Ep 106: Zac Bookman on Advice for DOGE & Building OpenGov into a $1.8 Billion GovTech Leader

22:44So I think things like that need to be done more efficiently. And then on top of that, it was, it was like, it's clear it is really valuable as well to have something that that's needed by these tens of thousands of customers and to make them work better. And so, so this was, you know, and I knew it was really, really hard. I didn't appreciate quite how hard it was, of course, which is always the case. You kind of, as an entrepreneur, you kind of don't want to appreciate quite how hard things are going to be, or you wouldn't really do it as much. If you knew how hard it was going to be, you probably wouldn't do it.

23:10This is always the thing about talking to entrepreneurs is like, if you're trying to do something in the space where they've worked for 10 years, they're always extraordinarily negative on you. And it's just like a rule. Like the two rules is, first of all, I mean, you don't take like an SMB business to the Stoppelmans. They'll be like this. No, terrible. You know, guys don't want to do that. It's yeah. It's like, first of all, any CEO, you bring in everything was shit before I was there is always the rule. And then the other rule is like, yeah, it's the space is like a hundred times harder than you realize.

23:34It's like the two things I get from every single CEO. but it was, but listen, I'd been in Palantir. I knew government was frustrated. It's a different part of government. Um, and, and it just, it was just Claire was so broken, right? It was Claire was so broken that there had to be something to do. And so did you get, you know, I mean, I got laughed at when we tried to raise money, including from some of your friends and your network. And it was a, it was a vuncular kind of laugh, like, ha ha ha. Good luck with that. You fools. Did you get that? A little bit, not as much. Cause I just made Palantir kind of work.

24:02So maybe they're afraid to laugh directly. It was like, yeah, Joe, that's like a, nonprofit area, not a for-profit area. And we're like, well, there's these big companies here, but they're like, oh, it's impossible. And it was almost impossible, but we figured it out. The first thing was that government only pay for the processes that they're already doing. That was big. The other thing that was very unintuitive to me was how hard it is to grow quickly, even when it's something people need. And so you end up having to buy stuff as well in order to expand. So you can obviously grow organically, but it just seems naturally really hard to grow organically.

24:35I guess you have some stuff growing 50 % right now, which is unusual, but it's hard for these companies to grow faster than 20 or 30%, usually for the most part. Why is that? I think it has to do with both the innovation cycle and the buying cycle. So to actually, people underestimate how complicated government is. And if it wouldn't bore the heck out of you or your listeners. Give us some examples. Well, a lot of people, I don't think stop and try to understand what these governments are. So let's take a city, for instance, a city. What do we do? We create an incorporated entity. We, the people incorporate an entity, get it incorporated by the state.

25:12And we throw in all these for-profit and nonprofit business lines that we either don't want or can't have in the private sector. And we set up a corporate structure, if you will. There's a board of directors. We call it the city council. It represents the stockholders who are the residents. And the board appoints a CEO. We give it some diminutive title like general manager or city manager or town manager. Yeah, the CEO always gets a little tiny title, but they're actually really important. They're the CEO. Yeah. And they appoint an executive team. The executive team has funny titles like director of public works, director of parks and recreation, director of the library.

25:49But if you think about it, these are the services that we want and we rely on every day. And it's funny because the mayor is more like the chairman of the board usually than they are like CEO. cuts the ribbons and has a guy in town, he makes$6 ,000 a year or a gal and, or sometimes unpaid. And they spend all of Tuesday night and frankly, way too much time. And it's like the sixth grade class president or something, you know, it's like, likes to, you know, be a ceremonial figure, but they don't run. Some strong mayors are involved. So the top 1 % of governments are run by a strong mayor. So these are the largest cities in America that people think of when they think, go, oh, that's a city.

26:23But we live in towns. We live in counties. We live in unincorporated areas and we have governments everywhere. And we drive on the roads and we flush the toilet and we turn on the light switch. And we never think about this is your tax dollars. This is your property tax. This is your gas tax. This is fees, fines, hotel tax, what have you. And that money goes into various different coffers. By the way, you can't spend, that money goes into funds. And the core difference between a company and a government is often the multi-fund accounting. So everyone says, you're taxing my gas, you idiots. You can't even, you can't even, you know, deliver my water correctly.

27:04Well, I can't spend the gas tax on your water because it goes into the roads fund. And that's all I'm legally, that's all you, the people allow me to spend it on. And so there's all these contradictions and confusions and everyone just gets angry, except it's our government. Well, sometimes, and sometimes it is run poorly, but sometimes it's run really well too, right? When it's run poorly, people should get out of bed and go fix it. Yeah. Not even just vote. You can raise your hand and go run for town council. You can go be city manager. That's true. It's a, hey, Joe, it's a free country. I know, I know.

