20VC: Why The CEO Should Make As Few Decisions As Possible, The Trade-Off Between Freedom and Raising Big From VCs & Why Our Jobs Are Not As Hard As We Think and How To Assess Talent and Potential As a Result with Tristan Handy, Founder & CEO @ dbt Labs

Tristan Handy is the Founder and CEO @ dbt, a data transformation tool that enables data analysts and engineers to transform, test and document data in the cloud data warehouse. To date, Tristan has raised over $400M from the likes of Sequoia, Altimeter, Coatue, ICONIQ and GV with the latest funding round valuing the company at $4.2BN. Prior to founding dbt, Tristan was the VP Marketing @ RJ Metrics and got his break in the world of startups through former 20VC guest, Anthony Casalena with a Director of Operations role at Squarespace. In Today's Episode with Tristan Handy: 1.) Entry into Startups: How did Tristan make his way into the world of startups with his first role at Squarespace? How did Tristan's time with Squarespace impact how he builds dbt today? What does Tristan know now that he wishes he had known when he founded dbt? 2.) Our Jobs Are Not That Hard: Why does Tristan believe that our jobs are not that hard? If going down this line, how does Tristan hire? What does he look for? How does he test for it? When does experience matter? When does it not matter? 3.) dbt: The Company Why does Tristan believe that remote work does not work? What financial packages have dbt put in place to allow their employees this physical interaction? What does Tristan believe is the hardest element of building a hybrid company? When does everything start to break? What are the biggest lessons Tristan and dbt have taken from Gitlab? 4.) Tristan: The Leader How does Tristan conduct and execute on the best performance reviews? How does Tristan create an environment of safety where people feel they can be honest and transparent? What are the elements that you cannot be transparent on? Where does transparency break down? 5.) Trading Freedom for Scale: dbt could have been a small and super profitable company, why did Tristan decide to trade off the freedom and raise big from VCs? How did Tristan raise over $414M without ever talking about an efficiency metric? Is Tristan concerned about living into the $4.2BN valuation in what is a very different time? With the benefit of hindsight, is Tristan pleased he went big and raised venture?

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

• 0:00Harry Stebbings?

  Welcome back. This is 20 VC with me, Harry Stebbings. Now, if there's one criticism of the show that I do sometimes hear is that I don't push back hard enough on guests. Today is a really fantastic discussion. Hopefully, people will think that I actually do push back more after hearing this discussion. We're joined by an incredible founder. Over the last five years, they've scaled their company to a $4.2 billion valuation and one of the most loved data tools in the business. I'm thrilled to welcome Tristan Handy, founder and CEO at DBT Labs, a data transformation tool that enables data analysts and engineers to transform, test and document data in the cloud data warehouse. To date, Tristan has raised over $400 million from the likes of Sequoia, Altimeter, Co2, Iconic and GV.

• 0:42Harry Stebbings?

  And prior to founding DBT, Tristan was the VP of Marketing at RJ Metrix and got his break in the world of startups through former 20 VC guest Anthony Casalena with a Director of Operations role at Squarespace. And I do want to say a huge thank you to Matt Miller, Yannes Alans, Ben Singleton and Ben Stansil for some amazing question suggestions today. But before we move into the episode today, holiday gifting for your friends and family can be hard. And for your business, it can be even harder. And Open helps companies of all sizes deliver better gifts and they make it super easy. Their platform is filled with best-in-class brands. There are no bad gifts ever. They source locally and operate globally. You don't even need an address. Simply send an email or DM with a unique gift link.

• 1:25Harry Stebbings?

  Ready to put the ease and joy back into your company's gifting? Head over to andopen.co/20vc. That's andopen.co/20vc to get started today. And speaking of amazing tools, which really take complex processes and make them super easy, Angel List has been a key partner for me in managing my investments. I love using the Angel List platform because it abstracts away all the complexity and operational burden of fund management, whether you're running SPVs, a traditional venture fund like me, or even a rolling fund. Angel List has you covered. The team is also just exceptional. They're great, great partners. I'm also super excited about their new product, though, Angel List Stack, which is purpose-built for founders. With Angel List Stack, you can create a fundraising-ready startup in just a few days.

• 2:10Harry Stebbings?

  Just a few clicks. AngelList handles all your company's incorporation, banking, cap table, and fundraising process, all in a single place. This allows founders to really focus on building. If you're a founder, you can launch your company at stack.angellist.com/20vc. Whether you're a founder or a funder, you're in great hands with AngelList. And finally, from websites and online stores to marketing tools and analytics, Squarespace is the all-in-one platform to build a beautiful online presence and run your business. There are three things for me that really stood out about Squarespace. First, mobile optimized websites. All websites are optimized for mobile. Content automatically adjusts beautifully, so your site looks great on any device. Second, email campaigns. Squarespace makes it super easy to grow and engage your audience

• 2:55Harry Stebbings?

  with Squarespace email campaigns, so you don't need any other tools or providers. Such a relief on that one. And finally, SEO tools. You've got to be found on search engines, and Squarespace takes the guesswork out of SEO, so you'll get found by more people more often. And if that wasn't good enough, head over to Squarespace.com/20vc. Not only do you get a free trial, but when you're ready to launch, use the offer code 20vc to save 10% off your first purchase of a website or a domain. But now it's time to hand over to the one and only Tristan Handy, founder and CEO at DBT Labs.

• 3:32Speaker 01

  You have now arrived at your destination.

• 3:35Harry Stebbings?

