BREAKING: Rippling v Deel, Tech Feud, Corporate Espionage Drama

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

• 0:00John Coogan?

  You're watching TBPN live. We are not live from the Temple of Technology today. We are broadcasting from the Temple of Technology because I am traveling. I'm in the nation's capital, Washington DC. It is a balmy 60 degrees outside. It's not cold at all. Jordy, where are you right now and how are you doing?

• 0:21Jordi Hays?

  I'm home in Malibu, the home of magnitude 4.0 earthquakes.

• 0:27John Coogan?

  There's an earthquake?

• 0:28Jordi Hays?

  There was an earthquake last night. It was like a 4-0. Just as we were sort of going to bed. And the fascinating thing is that there's been a ton of earthquakes, literally right on my neighborhood. Like if you look at the map. There was an LA Times article last week, I think it was Monday, about how this area of Malibu has just had a bunch of earthquakes. So we basically had two 4.0 earthquakes in the last week in the exact same spot and a bunch of others. So we're moving and shaking over here, John.

• 1:08John Coogan?

  Love it.

• 1:08Jordi Hays?

  And yeah, so the funny thing, it doesn't seem like seismologists, right? Like people that study, it doesn't seem, they describe their own craft as trying to read the tea leaves. Really? They can't, they actually aren't like, they aren't able to make really accurate predictions other than we think a big one's coming. But they have no sense, like, you know, there's been this massive uptick in activity over the last like six months. They're not able to make any type of more accurate projections other than at some point, there's going to be a big one.

• 1:50Jordi Hays?

  But anyways, we have some news shaking the timeline today. There is a post I wanted to pull up

• 1:58Jordi Hays?

  from a guy named Anon. He says about the story that we're going to cover, this is an incredible tale of espionage and intrigue. Until you remember, it's HR SAS. But

• 2:12Jordi Hays?

  It's real espionage and intrigue for our world. And do you think it's, do you think it's an accident that they, that they did this on St. St. Patty's Day?

• 2:22John Coogan?

  Well, just to set the, just to set the tone, if people haven't been following. Today, Parker Conrad, the founder of Rippling, announced that they're suing Deal for embedding a spy in Rippling, which is crazy.

• 2:40Jordi Hays?

  In the, in the Irish office.

• 2:42John Coogan?

  In the Irish office. And yes, it is St. Patrick's Day. And so, you know, we got to put on the tinfoil hat and wonder what's really going on here. Is this some Hibernian conspiracy going on? Are the, are the Irish lads up to something? But, but it feels like it's potentially Irish on Irish crime. And we hate to see that, especially on a day as important to me as an Irishman as St. Patty's Day.

• 3:12Jordi Hays?

  Not wearing any green, John.

• 3:14John Coogan?

  I'm, yeah, you're wearing green.

• 3:15Jordi Hays?

  Decency to throw on a green.

• 3:17John Coogan?

  Where's my green?

• 3:17Jordi Hays?

  I even thought about leveling it up and going double green with the bezel, but I'm gonna, I'm gonna leave it off for now.

• 3:25John Coogan?

  Well, let's set the, let's set the table. There's actually a new article that just dropped in Bloomberg that I think we should actually kind of pivot over to by, because it's by Matt Levine over at, at Bloomberg. Spies in the sales Slack. I'll send this, I'll send this over to the crew.

• 3:43Jordi Hays?

  I'm pulling it up.

• 3:44John Coogan?

  Yeah. Cause this one.

• 3:46Jordi Hays?

  There's nothing like, there's nothing like breaking news.

• 3:49John Coogan?

  Nothing like breaking news, yeah. And, and, and Matt Levine is, is a fantastic writer and I think he'll break it down pretty well. So we'll read through this, we'll take you through some of the actual complaint, the PDF that's been shared. It's a 50-page document. I have some ideas of what, where the interesting stuff is, where the interesting anecdotes are. And then we'll go through a list of other corporate espionage, just to give some history because it's a fascinating topic. Won't do too many deep dives there, but there's some, there's some fascinating ones in this list I put together. Somebody tried to steal a Coca-Cola formula at one point. The Chinese were stealing Google self-driving car stuff. There's been, there's been fascinating stories throughout the business history, so.

• 4:29Jordi Hays?

  Is the Coca-Cola formula, I don't know if you know offhand, is it still actually?

• 4:34John Coogan?

  Trade secret.

• 4:34Jordi Hays?

  Secret?

• 4:35John Coogan?

  I think so.

• 4:37Jordi Hays?

  They've they've found a way to to maintain that secret over a century plus.

• 4:43John Coogan?

  I think so. I think they I think they divided up in in such a way that no one can get a full look at everything. And so they've never been able to because it would be off patent by now. And so someone would have copied it. But yeah, highly guarded trade secrets, including a new product sample and sell them to arch rival PepsiCo. Someone tried to steal it and sell it in 2006. This happened. Anyway, we'll go into that at the end of the show. We got to cover the breaking news first. So let's read about Matt Levine. He says spies in the sales Slack deal. I wonder how much corporate espionage there is. Like, if you work in a high touch, high dollar sales business, enterprise software, investment banking, etc.

• 5:26John Coogan?

  Much of your time will be spent pitching new customers who are choosing between you and your competitors, or pitching customers who currently work with your competitors, or trying to retain customers who are thinking about switching to your competitors. If you knew what your competitors were up to, that would help. If you knew a competitor was coming to your customer's office next week to try and steal them away from you. If you saw your competitor's pitch deck, you could take some actions. You could get to the customer first and offer a discount. You could see the arguments in the pitch deck and try to counter them. You could see what your competitor says about the features of its own product and try to build those features into your product. It's not a magic cheat code. You still need a competitive product and pricing and good salespeople and all that, but it surely helps.

• 6:08John Coogan?

  So, you know, find a salesperson at a competitor and recruiter, not to quit your competitor and come work for you, but to stay at your competitor and spy for you. You give her quarterly bags of cash. She looks at your competitor's pipeline and keeps you up to date on who it is pitching and what it is saying. Obviously, this is not legal advice. It seems problematic in all sorts of ways, but surely people try it from time to time. The downside is that apparently if you get caught doing this, you will get a hilarious lawsuit. And there's a, and there's a big quote here from kind of summarizing what's going on. Workplace, workplace software company, People Center Inc., I didn't know this is the real name of Rippling. That's their, I guess Rippling's just their DBA.

• 6:52John Coogan?

  People Center Inc. is suing its chief competitor over alleged corporate espionage. Both companies were valued in excess of 10 billion. Rippling, in its complaint, says Deal cultivated a spy to systematically steal its competitors' most sensitive business information and trade secrets in a deliberate attack that lasted for more than four months. The alleged spy at Rippling, its Ireland-based global payroll compliance manager, was identified after he was observed accessing Slack channels and documents with no legitimate reason to do so, the complaint says.

• 7:24Jordi Hays?

  Crazy.

• 7:25John Coogan?

  I know.

• 7:25Jordi Hays?

  I just want to go, I just want to go out and say that this 100% is happening at other companies.

• 7:32John Coogan?

  Yep.

• 7:33Jordi Hays?

  And those people right now are shaking.

• 7:37John Coogan?

  Oh, yeah.

• 7:38Jordi Hays?

  And, and they deserve to be. This is deeply wrong. And, you know, you get into this situation because Deal and Rippling were able to go, grow extremely quickly.

• 7:50John Coogan?

  Yep.

• 7:51Jordi Hays?

  Initially doing very different things, right?

• 7:54John Coogan?

  Oh, yeah.

• 7:55Jordi Hays?

  Rippling was distinctly focused on the US market. They, they allowed you to pay people internationally, but it wasn't a core focus. Deal focused on helping US corporates move internationally. And then both these businesses are sort of, have been converging over the last, call it, two years. And given the scale that they're at now, yes, there are companies running on legacy systems and other competitors and things like that. But for the big logo clients, you can imagine that they're almost always competing.

• 8:28Jordi Hays?

  You know, nobody is saying, hey, I'm going to go sign up for, I want a new payroll provider and then not getting bids from Deal and Rippling, right? That would be like bad practice from the HR or finance team at any company, right? You should be getting competitive bids, so.

• 8:46John Coogan?

  Yeah.

• 8:47Jordi Hays?

  Not at all. It's not at all surprising that like these companies have basically been in a blood feud. What is surprising is that they would go far enough to allegedly, uh, you know,

• 8:56John Coogan?

