MedTech Insights with Salvatore Viscomi MD & Ursheet Parikh

5 Essential Moments in Building a Company

Collision: Building the Zone of Trust

Transcript

Alex:
Hello everybody. My name is Alex. I’m very, very glad to be here today because we are not doing what I usually do, which is sit down with a couple of people from the worlds of startups and talk about numbers and money and all of that. Instead, today we’re going to talk about relationships and in particular, the relationship between board members and founders and how they evolve over time. But thankfully you won’t just be hearing from me. We do have two excellent people with us today, Tracy, Navin thanks for being here. How are you doing?

Navin:
Very well. It’s a pleasure to be here.

Alex:
No, I’m really looking forward to this. I think that this is not a topic we talk about enough out loud. I know that founders talking amongst each other, so do venture capitalists, but I think that the actual relationship building between long-term partners is actually under discussed. Maybe the only thing in the world of startups it’s actually under discussed this year, but I want to go back in time to start to set a little context for everyone who is maybe less aware of the Poshmark story, then the three of us are. So Tracy starting with you. Can you tell everyone how you ended up moving to California and then joining the Poshmark founding team?

Tracy:
Yes. I grew up in a New York area. I was very interested in fashion and that was my world. And I came out to the Bay Area to really partner with a really strong technology and business team. And so came to San Francisco and networked around. And this is where the origin story and Navin comes in, really early as I did not know that the Bay Area did not have a whole bunch of fashion folks. There are none. And so as I met, I ended up meeting my co-founder and we still work together today, Manish, and it was via Navin and his firm that really put those two pieces together.

Alex:
Yeah. And that’s why this is so interesting to me because often founding teams meet their investors. But in this case, Navin your crew had an active role in that. So tell us just a little bit about how that all kind of came together.

Navin:
Absolutely. So Manish and I go back to 2003, 2004, and as he was leaving his last company, he and I started spending time together and looking at what to do next. And one of the areas he was very excited about is building a social fashion marketplace, which would be built on the iPhone, on the mobile thing. But one of the things he recognized is, he’s one co-founder short, where he needs a woman who relates to women fashion, which would be the focus of the company. And that’s where we met Tracy through the network in 2010, introduced them. They spent probably five, six months together, and then they came and pitched us in January of 2011. And that’s what led to the series in financing of the first money of Poshmark, the series in financing in January of 2011.

Alex:
So this is where I want to pick up on a more specific question. I’m curious. What about their pitch was attractive to you? I know that you knew the people, but was it the thesis, the economics, what really drew you in to cut that first Series A check?

Navin:
Yeah. So Mayfield is a people first firm. We believe in people first, market second. We believe people make products, products don’t make people. So it’s all about the people. Then we looked at the problem they’re solving and it was really a pain killer, where you help buyers and sellers of fashion to come together through mobile. The third thing we look at is, they were shifting from search based e-commerce to discovery-based e-commerce based on social and the market for fashion is a trillion dollars. So if you scratch the surface and get to 1% of the market, you’re $10 billion in GMV. So that’s what led to us getting excited about funding the Series A at Poshmark, but it started with people and ended with people.

Alex:
So Tracy, now I want to know a little bit about the early relationship building between you and Navin. I know a lot of startups have monthly board meetings when they’re very, very young, some do quarterly, some are a little bit less frequent. How did you guys go about in those early days, getting the level of trust you’d want to have with your earliest investors?

Tracy:
Sure. I’m going to answer that but first. I just want to take a small detour and add to what Navin just said. We can look back 10 years with rose colored glasses. And the truth of the matter is the world was very different when we were pitching Poshmark at that Series A to Navin and his firm. And I want to give Navin a lot of credit because it wasn’t just the market and what we’re going after and all the things that make business sense. What we were pitching was quite, quite innovative. And I think that if you just looked at the idea itself, it might’ve been really hard to wrap your head around committing and investing to what Poshmark is today. And I do think the people first nature of Navin and Mayfield really helped us come together because he could see the passion and the partnership and the team and really behind not just the great idea, but how we really felt like we were positioned to solve it. So I just wanted to put that in there. And now remind me your question again, please.

Alex:
Essentially building the early relationship. Once you were an operating company board meetings, how were you guys trying to get close essentially in relationship sense? Because things are hardest when your company is the youngest.

Tracy:
Yeah. I think one thing a lot of founders miss with their investors and board members is that they are part of your team too. And that, especially in the early days when you don’t have a lot of people to lean on, and a lot of people who deeply understand what you’re trying to build, your investors and your board members are there with you. If you take them with you on your journey and it’s up to you to form that relationship. So in the early days of Poshmark, Navin was another team member, he was someone that we bounced ideas off of. He gave us support when we needed it, intellectual, financial, emotional, all of the type of support that founders need in the early days. So I wouldn’t say it was just about board meetings. Those are kind of the official ways to connect. For us, team is everything and culture is everything. And that’s how we approached our early relationship with Navin and Mayfield.

Navin:
If I could add, right. I have a firm belief when founders are working with founding investors, is the role of the investors to invest in relationships, not transactions. You need to spend a lot of time with the founders in aligning your mental models and assuring them you will be their safety net and you will be loyal to a fault, but at the same time, you’ll practice radical candor. There you’re going to care deeply but challenge directly, and that healthy balance where they know they’re looking out for you. And it’s not only the board meetings where you spend time with them. It’s all the offline time you spend with them, ends up building a healthy relationship and ends up building the foundation off a built to last company.

Alex:
Yeah. But it feels like you guys had a lot of time, and one thing I think we’ve seen in the more recent venture capital world and startup world in the last 12, 24 months has been an acceleration of everything. Even just due diligence has gone from months to weeks to days to now I’ve heard from some investors, hours. So it seems to me, there’s this demand by the market to get to trust so much sooner. Navin, can you get to a comfortable level of trust with a founder pre-investment these days given how fast things are going? Or is that not as important to you?

Navin:
No, it’s extremely critical and there’ll be a lot of investments we won’t be able to do because we don’t know the founders or we are not able to spend quality time with them. Our belief is getting aligned on the mission, the values, and the culture is critical. And if somebody is only interested in our money, it’s not a good fit for us. So we are a firm, which is people first, we believe in investing in relationships and not transactions. And we have to invest time before we invest money. So we’re not in any rush, right. Business building and venture is a marathon, it’s not a sprint.

Alex:
Tracy. I want to ask you about this from the other direction, because Poshmark went through a number of rounds before it went public. And so you had to add, I presume a good handful of people to the board as you went along, did you put the same amount of time into kind of getting to trust with each board member as you did with Navin in the early days?

Tracy:
Well, there’s never, time is a finite resource. So I would say Navin got a head start with many years with us, but I would say that the approach is the same. We think that culture is one of the strongest pillars of the Poshmark brand, whether it’s external to the company or internal to the company. And as I said before, we really think that our board and our investors are part of the team that can help us get to this crazy lofty vision that we have. And so as we added more members to the team, it’s part of building culture. So if you say that the founders and Navin were at the beginning, right. But we had a dream that was much bigger than just us. And so, as you add people, it’s like, well, what can this person add? And what can that person add? And how as a collective team, do we get stronger and stronger as we go? And so that was the approach. In addition to fundraising that we took, as we built out the board.

Alex:
I want to double-click on that really quick, because I’m just thinking about how many startup CEOs telling me that they were juggling multiple term sheets when they’re raising their next round. So it seems like if you’re a founder, money isn’t the problem instead of kind of probably finding cultural fit slash trust within an investor is probably more important than ever given that there’s so many different fundraising options, Tracy.

Tracy:
Well, listen, if you’re lucky enough to have options, then I would opt for culture. Cash is king, and you have to keep your company alive, right?

Alex:
Yeah.

Tracy:
And if you’re building a solid business and you’re building it methodically, then you should hopefully have some options. So I would try to go for all of it, but you do have to make trade offs.

Alex:
Okay. Navin I want to move this back to you for a second, because I’ve heard about somethings that investors are doing during the pandemic because it’s shaken up the ability to get coffee and so forth with people. And I’ve heard about venture capitalists, playing video games with founders to establish a deeper relationship. Virtual HQ’s are a big thing. So are those the outliers that I’m hearing about when it comes to kind of founders and board members getting closer or are those things relatively common when it comes to really trying to get to trust for early stage company?

Navin:
I think it’s a hybrid. Some people and some venture firms are getting complete comfort doing this virtually. And then there are firms like us, which are using a virtual model where you start building a relationship and start having conversation with founders, or then you figure out how you can over them on a socially distant hike, how you can get them to your home. How can you get to the bottom of who they are, what their dreams are, what their passion is and figure out, you’re a services firm at the end of the day, how are you going to help them achieve their dreams and mission? So I think it’s a hybrid model, but every firm is different, right. One has to be comfortable with what their business model is. You need to believe in your model, your north star and follow that. And to me, since business building is a marathon. It’s not a sprint, spending that time upfront is so critical, so critical. And I tell the founders, don’t just get gamed by what the VC’s saying, go check them references on them, whether virtually or, and you can go on LinkedIn, you can go on PitchBook and see who they are. Really understand because entrepreneurs are going to have choices, really understand who’s going to be with you when things don’t go well.

Alex:
Right. Or who’s going to take credit for it all if things do go well, which is another particular issue we don’t have time for today. Tracy, I want to go back to you and talk about board diversity. One thing that I keep hearing a lot about is bringing on increasingly diverse voices to cap tables. And I’m curious amongst your founder friends, how much does that come into play when it comes to selecting net new board members for companies as they scale?

Tracy:
Well, it’s what you intention. So for us, that’s very important, particularly because what we have built and what we continue to build is something new and it hasn’t been done before. And so we do really benefit from various voices and perspectives. And so bringing on board, Jenny Ming, who is a retail veteran to help us think through scaling Poshmark, beyond where we are today, bring onboard Serena Williams, who is a powerhouse entrepreneur, fashion label producer. And also just how to build brands and to connect with audiences is a perspective we had, but she brings so much more there. And so since we’ve added some different voices to the table, the conversations have come to life and have changed. And so I’ve seen firsthand, not just in building diverse teams, but also like I said, your board is part of your team. So having that perspective has been very helpful for us in the later years.

Alex:
Yeah. So Navin, I want to take this back to you for a second, because you were talking earlier about going on distance hikes with people, having them over your house, kind of presuming a lot of locational proximity, that you’re going to be nearby. A lot of VCs also talk about pattern matching and trying to figure out kind of what might work based on past results. And I wonder if those things don’t in a sense accidentally discriminate against more diverse founders who may not be in the Bay Area, for example, or who may not have the exact same kind of like pattern matched background. So how do you go about building trust with founders who may not fit the kind of usual rubric that you see or that you’re kind of most comfortable with to kind of get out there and invest in more diverse people?

