle tested by some of the largest companies on the planet.
31:35 Speaker 1 It's fascinating. I'm sure we'll come back to a lot of this v0 AI stuff. I do want to ask you some company building topics, sort of advice for other founders out there. There's a lot of engineers who have a dream of creating something that is two pronged, an open source project and a for-profit corporation. The devil is in the details, and many people fail at doing this well. What would be your advice for people on how to think about doing that well?
32:06 Speaker 0 My number one priority is to be excellent at one thing. I want to be world class at one thing. People call it like dominating a niche. So when I started out Vercel, and then I focused on making the fastest websites, the fastest front ends, the fastest storefronts, that's when things started working for me. Being a jack of all trades doesn't work in this world. Both developers and the most discerning enterprises, they just want the best product in the category. And Vercel became that for front-end. And from there, we can expand outwards and provide a lot more services to developers. We call it the transition from being a front-end cloud to being a developer cloud. You know, developers are asking themselves for more from Vercel. And I think I had it upside down in the beginning.
32:52 Speaker 0 I thought, well, I have to give them everything. Instead, it's actually much better to establish a dance with a customer. You give them enough that they love the product. And then they should be the ones pulling product out of you. And so developers for many, many years would say, like, can I get a database on Vercel? And say, we're not ready yet. We're not ready yet. Can I do more back end on Vercell? We're not ready yet. We're not ready yet. And now
33:18 Speaker 1 we're ready. Because you viewed yourself as very tightly coupled to Next.js for you know the first six, seven years of the company, right?
33:25 Speaker 0 Exactly. We focus a lot on Next.js and front-end frameworks that had the same shape, if you will. There's others. For example, we support Zvelte that powers companies like Logitech on Vercel. It powers companies like IKEA. So there's others, it's not just Next.js, but these were all front-end focused frameworks. And what's happening now is people are saying, well, I want to build more. I want to build more of the back end for my checkout process. I want to build the entire backend for my SaaS application. I want to build the backend for how I process the tokens coming out of the AI models. And now Vercel is giving them that. But we started out focused and then expanded from there. And so that I think is something a lot of entrepreneurs miss, which is they feel like the initial presentation of their product has to match one to one the size of their ambition.
34:17 Speaker 0 And our ambition was to disrupt all applications, even not just web and beyond. So anything that runs on a phone, for example. But if we didn't start with something that was world class and small in the beginning, I think we wouldn't be here today.
34:32 Speaker 1 And to maybe ask the question a different way.js. Did you ever think about doing it differently?
34:46 Speaker 0 Never. Absolutely not. So open source for me has always been my life. When I was in Argentina, open source is sort of my ticket out of Argentina and into the world. I always wanted to build the best possible technology. I couldn't fathom as a developer today, if I'm starting an application, imagine if the framework was proprietary, it just doesn't make sense. And we're doing it again, by the way. So I mentioned the AISDK. We saw an opportunity to democratize building applications like ChatGPT. We knew that there wasn't going to be just one AI rule at all, right? The web is all about decentralization. It's about you have your own domain
35:24 Speaker 1 name,
35:25 Speaker 0 literally your own domain where you set the rules. And Vercel is so aligned with making the web better, making it reach more places, more surfaces. The deployment model of the web, the deployment model of the web is that you don't have to ask permission. You don't have to ask for a license from anybody. And web is where disruption happens to, right? So ChatGPT was a website built with NextJS. It was a research preview that someone put out into the world. And so I'm very excited to continue to do this. So AISDK, to give you a context went from 100,000 downloads a week to now almost a million downloads a week in about a year is the second most popular way of getting AI into a JavaScript or front-end application after OpenAI, second largest AI module.