  Yeah.

• 8:57Jordi Hays?

  plant a spy. Um, and I'm excited to get into the honeypot.

• 9:01John Coogan?

  Yeah.

• 9:02Jordi Hays?

  component because

• 9:03John Coogan?

  There's so much here.

• 9:04Jordi Hays?

  Rippling was really playing some, some 4D chess.

• 9:07John Coogan?

  I love 4D chess. Yeah. I mean, I, I made a whole documentary about Rippling. Uh, I, I used Parker's previous HR company in 2012, 2013, uh, Zenefits, uh, worked great. Uh, interesting hack there where they'd give you the product for free and then act as your, uh, your health insurance broker. And so they would take the brokerage, the brokerage fee. And that was when, when you sign a healthcare contract as a company, the healthcare broker gets a commission and those commissions can be really, really high because

• 9:43Jordi Hays?

  Yeah.

• 9:43John Coogan?

  you're, you're sending, you're like, you're, you're committing to spending a lot over a long time and they're very low churn. And so it was a very interesting, uh, uh, it was a very interesting like go to market hack. They grew extremely quickly. They were the fastest company to hit a billion dollars in, in sales in Silicon Valley or ARR like ever. They're multi-billion dollar company. Then of course there's all the drama with Parker and Saks and they've, that's been litigated and relitigated a million times. Um, but, uh, when I talked to Parker, I was, I was asking him like, okay. So like you're basically building the same company twice. Like what, how did you think about it? And it seemed like

• 10:21John Coogan?

  much more focused on HRIS early on. They wanted to do, uh, this vertical, this, uh, he called it the compound startup model. So they do multiple things. He really looks like what Microsoft does where they have Excel and PowerPoint. They're not this pure play vertical SaaS company. They're horizontal. And on day one, he wanted, uh, you know, payroll, benefits and IT. And so Rippling's go to market was, hey, you have all these employees. Some of them are working from home. You buy them laptops. What happens when they quit or they get laid off? Well, they gotta send their laptops back. It's a hassle. You're probably not refurbishing them properly and putting them back in the cycle. We will just handle all that for you. It was a unique go to market. Grew a ton.

• 11:04John Coogan?

  And then I asked him like, hey, like, what's going on with international? This seems like it hasn't been that much of a focus for you. And the subtext of the discussion was kind of like, what's going on with Deal? And he wasn't really mincing words. He obviously sees them as a very serious competitor. But also, just, I think there was a little bit of acknowledgement that

• 11:25Jordi Hays?

  Yeah.

• 11:25John Coogan?

  Covid caught him off guard and Covid really, really accelerated what Deal was doing because Deal was built for international

• 11:34Jordi Hays?

  Yeah, yeah, yeah.

• 11:34John Coogan?

  And super crazy remote work.

• 11:35Jordi Hays?

  And the fundamental, and anybody that's an entrepreneur or investor should go back and read the deals. Or sorry, not Deal, Rippling, Series A memo, like, on the compound startup.

• 11:46John Coogan?

  Yep.

• 11:46Jordi Hays?

  Parker basically lays out the master plan. He even published the memo himself.

• 11:51John Coogan?

  Yep.

• 11:52Jordi Hays?

  Deal didn't have to steal that.

• 11:56Jordi Hays?

  But he puts out this master plan of like, if you basically own the employee graph, you can launch every meaningful piece of workplace software.

• 12:05John Coogan?

  Yep.

• 12:06Jordi Hays?

  On top of that, and something to be, I think we covered this last week. It's something like 70% plus of all like, public companies are based in the US.

• 12:18John Coogan?

  Yep.

• 12:18Jordi Hays?

  And what that means is that Rippling should dominate. If they're going to come in the US and sort of dominate the American market here and then eventually expand into global payroll, then of course, they're going to eventually get to up-selling. And so for Deal to move into traditional payroll and HRIS, that's also something that's sort of critical for their long-term viability. Like, they're not going to basically dominate the global payroll market without also having a significant foothold in the traditional HR tech market here in the US.

• 12:57John Coogan?

  Yeah, yeah. It's

• 13:00John Coogan?

  Yeah, I mean, the compound startup thing is fascinating. It's funny because we were actually working on setting up payroll right now. And so we, you know, our decision is being informed by the war on the timeline. Whoever wins.

• 13:16Jordi Hays?

  Yeah, we should just condense this down and set up a zoom link between a deal rep, a rippling rep, Augusta rep, a warp rep, and just get them all on the same call and say, hey, guys, like, let's build in public here. Let's keep it transparent.

• 13:29John Coogan?

  Yeah, yeah. Come on the show and pitch us. And whoever pitches the best, it'll be good content and we'll, and we'll get a good, we'll get a good payroll provider. It is fascinating that, yeah, obviously, like, there's this almost like holy trinity of unicorn Silicon Valley companies, and they're all, they're all funded by Founders Fund and Andreessen and Sequoia and stuff. And like, all those serious VCs have piled into these like unicorn Decacorn payroll companies, Gusto, Rippling, and Deal. But if you look in the public markets, there's another three companies that are all in like the tens of billions, and they all have basically the exact same name. It's like Paycom, Paylocity, and there's another

• 14:11John Coogan?

  one with Pay. And then above that, there's higher end ones that are worth even more. So it's just a massive market. When you're taking a cut of just payroll, it's just so easy to justify, oh, yeah, 50K a year, 50K a month.

• 14:24Jordi Hays?

  Yeah, you can, you can look at, you can look at, historically, I think the payroll market has always been, you know, the narrative has been, this is not a winner take all market.

• 14:36John Coogan?

  Yep.

• 14:37Jordi Hays?

  Deal and Rippling and Gusto can all be worth tens of billions of dollars just by eating ADP, right? ADP today.

• 14:44John Coogan?

  Yeah, ADP is the big one.

• 14:45Jordi Hays?

  ADP is at 120 billion today. There's no new companies signing up for ADP that I know of.

• 14:51John Coogan?

  Totally, totally.

• 14:53Jordi Hays?

  It's just not happening. I, I never interacted with a startup in coming up in like 10 years in startups that was on ADP. I'm sure they reach out to.

• 15:05Jordi Hays?

  Companies, but they're just not winning any companies. So it's almost like a cable style business where it's just

• 15:10John Coogan?

  Yeah, or like the Oracle. It's like, you know, it's like a huge business, but like for older school companies and bigger companies. And ADP, I'm sure is great if you're Disney. I think, I think when I was at Disney, they were on ADP. And it was like, yeah, they have like the most insane enterprise compliance needs and ADP fills that probably pretty well, but it's probably so cumbersome if you're startup and you're like, actually, I have no need for 25 of these features.

• 15:36Jordi Hays?

  Yeah.

• 15:37John Coogan?

  Anyway, let's continue with the Matt Levine article. So a deal spokesperson said Rippling was attempting to deflect negative attention from itself. Weeks after Rippling is accused of violating sanctions law in Russia, which we'll get into in the information article, it's seeding falsehoods about deal. Rippling is trying to shift the narrative with these sensationalized claims, the spokesperson said. We deny all legal wrongdoing and look forward to asserting our counterclaims. Sorry, but yes, that absolutely works. If you are ever accused of violating sanction laws, please do bring a sensational spying lawsuit against your competitor. That will certainly distract me anyway.

• 16:11Jordi Hays?

  So to be clear here, this is a, this is a good line from, from deals, uh, PR team. The thing that's sort of hurting them on this is that the alleged spy hid in the bathroom and then led the scene.

• 16:27John Coogan?

  You read the complaint and you're like, oh, this is like so bad.

• 16:32Jordi Hays?

  So this is the right line from, from deal, but it's, I don't know. I think Matt's seeing through it a little bit.

• 16:39John Coogan?