Navin:
Yeah. And I think in today’s world, right. Like there is easy ways to check founders. You’re only one or two degrees of separation away from them based on common connections. But then we have a strong conviction of embracing the unconventional, the different and the unusual. And we believe it’s often the founders who don’t come out of central casting that have the grit necessary to succeed against seemingly insurmountable odds. And at the same time, we have another belief that great people evolve. Almost no one comes into the job, but all the skills and experience they need, this is where our role as a coach, as a VC can help them grow as long as they are continuous learners. So the amount of time you spend, it may not be physical, you can reference check them, but have candid conversations and say, what drives you? What are you looking for? What does success look like for you? Have you made tough decisions? How do you value teamwork? So I think it’s more of a psychology test and it may feel we have an x-ray on founders where we look at who they are rather than looking at their metrics and really studying them and making sure these are the people we want to invest our time and money in and help them grow and achieve their dreams.

Alex:
Navin I want to stick with you for one more. We’re a little bit short on time. So I’m going to squeeze in a couple of quick ones here. I was actually playing video games with a Midwest based seed stage VC last night. And we were talking about when to leave boards and I wanted to bring this to you because he said that he doesn’t really stay on boards past Series A, that’s not really his domain of expertise and so forth. So how do you as a founder or maybe as a different board member, remove board members over time as maybe the company evolves past their expertise without breaking the trust that you had as a group and they were active on the board itself?

Navin:
Yeah. So I think let’s look at the Poshmark situation, right. I have such a close relationship with the founders. I’m going till the end. IPO is just a financing event. I’m there for as long as they need me, today we are the largest shareholder, a year from now we may not be. Where the services from our job is to help them, but there’ll be other where more independent board members can fulfill the need. Then we can post the ideal. Then you transition, but we are loyal to a fault. We are committed for the long run, but it’s all dependent on the founders because if they need something that may feel that I can’t offer you step back. But if he can offer that you continue on the journey. So it’s a collaborative decision rather than just saying I did the Series A, I need to stay on it.

Alex:
Got it. Tracy does that square with your experience as a founder? Does that make sense?

Tracy:
It does and all your questions tied together. It’s, if you can build your board to want to have you win as the number one goal, then all of this just comes, right. And everything else, it might be ups and downs, but these decisions are easy when you have the same goals in mind, when you get into a lot of trouble. And a lot of the horror stories that I hear is when those goals are not aligned and that was never a mindset to begin with. It was more about, I need cash, let me have a cash infusion. They looked at their board members as transactional people and not as a person, what does this person want to see from me, et cetera.

Alex:
Yeah. So we have time just for one more, Tracy, I’m going to leave us with you. So thinking about more red flags, just for all the founders out there who are listening in right now to us, what would you say are a couple of things to watch out for that are potential negatives and maybe even some positives amongst board members, as they go out there to raise more capital and pick their board member team.

Tracy:
So I think there’s a simple thing that a lot of people don’t do as you are raising money, as you are looking to add to your board, do you want to spend a Saturday afternoon with this person? Do you like them? Can you trust them? We have really good instincts. We can decide that you’re talking about short investing or due diligence timeframes. We know within five, 10 minutes, whether we think we can trust someone. And so we have this skill, use that skill and apply it during this circumstance. And I think it’ll serve you quite well.

Alex:
Okay. Well, Navin, Tracy, sorry. We have to wrap it up there and throw it back to Toronto. I had a bunch more, but sadly that’s all the time we have. Thank you much.

Navin:
It’s a pleasure being here.

Tracy:
Thank you.

Navin Shares Lessons Learned from his Journey at TiEcon

Scientist Entrepreneurs – Scaling Breakout Engineering Biology Companies

Biology as technology will re-invent trillion dollar industries and enhance human and planetary evolution. In this session at TechCrunch Early Stage 2021, two early-stage investors and company builders, Arvind Gupta and Ursheet Parikh, connect with leading author and seed investor, Po Bronson, Managing Director of IndieBio. They share their playbook on scaling start-ups touching upon three seminal areas which influence trajectory — fundraising, hiring, and product design. Their insights draw on their experience with companies including ingredients-as-service leader Geltor, which raised a $91 million Series B in 2020, CRISPR platform Mammoth Biosciences whose dream team includes co-founder Nobel Laureate Jennifer Doudna, and Endpoint Health, started by the founding team of GeneWEAVE (acquired by Roche) and former YC Bio Partner Diego Rey, which is designing a new class of therapeutic products that focus on hospital conditions that kill as many people as cancer.

Transcript

Po Bronson:
Hi, welcome. I’m Po Bronson. I’m the managing director of IndieBio, and a general partner at SOSV. And in this hour, I’ve got two wonderful VCs from Mayfield, Ursheet Parikh and Arvind Gupta, who lead their engineering biology practice. And today, we’re going to talk about something dear to everyone’s heart, building companies to make an impact on human and planetary health, which this year has really reached a crisis stage. Hi, Arvind. Hi, Ursheet.

First question to you Ursheet, and then to Arvind, just introduce yourself to our audience, but I want you to finish with a quick lightning round. Drop in no more than five companies you’ve done that exhibit your work in this space.

Ursheet Parikh:
Sure. Well, good to see everyone. I am a former entrepreneur. Actually, a Mayfield entrepreneur who joined Mayfield in 2013. I invest in enterprise technology, and then with Arvind, co-lead our engineering biology practice. It’s great to be in this particular practice because whether we are investors in a company or not, we really want everybody we meet, every company in the domain to be successful because it makes all of our lives better.

And to your lightening round question, Mammoth Biosciences, Endpoint Health, Nesos, Mission Bio, and Qventus are some of the publicly known companies where I’ve had the opportunity to champion founders and leaders.

Po Bronson:
Thanks, Ursheet. Arvind, follow up as well to you.

Arvind Gupta:
Gosh. So my background is genetic engineering. I’m also a designer. And blending those two background together, had the idea to start IndieBio, which I founded in 2015. And the whole premise is that scientists can become entrepreneurs and build product driven companies that can change the world. And that could extend beyond just therapeutics, into worlds that people hadn’t previously imagined from food to fashion and beyond.

Recently, as Ursheet and you’ve mentioned, I joined Mayfield. I’m very proud of that. I’m very proud to work alongside Ursheet and Navin and others to extend that mission and to drive more capital and more resources into that purpose.

Po Bronson:
Okay. Lightning round, remember five companies.

Arvind Gupta:
Five companies. There are so many. I’ve invested in over 150 companies. Five off the top of my head. Let’s see. Memphis Meats is really well known. Michael works, Geltor, Prelis, and NotCo.

Po Bronson:
Awesome. So it’s fascinating, because to both of you, when you describe these companies, we all know you are both taking a lot of risk. You’re going into areas the world thinks it was risky. Ursheet, sepsis, the brain, CRISPR. Arvind, barely know where to start with you, but human immune system, outside the body, leather without the cow, first VC into cultured meat. Tell me a little bit about your feelings about risk, how much you like it, how you manage it.

Ursheet Parikh:
Go ahead, Arvind.

Arvind Gupta:
So my whole life has been about managing risks. And not many people know this, but I was a base jumper and I don’t base jump anymore, but a rock climber. I’ve climbed El Cap. And it’s really not about getting away with it, but it’s about figuring out how to do it safely. And that’s carried over into my venture career and in doing improbable things. I oftentimes see founders that say or show what they’re doing and you’ll be like, “Well, why tackle that problem when the much bigger problem is right next to it and you can easily do with your technology and your mind?”

And they say, “Well, most VCs tell us that’s more risky.” Well, what’s riskier, going after the smaller idea that isn’t going to go very far, even if you’re successful, or changing the world with what you can make and what you could produce with your own mind and creativity? I fully go for the latter. I think that is where the right risk is. And it allows everyone to align. It’s not about trying to make some money. It’s actually providing value to people that could change our lives. And in doing so, using capitalism to fight the old capitalism that has led us down to the path we are, which is ruinous destruction and climate change, which is upon us.

Po Bronson:
Ursheet, what do you think of that, and how do you think about risk? Same way?

Ursheet Parikh:
Actually, I think it’s a little bit of a mirror image, but very consistent. We personally look at a lot of these problems. And when I look at the problems we have with regards to global health or the health of our planet, they are the biggest entrepreneurial opportunities of all time. There’s no fixed formula around on it, but two things really stand out for us in the way we look at it. The first is it does start with people, and it doesn’t matter how awesome the starting technology is. People are the ones who build the companies. So really understanding them, their mission, how they operate, how they learn.

Two of the most important attributes in entrepreneurs that probably are not spoken about enough is intellectual honesty along with continuous learning and the ability to learn. Because entrepreneurs just go on to do amazing things. To do that, they end up having to learn a lot in a very, very fast time period. The second thing is it often requires some really good first-principles thinking. It does require understanding why the world is broken the way it is. You cannot necessarily ignore it. You want to make new mistakes, not the same ones that people have made before, but it does require first-principles thinking.

And so when we were partnering with Jason, Diego, and Leo Teixeira worked for Endpoint Health, they had been on a mission to save lives for the top killer in hospitals, which is sepsis. And it really started with understanding why that was happening. And besides the core understanding of the disease, the business model of that category of therapeutics was broken and so it required a new way to look at it. When we saw CRISPR, it felt like a core bioengineering technology. And rather than our company trying to keep a monopoly on that technology, it became much more about enabling an ecosystem to build many new applications with such a platform. You get a similar bioengineering platform.

When we were looking at Nesos, it was the realization that therapies for the brain diseases are so far behind say other areas. And it’s maybe because we might be looking at the brain all wrong. Think about it. The brain is reshaped every time you sleep, train, hear, talk. And at the same time, it’s designed to be different from animals, so the classic drug development may not work. And it’s also designed to not take a lot of new drugs. And so maybe there is a new version of therapy that is actually understanding the communication language of a nervous system, which is electrical signals, and using that to unleash the power of the brain to control the immune system.

And so as crazy as it sounds, these were some of these first-principles starting points with amazing people and partners. And then as Arvind said, fundamentally, it’s about managing risk. So where do you take something from science, which is not what the entrepreneurial ecosystem is set up well to find. It’s not science, but it’s like taking that science into a product that actually really can then become the basis for a business. And then building a platform company. Those are the things that we love to partner with people on. But yeah-

Po Bronson:
So I want both of you to apply to this, but stick with science just for a sec, because we are going to get to scaling business. But Ursheet, you said something fascinating to me last week. A lot of VCs, we talk about programmable biology, but you took it to another level. You were like, it’s programmable, but it’s programmable and far more than genetic code. It’s programmable with any form of energy. And I think you were just speaking to that. I thought it was brilliant. What are some other examples of how we can program biology, not just with the genetic code itself?