36:13 Speaker 0 And there's actually no direct business model for it. We want the developer adoption. We want their feedback with their community. We want to get our brand out. We want to learn. We want to learn from as many people as possible. And then when they decide to build and deploy their application, they'll probably choose Vercell because they know that we have sweated the details of the parts of infrastructure that they don't care about. Some people do. On some level, there is an IKEA effect too of like, I enjoy the process of learning. A metaphor that I've used sometimes is that you know, you have to do it at least once so that you learn what it's like to create this infrastructure is like going to school. But if you think about the successful companies out there that share the same business model as Vercel, like Snowflake, like Databricks, like Datadog, the value they give to the world is that you've given them the heavy lifting of infrastructure.
37:13 Speaker 0 And you pay for what you use. If an application on Vercelle is small, then you don't pay a lot. If an application takes over the world, you pay more. So it's a very fair deal to developers and they understand exactly what they're paying for.
37:29 Speaker 1 Okay, so one more question along this line. I'm a founder, I'm considering something with this business model. Would you caution me against taking it all the way to the logical extreme where I say every single thing I do is open source, and I'm the best in the world at creating the infrastructure and the hosting and the deployment, so I can just trust that I open source everything that I do, and I'm not giving away too much of the golden gooth.
37:52 Speaker 0 The bottom line is that part that I just mentioned. Most companies in the world want to offload the infrastructure burden to Vercel. So having that PSB open source so that we teach you how to set up 20 global regions of infrastructure with hundreds of microservices each. Open source actually hits diminishing returns there. It gets so mind-bogglingly complex. And most of the software engineering that goes into that, by the way, is operational rather than based on the source code. It's the monitoring, is the upgrades, is the rolling systems, is the staging techniques. Actually, I would argue that's not where open source even shines for that matter. Open source shines when it gives you a programming model. So NextJS defines and declares the application.
38:39 Speaker 0 The way we think about this at Vercel, which is actually quite disruptive, is infrastructure has to be an output of the application. Most companies that reach for the cloud start with the infra. We're inverting that. We tell you here's the Next.js framework, focus on the application. You're going to be multi-cloud. You're going to have the ability to self-host it yourself. Or we've also taken that burden, here's Vercel as an option. And Vercel doesn't need to be open source. I think it wouldn't bring value to that audience.
39:12 Speaker 2 When you were creating the business model, were there any companies that had perfected this that you're like, oh, this is the inspiration, we should just do that, or how much of this was innovative? Because the open source business model basically used to suck. There were successful companies out there, you know, like Red Hat, the company around it is just support. You're just selling support. It doesn't scale.
39:31 Speaker 0 Totally. There weren't a ton of examples, to be honest. I think the closest thing is probably data breaks or GitHub. GitHub is a lot about collaboration and it build on Git as an open source component. They didn't create it. So I think that's a big difference. But they give you this URLs to code. So there is a huge parallel there. Instead, Vercel gives you URLs to working applications. I'll argue that code over time will become Less important as it becomes the domain of AIs, but GitHub is a phenomenal example of that part of the pre-production side of Vercel. And then on the infrastructure side, companies like Databricks or Snowflake, where in the Databricks case, you adopt an open
40:14 Speaker 1 source
40:14 Speaker 0 component
40:15 Speaker 1 like
40:15 Speaker 0 Spark. And then they have a highly optimized compute engine for that component in the cloud. And you can totally do the DIY yourself, but scaling global clusters of compute, very difficult job. That's sort of the secret sauce of Vercel for the parts of the application that deal with the runtime, the serving, the securing of the application, the DDOS mitigation, the making sure that it stays up during massive spikes of traffic. That's
40:47 Speaker 2 the beauty of Vercel. It is a beautiful business model. There's actually like a lot of stuff you got to do for this to be viable, right? Like for corporations to trust you to be their infrastructure. You can't just be like, oh, I'm a seed stage startup, you know, and like uh, hey, supreme, come trust me with your infrastructure. Like
41:06 Speaker 1 what were inflection points there? Like when did you feel like whoa, we got a customer that it was hard to get them to trust us and now they trust us.