  Yeah. So he says, this is not legal or public relations advice. It's just an expression of my own interests. Anyway, here is Rippling's complaint, which refers to the alleged spy as DS for a deal spy. The guy allegedly lurked in a bunch of Slack channels devoted to Rippling's sales process so he could channel information back to deal. Guided by deal as his primary search term DS surreptitiously accessed Rippling Slack channels replete with its sales and marketing trade secrets and proprietary and confidential information. The channels accessed by DS contain highly sensitive and confidential information about customers, prospective customers, including details such as customer name, contact information, revenue at issue, and current issues and problems the customer

• 17:19John Coogan?

  is facing, and details of sales and relationships, conversations between Rippling and its customers or prospective customers. All of these are details that a competitor such as deal could exploit to convince such customers to purchase their products rather than Rippling products. It is not clear how much this actually helped deal, but there is at least one suggestive case here. DS navigated to a mention of deal in a channel focused on a particular prospective customer who is considering both Rippling and deal. This is known as Prospect B. DS previewed the channel, which included details for a call scheduled with Prospect B. the next day, and communications in which Prospect B. relayed to Rippling specific concerns with the products and services offered by deal. The channel also contained

• 18:04John Coogan?

  Rippling's sales team's internal pitch strategy discussion, including confidential details about how Rippling planned to highlight certain advantages of its products to address the prospect's pain points with deal's offering. On February 20th, 2025, this is like just weeks ago.

• 18:19Jordi Hays?

  Too recent, yeah.

• 18:20John Coogan?

  The day of the scheduled call between Rippling and Prospect B., DS previewed the B. related channel 66 times. Later that day, Prospect B. abruptly canceled the scheduled call with Rippling, in which Rippling was going to deliver its proposal, and explained that they were doing so because they had decided to select deal for the product they were interested in, even though Rippling believes that customer would have been better served by Rippling. And it's fascinating here. My takeaway is like, we are in a very new age of, especially with like the Gong IOs and the sales recordings and stuff like, like if you're in an organization and you have access to the Slack, like

• 19:03John Coogan?

  There's more information than ever because you don't have to walk filing cabinet and grab their notes off their desk. Like it's possible that like every single interaction with a customer is recorded verbatim and then also summarized. And then you see all the Slack channels that they're in and some of them are like, it's literally just a ticker of like, this company is about to sign for this much money. This company is worth this much. This company wants us to build this feature and it's just like

• 19:30Jordi Hays?

  Yeah, well, well, to me, this is just surfacing the reality of business, which is that it's, it's, everybody in Silicon Valley has had this narrative, generalized, you know, competitive CEOs will talk to each other, they're friends. It's sort of like, hey, some, we're eating, you know, we're eating these sort of legacy businesses. Like there's enough market cap for us to go around.

• 19:56John Coogan?

  Yep.

• 19:56Jordi Hays?

  And so this type of story is basically surfacing what has been, I'm sure, happening in the background in a bunch of different ways. Right. I was joking earlier that, you know, imagine a world where somebody bugged all the Waymos in SF because there's no driver in them. You could just like hire a Jason Bourne type to just like, you know, bug them.

• 20:16John Coogan?

  Keep calling Waymos, dropping like an air tag off with a microphone.

• 20:20Jordi Hays?

  Yeah. And you would just get this constant stream of, of private conversations.

• 20:25John Coogan?

  And this is why the ski lifts are so important. I mean, people are talking about bugging the ski lifts because that's where the capital allocators really exchange the proper alpha.

• 20:33Jordi Hays?

  Yeah, yeah, that too.

• 20:36Jordi Hays?

  But anyways, uh, you know, I, I think this is going to be a big wake up call for the industry that again, it's not all positives.

• 20:47John Coogan?

  Yep.

• 20:48Jordi Hays?

  We are competing for the same customers and you know, we certainly, um, we have our own counter, counterintelligence operations lead against other podcasts, right?

• 20:59John Coogan?

  Yes, yes.

• 20:59Jordi Hays?

  We, we know that, that, uh, competing, uh, you know, podcasts have, have tried to get moles into the system, but, um, But yeah, we're just embracing that head on, right? And I think every SaaS needs, needs to have a counter, counterintelligence operations lead.

• 21:14John Coogan?

  Yes.

• 21:15Jordi Hays?

  You know, yesterday.

• 21:16John Coogan?

  Definitely, definitely.

• 21:18Jordi Hays?

  Anyways, um, yeah, but, but like, let's be clear here. If, if Rippling is coming for damages and they have uh, this, you know, this example here where it's very clear that Deal had insight into the sales process. Um, you know, this is all, you know, it's, it's up to Deal to like, you know, prove, uh, whether this is, uh, real, real or not, but in this situation that Rippling is highlighting, Deal had direct insight into the sales process down to the dates, down to the individual selling points, and they were able, they were able to leverage that information to get the prospect to drop out of the process completely with Rippling.

• 22:02Jordi Hays?

  And if this was happening at scale, there's totally a world where there was tens of millions of ARR that was on the line, especially if you look at collectively and Rippling is able to say, look, our average customer stays with us for seven years. You guys, you know, uh, you know, were, had a sort of, you know, leverage these sort of trade secrets and sort of corporate espionage. This could be, the settlement here could be well into the tens of millions of dollars or, or, you know, even, who knows? It's, it's not, uh, this is gonna be, you know, Deal is gonna be fine. Rippling's gonna be fine. But this is, uh, you know, not gonna be an expensive blunder.

• 22:47John Coogan?

  Yeah. Yeah, it, it gets to like the nature of this particular business, which, you know, you talk to like the nuclear founders, the, you know, they were just literally all in that Jason Carmen documentary together. And they have a very positive sum mindset because for anyone in this like far out R and D heavy energy business, like they'll even let their, their lead VC invest in another nuclear company often because they're just like, look like.

• 23:16John Coogan?

  A, if we both succeed, it's really good for the industry and we're all just selling energy onto the grid, like we're competitive with oil and gas more. Sure, we are competitive with each other, but it's much less zero sum at this point. Whereas with these with these HR and B2B SaaS products, they're much more directly comparable. And then the other thing is that, I mean, this is a very high margin business where the the pricing is super opaque and what the price that you're throwing at a customer is basically just like an idea of how much value they're going to get from this maybe. And if you have the ability to come in and quote just a little bit under, you're going to win those deals again and

• 23:58John Coogan?

  again, like, because it's just it like, you just have to throw out a number and you kind of get an idea from you can take the temperature of people. Well, what are you paying for ADP? Maybe they'll tell you.

• 24:08Jordi Hays?

  No, and think about how many people at Rippling. It seems like there's enough proof to that, like out there already that if the alleged spy is hiding and all this stuff and, you know, it seems like there's enough proof to know that like some information would pass the deal somehow.

• 24:26John Coogan?

  Yep.

• 24:27Jordi Hays?

  Think about how angry if you're the Rippling exec team, if you are, that that one's obvious. Parker being livid is is obvious. The the team, the sales team, right, where they're they're losing deals because people are, you know, basically just have, you know, this sort of information advantage. If you're the engineering team who's like in the product team that's trying to compete on features and you're spending all this time to build the best possible product, but then you're losing out on revenue and, you know, growth because, again, this sort of unfair advantage. I can see why they took it this route versus

• 25:08Jordi Hays?

  just, you know, this is sort of beyond just putting up an X threat and being sort of

• 25:14John Coogan?

  Totally.

• 25:15Jordi Hays?

  being angry, right?

• 25:17John Coogan?

  Yeah, let's continue with this Matt Levine article. If you had your competitors whole pitch deck for a potential customer you both wanted, that wouldn't guarantee you a win, but it would help. Anyway, most of the fun in the lawsuit is the tradecraft. Rippling apparently discovered the alleged spy not because he was snooping on their sales information, but because an investigative reporter at the information contacted Rippling about a forthcoming article concerning Deal's Russia-related sanctions activity and asked Rippling about its dealings with Russia. The reporter included internal Rippling Slack messages in his email, and Rippling investigated who might have accessed those messages and quickly identified the alleged spy.

• 25:59Jordi Hays?

  Wow.

• 26:00John Coogan?

  Crazy, right?

• 26:01Jordi Hays?

  Wait, I didn't even, I didn't even see anything about this yet.

• 26:05John Coogan?

  Yeah, and so we can go, we can go over to that information article, but the possible lesson here is that tech companies are much more sensitive about leaks to journalists than they are about sharing, sharing the sales information with competitors. So if you're doing corporate espionage, don't blow up your spot by trying to plant negative stories, not any sort of advice. Having identified the spy, Rippling then tried to prove that he was working for Deal. The smoking, this is a quote from the, from the, from the complaint. "The smoking gun came earlier this month when Rippling set forth a test of, or what is known by security professionals as a honeypot, to confirm Deal's involvement.

• 26:47John Coogan?