Ursheet Parikh:
Correct. So I think if we look at biology, biology as it exists on the planet is responding to many, many different forms of energy. I was just talking about how electrical signals end up being that you can have the same thing happening with light. You can have the same thing with materials. And then if we go back and look at traditional cultures, they’ve had different attributes of how just wellness and other things play out.

I think the key is if you have to take ideas or concepts which are not mainstream accepted and make them real, the onus does end up becoming on the company to actually create the evidence and create business models that can sustain the companies through leading that change and really creating a movement and then getting everybody to board and join that movement, but … Sorry. Go ahead. I really wanted-

Po Bronson:
Well, no, that’s good. But Arvind, I’m going to push you now. Let’s talk about scaling a bit. It starts with the fact that a platform isn’t a product. Everyone wants a platform, but it’s not a product. And you said to me the other day, there are no biotech companies. There are only consumer companies and enterprise companies, which that was a hot tick, and I want you to unpack it for people.

Arvind Gupta:
It’s less of a hot tick and more obvious. So when you really think of … Biotech is simply a foundational technology. It doesn’t imply any value creation. Consumer companies focus on products that end people use and buy, whether it’s in stores or wherever. That requires a full value stack. That requires communication of what the product is. It requires all of the things that are necessary for a solution to a problem that a person has, getting into their lives.

And likewise, I can ask you, is … The same thing for an enterprise company that’s doing ingredients into … Is it a biotech company? No, that’s just their technology. That type of company just has a different sales channel. It has a different end customer. That end customer is a business with different margin structures. So how you design the business from the very beginning is completely different.

And if you don’t design the business from the very beginning to match the product and the end customer, you’re hosed, because you’re going to run out of runway, you’re going to have to pivot around. It’s going to cause all sorts of heartache and real issues. I learned this from Ursheet, and I learned this from Mayfield really. As I was going through all the IndieBio companies, as they were scaling, it was a real opening eyeopening experience for me. As they started to hit the market realizing, oh, actually, distribution channels, putting chemicals on trains and the volume it takes directly affects your margins. Because how many train cars do you need to lease?

So it gets mind blowing. And so if you don’t think about all of these specific things in a margin structure that makes sense for your business, you don’t have a business anymore, and therefore you don’t have the change you can create. We’re using capitalism. One of the reasons I joined Mayfield is Navin coined this phrase, conscious capitalism. And you and I, Po, wrote about it in our book as fighting capitalism with capitalism.

Po Bronson:
With better capitalism.

Arvind Gupta:
With better capitalism. And that’s it. And so it’s about building these businesses in the right way. And going back to the programming biology with anything, Ursheet talked about making movements right at the end. And I want to make sure we put a pin in that, because if you abstract it all the way out, to create movements, you’re actually reprogramming biology with culture. So you could extend all the way, and-

Po Bronson:
I like that. You’re reprogramming biology with culture by collective mass movement that’s inspired by the companies and the founders voting with their dollars-

Arvind Gupta:
That’s exactly-

Po Bronson:
… and their culture is literally reprogramming the sustainability of the planet. That’s fascinating.

Arvind Gupta:
That’s what we’re doing. And whether we recognize it or not, everyone in our industry, that’s what we’re doing. And when you see news articles and industry reports about making weather without the cow or whatever product you’re reading about, that’s what’s happening. It’s a reprogramming of society. And-

Po Bronson:
I’m going to interrupt you. Because I’m the host, so I get to do that to keep us on track. Because I want to establish how much this contrast is there or not. Obviously, where engineering biology has taken biology is into lots and lots of markets, but you’re still firmly rooted in human health. And so let me ask you how different the engineering biology practice at Mayfield is than traditional biotech. So one might say you’re reinventing the economics, reinventing the nature of the risk, or one might say, “Hey, it’s biology. There’s always huge upside and fundamental risk there.” So in your minds, do you feel like you’re doing biotech, or life sciences, or do you feel like you’re doing something different? How unique is it?

Ursheet Parikh:
So I think we have the benefit of being at a firm which has been in business for over 50 years, has had a chance to create profound companies in biotech itself, the Amgen and the Genentechs, and the Intuitive Surgicals of the world. But in the current incarnation, the genesis of what we are, we really started with the mission of transforming human and planetary health. And that has been a big thing. So in the clean tech era, one of the best companies at the clean tech era, before Tesla or SolarCity, and that was an example of a company that had happened.

But if we are thinking about it, we think about just as you can program biology with many things, ranging from drugs, to electricity, to light, or any of that. To transform human and planetary health, there have been other technologies that have existed. There’s been Silicon, there’s been software, there’s consumer companies that we have like Grove. There’s companies like [inaudible 00:15:27], which are of cycling. There’s companies like Tonal, which are really about transforming consumer health and that sort of things as well.

And so one thing I ended up learning from Arvind five years ago is to really start thinking about biology as a technology that can be used to solve this full set of problems. And then as we start looking at this as a additional technology to solve these problems, fundamentally how we think about company building differs from traditional biotech as follows. In traditional biotech … And it wasn’t like that. So if you look at the startup biotech, when Amgen and Genentech were funded, they were not funded to create an asset and then sell the company.

So traditionally, biotech was also like tech to go build companies. Then in the ’90s, as the tech and the bio innovation space changed, a lot of bio-investing and the entrepreneurial and venture ecosystem really became about taking a project off and coming out of academia. Funding some additional clinical research on it, taking the data and then selling the asset. Now, one thing that we’re really passionate about at Mayfield is if we are going to have the solutions for human and planetary health, they’re not going to come from a lot of the large companies who’s watched these problems have emerged in the first place.

So we’re going to have to have a set of entrepreneurs that build the next generation of lasting companies. So now, if we have to do that with engineering biology, it can’t happen in a traditional biotech model, because as soon as you flip your asset, your mission’s lost. It’s become a cog in the wheel of a different entity. And they just are not going to be able to really make the automation their own. And so then this starts with the very foundation of the company.

How do you get the stakeholders aligned for the long haul? How do you design your business? How do you set up that culture? How do you think of your technology as not a project, but a product? How do you get it to market? How do you then show commercial scalability? How do you raise the capital, run the industry conversation out on that? And how do you build a commercial org to get success with your first product? Then you take that footprint and get a lot more product in the pipeline and partnerships with the ecosystem to really create a platform and a company.

And none of the success is accidental. So it’s great to be in this time where despite COVID in the last 24 months, we’ve seen several of these platform companies make it in both planetary health, as well as human health and collective consciousness. And it is to try and see how we can go ahead and engineer company building. And-

Po Bronson:
We’ll come back to COVID in just a second, but let me stick with what you’re describing about alignment. And let me ask this question in the form of just two words. Lightning round question. I’m going to say two words, and then Arvind, you can start. I just want you to react. Alrighty? Two words. Mission driven.

Arvind Gupta:
Founders.

Po Bronson:
No. You don’t get one word. You got to react. This isn’t a therapy, man. Expound. Mission driven. How do you think about mission driven? Every wants to be mission … How do you think about it?

Arvind Gupta:
So mission driven. First of all, the first thing that comes to you is founders, because it’s the founders’ mission in the end. It can’t be mine. And so I think often times, venture capitalists will project what they want onto others, “Arvind, you can do that.” So first of all, I’m excited to meet founders that are mission driven, that have the ability to start movements, to program culture, and reprogram society through their actions.

I’ve seen it many, many times in companies I’ve founded. And so there’s a obsession with those types of founders about the end consumer or customer that they’re reaching. They have to feel like that is their goal. Not the gizmo necessarily that’s going to get them there. The gizmo could change, but the end customer or consumer, and giving them a better life that results in a better society or better future, those two things, that Venn diagram that’s in between, that is the sweet spot when I think of mission driven.

Po Bronson:
Ursheet, how do you think about mission driven?

Ursheet Parikh:
I think it’s mission ahead of everything else. It also means that it literally translates to entrepreneurship because there are a few things out there, few constructs that can allow for the change that is needed to realize the mission the way entrepreneurship can. No amount of publishing papers, no amount of nonprofit boards and conversations will go out and do that. And then that moves to this built to last. Because realizing that mission just cannot happen in a short time, and so it does require great tactical execution, but amazing strategic thinking and just always doing the right thing.

Po Bronson:
Let’s use an example. So I want to give you one. It’s quite an interesting story, so with Mammoth Biosciences. You all became the first CRISPR product to market, which is amazing. And with COVID testing, an incredible pipeline of partners there for Mammoth. But not that long ago, when you started with Trevor it was going to do STD testing and it was going to be 2024 before it reached the market. So how did you get from that plan to what you incredibly have done today? That’s scaling in a way that we often don’t hear in this industry.

Ursheet Parikh:
So when we met with Trevor for the first time, his mission was where he saw that CRISPR was a technology to program life in one way. To read and write and edit the code of life. And his mission was that the long-term company would be something that powers the whole ecosystem, like Intel Inside. In fact, they literally had a version of that Intel Inside logo that they had in that first step. And then as they were given feedback by the entrepreneurial ecosystem, it was something that had to be put away, maybe in the appendix and not early on. And so they took that feedback and figured what would be the first insertion product and came up with what would be an STD test that would be in the consumer self pay model that could come to market faster?

So that is how they were … The opportunity we had was to really understand what they wanted. We participated in their seed round and then spent a good amount of time trying to peel the onion on the core vision. And then it became pretty clear that what we needed was a CRISPR platform company. And to that effect, while the company had licensed something out of UC Berkeley, they needed a core innovation engine, and they needed a lot of the heft on the IP side.

And so we got into a conversation with Jennifer Doudna and shared our vision. She had a certain direction and vision back then. And there was another company that was coming out of her lab. Two of the best graduate students she had out in her career. And you could see that these founders were quite aligned in their mission and direction. They wanted to get it to market. While CRISPR was coming with therapeutics everywhere, they wanted to see the impact in patients. They felt diagnostics was going to be a fast way of doing it.

But the core thing, the conventional wisdom was to a diagnostics company or a therapeutics company. And it wasn’t recognizing that this technology was starting with a CRISPR innovation engine that would find new CRISPR systems, develop new CRISPR systems for different applications. And then diagnostics and therapeutics were just two applications. There are other applications in ag and then bio-defense and a range of other places. And so we were able to go ahead and align on that mission, and then design the company and the business and all the stakeholders on that journey, form very deep trust relationships.

One thing that people … It’s like when you have very deep trust between the early stakeholders, founders, investors and other advisors and mentors, it really allows for an exponential speed up. It’s one of those slow down to speed up things. And so the whole process to figure this thing out, this business design, we weren’t doing a lot of science at that time, but it took us three to six months to figure it all out. But when that happened, you can see three years since, the company has accelerated so much. And about a year ago when COVID was happening, they were so well poised to actually go ahead and bring the first CRISPR based products to market with the COVID test.