  Tristan, this is such a joy to do. As I said to you beforehand, I was sitting with Matt in a restaurant in London. I said, who must I have on the show? Immediately Tristan. And so I'm so excited that we made this happen, and thank you so much for joining me today.

• 3:48Speaker 02

  Yeah, absolutely. Matt, thank you for always being a cheerleader.

• 3:50Harry Stebbings?

  Fantastic cheerleader, by the way. I think I was distracted by a steak in front of me, but I would love to start with a little bit on you. How did you make your way into the world of startups first? And then how did you come to found DBT most recently?

• 4:02Speaker 02

  I was a lost soul, went to undergrad business school, went to work for Deloitte Consulting. Didn't really have any idea what I wanted to do. I spent five years there, still lost, went to get my MBA. And then I had a lucky break. One of my good friends from high school and college is Anthony Castellina. And Anthony had founded Squarespace five or so years before. Things were moving quickly. And I ended up spending a year there to do a bunch of things, but partially to help them raise their Series A. It was an environment that I had never seen before. Just the whole concept that I could wear jeans and a t-shirt to work. I loved it. I loved that you could just sit down and do the work and not make PowerPoint slides about doing the work. And so I just decided that I was never going back. And then the hard thing, honestly, for a consultant was to figure out how to make myself useful in this context.

• 4:47Speaker 02

  Because the majority of the skills that I had learned to this point in my professional career were not that useful. I wasn't the person who built the product. I wasn't the person who was going to sell the product. So I really doubled down on my data skill set, which had been something that I had been good at for a long time. But I had to figure out ways of making that useful. And for me, that was marketing. I learned how to do performance marketing. Early-stage marketing is highly quantitative. And so I spent my first seven years in startups, doing marketing in various shapes and forms.

• 5:15Harry Stebbings?

  I mean, I have a couple of things I have to unpack there. First, I actually had Anthony on the show before. Fantastic dude. The first thing that you mentioned, though, was luck. I always think how important is the role of luck versus skill? And I go back and forth on this. When you think about that, how important do you think luck versus skill is?

• 5:29Speaker 02

  I think that you need some amount of luck to be in the game. You need some minimum bar of luck. Then above that, it's probably skill. But I can tell you for a fact, Anthony and I both come from this little town called Hereford, 30 minutes north of Baltimore. We talk about it as we're from the forest. There's nobody that works at a startup there. Nobody has any concept of what the technology ecosystem looks like. And so there was just not a path for me to go in this direction. You've already spoken to him, so you kind of know his story. So if I hadn't had that little moment of luck there, I honestly don't know what I would be doing in my life right now. But it certainly wouldn't be this.

• 6:05Harry Stebbings?

  I love that. This little town has created like 10 to 15 billion dollars of enterprise value in markets. It's pretty impressive to be honest. It's more than most European countries. I do want to touch on, yeah, I spoke to many of your investors before the show. And one thing where they were resoundingly agreed upon is your skills in terms of team building and specifically talent detection. So I wanted to double down on this. How do you spot talent? We look at like non-obvious sources. I spoke to obviously Ines on your marketing team. And she said about never having done marketing, your co-founder being a marketing intern before. How do you spot talent without historical data?

• 6:40Speaker 02

  Do you know that feeling when you have a conversation with somebody? It's like locked in. The two of you are very tightly communicating and have a shared understanding of the world. That is the feeling that I get when I get really excited about somebody. So I think that the like most interesting example of this is Erin, who was our very first employee. She worked with myself and Drew and Connor at our last company, RJ Metrics. I had really spent almost no time with Erin there. We were on different teams, whatever. But I'd been in exactly one meeting with Erin and Erin was a junior-ish person there. She was an individual contributor, a sales engineer. And there was some conversation happening in this meeting and Erin raised her voice and she cut through some complexity or BS that was going on in this moment. And I was just like, who's that?

• 7:26Speaker 02

  And from that point onwards, I was like, that's a person that I need to stay in touch with. And so she was one of my very first calls to figure out how are we going to grow this team? And Erin now runs customer success for us and has for five years. And Erin has never led a large team before. She's certainly never like operated at this level. This might be controversial, but honestly, I don't think that a lot of our jobs, including my job, are that hard. It's not that you need to have seen this a million different times and that you need to be the best in the world, da, da, da, da. You need to have a certain set of traits. You need to be hardworking. You need to have a clear mind and be willing to say what your mind has on it. But the talent search algorithm is fundamentally not that hard. People just get focused on the wrong stuff. Have you led a customer success team at scale before? Like, that's the wrong question.

• 8:11Harry Stebbings?

  Okay, can I, and this as well, I used to, remember I started when I was like 17, 18. Everyone said because I didn't know anything. You know, if I look now, I've built a media company over eight years. If you hired me as your CMO, say, I would know a lot because I've been doing it for eight years. If you hired someone fresh into marketing, they would have no idea about how to think about distribution, flywheels, channel by channel optimization, all of the hard yards that it's taken me eight years to learn. Same with sales, same with CS. Do you not think that experience has value in that way?

• 8:44Speaker 02

  One of the strategic levers that I've tried to use throughout is to use time as a weapon. I think that there's this tremendous focus inside of the tech ecosystem to grow as quickly as possible. From Y Combinator, like if you're not growing your user base 10% every single week, then like whatever I was.

• 9:01Harry Stebbings?

  You're out.