27:37It's, and it's all my friends have, but it's pretty rare. They don't want to. It's easier to complain. Yeah. And it's hard. I mean, to be clear. We pass some propositions sometimes. There's different ways of affecting it, but yeah, it's tough. um what do you think's gonna happen about ai i want to i'll tell you my views but i want to hear joe lonsdale on ai with respect to state and local government in particular let's do one acquisition question really quick john chambers might be who was on our board might be the the best expert all of us know on this because he bought over a hundred things at cisco and crushed it and he was really helpful to have around obviously what were what were some of the things you learned as you're because you bought a lot of companies you integrated them you you got you bought them well and you grew them 50x in some cases and stuff so like like like how do you do these things Luck played a very large role in this, but we, our strategy was completely different to our competitors.

28:23Our competitors would buy companies based on revenue, based on profit, customer footprint, based on basically anything other than product quality. And Joe, you're a product person. You're a builder. You want the best people. You want the best user experience, the best user interface. and we took some of that snobbishness, if you will. Well, it's Silicon Valley DNA. It's Silicon Valley DNA. Yeah. And we just don't want to be associated with companies or products that we don't believe in and that we don't admire. And that was the heuristic. And John, I met John at the WEF, at the World Economic Forum, and he was the most gracious.

29:04I think he was just leaving Cisco and looking to build his kind of venture fund. And he got involved. And one of the very first things he said to me, I had a deal with some entrepreneurs that I'd known these people. I've been in the local government industry with entrepreneurs for years. And so I know who's trustworthy, who has that kind of shared values, who's building the best products. And I told him about one. He said, you can't buy that. They're not located in Silicon Valley. And I was like, what do you mean? He's like, I've done 185 acquisitions. You got to do it in Silicon Valley. You got to do this.

29:35You got to do that. And I was like, well, I signed a term sheet with these guys in Boston and their product's amazing. and this is going to revolutionize how we get permits and licenses, which is a huge important space in local government. And it was another CEO moment where I was like, I'm not going with John's advice. And John was a little annoyed, a little disappointed, and probably like, I probably wasted my money on this company, namely Zach. And it's worked magnificently. And as we strung together successes across permitting and licensing, procurement, asset management, asset management, by the way, It was located in Iowa.

30:12And the company's amazing. The best product in the market. This runs the entire public works. This is ironic because John did WebEx to help people work together across the world. Well, John now, and we've become dear friends and he's an amazing mentor. And he's like, Zach, you educated me on M &A. No one's done more M &A than me. And no one's made more mistakes than me. And I thought I knew what was going on and you redefined it. And he says now two nice things. I'm like, John, a lot of this is industry dynamics. They, they tend to work. The software is very sticky. I really appreciate the kind words, but that's kind of funny example where it's like, this space is a little bit different and, but product quality has been the, has been the.

30:50And how did you integrate like the cultures and the tech and stuff? Was there any tricks on that? It's been super hard. We, um. You go to these places sometimes. Well, I mean, I, I, yeah, you got to show up. You got to show face. You got to show the energy and the enthusiasm. We believe it. We, we have, we are values driven company, build the trust, live our mission, act with urgency, learn and grow. Win is one. And we repeat this stuff and we talk about it and people look at me like I'm nuts. And some people leave. Most we've retained most people, the enterprise asset management acquisition in Iowa, we lost a quarter of the people.

31:25Well, I, yeah. And I, and I found there's places like Iowa, there's amazing people, but there's also some people who are not used to the intensity of the culture. There's a lot of that. And, and we also found in other companies, Look, everybody, everybody's home is messy when you dig in. Everyone's marriage has issues and everyone's company is not quite as good as they market. And so we saw a lot of companies with lots of problems and you dig in and wait a second, that person actually hates that person and they fight all the time and they don't even trust each other. And so we'd end up having to go do psychotherapy and marriage counseling and the whole thing.

32:00And it's like, you know, it's, it's, it's hands-on. These things are always, these things are always messing on the inside, but you make them work. I love it. Well, it's amazing what you've accomplished, Zach. It's been great being your partner at OpenGov. Thank you. You know, the two of us have been talking about government efficiency for decades. It's finally cool now. All of our smart friends are going and doing, you know, doing Doge and stuff. What advice would you give to the Doge team? Go deep and maybe start with the postal service. I have a funny story. I mean, it's literally personal and related to the Doge.

32:29Seven month old baby. so my first baby was open gov child out of wedlock and uh and now kind of growing up a little bit and we took the baby to the post office to get a passport this was like six weeks ago and it's not that easy to take a five-month-old baby and there's nap times and there's a window of 30 minutes where they take walk-ins and we show up and the woman behind the counter at we show up at 9 34 9 30 10 is the open window. And she says, no, no more walk-ins. And we said, what we're carrying this, you know, stroller. And there's a woman in front of us with her daughter and the woman is sobbing and a young couple with a baby comes in afterward and everyone is stunned.