41:13 Speaker 0 I feel like it's when it rains it pours because it's now happening a lot. You know, there's all these banks that are migrating to Vercell. I think by the way, I'll give credit to the crypto space. So what happens to Vercell, by the way, is whenever there's a new wave of technology, and this has been a blessing and also sometimes a challenge. Anything that's new and disruptive, people tend to build it on for sale. Why? Because they're motivated by the speed at which they can get their idea out. So if you're building on crypto and you're building on AI, most of the startups are choosing for sale. Crypto though was fascinating because it attracted literally the worst, darkest actors inside of the internet.
41:59 Speaker 0 So it really made us triple down, quadruple down, 10x on security services and products from the careful encryption of the vaults of how people store the secrets to connect to their databases and backends or wallets and all kinds of cryptographic details that this companies need as well as the traffic. The hardest most difficult thing about the internet and running infrastructure is that you have to discern between good traffic and bad traffic. And we set out to do security the Vercel way. The Vercel way is that it's zero configuration, it's secure by default. And we needed to be secure by default because I think something that's different between us and the CDNs, for example. For context, Vercel builds in the CDN and WAF capabilities that you typically would have to like go to another infrastructure provider to get.
42:53 Speaker 0 The difference between the legacy ones of the non-cloud ones or the outside the cloud ones like Akamai, Cloudflare is that because they don't host the application, you know, they filter out all the traffic. It's hard to say if they're even doing a good job sometimes. Whereas Vercell has to filter out a hundred percent of the malicious traffic instantly.
43:17 Speaker 1 Otherwise, it's your own problem. Correct. That your incentive is aligned to be a really, really good CDN. Correct.
43:23 Speaker 0 Crypto really put us through the ringer. And I loved it, to be honest. You know, I look back and so for example, Solana is really hot right now. So Lana hosts all of their web properties. We're like the web two face to web three for a lot of these great blockchains and crypto companies, all of the large NFT companies. You picked Vercell, and you could imagine also just the massive upswings of traffic, right? Like there is a meme coin that that goes hot, there is an NFT that goes hot, there's a new cryptocurrency that goes hot, but it bolstered our security to the point where we have industry leading response times, for example, in DDoS mitigation. We do it within seconds. Our competitors do it in minutes sometimes. And we see this because sometimes customers layer on another CDN in front of Vercel, which is not necessary.
44:15 Speaker 0 And so we see the attacks coming from the CDNs, and we're like, what? We were supposed to protect the customer. That was fun. And yeah, you learn a lot by being exposed to all of this.
44:26 Speaker 1 I gotta say, there is a delicious irony to the fact that these Fortune 500s that are signing these big multi-year enterprise contracts with you and effectively using Vercell for their own digital transformation and changing their workplace and their culture is benefiting from being hardened by DDoS attacks from the crypto world.
44:46 Speaker 0 But there's another fascinating effect. The way that we've gotten into large enterprises sometimes is because they acquire NoPy Nintendo Acquire Podcast, they acquire the disruptor, they acquire the innovator. I wouldn't be surprised if there is, you know, in the next 10 years, more of a merger between crypto and traditional finance. That's happened a lot with AI. You know, an X.js has become the common language that speeds up MA. I also give credit to React for this. When you acquire an XJS powered company, your integration times go down to like what you copy and paste some files into another repository. Why? Because the infrastructure is an output of the application. Literally, the job of integrating companies becomes integrating the two front ends. The back end services are pluggable.
45:33 Speaker 0 The more people stand their eyes on this tooling, there's this like greater than the some of the parts effect that happens. And we're starting to see it in the form of MA, where the startups get really, really, really big and intimidating to their incumbent competitors and they get bought. And of course, there's also enterprises realizing I need to hop on this train. This is how I get talent. This is how I retain talent. This is how I move faster. It's been awesome to see that we have global impact and it happens with the brands that I love. My favorite automobile company from Germany uses Vercel and it's just delightful. So
46:10 Speaker 1 all right, which
46:11 Speaker 0 one? I think we don't have local rights for that one, but like
46:15 Speaker 1 have
46:15 Speaker 0 we covered it on acquired or not? You could probably extrapolate from Vercel's sort of design and taste. Yeah.