  Rippling's general counsel sent a legal letter to Deal's senior leadership identifying a recently established Slack channel called D-Defectors, in which the letter implied, Rippling employees were discussing information that Deal would find embarrassing if made public." It's such a weird, like, thing to send, just be like, hey, yeah, we're, we're, we're talking trash about you in our Slack.

• 27:11Jordi Hays?

  I know, but it's just too...

• 27:13John Coogan?

  And it's like, I don't know why you would share that with your competitor, but...

• 27:18Jordi Hays?

  Well, it just apparently didn't matter.

• 27:20John Coogan?

  Yeah, I guess it just didn't matter because they fell for it.

• 27:22Jordi Hays?

  Well, and here's the thing, so we're not picking, we're not picking sides here. If anything, I've been incredibly impressed with Rippling's... Growth and deals growth, they're both tremendous examples of, you know, you know, what's possible in Silicon Valley. Many, many people, many people almost couldn't believe how quickly deal was growing. But deal hasn't been without its own sort of crises, because anytime you're, these companies are moving huge amounts of money around the world all the time, right? And anytime you're in that business, you're, it's somewhat crisis prone, because let's say, let's say some sort of like account manager doesn't catch that,

• 28:03Jordi Hays?

  oh, this entity, you know, set up a deal account and they're using our product to pay out people that are doing prop trading, right? So they have this sort of crisis around prop trading. I think it was probably a year and a half ago. I can't quite remember. And then on the other hand, you have Rippling who's, hey, you didn't notice this, but you know, you've been paying out a sanctioned entity in Europe, right? You know, I'm just, I'm just making up an example. I have no knowledge of the specific instance, but um, but yeah, you can imagine this is a war at the feature level. It's a war at the sales level. It's a war at the capital markets level. It's a, it's a war at the sort of like, you know, narrative, PR level. So.

• 28:46John Coogan?

  It is so funny to compare it to like war, uh, because when I made the Rippling video, I, I wanted to make it like as dramatic as possible, basically. And I was like, what is the, like, what, what is like the hardest moment in your career here? Like, what, what's been the hard moment to talk about? And they gave me a pretty interesting anecdote about like, early on, something happened with like, one, one of their customers had a weird character in the name of the company and it completely messed up the entire payroll file. So payroll just didn't run. And they were on the phone with some of their clients, who like, a lot of the tech companies are like, oh, okay. Like the payroll is going to go out on Monday instead of Friday. Like all of our employees will be fine with that. Like we'll just deal with

• 29:28John Coogan?

  that. But, um, one of the companies was like running like trucking and he was calling the team being like, guys are going to like lose their mortgage over this. Like this is, this is like bad. Like you need to help that. And so the entire Rippling team had to go to ATMs, get cash, go to Western Union and like wire individual amounts to people and they just like, and it was like super dramatic, but it's so funny because it's like. It is dramatic, but at the same time, like, we're talking payroll software here. It's not really life or death, but it is actually very important. And, and the stakes are high with like sanctioned entities and even, I mean, the abuse that can happen, just moving money. Any system that moves money, whether it's Venmo or PayPal or Stripe, like, it can be abused, it can be hacked.

• 30:11John Coogan?

  And by definition, there's a lot of money at stake. And so it is, it is serious business, even though, you know, we, we like to joke like, oh, it's B2B SaaS. Like, it's, it's so easy. It's so like, you know, not, it's not as like world historically important as everything else. But like, there, there is stuff here that's pretty, that's pretty important. Let's move on. So about this D Defectors channel. In reality, the channel was not used by Rippling employees and contained no discussions at all. It had never been searched for or accessed by the spy, would not have come up in any of the spy's previous searches. And the spy had no legitimate reason to access the channel. Crucially, crucially, this legal letter was only sent to three recipients, all associated with Deal.

• 30:54John Coogan?

  Deal's chairman, the chief financial officer, and the general counsel, Deal's head of US legal.

• 31:00Jordi Hays?

  Which is the founder's dad.

• 31:02John Coogan?

  Oh, is that, is that who that is? I know Boaziz, it's like, it's gotta be someone related to him. And Deal's outside counsel. Neither the letter nor the D Defectors channel was known to anyone outside of Rippling's investigative team and the Deal recipients. Yet, just hours after Rippling sent the letter to Deal's executives and counsel. Deal's spy searched for and accessed the D Defectors channel, proving beyond any doubt that Deal's top leadership or someone acting on their behalf had fed the information on the D Defectors channel to Deal's spy inside Rippling. And then.

• 31:36Jordi Hays?

  Be amazing. Yeah. So pretty good. Good enough to get an Irish court order to seize the alleged spy's phone, at which point he also did trade crap. But here's the thing. This is in the days leading up to St. Patrick's Day. Can you imagine what, can you imagine the evidence that you need to get something like this to happen?

• 31:55John Coogan?

  Oh, yeah.

• 31:56Jordi Hays?

  Coming up on, on St. Patty's Day?

• 31:58John Coogan?

  I, I assume Ireland shuts down for the entire month of March.

• 32:03Jordi Hays?

  Yeah, it's, it's what, what's the, the Chinese New Year, you know?

• 32:06John Coogan?

  Yeah.

• 32:07Jordi Hays?

  In China, they sort of shut down a lot of factory operations.

• 32:10John Coogan?

  I mean, us Irishmen are known for, for liking the bottle and, uh, and, uh, St. Patty's Day is as good as, good as an excuse of any. So, you know, I certainly wouldn't be going to work if I was in Ireland in the high.

• 32:26Jordi Hays?

  This is, this is the natural, you know, you know how in 2020, 2021, there was this sort of like, you could go on Reddit and there's people that have two jobs, you know?

• 32:35John Coogan?

  Yeah.

• 32:35Jordi Hays?

  Like they're a software engineer at like Meta and Google, you know, or, or sort of Meta, like some unknown. This is the natural evolution of that.

• 32:42John Coogan?

  Totally.

• 32:43Jordi Hays?

  And you just work for, work for all the expense management companies, work for all.

• 32:47John Coogan?

  Just pass all the info back. I mean, that, that is my real question here is like, so this spy was clearly W two'd at Rippling, might even had, might even have had stock options, which is kind of hilarious to think about. But how was, how was this spy getting comped by Deal? Like, was it literally like cash in a duffel bag or?

• 33:09Jordi Hays?

  Well, so basically the Deal, Deal makes a really good product for, uh, paying people globally.

• 33:16John Coogan?

  Oh, okay. I see where you're going.

• 33:17Jordi Hays?

  And so, so it's, it's very possible that he was dog fooding the product.

• 33:23John Coogan?

  Yeah, maybe, maybe the long-term here is like, okay, Rippling has like the normal, like business mid-market, startup market, enterprise market, and Deal pivots to being like tradecraft payroll. So like when the CIA, like Palantir for payroll, that would be a good like rebrand, be like, hey, there's a massive network of spies all over the world. We're not going to use the traditional payment rails anymore, but if you need a duffel bag of cash dropped to an ex-KGB member at the Kremlin, like we can get it done for you.

• 33:55Jordi Hays?

  Crazy, crazy.

• 33:56John Coogan?

  I think that's a good, that's potentially a good like growth story out of this drama. It completely repositions the company. Palantir for payroll.

• 34:03Jordi Hays?

  Crazy.

• 34:05John Coogan?

  We gotta go through the actual, like, uh, the bathroom scene. Do you already read this?

• 34:10Jordi Hays?

  Uh, yeah, yeah, yeah.

• 34:11John Coogan?

  Okay. This is your favorite part.

• 34:15John Coogan?

  So Deal Spy initially told the independent solicitor that his cellphone was in a bag on another floor. The solicitor offered to have an associate retrieve the bag, but Deal Spy insisted that he retrieve it himself. The solicitor informed DS that if he was lying, he would be breaching the court order. The solicitor accompanied DS downstairs and took possession of the bag, but in fact DS had lied. The bag only contained a notebook. It held no mobile device. On information and belief, DS's cellphone was on his person the entire time. After misdirecting the independent solicitor, DS then went to a bathroom, locking the door behind him and refusing to come out, despite the independent solicitor's repeated

• 34:58John Coogan?

  warnings that these actions were in violation of the court order. Rather than comply, DS was heard doing something on his phone by the independent solicitor. You can just do things. Doing something. He's just playing Candy Crush, probably. The haptics are going crazy. He's addicted to TikTok, maybe. It's just ice cream so good in the bathroom, just watching a livestream. Suggesting that DS may have attempted to flush his phone down the toilet rather than provide it for inspection. Later that day, Rippling had the plumbing of its Dublin offices inspected, but did not locate any mobile devices. While in the bathroom and continuing after leaving the bathroom, DS was again told repeatedly that he was

• 35:43John Coogan?

  required to provide the device and he would be in violation of a court order. After DS left the bathroom, he was informed that taking another step forward rather than handing over the phone immediately would be an additional breach of the order. DS then replied, "I'm willing to take that risk." DS then stormed out of the office and fled the scene.