And the recently launched COVID CRISPR test from them increase the actual capacity of our country to do COVID testing by an order of magnitude with the existing labs. So I think it’s a privilege to have been in those conversations and to have enabled in our way the pharma’s vision. And there’s a lot that goes into this. And as I said, it takes a village to-

Po Bronson:
Well, let me give Arvind a chance here to add some of this. Because Ursheet, you talk about essentially being on a team with the founder. Arvind and Ursheet, you guys are on a team. And Navin and Tim is on your team in this space. Arvind, you’ve known the guys at Mayfield for at least six years, but nine months of working together. Ursheet earlier mentioned stuff he learned from you and what you’re doing at IndieBio. Tell us a little bit about you’ve been learning from them at Mayfield since you’ve been there.

Arvind Gupta:
Man, it’s been a massive learning curve, as you could imagine. That was the goal of working with Mayfield, and that goal is being accomplished. I think one of the biggest things is really understanding how to topple incumbents. Truly thinking all the way through. Not just getting these companies started, but all the way when it gets me into the nitty gritty, how do you keep … You’re getting the success, the incumbents want you out of there. How do you keep going and not become part of the problem and get shuttered? How do you go around that and make it all the way to IPO and then continue in the public markets and continue to create value dependably?

That’s the timeframes we’re talking about. That’s the timeframes that Ursheet, Tim, and Navin have built value in companies, literally. That’s something that’s rare and something that I’m excited about continuing to learn. And it’s different for different companies, it’s different for different founders, different industries. And so it really requires this long-term thinking and this ability to build, not just in, “Okay, we got to get a series A company funded,” or, “It’s series B, we got to get it funded.”

A, funding is not success. It just allows you to play a little bit longer and achieve your goals. And so if you don’t have clear goals and ways to achieve that long-term thinking, you’re getting sloshed around by turbulent seas and you end up drowning usually. But with that long range purpose North Star, you could chart your own course and make it all the way through. That to me is really exciting. And that’s what I’ve been learning in spades and I could write a book about it.

Ursheet Parikh:
Decoding the World is a nice book. That was a fun book.

Po Bronson:
Thank you, Ursheet. Really appreciate it. So you’re describing the challenge of knocking off incumbents. Do you have a framework? You guys just get to know you’re coming one at a time? Do you have a playbook here? Boy, who wouldn’t love to know how to knock off incumbents?

Arvind Gupta:
It is a playbook. I’m not sure. Some of it can’t be shared here obviously, because these are the learnings of the past 20 years. Navin was one of the very, very few venture capitalists that made money in the clean tech 1.0 wipe out. And there’s some very distilled learnings and a playbook that’s come out of that. And that’s directly being used right now in some of the companies we’re using. And so it’s good.

Po Bronson:
I don’t want to push too much. Let’s go with as you mentioned, because you just mentioned clean tech and making money in clean tech. One of the only people. A few. You’ve been doing human and planetary health for quite a long time. A lot of people are just jumping on to it today. Recently. We say, how many carbon funds have we seen in the last year? You guys have been doing this a long time. So I’m curious what’s your newest evolution of your thinking here around doing companies to make an impact on planetary health?

Arvind Gupta:
Specifically on the planetary health side? I think really making sure the latest evolution first to market, understanding that there are more markets than just food. I think that people are just starting to wake up to that. Michael Works is a great example of the first breakout. There’s going to be many, many more. Think of it this way. If a lot of this behavioral change, social reprogramming that we’re talking about is occurring because of climate change, what you eat immediately goes in your stomach. What you wear doesn’t. That is a billboard for what you stand for all day long. So I’m going to leave it at that, and you can imagine where these things go.

Ursheet Parikh:
I’ll definitely say the one thing, and we’re beginning to see more and more examples of that. I have a teenage daughter and she often … And it’s amazing how much she really worries about what’s happening out with the world. And really what is more worrying is that majority of the world doesn’t care. But guess what, there is a subset that does. And so if you can enable them to vote with their dollars on your innovation, then they become the people who program the culture and make that change happen.

And so the business design, often a lot of companies are made by scientists and entrepreneurs, and the right engineers. And so there’s a strong desire to just go and build a set of things. But I think if you could get the business design right, so those constraints bring focus and that helps actually make the problem narrower. Sometimes it can expand. You have to do a set of things more, but then you think about what all can you leverage. But the point being those constraints bring so much focus that it actually creates for a lot less trashing data and a more successful company.

So I think in the newer incarnation, we definitely encourage entrepreneurs to think about how, just because we are doing the right thing, people will buy it or will follow versus who really cares about this and how do we enable them to vote with their dollars. And people, organizations, whoever that may be.

Arvind Gupta:
That’s right. That’s a real focus for us. I could say for all the founders out there, they’re building product-driven companies that have an angle into impacting climate change or planetary health. That’s what we do.

Po Bronson:
Ursheet, you mentioned this earlier, that time of the pandemic altered things, is often called the great accelerator. Certainly pushing people online and watching more Netflix and the like. How has it impacted the human and planetary health sectors?

Ursheet Parikh:
I like to call them the silver linings from the COVID era. I think the first is we’ve had the e-commerce moment in healthcare. It had been building up for a while, and the technology was all largely available in there, but it just required COVID to get people to break out of the habit of always asking to see patients in person. It never made sense from a first-principles perspective to take an infectious disease patient and get them in to the clinic rather than seeing them on the telephone.

But not only that, it makes a case for making health equity happen much more easily. It’s a luxury to be able to take two or three hours off from your weekday to go see your doctor for a preventative care thing versus the … And there’s a lot of people who are working hard to make ends meet, who just don’t have that time. And so the convenience that comes along with the ability to get your medication quickly. So I think it’s going to be a big factor in changing practices to make our care system better and lower cost.

But the other thing that also it did is it changed processes everywhere, not just … Even at the FDA, for example. We had two fundamental platform technologies to get their first products to market during COVID. mRNA vaccines, they’ve been trying to get the cancer vaccines to market for seven, eight, 10 years, and we were able to get a vaccine to market in a year or less, to hundreds of millions of people within a year. And then CRISPR’s first clinical products as we’ve seen come in with diagnostics.

So I think these things happened not because the scientists were working as hard, but a lot of the large company ecosystems that you depend on to build the products or the government processes and practices. They evolved as well. The other thing it did is it also accelerated transformation in other industries. For example, wellness in the home. A company like Tonal and Peloton. You saw that break out. But as people spent more time in the home, they started caring about what products they’re using.

And there’s a company called Grove which actually gives you cleaning products that are better for you and better for the planet. And that’s an example of a company that really broke out. Initially it was because people couldn’t go out shopping as much or they were afraid, but then the other part is even as COVID is coming more and more in control and business continues to grow. Because people can see, why do you need to take so many petrochemicals and have them in such proximity when there are better other alternatives that could work as well? Why do you need packaging, which is this big versus you could have something this small and just add water to it and things like that.

Po Bronson:
It’s interesting. I love how you’re elucidating all this. And I like the framing of silver linings very much. But I want to acknowledge that we probably have a lot of founders interviewing audience. These are spirited people who the world probably hasn’t heard of at least yet. So for both of you, let’s imagine … Arvind, you’ll start with this one. Let’s imagine they get in a room with you. All right. So give me some red flags, some no-nos. And what gets them a second meeting with you?

Arvind Gupta:
Oh, gosh. Well, one, you have to be mission-driven. And that’s hard to fake. I think really, really focused on the customer, really care about your innovation making into the world rather than proving your innovation can work. Those are two very different things. And I’m looking for founders that are talking more about how they see it getting to people and changing their lives and what that world will look like. Then let’s go talk for an hour and a half on how brilliant I am. I know you’re brilliant. I know you’re brilliant, but I want to see the world change.

Po Bronson:
Little less prove me it works, and a little more prove me people care.

Arvind Gupta:
There’s plenty of time to prove that it works. You asked for the first meeting, the first thing that matters is if it did work, whose life changes, and does that sum up to a world changing? Does history change?

Po Bronson:
Ursheet, for you, red flags, turn-offs, or other things that you particularly love to hear?

Ursheet Parikh:
So I really don’t have a set … So I don’t have a set formula. I can share a wishlist. But I’ve had the great fortune of working with founders who’ve come right out of college to founders that have gone on to take products to market, to commercial scale, and companies that are billions of dollars. Constantinos, Nesos, or several other folks like that. I think on my wishlist is in that first meeting rather than tell me what you think VCs want to hear, telling us what’s really in your mind, what you want to do, why you want to do it. Recognizing that of anything that anybody can choose to do, entrepreneurship is probably the hardest thing to do.

There is just easier ways of making money than entrepreneurship. So it does start with a certain degree of authenticity and then a certain willingness to engage in conversation and learn. And not everybody is everybody’s going to be great at everything, but we clearly want to walk out of that thing feeling really healthy, respect for something that you are doing, or something that’s new or novel or something that I learned in conversation that I probably wasn’t aware of.

And given that one of the best privileges of our jobs is we get to learn from the smartest people every day, which are the entrepreneurs changing the world, if we try and say something, it’s really coming with the intent of enabling their success. I think that Arvind, you know there is a promise that you don’t have to worry about what we say versus what we mean. And it’s coming right … As what I said at the beginning of this session, anything that is said is coming really with the intent of whether we are investors in the company or not. We want the company to succeed. The entrepreneurs really are the ones who change the world, make our lives better.

Po Bronson:
So I think you identified something. And we have less left, but I just want to hang here for a second. Is the founder ready really for the life of an entrepreneur? Now, that’s an internal state. How does an entrepreneur themselves know whether they’re really built for this or not? Is there any way that you’ve found to work with them to help them understand whether they’re right for this, Arvind? You’ve got less than 30 seconds.

Arvind Gupta:
I think don’t think, do. You’ll find out along the way. It’s like saying, “Am I ready to take a grappling match?” Go, find out-

Po Bronson:
I love that answer. So thank you Ursheet and Arvind and the engineering biology team of Mayfield. Thank you for spending time with me today. Really appreciate your insights in this event for TechCrunch. Thank you very much.

Arvind Gupta:
Thanks, Po very much.

Ursheet Parikh:
Thank you everyone for listening.

How HashiCorp Works: Building and Scaling a Remote Company

As organizations weigh continuing to work remotely versus returning to offices, there are a lot of questions about how to build and scale with a distributed team. HashiCorp has been distributed since day one and has grown into a multi-cloud infrastructure automation leader. We recently hosted a webinar with HashiCorp’s Co-founder Armon Dadgar and Chief of Staff Kevin Fishner who shared their lessons learned for scaling remote companies, including:

  1. Treating the culture and company as a product, not an afterthought;
  2. Making implicit practices explicit;
  3. Designing norms to be inclusive of in-person and remote teams;
  4. Prioritizing EQ in hiring;
  5. Choosing the right tools and communication mediums;
  6. Creating community cohorts during the onboarding process.