46:22 Speaker 1 That's pretty
46:22 Speaker 0 awesome.
46:23 Speaker 1 Great. We we won't push you into something uncomfortable there.
46:27 Speaker 0 One
46:28 Speaker 1 question that's been a fun one for us to ask here on ACQT the last few episodes is what is something that you believe as a leader or a founder or a technologist that you have real conviction in and you feel others don't.
46:40 Speaker 0 Yeah, I think there's an easy one for me here because I experienced it over the last couple of weeks that reaffirm my conviction. I think CEOs, especially technical CEOs, can and should be involved in every aspect of the business. Whether it's closing a deal, whether it's looking at the numbers of the last quarter and tuning sales quotas and sales compensation, whether it's informing future product roadmap, whether it's pricing discussions. I'm involved in every aspect of the business. And
47:15 Speaker 1 how many employees are
47:16 Speaker 0 you? 550.
47:18 Speaker 1 Okay.
47:19 Speaker 0 Maybe also for context, Vercell is now at about we disclosed was we hit 100 million dollars in annualized revenue May 2024, growing 80% year over year in revenue. And developers using Vercell more than doubled over the past year. So we're operating at a significant scale, and I think the role of the CEO and the conception of the CEO is evolving and changing. Companies are becoming a lot more transparent. It's about optimizing the information flow within the company rather than creating silos of information. We're doing it a little bit different here at Vercell.
47:57 Speaker 1 How do you stay that involved with 550
48:00 Speaker 0 employees? I think using our own product has been a massive acceleration. I don't need to get brought up to speed on things. I'm in direct connection with the developer community. I talk to customers. And whenever I find time, I use VZero. I use Vercel. I'm staying very grounded on the reality of the product. So there is just no time being wasted on like briefing executives. The expectation is that you understand the customer deeply, you understand the product deeply. We try to hire people for every area of sell that have a technical background that have used Vercel in the past if possible. And so we tend to move real fast. We optimize our entire product and platform around product velocity, right?
48:50 Speaker 0 So the way that the company behaves is the way that the product behaves. When I'm seeing success with some of the largest, more established brands, household names, when the CIOs, CTOs, CEOs come to me, they don't want a specific aspect of our technology. They want us to teach them how we build. They can tell that we're moving fast. And so by continuing to make the company and the product a sort of symbiote, a two-way street. I think this is how we're saying really fast and lean.
49:24 Speaker 1 Makes sense. So an outside observer would then say there's got to be some trade-off here. How can you possibly hire executives that you want to empower as much as possible, but you also want to be extremely involved? How do you deal with that trade-off?
49:39 Speaker 0 I think the fast exchange of feedback is huge, right? Of course, the executive is the one that's on the line that is responsible for a set of numbers, KPIs, outcomes, whatever you want to call it. But I'm involved in giving them high quality feedback. That's my number one job. I'm the bridge to reality in many ways. I bring the customer stories from the outside world. I hold Accountable to that. I put them on the line, you know, like you have to be able to use our product to demo our product. And so it's not that I take their job, is that I'm able to get on the same altitude and go into the texture of what they're supposed to do. So I think it's rooted in understanding rather than outsourcing the labor. And a principle that I use internally a lot is as a CEO, you have to understand.
50:28 Speaker 0 You can't just say, well, this area of infrastructure, I have no idea how it works. Talk to Johnny. And so I spend time learning, and that's how we can give high quality feedback, and that's how I can you know delegate with confidence.
50:43 Speaker 1 Okay, so in some ways, for the revenue scale and customer scale you're operating at, I would reframe wow, you're 550 people as you're only 550 people now. A decade ago, you would have been way more.