• 36:06Jordi Hays?

  The Netflix doc is gonna go crazy, except I don't think it'll actually happen because it's, it's at the end of the day, it's enterprise sass.

• 36:14John Coogan?

  Yeah, uh, me or Jason Carmen are the only hopes for making this.

• 36:17Jordi Hays?

  Well, no, to be honest, to be honest, the right form factor with this is a South Park style cartoon.

• 36:24John Coogan?

  I agree.

• 36:24Jordi Hays?

  That that releases basically this week and it just sort of breaks it down because it's too, it's too silly to to actually be made into a documentary.

• 36:35John Coogan?

  It's so funny, but yeah, I mean, this is like this, the people keep saying like, oh, like, you know, we need Silicon Valley back. We need HBO Silicon Valley back. Things are getting too crazy. Yeah, the VCs are in the White House now. Like, it's truly like next level. Uh, well, let's finish as, uh, uh, what Matt has to say.

• 36:54Jordi Hays?

  The, the thing I don't understand is,

• 36:58Jordi Hays?

  is the spy not intelligent enough to understand that

• 37:03Jordi Hays?

  all of this stuff can be, um, what, what, what's the word for it? Uh, subpoenaed from like Apple or, or Google or sort of.

• 37:11John Coogan?

  Oh, yeah. I mean, I mean, Slack is not.

• 37:13Jordi Hays?

  I'm sure he was using, I'm not only he was using like Signal and stuff like that.

• 37:16John Coogan?

  Yes, I mean Slack's not end to end encrypted and then also, uh, like Salesforce owns Slack. They're happy to hand this over. And then also, like, when you run Slack at the enterprise level, like Rippling does, like, they own all the data. I'm sure they have like their own copy. Uh, they don't even need to go to Salesforce and say, hand it over.

• 37:34Jordi Hays?

  I think what's, what's totally possible is that he was communicating over an encrypted service.

• 37:41John Coogan?

  To the deal.

• 37:42Jordi Hays?

  To the deal team.

• 37:44John Coogan?

  Yeah.

• 37:44Jordi Hays?

  And then, you know, he, who knows, maybe he had a handwritten note with like, basically like the login information and was just like, okay, I'm gonna flush this down the toilet. And like,

• 37:53John Coogan?

  Yep, yep, yep.

• 37:53Jordi Hays?

  Basically it, right?

• 37:54John Coogan?

  Yeah.

• 37:55Jordi Hays?

  I don't know how much that's gonna help him.

• 37:59Jordi Hays?

  But, uh, but yeah, you know, innocent until proven guilty, right? So.

• 38:03John Coogan?

  Yeah. Uh, so Matt closes out by saying, when they come to raid your office, locking yourself in the bathroom until they go away probably won't work. Not legal advice, but it will make you something of a legend. Also, imagine dredging the toilets for the possible spy phone.

• 38:21John Coogan?

  Oh hilarious, hilarious, wild, wild stuff. Should we go to the New York Times article? Just give some extra context because Rippling did comment on this and gave some extra information around this.

• 38:33Jordi Hays?

  Yeah, I don't know how much of the New York Times we need to really cover, but.

• 38:38John Coogan?

  Mostly it's just that, you know, you can see, obviously, Parker posted about this, but Vanessa Wu, who I actually interviewed for that documentary, she's Rippling's general counsel, she said in a statement, "We're all for healthy competition, but we won't tolerate when a competitor breaks the law," weeks after Rippling is accused of violating sanctions law. And then, yeah, Deal also fired back with that. It's a brazen act of corporate espionage. Logan Bartlett on the timeline.

• 39:09Jordi Hays?

  Wait, real quick, somewhere it says Rippling told the New York Times that it also discovered correspondence between DS and Alex, Deal CEO and co-founder. I didn't see that anywhere else.

• 39:20John Coogan?

  I didn't see that either.

• 39:21Jordi Hays?

  But maybe it just didn't make it into the initial complaint.

• 39:24John Coogan?

  Maybe. I don't know. Is that, yeah, Rippling said it had also discovered correspondence between DS and Alex Bazeez, Deal CEO and co-founder. Earlier this month, they sent a letter, which we heard about to the father of the founder. Within hours, DS started searching the channel and the company asserts.

• 39:46Jordi Hays?

  Crazy stuff.

• 39:48John Coogan?

  Rippling's bringing in the heavy hitters. The lead lawyer is Alex Spiro of Quinn Emanuel Erckhardt and Sullivan, Pasadena law firm, by the way. Shout out John Quinn, named partner, lives in my neighborhood. Great, great dude. He's known for representing Elon Musk, Jay-Z, Mayor Eric Adams of New York City. Some heavy hitters on this. Also, I think he represented Evan Spiegel at Snapchat. And Mr. Beast was also a Quinn Emanuel client, giving you a little bit, a little bit of world tour of what Quinn Emanuel's up to. Shout out Quinn Emanuel.

• 40:22Jordi Hays?

  They're doing things.

• 40:23John Coogan?

  Yeah, they're doing things. Yeah, I went to high school with all the kids that were affiliated with this law firm.

• 40:29Jordi Hays?

  I honestly wonder, so I really wonder how.

• 40:34Jordi Hays?

  How this sort of plays out, right? So you have Deal Spy, who's an employee of Rippling, not an official employee of Deal, I would hope.

• 40:43John Coogan?

  Yeah. He's just W tiered.

• 40:45Jordi Hays?

  And then, and then.

• 40:46John Coogan?

  Yeah, yeah, I'm spying and they pay me 20 bucks an hour. It's great.

• 40:49Jordi Hays?

  And then, and then the issue is then you have Deal, who's represent, you know, Deals Council and any outside council that they would hire is representing Deal.

• 40:59John Coogan?

  Yep.

• 41:00Jordi Hays?

  But then they also have some interest in like making sure that Deal Spy has good representation. But at the same time, if they represent, if they represent, they can't like fund his lawsuit because then it looks like, you know.

• 41:15John Coogan?

  Jordy, I think you need to read more spy novels because this is what's called being out in the cold. Like, the spy is burnt, they're out in the cold and they gotta go, uh, they gotta go figure it out. Gotta get a new identity. Go Jason Bourne mode.

• 41:28Jordi Hays?

  Yeah, and it's a challenge because Deal has billions of, you know, potentially a billion dollars on their balance sheet and the spy probably made, uh, you know, what's that quote? It's like, I'm, you know, uh, I, you know, you should be embarrassed at how, you know, not that you sold out, but like how little it actually took, right?

• 41:52John Coogan?

  Yeah.

• 41:53Jordi Hays?

  Like this Deal Spy, like I could imagine him making $200,000 and then.

• 41:58John Coogan?

  Imagine he just got 10% of the company.

• 42:03John Coogan?

  Deal Spy, if you got, if you got less than 5%, you got hosed. You got hosed.

• 42:10John Coogan?

  If you're, if you're gonna do it for less than 5%, you're, you should be a co-founder for this. You should have co-founder stake, board seat for sure. Board seat. Apparently you can, you can tweet from prison and you can do podcasts from prison. So, uh, come on the show, but also, uh, join the board.

• 42:28Jordi Hays?

  Smart.

• 42:29John Coogan?

  Why not? Call in. Be the remote board member.

• 42:32Jordi Hays?

  Yeah. Great, great call.

• 42:35John Coogan?

  If they're really gonna pivot to Palantir for payroll, you know, and, and run spying operations across the world. He'd be an expert. Anyway, but wild, wild times in the timeline. Uh, should we go to Logan Bartlett?

• 42:48Jordi Hays?

  Yes.

• 42:49John Coogan?