Below is the full recording and transcript from the event. Thanks again to HashiCorp and SVB for partnering with us. To learn more, visit How HashiCorp Works.

Transcript

Navin Chaddha:
Good afternoon, everyone. I’m Navin Chaddha from Mayfield. I’m pleased to have Armon and Kevin from HashiCorp with us here today. As you might know, we led their Series A financing back in 2014. And since then, HashiCorp, a remote first company, has grown into a leader in the multi-cloud infrastructure, security networking, and application automation space. Today, I have the pleasure of having Armon, who’s co-founder and CTO, and Kevin, who was the first business hire, and is Chief of Staff today. HashiCorp has been a distributed company since day one. A month ago, they launched a resource called How HashiCorp Works. Now, I would like Armon and Kevin to share some key learnings, and why they created this, and how other companies can use it to help them transition to a hybrid remote model. With that, let’s start with Kevin.

Kevin Fishner:
Awesome, thanks Navin. So, How HashiCorp Works for us started as an internal resource to help new employees learn some of our internal working practices. So as a company, we add about 5% to 10% new employees each month. So at any given time, about 50% of the company has less than a year’s tenure. So it’s hard to disseminate these internal practices just by word of mouth and kind of positive gossip, when a significant percentage of the employee base doesn’t really know what those working practices are. Additionally, as Navin mentioned, we are a remote-first company. So we have employees in, I think 30+ states, 13 or more countries. We work in a lot of time zones, which can be difficult at times. But the important thing is those new employees who are coming into their company, many of them don’t have any remote work experience, or they’ve worked at companies who do have remote cultures, but they might be quite different than ours.

How HashiCorp Works was an effort to work with our existing employees to understand what practices they have that have helped them be successful, take that kind of siloed knowledge inside of their brains and document it. So, it would be global knowledge for all employees to be able to use and be successful with. And we found that these types of practices are very closely coupled with the culture overall. So we get asked a lot, “How do you create culture in a remote organization,” or really, “How do you create company culture at all?” And it’s our view that culture itself isn’t something you create. Rather, culture is an emergent property of the types of folks, types of people that you hire, and the types of systems that you build into the company. So, How HashiCorp Works defines both sides of that. So, our people practices as well as our systems practices.

I’ll show you a quick view of How HashiCorp Works and our opinions on culture specifically. So the website is just works.HashiCorp.com. We have a bunch of articles organized by individual practices, team practices, and company practices. So, I’ll start with the culture one, since it’s kind of a wrapper for everything. But as I mentioned, we believe culture is an emergent property on top of your people components and your systems components. And for us, both of these are grounded in our principles as some of our principles, which you can see here, are integrity, kindness, pragmatism, humility, vision, execution, communication, beauty works better and reflection. And as Armon likes to say, principles don’t work very well if they’re just words on a wall. So we try to take these principles and design them into our practices.

So for us, the really important people practices are who we hire, how we do professional development and promotions, and who we let go from the company, which often doesn’t get talked about that much, because it can be a touchy subject, but it’s just as important as the other two. And then on the system side, the components that are related to stewards of our culture are how we use writing to make decisions, how we run meetings in an inclusive way, and how we use an operating cadence to set goals annually, review progress quarterly, and track key performance indicators on a weekly basis.

So you can actually learn more about each of these within How HashiCorp Works. So there’s articles about writing articles, about running meetings, operating cadence, as well as hiring, and interviewing. We’re going to be releasing a few more articles, actually tomorrow as well, about how we use data to inform our decision making, and also how we do performance reviews and feedback. So, that’s the inspiration for How HashiCorp Works. Again, it started as an internal resource to help employees learn what working practices work well at HashiCorp and what it takes to be successful as an individual, as a team, and then as part of the company, overall.

We get asked questions about our working practices all the time, especially as remote has become required, essentially. So, we decided to open source these practices for other folks to learn from. We open sourced it a few weeks ago. We encourage other companies to use this as just one data point and a point of inspiration. We don’t expect people to just copy our practices, because every company is different. Every company has different practices that work for them. So that’s it for the overview for How HashiCorp Works. And Navin, if you have any questions from yourself, the audience, I think we can take those.

Navin Chaddha:
No, thanks a lot, Kevin. Let’s jump into the audience questions. We have quite a few questions which were pre-submitted and a lot of them are coming in. Let me start with Armon. Armon, being the co-founder of the company, how important was it to sell the culture and the values right from the beginning to think that you’re going to build a remote first distributed company?

Armon Dadgar:
Yeah, it’s a really good question. And I guess I’ll almost answer indirectly, and then I’ll come back to it, which is, I think it was super obvious to me that culture was going to be really important to us. And I think one thing people don’t actually realize is, when I first … when I was studying Computer Science, I did a few internships. And I worked at some very big tech companies and the experience was so bad. It was so disheartening that I actually fully changed gears and decided to not go into industry and go to academia. So when I first moved to the bay area, it was actually to go to grad school, and it was with the full intent of never working in industry. Because the cultural experience of the companies I’d worked with was so bad that even though I had a passion for Computer Science, I was like, “I wouldn’t want to work in this environment.” It was so negative was my reaction.

So, flash forward a little bit, I think I obviously got a little bit of startup exposure that made me realize that there were different cultures. It wasn’t just monolithic, mega tech companies. And so, getting a bit of that and realizing, “Hey, there’s these different flavors. There’s bits that are good. There’s bits that are bad,” but really getting an appreciation of how dramatically I think culture impacts what that experience is like as an employee and just realizing how radically different it is. How it can go from being a really fun, really engaging culture where you feel like you can bring your best to. So, it can be hyper political and feel like you’re getting stabbed in the back by people, or it’s this death match for resources, or how the attitude can just be like, you are a gear in this machine and we couldn’t care less about you. There’s the door. And you have this entire spectrum, and I think culture really defines what that employee experience is going to be.

So I think for us, it was really, coming in, it was like, “Okay, this is our chance to really craft what that experience is going to be. We want to be really intentional about it.” And I think there’s these extremes in Silicon Valley. I think for us, what we really want to do is find a healthy middle ground where we want it to be a place that’s low ego. We want it to be a place that’s not political. You come and you do your best work and it’s not where you’re fighting these other fights or you’re pampering some executive’s ego. It’s like, “Let’s do the right thing for the right reasons. Let’s really make sure the technical merit is what matters, but at the same time build a culture that is designed around kindness, build a culture in the office built around work/life balance.” I don’t want to have Nerf gun battles at the office.

Our last company, we had prominent investors that were celebrities. And they’d come to the office, and we’d have parties where they’re deejaying. And it was like, “Okay, that’s fine,” but we don’t want that. We want to be a serious B2B business. We’re not here because we want to throw giant VC parties, and hang out with celebrities. If you want to do that, move to LA, right? We’re here to build a real business. So, I think we wanted to find that middle ground of it’s a professional place. It’s a place where people are excited to come and do their best work. We treat people with kindness. There is a work/life balance. These were things that were really important, and in many ways were a reaction to the experience that we’d had in working at other companies being like, “What was good? What was bad? What was ugly? What do we want HashiCorp to feel like?” So that was a big piece of it.

To the remote part of it, I think really early on, we were three employees and we had three locations. I was based in SF. Mitchell was in LA. Our first hire was based in New York. And so, it was really clear from the very beginning, we’re going to be a hyper distributed company. And how can we be super intentional about how we build for that design for it, support it, so it’s not an accidental thing?

Navin Chaddha:
Got it, got it. Kevin, let’s switch gears. Given that you led How HashiCorp Works, can you share, how does one determine that a system they had in place is going to meet the needs of the organization moving forward, especially as people start thinking about remote and distributed organizations?

Kevin Fishner:
This is a good question. It’s a difficult one. Someone once told me that a company’s systems break on the threes and the sevens. And what that means is as you go from three people to seven people, to 30 to 70, to 300, 700, 3000, everything you’re doing breaks. At HashiCorp, we had the fortune of those day shifts happening every six to nine months, which was very cool that we were growing that fast, but also very difficult to build company infrastructure at the time. So how do you know when something is breaking? My simplistic answer is, when employees don’t understand what the company priorities are. So when there was … Well, I wasn’t there when there was three. I was there when there was four or five of us. But as we were seven people and 30 people, it was really easy, because we had weekly stand ups.

But as you get to 70 to 300, you can’t do weekly stand ups, and understand what everyone is doing. So you move to more centralized information, and then you communicate that out. Maybe you have All Hands where only a few people speak rather than the entire company. So, I would use the heuristic of when people don’t understand what the company priorities are, some of your systems are not working well. And you can use that at a local level, too, where if you’re in a team, where let’s say someone doesn’t know … an engineer doesn’t know the product roadmap, there’s probably an issue with the way that you’re defining the product roadmap and sharing that out to the dependent teams. So, that’s what I would watch for.

Navin Chaddha:
Got it. I was on mute. Very, very helpful. So Armon, given that HashiCorp has scaled so well, are there any key attributes you look for in employees to determine if they’ll do well in a distributed environment? And given that you have this heavy culture of writing, could you share some learnings on what you look for in employees as you hire them? Because there’s a lot of questions related to this topic.

Armon Dadgar:
Yeah, for sure. I think a few things start to pop and I think it also changes depending on the role you’re in. I think one thing I’d say for sure, especially in leadership roles is it requires a much, much higher level of EQ than you’d expect in a central role. And what I mean by that is if you’re hiring and everyone is centralized in the office, there are a lot of cues you’re going to get. I’ll call it kind of for free or organically. It’s body language, it’s tone. You come in the office, you’re like, “Oh, Alice seems not as high energy.” Or, “Bob is weirdly irritable or whatever.” You’re going to pick up on a lot of these things in person and you kind of get that in a freeway versus one year purely online. If you imagine the interfaces between your employees and you, it’s a lot more mediated. Yeah, think about how the information density of Slack.

If someone says, “Okay, no problem,” on Slack. That’s very different than when you’re in person and someone says like, “Okay, no problem.” Or their eye rolling or their attitude… Really, everything from tone to body language, all of that that you get in person is completely lost in your day to day mediation over email and Slack. And so I think, especially for people, leaders, managers, things like that, we do self-select on a lot higher EQ, right? You need the people who can read between the lines, whether it’s on Slack, whether it’s on their one-on-ones over Zoom, et cetera, to really have a pulse of, Hey, where are people… Is there an issue here? Is something off? So I think that piece is super, super important and we sort of select for that.