50:56 Speaker 0 Yes. I have a concrete example for that. So VZero was amazing. I called it a startup within a startup because we said VZero will be entirely full stack Vercell. Let's imagine that another company is innovating and they only want to use Vercell to build the idea top to bottom. Front end, back end, database, AI model procurement, everything is happening on Vercel. And so that team is just tiny. The revenue figure per head is astonishing. And it's a proof point that if you build on the Vercel platform, you can be so lean. You know, a thing that I monitor obsessively is. Oh,
51:36 Speaker 1 wait, I'm sorry. Is everything that that team used a publicly available product from Vercel? So theoretically, VZero could have been written by an outside team of just a few people.
51:48 Speaker 0 Yes. Like less than 10 people. And it's one of the fastest growing products in the industry right now. And so the thing that I monitor very, very, very neurotically, is they're not allowed to cheat. They're not allowed to go to the infrat team and say, Oh, I'm I'm having a million requests per second right now. Can you provision some special thing for me? Zero. And that gives me the confidence that our platform has no graduation risk. This is the sort of scary ghost of every startup that tries to simplify things. Yes.
52:20 Speaker 1 Oh, I'm so glad you went here. You
52:21 Speaker 0 know, oh, I'm gonna outgrow Vercel. So for as long as I'm alive, I'm in the details for my previous answer. I know that all of the scape hatches, all of the advanced capabilities, all of that is actually being provided by the platform itself. And that has allowed that team to be just tiny. And so I can project, I can forecast that there's going to be companies that are going to be born on this platform. I mean, I already have examples, right? Like I like to use polymarket as an example of like a tiny team that during the election saw traffic that would scare infrastructure teams. It's traffic that you have to have been around the internet for decades to be able to live up to and to sustain.
53:07 Speaker 0 And so I think teams are probably going to get smaller, by the way. I mean, this would be my prediction. If you have AI generating a ton of code, and the infrastructure is abstracted away, and there's no sort of graduation thing that you need to do when you get big, and if you can stay big with this level of simplicity, then the downward pressure will be on head count, but not in a sense of like, oh, people are gonna retire, like developers are gonna retire into a beach. Is that we're gonna see more products, more product creation that reach more people, built by fewer people. How
53:46 Speaker 1 fast and at what scale?
53:47 Speaker 0 Okay, so I'll give you a really good example. I think it was last week that operator by OpenAI came out within 24 hours, open operator launched. It was built by a Vercel customer. They used VZero create the interface. They used browser infrastructure that exists in the cloud to sort of automate the operator needs to use a web browser. And they used models like Deep Seek and others to sort of like provision the agent. So the fact that you can go from the idea of okay, so there's this new idea. Agents can control a web browser and solve tasks for people. And to put it out into the world, it can be 24 hours, and that thing sort of like took over the internet. I tweeted about it, and I was getting emails from people in China saying I'm losing my mind that that this is a thing.
54:39 Speaker 0 How did this happen so fast? So it can be hours, it can be days, it can be weeks. Of course, you have to sustain innovation, right? Like you can just like launch something, it goes viral, and then you don't have the thing to follow
54:54 Speaker 1 it with, but it's amazing.
54:57 Speaker 0 Marginal costs of software production goes to zero. What ends up happening is more and more people join the market, right? Like more people are going to be able to create. And hopefully, Vercel is in the middle of every transaction, meaning we're facilitating both the agents and the developers and the new developers, the citizen developers, if you will, with everything they need in order to ship.
55:19 Speaker 1 All right. Well, I can't imagine a better place to leave it than that. Guillermo, thank you so much for joining us today.
55:25 Speaker 0 That was super fun. Thank you for having me.
55:27 Speaker 1 Gee, if you want to direct listeners to uh any calls to action, where can they check you out? Where can they play with v0?
55:33 Speaker 0 If you want to directly get in contact with us, just find us on X. VZero or Vercell, reach out to us, feedback, start building, head to VZero.dev, put in your idea, press submit, and off you go. Awesome. Thanks so much.
Previous TSMC founder Morris Chang Next Rolex (Audio) Page updated August 25, 2026 · transcript and summary are machine-generated