• 9:01Speaker 02

  Should I say, yeah, I was gonna say fuck you, get out. It did like blitzscaling with Reed's book. And I think that making the decision to strategically take a long time in certain cases allows you to create strengths that are uncopyable in the market. So our first three and a half years, we were bootstrapped. We certainly could have raised money, but we didn't. We were a revenue generating business. We built DBT on the side. There were so many good things that came out of that. We developed a like user experience that was beloved. We didn't feel in a rush to do that. We grew a team that had some core members that are still leading the business today that developed this like deep trust between all of us and shared headspace. There's some things that you can't actually replicate by just throwing dollars onto a fire.

• 9:46Harry Stebbings?

  You said there about kind of building slowly, but building defensibility and moats within that. And actually, sometimes you have to go slow to go far. What did you do in terms of building defensibility and moats that was a deliberate decision not to go fast, but to build the right way?

• 10:03Speaker 02

  It took a long time to monetize our software. EBT core is open source. It's used by over 14,000 companies today. We, for a very long time, didn't have a commercial product on top of it. And so the way that we supported it was we sold consulting services to implement it, which is a hard business, running a consulting business and then. Taking the dollars from that and reinvesting them into building the open source software is challenging. But it allowed us to create this user experience that was unreplicated throughout the industry. And even today, maybe we have some competitors that have popped up here and there. But really, DBT is as close as you can get to a standard in the modern data stack.

• 10:45Speaker 02

  And I really think it's because we spent such a long time refining this use case and being users ourselves.

• 10:51Harry Stebbings?

  Do you think startups idealize the MVP, move fast, break things, test, get something out every week? How would you advise founders who are often told that?

• 11:01Speaker 02

  I really believe in that. I still try to get us to. And certainly in the early days, we released software that was not always perfect. That is fine, because if we in the early days had these like extensive release processes and et cetera, like we would not have had the iteration speed and cycles that we needed to get to a good place. I'm not suggesting that you move slowly from an execution standpoint. I'm suggesting that you move slowly from a monetization standpoint and like growing the business. What we found out is that the minute that you have a million dollars in software ARR, you're on a clock. People can take infinitely long to get to a million dollars. It doesn't really matter. That's perceived to be like wandering around in the wilderness and that's fine. But as soon as you hit a million dollars, it's like, well, next year you better have three. And the next year after that, you better have nine.

• 11:43Speaker 02

  So you should take a really long time to get on that treadmill because you can't really get off once you do.

• 11:49Harry Stebbings?

  And it's actually almost harder to raise once you have revenue. I know it sounds strange, but it's easier to raise pre-revenue with adoption.

• 11:56Speaker 02

  That is a common playbook in B to C companies, but it is much less well understood inside of B to B enterprise software. We were certainly early having investors accept our business was going to grow differently. I talked to investors throughout our three and a half years of bootstrapping. And the question was always, what metrics would you evaluate our business to determine whether or not we were ready for a series A? And the answers were like kind of all over the place and not that relevant. And when we eventually went down the road of fundraising, it was because we were getting good answers to that question. The answers were like, well, you folks are category creators and are set to own this part of the market and we understand. And that for open source companies, when they become standards in a certain part of the market,

• 12:39Speaker 02

  that that is a boulder that is going to keep rolling downhill. And like, okay, that's the kind of logic we use when we think about our business.

• 12:45Harry Stebbings?

  Why did you decide to turn on monetization when you did? Because those are the two questions. When do you raise and when do you monetize? Why did you decide the time you did to turn on monetization, given what we said about kind of the benefits of not?

• 12:56Speaker 02

  I am a big fan of a company called Reboot and an individual named Jerry Colonna. I read his book a while ago and he talks about something called the pathless path. It's like a Buddhist concept that you can't really know what the road in front of you looks like. So instead you have to adopt some principles whereby you figure out how to navigate that road when you get closer to it. So I honestly, I don't have a strategic answer to that question. I have a principles based answer and the principles based answer is that we navigate as much of our strategy as we can by asking what the community needs from us at any given point in time. What happened in 2019? The DBT community went from a place where kind of the cool kid, early adopters hung out to a place where Fortune 500 data people showed up.

• 13:39Speaker 02

  And we heard from half a dozen or so of these folks and they said, we want to use DBT too. But we are actually not allowed to use open source software without a commercial relationship to the vendors. You don't have anything for us to buy. We want to pay you money. Please help us figure out how to pay you money. It was this moment where we owned 100% of the cap table at this point, myself and my two co-founders and our employees. We were hoping to do the Basecamp path. Let's just own this thing internally and grow it on internally generated revenue. But it was very clear that these companies needed something that we were not going to be able to deliver without meaningfully investing in the business.

• 14:16Harry Stebbings?

  What did you need? When you think about transition from community and community adoption to enterprise adoption? I think a lot of people think SSO. But like, what is required to make the transition from community grassroots to enterprise heavy full rollout across Fortune 500s? Because it's so much more complex.

• 14:35Speaker 02

  I'm laughing because we're still in the process of doing that and I'm getting PTSD from even thinking about that. I don't remember if it was the first thing or the second thing that we built that our SSO integrations we built. Based access control, if you have an extremely mature multi-tenant environment, then you can answer all the security questionnaires in a certain way. And if you aren't yet there from a technology perspective, then you have to think about other deployment options that allow you to answer the security questions that way. So I think that there's this, and I've talked to now so many enterprise software founders who have made it through this messy period of hacking together, the like checkboxes that you need to sell into the enterprise. But if you do the like unscalable thing first, but you slowly have a motion to make it do the scalable version of it,

• 15:19Speaker 02

  then you'll slowly work your way through. And I think that you can see that in Databricks and Confluent and Snowflake. And like they've all hit this escape velocity where they've checked all the boxes and they can do it in a scalable way.