And I think where we see people fail in roles is when they prioritize IQ over EQ. In those kinds of management leadership roles at the same time, I think, for everyone managers, ICs, I think clarity of communication is a lot bigger of an issue. And so I think, even in terms of how we do our interview process tends to be a lot more like, “Hey, I want you to explain the thing to me.” And I think there’s a strong emphasis on whether that’s in a programming exercise where we do more of a test driven type of exercise, where it’s about getting them to explain their thinking and getting them to explain, “Hey, why are you thinking about these test cases?” It’s so much more stressing their ability to collaborate, their ability to communicate.

And the same thing when you talk about leadership, it’s like, I want you to put together a written plan and then do a read out to me and present it and walk us through it. So I think what we’re really stress testing is people’s ability to communicate in these settings and particularly in a written form of communication, because that’s the lifeblood of the company. Everything for us is sort of a written artifact, so it’s important that people have that. And I think that there’s a lot of company cultures where everything is a PowerPoint. And I think we need to kind of detect that, which is like, are you comfortable only presenting a 40 slide PowerPoint at a synchronous meeting and it takes an hour, or can you just capture your thoughts on a three-page document and walk us through it? And so I think it’s really important to filter on that. Especially just the way our culture works is we try to avoid the synchronous meeting with the 40 slide PowerPoint.

Navin Chaddha:
Got it. No, very helpful. So as a follow-up, there’s a question. What works or doesn’t work and why between your sync and async communication cultures? So anything. And what would you do differently if you had to go back?

Armon Dadgar:
Yeah. I’m happy to take this on. Kevin, maybe we can add some color too. So I think the guidance we try and give people is that each of the mediums has strengths and weaknesses. No one medium is the right one. I think what we sort of described is like, hey, if something is not time critical, but you want to make sure people don’t miss it, email is the way to go. Write a document, share it via email. That way it’ll sit in someone’s inbox until they get to it, but it means they’ll get to it at some point. So if it’s not timely, but you want a high guarantee of delivery, you go there and it’s great for having these, “Hey, I just want your thoughts on this or feedback, or this is just an FYI. Read this thing.” Then I think there’s a case of where you want the semi real time.

And I think for us, that semi async is Slack. I think the trade-off is great. You get a response a lot faster, but you might not get a response at all. If I’m in the middle of a meeting, I get 50 Slack messages and I’m in back-to-back for six hours, by the end of the day, I’m not going to respond to your message from six hours ago. So there’s no guarantee I’m going to see that message. If I’m free, I’ll respond right away. If I’m not free, I might not respond at all. So I think you have to treat it that way of like, it’s sort of this semi synchronous thing, but it might turn into async, and it might be lossy, right. If you send in a lot of Slack channels, it’s hard to read them all. It’s hard to hard to follow up when there’s a lot of conversation.

So I think you have to just accept that might happen. So it’s best suited when you’re like, “Hey, I have this quick question. Can you just answer this for me?” And if I don’t get an answer back, I can go bug someone else. It’s not good if I’m like, “Hey, let’s do a collaboration on this thing,” and you’re offline and you’re in the middle of another meeting. Then I think there was synchronous, which is like, hey, sometimes it’s best just get everyone in a room. Particularly, I think if it’s a contentious topic where if I put it just in a written document and blast out to people, if everyone comes back and they disagree, this is why I think we should do path B versus A, that’s when you kind of want to get every room, get some broad level of alignment and consensus of like, “Hey, do we think path A or path B is right. Okay, great. We think path A. Let me capture that as a document and I’ll circle back to this group.”

So I think anytime you have a lot of contention or there’s a lot of getting in the weeds people want to do, synchronous is probably the right format. And so I think where we see things break down is when people use the wrong format for things. So you might think, “Hey, this is an uncontentious proposal. I’m going to write an RFC for an incentive to the group.” And when you detect, hey, we’re 20 emails into this thread going back and forth and there’s 1,000 comments on the document, I think that’s the moment where you need to hit pause and say, “We’re using the wrong medium. We thought this wasn’t going to be contentious. It clearly is. Okay. Let’s schedule a Zoom call and get everybody in a room.”

Other times, it’s like you scheduled a Zoom call and you’re just reading them the document and everyone’s just nodding along and they’re like, “Yeah, okay. Why don’t you just email this to me? There’s nothing to discuss here. Sure, this all sounds fine.” So I think usually you can tell when you’ve picked the wrong medium, either people are talking too much or people are not talking enough, and that’s a good indicator that you’re either in the right or the wrong medium.

Navin Chaddha:
Yeah. I think that method can be very helpful, even if people are in the same office, because everybody is getting used to getting answers instantly. And if you don’t respond, then either people will send you a text, they’ll send you a Slack, or they’ll even walk into your office. So I think some of these practices even apply to a company which has employees in the same location. I think let’s switch gears to onboarding. Kevin, there’s a question. How does one handle onboarding from the perspective of sharing information, and more importantly, ensuring the new hires get to know people?

Kevin Fishner:
Sure. So I will definitely answer that question. I also wanted to quickly plug some of the How HashiCorp Works articles based on what Armon answered. So if you do want more information about how Armon was talking about synchronous versus asynchronous communication practices, we do have it, of course, written down about when to use which tool. So that’s a standard communication tools document. And Armon was also talking about how we do our hiring and how we screen for those principals. So the Hiring and Interviewing at HashiCorp article talks about how we use behavior based interviewing to suss out some of the EQ things that Armon was talking about as well as communication skills as well. So if you didn’t catch everything, there’s always the written document to go back to, which is a perfect example of when Zoom is good for things and when Google Docs, in this case… Well, these used to be Google Docs. Now they’re websites.

So for the question about how do you onboard employees, make sure they know broad company context and also meet new people. For broad company context, as you might expect, we write down pretty much everything. So you can always see what our company priorities are for the year. We define that two ways. We have North Star goals that never change. They only change in magnitude. So as an example, one of those North Star goals is monthly active users. So we always have a different goal for monthly active users each year. And then we also have three executive priorities that do change each year. So that might be an emphasis on one of the products as an example. So in terms of the overall context for the business, there’s always access to that information. And then in terms of meeting people across the company, we think about this in two ways.

One is your onboarding class and that being your essentially peer group that you can ask some of the dumber questions, I guess, for lack of a better word. So silly things like, “Where can I find our expense policy?” So you can kind of crowdsource that within your group. And those cohorts meet pretty much every month for the first six or so months in what we call Hashi Cafes, which there’s a pretty strong coffee culture at HashiCorp. So there’s a lot of coffee branded things, that being one of them. And then the second is we have an onboarding checklist, and when each employee onboards, their manager connects them with people in other teams that they would be interacting with pretty often. So let’s say you’re a new product manager. You would get connected with the engineering manager, who is your peer, maybe the engineering lead who’s on that team, design lead, and then product marketing folks. So it’s up to your manager to make the appropriate connections for you in the business.

Navin Chaddha:
Got it.

Armon Dadgar:
I’ll add a little bit of just added color to that, because I think there’s probably a few other really important touchstones as we think about just building those connections across the company. Like I think up until COVID, those onboarding classes that Kevin was describing, they would fly into our San Francisco HQ. So great. There’s the February class. We fly them all in. They spend three, four days at our office. So the onboarding would be in person. They meet the other cohort, but then they also meet the people in the SF office. There’s usually a happy hour. So it’s a bunch of existing employees and the new employees will kind of hang out, plus it was, as part of our onboarding, almost all of our executives come and present. So I present, our CEO, Dave, presents. Most of that executive team shows up to explain their function and how the different groups work.

So you get exposure and get to actually meet the different executives of the company as well. So I think that’s an important touchstone as well, making sure people feel like they got to meet and be connected to different folks in the business. And then we have probably two other big ones annually. One is we have our big employee summit, we call HEX, the HashiCorp Employee Exchange. And that’s the whole company getting together once a year. Obviously, the sales team has their sales kickoff once a year where they also all get together within the go-to-market teams. And then most of the other teams do an annual offsite. So it’s like great. Each engineering team will do their own off-site, marketing teams will do their own offsite, things like that. So those become additional opportunities just to get in-person and build those connections that you wouldn’t otherwise build if it was just 100% Zoom all the time.

Navin Chaddha:
Yep. And I’ve seen how successful some of those things have been. A follow-up question after onboarding, you already answered it, is what do you do on an ongoing basis to bring people together? A pretty interesting question. How does one encourage creativity amongst virtual teams? So do you have them play games? Are there leaderboards? What do you help people do? How do you make sure they remain creative and competitive to keep doing great stuff and enjoy the journey?

Armon Dadgar:
This is making me… I’m smiling because I’m thinking of an all hands that our marketing team did recently. And so as you expect, our all hands are all done over Zoom. Once a week, we have this type of a thing. And so what we do is we rotate between different functional groups. So, great. First, let’s say, Thursday of the month, it’s marketing and partner teams read out, then the next one is sales, and the next one’s product engineering design, et cetera. So we kind of rotate. And we had a recent one where the marketing team did their updates, but they all planned where they did it to the tune of Hamilton. And so they basically, they delivered their whole marketing update of, “Hey, here’s the current things we’re working on and what are the things in flight and things like that.”

And they did this great sequence of, they picked some of the key montage scenes out of Hamilton and they themed it to that to tune and did a good job with kind of a show tunes-y the presentation of it. And so I think these are the kind of opportunities where it’s like, yeah, you might say, “Okay, it’s just a readout we do every single week. It rotates through the departments.” It could be this dry, boring thing. But even something as dry and boring as that, you don’t have to make it dry and boring. You can bring the creativity into those things and make it be a fun, high energy thing where people are being creative. So I think that’s a great example of even a thing that’s a total, regular, you’re doing all the time. You can make it fun and interesting. Mix it up every once in a while.

And then I think there’s the more ad hoc stuff. So some of the ad hoc stuff we’ll do is design workshops. And so if you’ve ever done any of these design led thinking or design workshop type exercises, I think those are a great way to get people to take a step back from the day-to-day of it and say, “Okay, big picture, what are we trying to solve for? What are the big blocks here? And let’s do a bit of that blue sky thinking around what can we do? What should really be the priorities?” And so I think doing that on a semi-regular basis with product teams, marketing teams, go-to-market teams, I think is an important exercise to get people to just think about what should we be doing differently, or where are we trapped in a local minimum? We’re just doing it because we’ve been doing it, versus where we should be creative and change what we’re doing. So I think there’s a bunch of these techniques you can do, but I don’t think being remote limits the creativity options.

Navin Chaddha:
Anything to add, Kevin, on that front?