  Today is like the not like us drop for people who know what T3, T2, D3 is, which is triple, triple, double, double, double, which is how you grow a really high growth B2B SaaS business, of course. Is not, not like us is the, is the Kendrick song, right?

• 43:08Jordi Hays?

  Yes.

• 43:09John Coogan?

  Yeah.

• 43:09Jordi Hays?

  Yes. Uh, I'd like to see, I would love to have had a little, little birdie, you know, flying around, following Parker Conrad, because I wonder if he did a face to face, you know, with, with his employee who was spying on him. You know, like, like the king, you know, the king, you know, there's a spy within the castle walls and the king, like, you know, the.

• 43:32John Coogan?

  Yeah. Yeah. I mean, you gotta hand it to Parker, like, like enterprise SaaS is normally so boring and his, his entire life has been fascinating. Somehow it's just always filled with.

• 43:45Jordi Hays?

  Well, also the, you gotta, like, one thing, the, the two reasons to be really bullish on, on Rippling after this. You know, and again, we're, we're the news. So we're not, we're not taking sides here, but, but just sort of objectively like incredible execution on both the law, like the, the, the law here, the, the execution of the honeypot, uh, you know, how quickly they moved on this. Uh, you know, less than a month ago, they were still sort of uncovering a lot of this. And then, uh, you know, it, it's not super, you know, companies that are, that are winning and, you know, crushing markets, don't typically feel the need to, uh, hire, uh, spies.

• 44:31Jordi Hays?

  That being said, the best ones probably do it and don't get caught.

• 44:35John Coogan?

  Yeah. Yeah, if you're an enterprise SaaS thought leader now, you need to parody Josh Steinman's, how many foreign sabotage teams are operating on US soil? You need to just post that every day. How many enterprise SaaS sabotage teams are operating in Silicon Valley right now? Just ask the question every day.

• 44:58Jordi Hays?

  There you go.

• 44:59John Coogan?

  Good morning, we're gonna win. And how many enterprise?

• 45:02Jordi Hays?

  How many corporate espionage teams are operating within, you know, American SaaS?

• 45:07John Coogan?

  American unicorns. Yeah, well, you had a good post about this. It's a, it's a photo of a soldier doing a house clearing. Cooptis SaaS, Bellum Ast, enterprise SaaS is war. There was some debate in our group chat about whether or not that was.

• 45:23Jordi Hays?

  The translation.

• 45:26John Coogan?

  But I think the message got across and you got a couple hundred likes already because it's a lot of fun. And Paul Avell Asperuav says, the East India Company had a private army. Why shouldn't the corporate expense management platforms militarize? Back to basics.

• 45:44Jordi Hays?

  I also said.

• 45:46John Coogan?

  Imagine you're in Valhalla explaining to King Leonidas about the great battle of banking products.

• 45:53Jordi Hays?

  Amazing. I also said Richard Nixon would have loved B2B SaaS.

• 45:57John Coogan?

  For sure.

• 45:58Jordi Hays?

  If he were around today, I'm sure he would have been an angel investing into, into one of these, you know, companies.

• 46:05John Coogan?

  I'm in DC. I almost stayed at the Watergate. I'm a big fan of that hotel. They have fun with it. When you, when you pick up the, the phone at the Watergate, it says, like, welcome to the Watergate Hotel. You don't have to break in like, and everything is like branded around like the break in. And they've really leaned into that as their like shtick. It's pretty fun. I like it. Adam Rankin, I think who's over at Warp says, the world of payroll moves fast, but join Warp ships faster. Announcing our latest product launch, SaaS, sue your competitors as a service. Try it out now. He's having a lot of fun with it.

• 46:43Jordi Hays?

  Yeah, Warp is just happy to not be in the, be at the forefront of another dramatic payroll incident.

• 46:50John Coogan?

  Yep.

• 46:52Jordi Hays?

  Warp's a portfolio company. They've just been, they had a little hiccup last year related to some marketing stuff, but they just have stayed laser focused. And now, if you look over at Luke Metro, he's posting, I will share this in the, in the, in the YouTube chat. Luke Metro has the emoji where the two people are fighting and then like the guys in the background, you know, like

• 47:22John Coogan?

  Oh, yeah, yeah, yeah. That's warp.

• 47:24Jordi Hays?

  Yeah.

• 47:24John Coogan?

  That's what we're chilling in the back, just not paying attention. I mean, honestly, like, it, it, I wonder what's going on at Gusto today. Like, they gotta be so happy that they're just out of it.

• 47:37Jordi Hays?

  Yeah. The only thing is like, I legitimately believe that Gusto isn't actually competitive with these companies. From, from everything that I know, they don't, they really say if you have more than 20 employees, like just go elsewhere. Like it's really meant to be for sort of the SMB category. So

• 47:57John Coogan?

  That's cool.

• 47:58Jordi Hays?

  I have to imagine that they're just sort of like, cool. We're glad that you guys are, you know, duking it out. But

• 48:04John Coogan?

  Yeah. I've been a Gusto customer for almost a decade, like years, always good experience.

• 48:12John Coogan?

  And yeah, I mean, it was interesting because Gusto launched as Zen Payroll. And then Parker went through Y, they were, is a YC company. Parker goes through YC with Zenefits and gets so big, so fast and like completely sucks the oxygen out of the air. And then quickly is like compound startup mode, take over the world mode. I'm going to do payroll. I'm going to do everything. And so Zen payroll rebranded because they didn't want to be confused, even though they were the, they were their first mover. They were like, ah, we're just gonna like not deal with this chaos stuff that's going on. You can have the Zen name. And then Zenefits, of course, like sold and got shut down and like rebranded. And so they could have stuck with Zen payroll the whole time. But I mean, Gusto is a good name too. I, I think it all worked out. And

• 48:57John Coogan?

  also it feels easier to rebrand a B2B SaaS product than it does a consumer product. Just because there's like, like the goodwill doesn't build up the same, like you have your install base.

• 49:08Jordi Hays?

  Yeah. Most of, most of your sales motion is coming from

• 49:14Jordi Hays?

  You know, word of mouth, uh, you know, direct sales, like it is much easier.

• 49:19John Coogan?

  Yeah.

• 49:21Jordi Hays?

  Uh, I don't know if there's any other.

• 49:24John Coogan?

  Yeah. I mean, there's interesting stuff. I mean, honestly, people should go read the entire complaint because it is written in like plain English. Uh, and also I just think it's a fascinating tour of, of like how enterprise SaaS works. Like it's not like they're leaking alpha here, but if you're running a B2B SaaS company, like you should read this just to, just to understand how Rippling works because they're explaining the whole process, like, like from leads to most valuable pro- prospects. They have like this five-stage funnel, research, customer development, a demo, then refinement, then a contract stage. Uh, each stage of the sales pipeline requires significant effort and it kind of goes through like, it's kind of a playbook for

• 50:06John Coogan?

  building enterprise SaaS. And I thought, I thought it was interesting because like you, you often like these playbooks are repurposed by like, oh, you hear Sam Blonde who worked with Parker on a podcast on like the set, Jason Lemkin, like Saster, right? You could learn some of the stuff there, but this is laid out in like, with legal precision. And so it feels like there's actually maybe very implementable here.

• 50:33Jordi Hays?

  I actually have some breaking news. So this, um, this story has apparently reached LinkedIn.

• 50:39John Coogan?

  Oh.

• 50:40Jordi Hays?

  A lot faster than I thought because my buddy who's a, who's a big LinkedIn user, he doesn't use X. He just sent me the story.

• 50:47John Coogan?

  Hmm.

• 50:48Jordi Hays?

  Um, and I want to reply back. I'm not going to reply right now, but I wanted to reply back. Uh, buddy.

• 50:54John Coogan?

  Six hours too late.

• 50:56Jordi Hays?

  Six hours. No, the, the, my, the first text that I got this morning were like, check X. People are tagging, you know, people are tagging TVPN in this.

• 51:06John Coogan?

  Yep. Yep.

• 51:06Jordi Hays?

  Story. They're calling it the Watergate of SaaS.

• 51:09John Coogan?

  The Watergate of SaaS.

• 51:11Jordi Hays?

  Um.

• 51:13John Coogan?

  Let me see.

• 51:13Jordi Hays?

  Do we want to go, do we want to go through some of those examples of other big uh corporate espionage moment?

• 51:20John Coogan?