• 15:30Harry Stebbings?

  We mentioned hiring earlier, and when you move into enterprise, org also changes as well as the product does. When you think about hiring mistakes that you made, are there some big hiring mistakes that stand out to you? And how did that change your mindset?

• 15:42Speaker 02

  This is a hard one for me. We now have 350 people on the team, which either is unbelievably huge or still very tiny, depending on your perspective. Certainly not everyone who has joined us on that journey is still at the company. But I would say that we have an unbelievably high retention rate, both voluntary and involuntary. So there really just aren't that many people who we've hired over the years that are no longer with the company. I mean, it's like maybe a dozen, somewhere around that number.

• 16:11Harry Stebbings?

  You're either a fucking majestic pick or you have B or C team players still.

• 16:15Speaker 02

  That is a fair response. To a certain extent, none of us know what we don't know.

• 16:18Harry Stebbings?

  I don't buy this whole A-team, only A-team player thing. If you have more than 100 people, by definition, A-team is like the top 1% in my mind. You can't have only A-team if you're going to build a sizable company. It's impossible.

• 16:32Speaker 02

  I don't know that I come at it from that exact perspective, but also have my own challenges with the A-team, B-team, C-team players. This kind of goes back to what I was saying before, that I don't think that most of our jobs are that hard. Oftentimes, our ability to work together, to communicate, to have a consistent approach and consistent set of values that really determines the performance of the team. Because what we really need to be solving for Is the performance of the team and not the performance of individuals. That is an answer. Some of the ways that we've found that folks are no longer at the company have to do less with individual performance and more with team issues.

• 17:10Harry Stebbings?

  I worry with like team goals, you lose individual accountability. You can have people who kind of coast along in a good team and actually aren't good individual contributors and like executors of plan. Do you worry that with team plans and team goals, it can hide a lot of sins on the individual basis?

• 17:28Speaker 02

  I'm in no way trying to say that individual performance is a non-factor. We maybe over invest in performance management, like formal performance management. We've done this since the very beginning of the company. When it was three of us, we've had quarterly performance reviews. So we spend a lot of time talking, writing, holding ourselves accountable to the goals that we set for each other.

• 17:47Harry Stebbings?

  What do they entail? How do you structure them? What do they look like?

• 17:50Speaker 02

  Historically, it's been an hour, once a quarter. It's a little unusual. We have three people in the room. We have the person, their direct manager, and then typically a skip level. Although we've stepped away from that a little bit. It's like we call it the third person. And the goal that I always set for these meetings is that we don't leave the room without somebody saying something that feels uncomfortable. The way that I like to say it is that if you've ever been in a long-term relationship, that relationship does not stay healthy just by itself. Like there need to be these hard conversations every once in a while. Like, hey, you've really been pissing me off by doing X, Y, Z. And if you don't have those conversations, then slowly people build up animosities, relationships deteriorate without them. And so these hour-long sessions, once a quarter,

• 18:35Speaker 02

  are reset opportunities to say like, okay, let's just get your shit out there and let's talk about it.

• 18:40Harry Stebbings?

  So this is not how many S Q Ls and M Q Ls you bought?

• 18:44Speaker 02

  No.

• 18:44Harry Stebbings?

  This is, hey, I feel like you're not contributing in the same way that you did last quarter. Is something up? Why are you acting in this way?

• 18:52Speaker 02

  It is also, the feedback goes the other direction too. I feel like you're not setting me up for success because we've changed our goals twice in the past quarter and it's impossible to actually create programs along that kind of cadence. That kind of thing.

• 19:05Harry Stebbings?

  No, I hear you're brilliant at accepting feedback. The hard thing, though, with these conversations, which are very human and deep and meaningful, hopefully, is you're not in person a lot of the time. And I wanted to talk about this, and remote in particular. And you said before, working remotely is terrible, but distributed companies are amazing. I kind of did a double take on this, I was like, where's Tristan going with this one? So what did you mean by working remotely is terrible, but distributed companies are amazing?

• 19:31Speaker 02

  So the other word that I like to use is asynchronous. So I think of us as a distributed asynchronous company. Those things describe how work is done. Work gets done by people who are far apart, often on different time zones. But that doesn't mean that we need to be remote. We are in the process of opening up an office in San Francisco. Our biggest concentration of talent is now in San Francisco. I think it's like 15% of the employee population. And it's not because we've tried to hire people in San Francisco. It just turns out there's a lot of great people there. And when you open up job postings, then people apply from there. It's not like we have engineering in San Francisco or support in San Francisco, nothing like that. And so one of my favorite lines on this was from Sid at GitLab. He said, "Working remotely doesn't mean working from home." We've really taken that to heart.

• 20:16Speaker 02

  We all have different things that we get out of work, and one of those things is community. So we don't plan our office spaces around doing work together in person. We plan them around giving people a place to work that is outside of their home and allowing them to connect with their local community.

• 20:32Harry Stebbings?

  Why is remote terrible in your mind?

• 20:34Speaker 02

  Because it's lonely and dehumanizing because we're built to interact with other humans. And for many of us, especially for early career folks who are, I lived in an apartment with four roommates right out of college. I wouldn't have wanted to work there 40 hours a week. So it's just like not totally consistent with how we are wired as humans.