Kevin Fishner:
Yeah, I agree with what Armon said. And I think when folks think about creativity in an office setting, there’s really two approaches to it, I suppose. The first is what people sometimes talk about, the hallway in and the epiphany with the random conversation. You’re like, “Oh, we just came up with the idea for Xbox.” And who knows if those stories are true. I have suspicions that they’re probably not, but the point is the random collision creates new ideas. And then the second is, the group brainstorms, or people put stickies up on a wall and magically you come up with the answers. When you have remote and both of those don’t happen, you don’t have hallways and you don’t necessarily have physical walls to put stickies on, but what you can do is structured brainstorms which are pretty similar to exactly what Armon said with the design sprints. Where, rather than having everybody in a room and having them come up with ideas on the spot, you’re going to have them brainstorm independently and then review their work in the group setting, and then you can kind of combine forces.

And this has a few benefits. The first is, giving people time to prepare independently. They’ll usually come with more thoughtful ideas and you also limit group think, so you don’t have just people echoing what was said before them, so you get much more diverse ideas. And then in the room itself, you give everybody an equal opportunity to share their ideas, so everybody gets an opportunity to feel heard and you can run much more inclusive meetings as a result. And what you’ll find is some patterns start to emerge in the feedback that’s coming and you can kind of group around those patterns and move forward.

As an example, every year for annual planning, each executive comes up with three, what they think the top three priorities are for the company. Then we meet altogether either virtually or in person, each exec gets five minutes to review their proposal, and then we combine any ideas that overlap and we do a weighted voting on what’s the most important. And at the end, we get our top three priorities. Which actually makes what would probably be a very controversial process of getting 12 executives in a room and figuring out what’s the highest priority work to do, and there’s egos involved in there for sure, and it turns out it’s actually not that controversial and everybody has an opportunity to feel heard.

Navin Chaddha:
No, that’s awesome. Switching back to the kind of employees that will fit in into a remote company, the question is, should remote be reserved as a way to recruit rare talent where it’s not available, say, in San Francisco or it’s hard to employ, or is it also effective for regular roles? So, how does one plan an organization and what functions can get centralized? What needs to be distributed? And is it hard to find talent when you go remote or it doesn’t matter?

Armon Dadgar:
I can kick this one off. I actually think if you try and think about it as only a way of attracting rare talent, it’s probably going to fail. And the reason for that is, I think there’s this notion of like, you have to have a critical, massive remote. Because if you don’t, I think what will end up happening is, if you say, “Great, 95% of my workforce is central,” then you have this center of mass and it’s so much easier for process and culture wise for that to be the first class employee and the remote to become the third class employee. And I think it’s very difficult to actually manage that balance, because it’s like, “Okay, great. Do I just walk over and have a chat with that person’s team? Because, that’s the default. They’re right there. It’s going to be the frictionless thing to do. Or do I reserve a conference room, set up a Zoom call, get the seven people who are in the office in the room, and then the one person that happens to be remote, that way they can dial in and join the conversation.”

And so you can see, it’s like, “Okay, well the friction of doing one is like 100 times higher than me just walking over to that area and just asking the question.” And so how does that other person feel? It’s like, “Well, they were outside of the loop of those discussions. They weren’t a part of it. They’re not going to get any of the context.” And so I think you’ll see this, and what ends up happening almost inevitably is, that person feels third-class because of the workflow, the process, the tooling, you’re not investing in any of that because you’re like, “They’re the edge case. They’re not the default case.” And so that rare talent will leave. You’re not going to retain them, because they’re going to be like, “Eh, I’m going to go somewhere that either I feel first-class or I’m not sort of so, I don’t feel like I’m out in the provinces, basically.”

I think you almost, your orientation has to be that we’re setting this up for the regular employee, if you will, and not for the exceptional person. Because again, a person might be exceptional, but your process won’t be. Your process is going to be what caters to everybody. And so I think our view is like, that doesn’t mean you have to apply it to every function. So I think for us, we’ve made the conscious decision that most of our GNA functions are centralized. So if you go to our SF office, it’s by and large legal, finance, HR, that happens to be based sort of in-person, but it’s you take the sort of almost all or nothing view. It’s not like 90% of our finance team is centralized. It’s sort of like 100% of each team is either central or 100% is distributed, because you have to hit the right critical mass. The middle grounds are really, really, really tough.

And I think we’ve even taken it to extremes, where it’s like occasionally we’ve had it where there’s multiple engineers that happen to be on the same project, we don’t allow them to sit on the same part of the floor. They will sit on opposite ends of the floor, so that actually, Slack is the thing that’s lower friction. It’s not just, “Let me swivel my chair and ask them the question,” because that will just be what happens. That will be the default. So we want to force them, does their conversation have to be over Zoom and Slack as well? Otherwise, the rest of the team is going to feel out of sync. In that case, it was the two team leads that were in the office, and we had an issue where the rest of the team’s design decisions are being made all the time and none of us even know about them. So I do think you have to think about what’s the default, what’s the activation energy in any of these communications? And people are like water, they will take the path of least resistance, so you kind of have to design for that.

Navin Chaddha:
Got it. Anything else, Kevin, from your perspective?

Kevin Fishner:
I think for our listeners, it might be helpful just to have some numbers to understand all the context. We have about 11, 1200 employees. And if COVID wasn’t happening, about 100-ish work out of the San Francisco office and everyone else is distributed, with engineering, product design, sales, being pretty much fully distributed. And as Armon said, legal, finance, HR, being in the SF office.

Navin Chaddha:
Got it. Kevin, a follow-up question on technologies and tools. What technologies and tools have you found effective for facilitating remote work? And I know you guys want to share some of these things broadly, so could you share what works, what doesn’t, how do you make sure if you are a distributed company you have the underlying infrastructure and technologies to make this a success?

Kevin Fishner:
Sure. So I’m going to actually re-share that one article that we wrote. These are pretty much our primary tools, Zoom, Slack, email, Google Docs, and Asana. For me personally, I use Google Docs for pretty much everything, I get teased about it even. And the reason why I prefer Google Docs to a bunch of other tools, is it’s the easiest thing to collaborate on one source of truth. So I think the beautiful thing about Google Docs and also engineering workflows around GitHub, is rather than creating multiple versions of the same thing, you might do a version where Docs and Dropbox, you replace the existing version with an improvement. You’re always making one artifact, a better source of truth and a better piece of information rather than creating versions that you then need to manage and you lose track of. So we use these tools very heavily for facilitating remote work and communication and collaboration. Armon, I’m trying to think, are there other tools that we use? Oh yeah, we use Donut for random pairings of one-on-one conversations, which are fun. But these are really the core backbone.

Armon Dadgar:
I think within sub teams, these are the ones I think that are sort of certainly corporate wide. Obviously within design you might have things like Figma, engineering obviously has things like GitHub, so I think within different, sort of the business groups, it’s like there’s specialized tooling that they need. But by and large, to kind of the corporate supporting infrastructure, is just that.

Navin Chaddha:
Got it. A lot of questions around compensation, which I think people care about and can be controversial. So Kevin, any best practices as you build a distributed company? How does one think about compensating employees? Because, the places which are very expensive to live like San Francisco, New York, and then there are places where the cost of living is not that high. And I know the big companies have a policy where they take COLA into, cost of living adjustment, into account. So how does a company, when it’s 100 people going to 300, going to a 1,000, think about these things? Any best practices you can share?

Kevin Fishner:
I can go first, and Armon, my information might be a year out of date, so correct me. Just the context of what we did, and this is when we were about 800, 700, 800 employees, is we basically created city tiers. So rather than doing compensation amounts for each individual city where there’s obviously hundreds of major cities all over the world, we grouped cities into tiers based on cost of living, the compensation ranges based off of that. So that’s where we were at last year. Armon, did that change? I think that’s about the same.

Armon Dadgar:
No, I think that’s right. Yeah, I think it’s sort of a matrix-ed view of, obviously, geo being one determiner and yeah to Kevin’s point, core screen bucketing there. It’s like, great, you have certain cities like Bay Area and New York, Seattle, that are maybe kind of tier ones. And then you have kind of your tier two and tier threes, just depending. And I think that gives you some rough comp banding, but I think the general kind of maybe high-level philosophical view is, there’s sort of two aspects; one option is you say, “Everything is indexed against Bay Area.” And so it’s like you go global with a Bay Area comp, that’s one strategy. I think a different strategy is everything is local, everything you index 100% to whatever local comp and Bulgaria is if you’re hiring someone there.

Our view is like, you have to take a bit of a hybrid stance on it. Which is like, it’s sort of neither. Which is, the employee that you’re hiring maybe in Bulgaria, if they’re applying for a remote job, then they’re applying to sort of a global workforce. They’re not applying to a Bulgarian employer. And so great, they could also work at GitHub, they could also work at Microsoft, they could also work at Facebook. Some of those companies might not hire remotely, but you kind of get my point.

You probably need a bit of a blended index, which is like, “Yeah, you’re indexed partially to the local, because there’s a cost of living and a local market reality there, so that should be a part of the index value.” But then a part of it is like, you’re also just competing on a global marketplace and comp is ultimately a reflection of sort of clearing price, if you will. And so you have to adjust accordingly and realize that you’re competing with other companies that are hiring remotely on a global basis, so it has to be a bit of a blended strategy. You don’t want to over-index just to the local geo.

Navin Chaddha:
Got it. A question around interns. When you are a company with a few hundred employees, people start thinking about internship programs for students. Any best practices on how to build and manage a remote internship program?

Armon Dadgar:
Yeah, this is a good question. Actually, I’ll broaden it a little bit in general, which is not just interns, but I’ll say kind of early career folks. For the first few years of HashiCorp, we basically had an implicit policy of, we effectively only hire senior. And the reason for that is, there is so many kind of norms of corporate America, if you will, or corporate anything, not just America, that you, it’s very hard I think, until you’ve been in that environment for a while, you assimilate into it. Of just like, “Okay, how do things work?”

And what we found is that that is assimilation doesn’t work super well remotely. It’s not the same when you’re not in an office if you’re a junior person who’s never been in that setting, it can be a little bit confusing. I think people who are also more junior in their career don’t have the same, I’ll call it a social support network, in terms of, great, you just graduated out of college. You take your first job and move to a new city. You don’t really have friends there, you might not have family there, you don’t really know any of your coworkers, so you don’t really have that social safety net, if you will.

And I think those folks really struggled at HashiCorp, because it was like, “Okay, great. I started this new job, I don’t really have friends in the new city I’m living in.” And for a lot of people, the way they meet that initially is through their work colleagues and going out for drinks afterward and things like that. And so, a lot of that interaction just doesn’t exist. And so I think the first few years we sort of dabbled with it and found that we didn’t do well, it just didn’t work super well particularly. As we’ve gotten much bigger, obviously we’ve changed that.