  Yes, we do. I, I, I, I do want to hi- highlight this one image from the complaint. Uh, it's, it's like page sixteen, seventeen, and, and I think this is what people are going to be pointing to on like the was something actually nefarious going on, or was this guy just acting weird? Uh, Rippling Slack logs show that the deal spy began searching and accessing and accessing Rippling Slack channels at an unprecedented rate beginning or around November twenty twenty four. Notably, DS searched the term deal approximately twenty-three times a day. And so it seems like, it seems like this person uh was maybe at Rippling and then started spying, and it kind of goes from like a before and after.

• 52:05John Coogan?

  It's not like they were planted there beforehand. Um, the below illustrative example demonstrates why a search for deal is powerful and alarming. Namely, this example shows that deal is mentioned in discussions concerning Rippling's sales leads as well as discussion related to a potential customer for Rippling's PEO product.

• 52:25Jordi Hays?

  Um, yeah, so the challenge, the challenge here and what I think deal is going to run into because deals own internal Slack messages in regards to their entire like it's, it's not like the, the sort of deal spy at Rippling could just pass information to one person at Rippling on Signal, and then that's like the end of the information. It's, the information gets passed, and where the evidence will be really damning is if there's sort of this top-down, hey, focus on Shopify. We know Rip, like, uh, we're at risk of, and then there's sort of this uh record of uh, this sort of information coming in from unknown source, and then using that, you know, that, that information being used to change the um.

• 53:12Jordi Hays?

  Change the outcome of this sort of sales process.

• 53:15John Coogan?

  I wonder if the spy knew that there are records of channel previews? Because that's something, because just for some clarity, when you're, when you're in, when you're in an organization, there are private channels which you can't even access or search for. There are public channels which you can join. When you join them, it sends a little message like, hey, Jordy joined the TBPN guest planning chat or whatever. But you can also just preview them, which means you're just like looking and scrolling through, but no one

• 53:44Jordi Hays?

  Funny, because

• 53:45John Coogan?

  No one in the organization knows, but the IT guys know.

• 53:48Jordi Hays?

  This is basically one of the, the sort of things that Rippling pitches, which is like, you should have one sort of, sort of database for all your employees and then it should connect to every application that you use. So that there's sort of this like graph of activity. So

• 54:08John Coogan?

  Well, there's a graph, baby, and the graph is looking like this, like flat, flat, and then just massive

• 54:15Jordi Hays?

  Oh, no.

• 54:16John Coogan?

  And it's like, what's going on there? Something changed.

• 54:21Jordi Hays?

  It's funny. It's interesting to think about how that relationship would have popped up because it's possible that Deal was, you know, and totally speculating here, it's possible that Deal was wanting to recruit this person. And then the person was like, I actually really like Deal, or I like Rippling and the culture here. And like, I've got like a pretty great like stock option plan, but I'm down to moonlight.

• 54:48John Coogan?

  Yeah. Give me, give me the, give me the cash bags. So the, the, the, the interesting thing here from the complaint is they really lay out how they actually found the spy. And the title of this is Tiny Bird. I love these like little spy terms. On February 27th, 2025, when the information published the article for which its reporter saw comment from Rippling, Rippling learned two important things for the first time, that Tiny Bird, a startup discussed in the article, is Deal's customer. And two, that Tiny Bird reportedly made payments to sanctioned Russian banks using the Deal platform. Specifically, quote, "Tiny Bird followed instructions currently hosted on the website of a sanctioned Russian bank

• 55:33John Coogan?

  that guided companies on how to skirt sanctioned rules by using Deal." Prior to the publication of this article, no one at Rippling, including Deal Spy, had any other work-related reason to know about any connection between Tiny Bird and Deal, let alone search that name through Rippling Slack archives. Nevertheless, Rippling's investigation revealed that DS had searched for Tiny Bird 20 times between February 19th and February 20th, so before the article broke and before the information had been passed back. Over a week.

• 56:05Jordi Hays?

  You gotta give DS credit for just being incredibly locked in on the task. It's hard to imagine him getting any other work done, other than just spamming these different search terms.

• 56:16John Coogan?

  Yeah, you know, we talk about like 10x engineers and we talk about A players and it's just seems like, let's just call balls and strikes. In terms of spying, potentially a 10x spy, potentially an A player here, although he did get caught and the whole spying could only last like two months. Rough. And also the handling of the phone afterwards was pretty bad, but clearly on the grind for a while, gotta give credit where credit's due.

• 56:47Jordi Hays?

  What did DS flush? That's the big, you know, it's like, what did Ilya know?

• 56:52John Coogan?

  What did Ilya see?

• 56:53Jordi Hays?

  What did Ilya see?

• 56:54John Coogan?

  What did DS flush? You gotta impose. On information and belief, DS most likely knew to search for Tiny Bird because he was instructed to search for that term by Deal, presumably after the reporter indicated to Deal's communications team led by VP of Communications Elizabeth Diana that Tiny Bird was a focus of his reporting or of the reporting. Upon learning of the Tiny Bird searches, Rippling strongly suspected that Deal was directing DS's actions, but to ensure, Rippling conceived a test, a honeypot, and this is where we go into the D-dash-defectors tab, which is fascinating. Anyway, so we should quickly read through that information article that actually kicked

• 57:39John Coogan?

  all this off. It's in the information, it was an exclusive that dropped on February 27, 2025, less than a month ago. It's called "The Bitter Fintech Feud That Stretches From Silicon Valley to Moscow." Deal and Rippling have stirred up a hornet's nest in the staid world of HR and payment software.

• 58:01John Coogan?

  The seemingly mundane world of human resources management startups is not the place you'd expect to see cutthroat corporate bloodsport, battles linked to global geopolitics, and questions about whether companies took on the wrong customers to boost growth. But Deal and Rippling are hardly ordinary startups. Their feud spilled into open view earlier this year in a Florida courtroom. A court-appointed receiver to a fraudulent investment scheme accused Deal in a complaint of becoming a magnet for people moving money into Russia and making it easy for bad actors to do business with our nation's enemies in violation of national sanctions. The takeaway here: Deal and Rippling are trading jabs over payments in Russia.

• 58:43John Coogan?

  Rival fintechs are both under pressure from partners over sanction risks. Feud spills out into the open. Deal immediately pointed the finger at Rippling, calling the accusation "a coordinated effort by Rippling to damage the reputation of its main competitor." Deal applied to dismiss the case. Deal's evidence was that the receiver's attorney was an investor in Rippling and represented it in licensing and regulatory matters, including helping set up its insurance brokerage. So, yeah, there's been this like go back and forth on like Parker and the Rippling team clearly go pretty hard at Deal. He's taken shots like, I think there's been interviews where people have kind of asked like, "Hey, what's going on in the international market?"

• 59:26John Coogan?

  And he'll just be like, "Deal is not a good product." And he like is very aggressive about that, where most founders would not like cross that line because it can, it's just like, it's just a high downside risk. It can be seen as gauche or, you know, improper, impolite. Everyone in Silicon Valley is usually like, "Hey, that might be a future acquirer or someone we acquire. We might have similar investors, similar employees. Like, let's just keep it cordial and say, 'Yeah, we love what we're doing, but fundamentally we have very different visions and, you know, different cultures and pick whatever you want.'"

• 59:59Jordi Hays?

  Yeah, so one data point that's interesting. Rippling had barred former employees who went to Deal from participating in tender offers. So, he's basically saying, "Sure, you're still a shareholder in Rippling, but you're not going to get access to liquidity the way you would if you went and worked at, you know, someone like Ram."

• 1:00:19John Coogan?

  Yeah, yeah, I mean, just very aggressive stuff across the board. And then, do you remember the snake oil fiasco, this whole thing?

• 1:00:27Jordi Hays?

  No.

• 1:00:28John Coogan?

  So there was something where, where, uh, I think it was, I think, I'm gonna get this, I'm gonna get this close, but I think it was like Rippling was calling Deal snake oil and they created a snake game that you could play, like, you know, a browser based game to kind of like take a shot at them. And a lot of people on, on Axe were kind of like, just like, like, this is like too much, like just focus on building, like play a clean game. This is rough in the passer. This is getting a little aggressive. And we, the trash talking like, you know, maybe, maybe this is, maybe tech should be like the NFL, not like.

• 1:01:09Jordi Hays?

  Deal just launched, they said Deal just launched a page comparing themselves to Rippling. Good news, they know who's beating them. Bad news, they're selling snake oil. And then that was, you could, you could play the game.