• 20:52Harry Stebbings?

  So I totally get you and agree with you there. I love doing the show because it's human interaction. It's nice to break up the day with real conversation. My question to you is on the facilitation of distributed. I had Matt Mullenweg on the show from WordPress. He spoke about the budgets that they give to all employees to go work in a coffee shop, to go find a local space. What budgets and how do you structure them to allow for these distributed workspaces?

• 21:14Speaker 02

  Yeah, so everybody gets, I think it's $250 a month for an out of home stipend. So whether that's, we work with a vendor called Liquid Space. And so if there's liquid spaces in your area, it makes it very easy to sign up for them. But you can also just expense drop in space or wherever. And the $250 is probably not enough to get outside your home every single day, but hopefully enough to make it so you don't go crazy. So that's step one. And then step two is, oh, of course, we also have a budget for people to like set up their home offices. But step one is like blanket everyone with a work out of home budget. And then step two is in places where we have high concentration of employees, open up satellite offices. We're calling this our many satellites strategy. And then the people who live in commutable distance of these satellites,

• 21:56Speaker 02

  then you lose your $250 and you are assumed that you're going to go into this satellite as your out of home experience.

• 22:02Harry Stebbings?

  Can I ask you, we spoke earlier about the growth. We also spoke about growth, community, monetization, fundraising. And I did want to touch on before we focus on your management. We've spoken before about aligning success between specifically two different parties. One is like success from the founder and then the other is success from an investor. How do you think about kind of aligning success in that way and not making it binary either way?

• 22:24Speaker 02

  There's so much here. The most important job of the CEO is to keep all of the different stakeholders in mind at all times and try to balance their like long term interests against one another. So if you specifically think about it from the perspective of the founders and investors, for a long time I had talked before about the vision of creating Basecamp, the like internally funded thing. And you can imagine if that's the path that you go down, that success looks very different. I grew up in a very middle class background and all the money in the world to me felt like $10 million. That was like all the money I could possibly imagine. And so you could imagine growing a company to that kind of scale. And if it's completely employee and founder owned, an acquisition at that level is great. That's a great outcome.

• 23:09Speaker 02

  The minute that you get institutional capital involved, then that changes. This is one of the biggest decisions we had to make. This was the trade off that we made when we first fundraised. It was like, do we want to trade this modest success goal? For a unicorn, whatever you want to talk about it, goal. And the risk associated with going big is much greater. There's really great people in the SaaS community that really are pushing hard to create funding opportunities that allow founders to optimize for these five, 10, $50 million exits. And I love that. I wish that was the path that made sense for us, but that was a real cost for us. And we only wanted to take the first step down that path when we felt like we had a

• 23:52Speaker 02

  shot at success on that level and that it's really what our community needed from us.

• 23:56Harry Stebbings?

  I have many thoughts here. The first thought I have is, and I'm going to make a bold statement, this is coming from a VC, so I'm admitting my sins. I think you sold freedom for scale of money. And I think when you're small, you have freedom, you have flexibility. You could print five, $10 million year in revenue, which I'm not belittling, that's fantastic, but you could do it and kind of keep going and make great money. But you decided to go big and with that, you do lose freedom.

• 24:22Speaker 02

  I agree with you, the cost is freedom, but the upside wasn't more money. It was expanding the community, expanding the set of humans that we could actually include in the community. It was very binary. The kind of business that we were building towards, we could build a credible credit card swipe, $100 per user per month, something like that. But our customers today, that still makes a large percentage of the companies that we sell to, but there was just no path to get from there to Fortune 50 company adopting this across 1,000 employees. Like it just wasn't feasible.

• 24:56Harry Stebbings?

  But you couldn't have used the self-funded bootstrap business to then fund an enterprise business over, I know it's slow.

• 25:02Speaker 02

  So I think that one of the things that's interesting about this is like, what is the environment that your company is operating in? And so if you're building something that I think has a long time horizon of relevance, then yeah, maybe you can reinvest over the course of five, 10 years. I think that there are product categories like productivity software, like email marketing clients or whatever, that the need is real and it is fairly consistent over the course of a decade or more. Our space moves incredibly quickly. And so if we took five years to reinvest revenue, the entire space would have changed by the time we got there.

• 25:35Harry Stebbings?

  Can I ask a blunt question as well? And you should have come on the show years ago. It was so much more friendly. Do you worry that with all the cash coming in, you just get diluted to shit? And what I mean by that is like, we've seen founders who have $10 billion exits and make like $40 million because they have 4%. With the more and more cash, you just get continuously diluted. How do you think about that? And what's your mentality around that?

• 25:56Speaker 02

  That is an interesting question for me to answer. You can look up our, I don't know how many of our valuations are public. We were public about our last one, the 4.2 billion valuation. So our fundraise, I think it was January or February.

• 26:08Harry Stebbings?

  How big was the fundraise?

• 26:09Speaker 02

  It was 222.

• 26:10Harry Stebbings?

  See, that is a great raise. So you dilute by like five or six percent, not that much. And you add 200 million to your balance sheet. That, beautiful.

• 26:19Speaker 02

  Well, the market was very conducive. So I don't know how I would have tried to balance that in a different market environment. It turns out that we raised four rounds of funding, all during COVID. The valuations during that period started off attractive and only got more attractive. Fortunately for employees and founders, we're not in the situation that you described there.