We’re more able to bring in folks that are junior. Actually, we launched a formal early career program last year to bring people, not just interns, but whose first job might be tech type of a thing, but they’re not interning. So I think we’ve sort of turned that dial, but I think we had to be a lot bigger before we could have the bandwidth to focus on enabling those people and making sure they’re successful and formalizing an intern program where you have to have high support from people and clear one-to-one one-to-one mentorship, and a buddy system and things like that. So I think we’ve sort of upped the ante over time, but I will say it is very hard if you’re a small company to absorb that. Junior people do take in more time and resources to mentor them and get them up to speed. And I think some of that happens implicitly when you’re in person, and there’s an extra effort that it takes to make that explicit once you go remote. And so that can be a high bandwidth cost.

Navin Chaddha:
Got it. So a few questions have come in. “You guys addressed the benefits of highly remote and distributed teams, but what are the negatives or where do you see limitations, and how does one address them?” So I don’t know if Kevin or Armon, you want to take that? And then we’re going to have time for probably two, three more questions. So if people want to start sending them in, that’ll be great because we won’t have time to answer every question. So let’s come back to the negatives or the limitations, and how does one address them? Because nothing is perfect. And I think you guys have done a great job of making sure onboarding happens well, day-to-day stuff happens well, how do you do off-sites, how you bring the entire employee base together. But what are the other limitations that one needs to keep in mind and how to address them?

Kevin Fishner:
I can take a first crack at this. So, there’s two limitations that come to mind for me. The first is the communication overhead is a lot higher. You don’t get the benefits of positive gossip, where information just kind of disseminates throughout an in-person office, whether or not you’re deliberate about it or not. So you need to be really explicit and build communication systems that make sure employees know what’s going on at the highest level. But also, and I saw some questions in Slack coming through about, “Have you run into issues with Slack being used as a source of truth for decisions and people not knowing or getting lost in the feed?” And 100% yes, we’ve definitely had those issues. And we really encourage decisions to be made in Google Docs, and written down in RFCs, not in Slack or in Zoom. But that requires a lot more work.

You have to take out the information that you just discussed in Slack, document it in Google Docs, and then share it with all the folks that would be affected. So, it requires work. It requires intentionality. I would argue that that intentionality and deliberateness is very good because it keeps people in the loop, but it’s work. The second downside, or it’s not even necessarily a downside but difference, is the relationships that you have with coworkers aren’t as close friendships as you might in person. So as an example, Armon and I worked, before HashiCorp, worked at the same company together. There were about 40 people in the company. 10 of those people, I’m still extremely close with. I’ve been to their weddings, they’re going to come to my wedding. We’re very, very close friends.

In a remote setting, those types of very deep relationships don’t come as easily. So your community is much more your community where you live, rather than your work community. Which as Armon said before, if you don’t have a social network already, that can be difficult. But the positive side is you get to create your own community wherever you live or even virtually if you want. So, you kind of have more say in that. So, it’s just a difference. It’s not necessarily a downside. But I think it’s important to acknowledge.

Armon Dadgar:
Yeah. I’ll add some more. I think Kevin hit a lot of the substantive ones. I think some of the ones that, even when we’ve talked about kind of the work style, it’s a lot harder to do things like design sessions. I think the day-to-day kind of transactional stuff is fine. I think the things where you’re like, “Hey, I want us to get on a whiteboard and architect through this idea and do this kind of brainstorming,” that kind of stuff is a lot harder remote. So I think that’s where you want to supplement it with team off sites. I think that’s where you look at, “Hey, instead of trying to do this white-boarding together remotely,” yeah, there’s tools you can use, Miro and things like that, it’s just not the same.

It’s a lot easier to just fly everyone in and be like, “Great. We’re just going to get in a conference room and use the whiteboard and jam out for two, three days.” I think what’s nice about that is because you’re intentional about it, you’re like, “We’re going to clear two or three days to go do this. We’re not going to pack it with other meetings and try and squeeze it in.” So, it forces you to have a higher level of focus on those kinds of things. So I think you can manage those trade-offs. Then I guess I’ll talk about some of the boring downsides. The boring, nuts-and-bolts stuff is you should anticipate higher T&E. By virtue of being distributed, yeah, you have to supplement it with all hands and employee summits and off-sites and things like that.

So, factor in there’s going to be a higher T&E cost because you’re budgeting for more hotels and flights and things like that. Flip side is relative to the cost of SF office space, you still probably net out ahead. But you should budget for that. There will be a higher T&E cost than a central company, which doesn’t probably have a whole lot of it. So that’s one piece of it. I do think there’s a bunch of GNA challenges, especially when you start talking about many states, many countries. Your options as you go international, for example, if you’re only hiring two or three people, it’s like you go through a PEO firm. They’re going to add a 20-30% overhead per head. So it’s not cheap. And then as you say, “Okay, great, I’m going to have a density of folks that’s more than three, five people in a country,” then there’s a bunch of overhead of, “I’m going to create a legal subsidiary, a financial subsidiary, set up a global banking relationship.”

So you start to bring in a bunch of legal, financial cost and overhead. And then from a tax situation, great. Do you end up dealing with 50 different tax authorities because you’re in all these different states and countries? And so there are some underside things like that. It’s not totally costless. You do have to end up bearing some more legal and financial and HR costs for every new country and state that you’re lighting up because of different laws, different compliance requirements, different ways they handle equity. Benefits are slightly different. So all of this kind of stuff, it does add this sort of hidden cost to it all that it’s not apparent.

And oftentimes, we get this feedback from someone who says, “Oh, HashiCorp says they’re remote. And I tried to apply for the company, but I’m in some random country and HashiCorp rejected me. And it’s a lie that they’re remote.” And the thing about that, we have to usually respond to kind of diffuse that situation, like, “Just because you’re remote doesn’t mean that we have 180 legal entities in every single country and every possible benefit provider for every country on earth.” There is still a logistical limitation. You can’t just hire anyone anywhere. So yes, we’re remote. Yes, we’re global. Yes, there’s a set of, I don’t know, 20 something countries and 30 states that we’ve lit up, and we’re expanding that over time, but it’s not trivial. Every quarter we add two more countries to our list that we try to go onboard, but yeah, you’re only adding two to three countries every six months. Because there is this overhead to it. So, there is this tension, there is this trade-off. So I think you have to message and manage that correctly.

Navin Chaddha:
I think I’m going to leave it to one question to end for each one of you. So for Armon, the question is if you could go back to the beginning of the founding of the company, what would be one or two things, now that you know what it means to be a 1,000 plus people company as remote and distributed, what would you do differently? What would you do differently? You wrote the Tao of HashiCorp. You talked about the product. You talked about the culture. But anything, if you had to go back to 2012, what would you do?

Armon Dadgar:
That’s a tough question. I mean, there’s a lot of things I would do differently. But thinking about the kind of the culture specifically and sort of the remote workforce pieces, I don’t know why we felt strongly that G&A had to be centralized. I think what COVID has taught us is even that didn’t need to be centralized. So if anything, I think we probably could have turned the dial even further, even a bit more extreme. And I think it would have changed our approach to the SF office. Because right now, we still have a, I don’t know, 30,000 square foot office space. So we still have a pretty large footprint. And that’s because we have the G&A folks in there. I think I probably would have changed that to go with more of a hoteling setup, optimized it more for conference rooms, treated it as a place where you come into the office to collaborate, as opposed to we have a bunch of like, “This is your dedicated seat if you’re in some of these functions.”

So I think we would have probably changed our use of real estate a little bit. Having done it, I don’t think I would go to a place where… I think there’s some companies that take it to such an extreme where they say, “We have no office.” I don’t think we would do that. And part of it’s the nature of our business. We’re in B2B. Great, JP Morgan wants to come to our office and have an EBC. I’m not going to invite them to come to my living room. So, I think you do want that. If you were a pure consumer and you’re never meeting with people, maybe you could take it to that sort of an extreme.

But I think being B2B, you still want an office space, and I think you want a space where you can collaborate and make it easy for people to have an onsite, if you will, where they’re flying in and coming into your SF office and and meeting and doing that kind of stuff. So that’s probably what I would change the most, but I think it’s served us well to hire remotely. And I think from that perspective, I wouldn’t change it. If anything, I’d lean into it more.

Navin Chaddha:
No, that’s great. Kevin, ending question for you. Given that you put this together and took the leadership on how HashiCorp works and the site, how far do you think this scales? Is it limitless and endless? Or at some point, you will need more and more things for the stuff you guys talked about that doesn’t work to be more of a hybrid thing. You could still be remote, but bringing in people to have face-time, to create that bonding. So if you could take a minute or so to talk about, how far does it scale?

Kevin Fishner:
Sure. I was hoping this would be the last question. I saw it come through. I was like, “Oh, that’s good. That’s thought-provoking.” I think it can scale… Well, limitlessly. I don’t know how large any organization could become. I think Amazon and IBM are stretching the limits of million plus organizations, which is wild to me. But if you look at other tech companies like Google and Facebook are good examples, they have offices all around the world. So even though they have office cultures, they’re globally distributed. So I think for us, what it would look like is we wouldn’t have large offices all around the world, but we have a globally distributed workforce with small offices that people could come in and collaborate in, exactly as Armon said. So Armon touched on this in a lot of his answer, but I think one of the ways that we approach remote and really all company things is with a heavy dose of pragmatism.

And there are some companies that are very strict about everything must be remote. But for us, it’s what makes sense remote, what doesn’t make sense remote, how do we keep evolving it over time? So we have opened up small offices in places like Singapore. There’s actually going to be a small office here in Austin. So as long as we keep the principle of remote first, and decisions must be made in a transparent and globally communicated way, then where you work, whether that’s in your home or in a small office or in San Francisco, is kind of a detail. So, we just have to continue the remote first mindset, and we can scale from there.

Navin Chaddha:
Great. Great. I want to thank you both for taking the time to be with us here today. Keep doing the great work you guys are doing. And always keep in mind the work you have done for being a community first company and open sourcing your software, and now open sourcing the best practices of how to scale as a company, as a remote first and distributed company, is appreciated by all. So, thank you very much. And thanks everyone for spending the time with us today.

Open Core Summit 2020 Keynote: HashiCorp CEO Dave McJannet & Mayfield MD Navin Chaddha

Unwritten Rules of the Boardroom

Drawing from their board experience across dozens of venture-backed companies, Elena Gomez and Navin Chaddha join Jocelyn Mangan and the Him For Her network of board-ready women to share stories and suggestions to shape the way you approach board opportunities and show up in the boardroom.

VC & Entrepreneurship Trends

Radical/Compassionate Candor Webinar with Kim Scott

We recently hosted a webinar with Kim Scott, author of Radical Candor and upcoming book Just Work, in which she shared the Radical/Compassionate Candor framework as well as actionable insights for adapting these principles in a remote-first context. We also heard from Splunk President of Worldwide Field Operations Susan St. Ledger and Outreach Co-founder & CEO Manny Medina, who shared their own personal experiences with radical candor. Below is a recording of the event:

For more from Kim Scott on Radical Candor and creating just and equitable work environments, listen to her episode on the Conscious VC podcast.