• 1:01:19John Coogan?

  Yeah, yeah. It was, it was their response to Deal's competitor page, which are very standard. Like almost every startup will have like the side by side of like, oh, and it turns out like we check all the boxes and our competitors check none. Like, you know, it's like, everyone just does that. It's seen as just kind of normal, normal stuff. Normally you don't use, uh, use a, a phrase like snake oil, which is aligned with like, almost like illegality, right? Because you, you, like snake oil is a, is a fraudulent medical claim usually, although Brian Johnson famously, you know, just sells oil that's called snake oil. And he's leaning into it and kind of repurposing the term. But in general, snake oil is a, is, it's a little bit harder, harder phrase. It's

• 1:02:04John Coogan?

  a harder edge than just saying, look, like, you know, we think we're better than Deal in boom, boom, boom, boom, boom, six different ways. And like, that's why our product is better. And I'm sure Rippling has that landing page as well and Deal does too. But, uh, but people were like, oh, okay, this is really, really heating up. But now we see like, okay, well, like, maybe that was all justified. Like maybe there's really a reason for there to be a blood feud here. Uh, and, and maybe there's a reason why they were, uh, doing that snake oil jab at Deal and not at Gusto or Paylostity or AEP, even though they might be competitors with any one of those companies.

• 1:02:38Jordi Hays?

  Yeah.

• 1:02:38John Coogan?

  Anyway, uh, we should, we should move on to some of the, uh, The greatest corporate espionage things in history. Oh, we should give some context on just where these companies are sitting. There's a good, there's a good data table in the information. Comparing global payroll platforms, Deal and Rippling. Valuation deals at 20, 12.6 billion, Rippling's at 13.5 billion. On revenue, Deal allegedly is at 800 million. Rippling's at 580 million. And so a lot of people, which is, I think, huge.

• 1:03:13Jordi Hays?

  Which is crazy. I mean, it's such a, if you just had to estimate their revenues.

• 1:03:21Jordi Hays?

  It's, Deal's growth has been almost unbelievable.

• 1:03:25John Coogan?

  It's insane.

• 1:03:26Jordi Hays?

  And so when articles pop up, you know, they had an article.

• 1:03:32Jordi Hays?

  This is also in the information back in September of 2023. It said how Deal became the payout provider for prop trading firms, including a site frozen by the CFTC. So. This stuff. This is potentially one way that they're able to. Put up, you know, I don't know. Deal, I think, came out in this article and said, this represents like, you know, very. Miniscule amount of our revenue. But, but clearly Deal is a real threat to Rippling, right?

• 1:04:05John Coogan?

  Yep.

• 1:04:05Jordi Hays?

  It's not a, it's not. This isn't Rippling like sort of beating up on some, anyway, you know, they almost have doubled it. Yeah.

• 1:04:14John Coogan?

  Yeah. And so Rippling's raised 1.4 billion, Deal's raised 685 million. Deal has 5,000 employees and Rippling has about 3,000 employees. Rippling's available in more countries, 185 countries compared to 160 for Deal. So that just gives you some, some, some context around the size of these companies, but they're pretty close. And it makes sense that they're rivals and it does feel like increasingly they're going after the exact same customers. Whereas maybe the ADPs and the Gustos have found like different segments that are less hotly contested, at least for now. But it'll be interesting to see where it happened, what happens with it and, and whether. Like one of these companies breaks out.

• 1:04:57John Coogan?

  Or, or if we're just doomed to a, an oligopoly in payroll forever, which, which is certainly what's happened at like kind of the, the, the public market deck of corn. Territory, but we'll see.

• 1:05:10Jordi Hays?

  Yeah.

• 1:05:10John Coogan?

  Anyway, should we move on to other corporate espionage cases involving US companies?

• 1:05:16Jordi Hays?

  Yeah. Should we start with IBM versus Hitachi?

• 1:05:19John Coogan?

  Let's do it. Do you want to read this one or?

• 1:05:21Jordi Hays?

  Do you want to explain what these companies are, John, since this was kind of more your era?

• 1:05:28John Coogan?

  Brutal. Yeah, back in 82, I almost interned at IBM, but decided to go over to Hitachi. You know?

• 1:05:36Jordi Hays?

  Yeah.

• 1:05:36John Coogan?

  But it was 21 at the time.

• 1:05:38Jordi Hays?

  Didn't Hitachi try to get you to go back and work at IBM and then come back? They said, you know, go, go do a summer internship with IBM, then come back next summer. We got you on a, you know, a maxed out six figure four year deal.

• 1:05:52John Coogan?

  Yep, yep, yep. Yeah. Have you, have you seen War Dogs where Jonah Hill is like, it's like IBM. No one knows what IBM stands for. And then the actor is like, the one guy's like international business machines.

• 1:06:05Jordi Hays?

  Yeah.

• 1:06:06John Coogan?

  And, uh, and he's like, get out of here. You're fired. It's the greatest clip. I love it. I actually filmed an ad with that actor. He was like, oh yeah, it was a great, great experience. He has like one line in the movie. He was really stoked about it. Nice guy.

• 1:06:17Jordi Hays?

  Nice.

• 1:06:18John Coogan?

  Anyway, in 1982, IBM became the victim of a major industrial espionage scheme when agents of Japanese firms, Hitachi and Mitsubishi sought to illicitly obtain IBM's confidential mainframe computer designs. The FBI set up a sting operation to catch the conspirators in the act. You love it. An FBI undercover operation uncovered that 12 Hitachi and five Mitsubishi employees were conspiring to purchase or steal IBM's proprietary technical manuals and software tapes for.

• 1:06:51Jordi Hays?

  Wait, so were they, is this one of those things? It's like a correct, what's it called? The Kretzsch, where you.

• 1:06:56John Coogan?

  Kretsch, yeah. So I mean, yeah, I wouldn't be surprised if the Japanese government owns part of Hitachi and Mitsubishi, or they own pieces of each other. This is very common.

• 1:07:05Jordi Hays?

  Why are two companies coordinating on something that's so obviously illegal?

• 1:07:10John Coogan?

  Totally. This is why we need American Kretzsch. We should, Deal, Rippling, Gusto, Paylocity. Let's get you all together. You all get 20% of each other's companies and then we can all work together to destroy Japan. Japan doesn't stand a chance in payroll. Once we get the American B2B SaaS Kretsch, let's get everyone in there. It's great. The scheme was halted with multiple arrests and the case was described at the time as possibly the largest industrial espionage case in history.

• 1:07:41Jordi Hays?

  Right. So this is crazy. Hitachi pleaded guilty.

• 1:07:45John Coogan?

  Eighty-three.

• 1:07:46Jordi Hays?

  In eighty-three with two executives and they paid fines of $10,000.

• 1:07:51John Coogan?

  $10,000. How will they ever recover?

• 1:07:55Jordi Hays?

  Yeah.

• 1:07:56John Coogan?

  They also issued an apology to IBM and entered a legitimate technology licensing agreement. The case, the early case raised awareness of overseas competition targeting US technology and led companies to tighten their security on sensitive R and D. Yeah, wild. It's funny. Should we go into the hair care product espionage of 2001?

• 1:08:18Jordi Hays?

  Of course. I mean.

• 1:08:18John Coogan?

  People have been asking about our hair care routines again, you know?

• 1:08:21Jordi Hays?

  Yeah.

• 1:08:23John Coogan?

  The answer is we is we conduct a large espionage on the major hair care products.

• 1:08:29Jordi Hays?

  We have moles inside of Unilever and Procter and Gamble.

• 1:08:32John Coogan?

  Yes.

• 1:08:33Jordi Hays?

  And they're they're just giving us, you know, sort of, you know, chemicals out the back door that won't hit the market for another decade.

• 1:08:40John Coogan?

  Exactly.

• 1:08:41Jordi Hays?

  That's really.

• 1:08:41John Coogan?

  Exactly. Yeah. So in 2001, consumer products giant Procter and Gamble was caught spying on its rival Unilever to gather intel on Unilever's hair care business. P and G's tactics crossed the line from normal competitive intelligence.

• 1:08:55Jordi Hays?

  I just have to say something really quick. So when governments do this or hard tech, you know, defense they do it, it's like, oh, this is like, this is really bad. And then when when when hair care companies and HR staff.