• 26:38Harry Stebbings?

  I totally get you. Can I ask you, and again, I used to be so nice, 4.2, it's a lot and you're a fantastic company. But do you worry about living into what was a very excited valuation?

• 26:49Speaker 02

  I think that there's a lot of companies, including public software companies, that are doing a lot of living into a lot of things. So we're not alone there. The good news is that we are executing incredibly well. We are growing very quickly. I think that one of the challenges that was introduced by the valuation environment is that it prized growth to such an extent that efficiency was like not even a conversation. I'm trying to search my memory banks. I don't even know that I talked about an efficiency metric in any of our fundraises. Fortunately, my history in growing the business over the course of three and a half years in a bootstrap fashion. I'm like a reasonably financially conservative person because of that experience. And so we have always been a pretty efficient business.

• 27:30Speaker 02

  We have had to recalibrate a little bit over the past six months, but it hasn't been some like gut wrenching change. It's been like some nudging of the steering wheel in one direction. We're very focused on a metric called cost of book, which is like not that different from customer acquisition cost, but it's like the math. Work just slightly differently. I think that's probably the main one that you see growth stage enterprise software companies focusing on now because

• 27:53Harry Stebbings?

  And so cost of just so I understand it is customer acquisition cost but not? How does it differ? Just so I get it.

• 27:59Speaker 02

  It's done on a margin basis as opposed to a revenue basis. So if you're a margin inefficient business, then your cost to book will look worse. Most companies, if you just look at customer acquisition costs and you're selling hundred dollar sneakers and the sneakers cost fifty dollars to get from your suppliers, you're actually overstating how efficient your business is if you just look at CAC. I think a lot of enterprise software companies, because they were so focused on growth, they've often paid a lot of money for that growth. Very fortunately, because our fundamental growth comes from organic community adoption of our open source product, we've always been a pretty efficient growth business.

• 28:33Harry Stebbings?

  Can I ask you, when we think about you as a leader, you mentioned the growth of the business. I'm always fascinated by the term high performance. And so I just wanted to hear your thoughts. When you think about high performance today in leadership, what do you think of?

• 28:46Speaker 02

  I don't use that formulation for leaders or for individuals. I certainly I would kind of understand how to call a business high performance or not. And so maybe for me, a high performance leader is one that results in a high performance business. I think that we've found that the best leaders communicate very clearly. They bring their entire organizations along for the ride, whether it's the good parts or the bad parts. Transparency is a core value of ours. It's not exactly clear how to operationalize transparency. When we hire leaders from the outside, there is this period of learning what transparency means internally. And sometimes that can be awkward for folks, even who supposedly come from environments that are transparent. We recently, we were talking about efficiency a second ago. We recently went through this exercise in optimizing our cost to book,

• 29:30Speaker 02

  primarily inside of our revenue organization. This was in many organizations, this would be like finance dictates certain changes have to happen. The CRO decides how to do it and pushes it out to the teams. That's just like not at all how that happened at our company. It was collaborative between sales and finance. And then our sales leader wrote up this seven page long document in Notion, asked for comment from the folks on his team, like, how should we roll this? How do you want to do this? And it was all like in the light of day. And these changes really did have real impact on the humans on Nick's team. But this is just like the way that we communicate with each other. We share good news and we share hard truths and we ask for people to be adults. And I think that's really how you get the most out of your team.

• 30:13Harry Stebbings?

  There are things that you can't be transparent on. So like exits, you can't be transparent. People see their exit numbers light up and woo, they're checked out. Or they're fundraising, they suddenly get super jacked, that there's new rounds coming together. And then it doesn't for whatever reason. Do you think there are limits to transparency?

• 30:28Speaker 02

  The main limit to transparency is when it conflicts with an individual's privacy. In Netflix, in No Rules, Reed talks about how they're very transparent about employee exit reasons. We don't do that. We say more than nothing, but we don't say like, ah, that person was doing terribly. We fired him. And there's other things that like, we share public salary bands on every job posting, but we don't share an individual's salary. It's this line we try to draw between being transparent and being invasive of people's privacy.

• 30:58Harry Stebbings?

  In leadership, there's painful moments often, and they're often the most useful from an education standpoint. When you think back to the D V T journey, what's been the most painful lesson that you're also quite pleased to have been through from a learning perspective? And what did you learn?

• 31:12Speaker 02

  It flows nicely. I think it was about operationalizing transparency. The companies that I had always worked at, the expectation was that you as an employee were going to learn about a fundraise once everything had been signed and the money was in the bank. It's like, we got five million bucks, whatever. Because there are a million things that can go wrong with a deal before the money is wired. And you don't want to have egg on your face if something does fall apart. The challenge with that approach is that it doesn't give employees information that they might use to, for example, decide things like when to exercise their options. That has real tax implications or all kinds of implications for employees. So when we raised our series B, we raised our seed A and B. We used kind of the historical approach that I had been familiar with, which is like, hey, guess what? We just raised money.

• 31:57Speaker 02

  Our employees were not jazzed about that at our series B. They wish that we had been more transparent with them. And I believe that the sentiment Was we wish that we'd known that this was coming to that we could exercise before the 498 changed. And I was like, does anyone do this? And the answer came back like, yes. GitLab taught us how to do that differently. GitLab actually says to their employees, hey, we're thinking about fundraising right now, full stop. And they don't say like, here's the terms we're gonna.

• 32:23Harry Stebbings?

  But the data is so incomplete that it could be 2 billion, it could be 4 billion. And the numbers associated are so different that actually I almost feel unfair communicating with such imperfect data.

• 32:34Speaker 02

  That's a fair statement, but I think that our employees have been very consistent that they want more information rather than less. What we've done, we did it in our C and our D was that we, a month before anything came together, we said like, there's interest in the market, we're probably going to raise in some reasonably near term timeframe. We don't have any details, but we wanted to let you know that the wheels were happening. And we're not going to sign any term sheets for the next 30 days, so you got time. And that has been challenging to operationalize because sometimes fundraising markets move very quickly, whatever. But that's a commitment to our employees that we've felt pretty strongly about because of how strongly they voice their feedback and the Series B.

• 33:14Harry Stebbings?

  How do you think about your relationship to money? How do you think about secondaries, options and exercising them? How do you think about that as individual and personally?

• 33:21Speaker 02

  Yeah, we have started a secondary program. Our goal is, I knew it's impossible to know whether the market will continue to support this, but we did it this year in the middle of a very challenging market. So our goal is to provide opportunities for secondary on an annual basis. And we have general way that we think about how to allocate those employees of a certain tenure, always get to participate at a certain level. And we try to do it in a way that it's, all the rules are consistent between everybody at the company. So fairness in doing this stuff is unbelievably important. But I also think it is just so important for everybody that's put in like real work into this thing that we're all doing together, that they don't have to kind of wait on the edge of their seat with all of their money invested in this illiquid stock. They should be able to get some returns for that before an eventual exit.

• 34:05Harry Stebbings?

  So you have equal rights between like C-suite and tenured employees and founders? Cause that's something that I've seen more and more, this obviously clear dislike that there is this imperfect. Relationship between the rights of one and the rights of another.

• 34:17Speaker 02

  I've followed the news on that, just as I'm sure you have. As a founder, I try to imagine making some of the decisions that have been made at some of these companies. And I can't understand how some of those decisions have been made. You were asked personal relationship to money. Like I talked before about like my fairly modest upbringing. And I'm in a very fortunate position right now where I've exceeded all of my own personal aspirations from a cash perspective. And so it's just not a thing that makes me come to work in the morning anymore.

• 34:44Harry Stebbings?

  Final one before we do a quick fire. Do you agree with me in terms of being encouraging of founders to sell? I think the minute that you can own a house, you can pay the bills. You can have a family comfortably. And I think that unlock is just such a different level of ambition that it enables. Do you agree with me?

• 34:59Speaker 02

  I do. My wife and I both work very hard. The fact that I've had the opportunity to do a little bit of secondary. I also have two little kids. We have a two year old and a four year old. And it has meant for us that we can renovate our home to actually have bedrooms for our kids. It's meant that we can have childcare support that we need to actually like be able to do our jobs and focus on them. And it's a tremendous luxury just from a stress reduction perspective. There's things that are just less stressful than they used to be. And not that I know that's an incredibly.

• 35:29Harry Stebbings?

  For you, what's the biggest stress that is taken away by money?

• 35:32Speaker 02

  Throughout COVID, being a parent during COVID is is slash was tremendously challenging. Just making it through was hard. If you were trying to navigate that, but then also saying, ah, we can't hire a nanny. We can't send our kids to camp. We can't, whatever. We talk about solving certain classes of problems, a lot of them childcare problems, solving them with money. Because otherwise we would actually suffer meltdowns, I think, in my family at least.

• 35:56Harry Stebbings?

  I do want to dive into my favorite, which is a quick fire round.

• 35:58Speaker 02

  Yeah.

• 35:59Harry Stebbings?

  So I say a short statement, my friend, and you dive in. I heard there was a trip to Italy. Why was it so special and important to you?

• 36:05Speaker 02

  I have a grass is greener problem. I want to live every life. I want to experience everything. That is a little inconsistent with having a startup for a decade or more. It's also inconsistent with being a parent. And so this was a really exciting way for me to like truly live and work in a different location and absorb the local culture and just try to experience something brand new. I'm looking forward to. Doing a lot more of them.

• 36:26Harry Stebbings?

  Tell me, Frank Slootman, the trip to his house with the Sequoia CEOs. What did you learn and how was that experience?

• 36:32Speaker 02

  I think that a lot of content you could get if you just like read his book. But what was interesting is that Frank has become one of these kind of iconic figures. He's kind of larger than life and this was an opportunity for me to just kind of see him as just another person. He has a really nice house and he likes to be outdoors. It's a beautiful view from where he is, but at the end of the day, he's just like a guy. And I know that sounds weird, but sometimes when the moment that I'm in feels very unreal. It's nice to understand that like all of us that are trying to figure out these journeys are just people doing our best.

• 37:06Harry Stebbings?

  What's the hardest element of your role with DBT today?

• 37:09Speaker 02

  Hardest thing is public speaking. I hate public speaking and I have to do it more often than ever. I've gotten better at it, but I don't know that I'll ever enjoy it.

• 37:18Harry Stebbings?

  What's the secret to a successful marriage?

• 37:20Speaker 02

  Listening before you talk.

• 37:22Harry Stebbings?

  Negotiating well. If you could be CEO of any other company, what would it be and why?

• 37:26Speaker 02

  It would be a 10 person SaaS company that had never taken any funding, the freedom.

• 37:31Harry Stebbings?

  What do you know now that you wish you'd known at the start of DBT?

• 37:34Speaker 02

  I think I had a lot of post job baggage from prior companies that didn't work out the way that I and others had wanted them to work out. I think I was a little gun and didn't have enough confidence. I think that I should have operated with a little bit more confidence when I saw things starting to work.

• 37:48Harry Stebbings?

  What have you changed your mind on recently?

• 37:50Speaker 02

  I don't have a good answer to that. It's not that I never changed my mind, it's that I try not to be the person making decisions. I think a lot of people see the CEO as the person who makes a lot of decisions. And I have a doc that says like working with me and what, how do I see my job? And it says, I try to make as few decisions as possible. You could also ask me like, what are the five most recent decisions you've made? And I actually, I don't know the answer to that.

• 38:11Harry Stebbings?

  What do you do to make async work well for you? Specific tools, is it specific timings of the day? Is it blocking time of the day? How do you make async work for you well?

• 38:21Speaker 02

  We write a lot and we put both cultural and technical guardrails in place to actually nudge people to work in the way that we need them to. The problem with async and the time when it's really hard to adopt well is when it's adopted. Inconsistently because if people start putting a bunch of meetings on everybody's calendars and that's how everybody expects work to get done, then all of a sudden async work is impossible because you spend all your time in meetings and nobody gets to write and think and react.

• 38:46Harry Stebbings?

  Why do you think most people go wrong with async?

• 38:48Speaker 02

  I think it is really hard to say, please cancel that meeting and send us a doc. I think it's really hard to say like, I'm not going to join that meeting. It's almost like a human thing. If somebody knocks on your door and says like, here's this delightful pie, I made it just for you. You're just like, oh, thank you so much, even if you don't like the pie, right? In the same way, if somebody like says, oh, I'm inviting you to a meeting, here's the agenda. It's very challenging to say like, that's inconsistent with how we get work done at this company.

• 39:16Harry Stebbings?

  I actually think that we can cover a lot of this in email. If there's anything left over, then let's jump on a call. But I think we can take the majority by email. Do you see what I mean?

• 39:24Speaker 02

  Yeah, I'm stealing them.

• 39:25Harry Stebbings?

  Yeah, it works really well, especially for like repeatable processes, sales processes, anything like that. Final one for you, my friend. Five years' time, 2027. What does DBT look like then and where are we then?

• 39:36Speaker 02

  I know every founder in the world references Jeff Bezos' day one letter. Data is unbelievably early and a lot of the conversation in the ecosystem today is about how we've unlocked all these capabilities, but things still feel pretty chaotic for practitioners. And there's really a lot left to do. In five years, there will be more people participating in creating data, analyzing data. There will be more quality around the data that is produced and consumed, more consistency. It will feel less messy.

• 40:05Harry Stebbings?

  Tristan, listen, I've loved doing this. I'm sorry for pushing and prodding in ways that I quite enjoy doing, I have to say. But I love it. You're a fantastic guest and I really appreciate the time.

• 40:15Speaker 02

  Awesome. Thanks so much. It's been a lot of fun.

• 40:19Harry Stebbings?

  I want to say huge thank you to Tristan for being so accommodating there and putting up with my much more pushback stance that we had in that episode. It was such a great discussion though, and I really did love it. Such exciting times ahead for DBT. If you want to see more from us, of course you can on 20vc.com. But before we leave you today, holiday gifting for your friends and family can be hard. And for your business, it can be even harder. And Open helps companies of all sizes deliver better gifts and they Make it super easy. Their platform is filled with best-in-class brands. There are no bad gifts ever. They source locally and operate globally. You don't even need an address. Simply send an email or DM with a unique gift link. Ready to put the ease and joy back into your company's gifting?

• 41:01Harry Stebbings?

  Head over to andopen.co/20vc. That's andopen.co/20vc to get started today. And speaking of amazing tools, which really take complex processes and make them super easy. Angel List has been a key partner for me in managing my investments. I love using the Angel List platform because it abstracts away all the complexity and operational burden of fund management. Whether you're running SPVs, a traditional venture fund like me, or even a rolling fund, Angel List has you covered. The team is also just exceptional. They're great, great partners. I'm also super excited about their new product, though, Angel List Stack, which is purpose-built for founders. With Angel List Stack, you can create a fundraising-ready startup in just a few clicks.

• 41:43Harry Stebbings?

  Angel List handles all your company's incorporation, banking, cap table, and fundraising process, all in a single place. This allows founders to really focus on building. If you're a founder, you can launch your company at stack.angellist.com/20vc. Whether you're a founder or a funder, you're in great hands with Angel List. And finally, from websites and online stores to marketing tools and analytics, Squarespace is the all-in-one platform to build a beautiful online presence and run your business. There are three things for me that really stood out about Squarespace. First, mobile-optimized websites. All websites are optimized for mobile. Content automatically adjusts beautifully, so your site looks great on any device.

• 42:22Harry Stebbings?

  Second, email campaigns. Squarespace makes it super easy to grow and engage your audience with Squarespace email campaigns, so you don't need any other tools or providers. Such a relief on that one. And finally, SEO tools. You've got to be found on search engines, and Squarespace takes the guesswork out of SEO, so you'll get found by more people more often. And if that wasn't good enough, head over to squarespace.com/20vc. Not only do you get a free trial, but when you're ready to launch, use the offer code 20vc to save 10% off your first purchase of a website or a domain. As always, I so appreciate all your support, and I can't wait to bring you an incredible episode on Monday with the one and only Drew Houston at Dropbox.