33:12And this woman behind the counter just says, no more walk-ins. I only take two a day. And I said, well, it's 934. There's no way you could have processed two passports in four minutes. And people start crying. I mean, this is insane. The woman just didn't want to do it or she made up her own rules. And I'm a recovering lawyer and I'm kind of obnoxious. And I said, I'm going to need to talk to the manager here. It took like 15 minutes for a manager to trundle out of the back. And the manager was scared of the employee. Very obvious. This is a rogue employee. This was a level of dysfunction that was extraordinary.

33:45Yeah. It's crazy. It's totally insane. It's totally insane. This is the United States of America. This is Lombard Street in downtown San Francisco. And one individual gets to ruin the days and weeks or vacations of young families because she made up a policy on her own that is not the post office's policy. And it's gotten so sclerotic that she can't be managed. Something is clearly broken here. I've heard, by the way, talked to some of the people involved. And maybe it was you who told me this. Since COVID folks are allowed to, federal employees are allowed to work from home or remotely. They have to come in one day a month.

34:28So many people have moved away to other mountain houses or beach or home with the folks. And they come in the last day of the month and the first day of the next month, and they end up working in the office two days in two months. Is this true? I've heard, I've heard, I've heard about it. I guess we're going to find out more of the details once we get in and map it out. And president Biden's administration is trying to lock it in. So all these people are allowed not to have to come in at all anymore. They're trying to, as they leave and make all these agreements. But I think, I think we're I think, I think there's a lot of hype.

34:55I think there's a lot of excitement. I think what tends to happen and you know, me for many, many years now, and I'm often the one whether it's at the, at the dinner or in a meeting saying, Hey, like you actually have to understand how these institutions work and you have to go deep and you think it's really simple and it's not. And you think everyone who works in a government agency is stupid and they're not. There's actually a lot of smart people. There's a lot of people who care. I do believe that. And so I do, you know, as excited I am to maybe not have the experience we had in the post office last month, I do think this is an undertaking of extraordinary magnitude.

35:33And look, it's going to be extremely contentious, including to, you know, go full Twitter style on various government agencies, but there needs to be a level of, there needs to be a level of empathy and there's gotta be a level of understanding or it would seem to me it's not gonna be particularly successful. I would never bet against Elon given the track record. I think it needs to be extremely bold, but then there also has to be another side of it. You're right, that has some empathy and understanding and frankly, partnering with the best people in some of these places. And that's how I've always succeeded at Palantir.

36:02And I think at OpenGov as well, as you find, but also you find at the government that there are some good people there and you partner with them and they, and they, and they pull you in. Like the reason OpenCup gets pulled in is because there's a really competent person in one of these cities and they're like, I am competent and I want to get things done and we're going to work with the best thing. Right. And to me, that's like, that's what you need is there's, yes, there may be like that annoying lady and a few lazy people, but then there's like a few great people and let's find them and make it work.

36:26I mean, two notes on that. One, my, my father was a civil servant. And he worked at the National Academy of Sciences in Washington. And I mean, he was at his desk at 7.30 in the morning every day. I mean, most people in Silicon Valley aren't actually at their desk at 7.30 in the morning. Let's just get real. And he would come home after six at night and then we'd do a little dinner and he'd sit on the couch reading his stuff. And it's like, that was the 80s and 90s. There's a lot of people doing that. And the second anecdote is these regulations that we all hate, let's just get crystal clear on who created them.

36:59We. It's very obvious in local governments. It's less obvious. You know, there's an us versus them in the federal context. We vote for these people. Political parties. But we vote for these people. And every time there's a crisis or every time there's some corruption, we create new rules, new regulations. And what does that do? Slows everything down. How many companies have you had that have blown up or made the wrong move or had a near-death experience? The board, it's not a good board if it then goes into the entrepreneur and says, all right, from now on, Here's how things are going to work.

37:29And here's a new set of rules and regulations on how we're going to. It's not really how it works, is it? You don't want to overregulate. You do that and you're going to slow everything down. You're going to make it worse. If you overregulate, you're going to make it worse. I totally agree. One more question on this area is AI. That's a big one. I'm really excited about how AI is going to hopefully make government way better over the next decade. How are you thinking about AI? How are you using AI? We are excited too. We are extremely excited. We're pivoting the entire company to go AI first. And this is the obvious stuff.

37:57from using it in how we work, using it in how we develop software, how we code, including some tools in the 8VC portfolio. We are lacing our product with AI. We're using it to outreach and touch customers and show them our love. Basically everyone who has two arms becomes an octopus with eight arms and the whole thing. So you know all of that, everyone's talking about that. In the government context, there's two things we think are gonna happen. One is, and in my opinion, many of these systems are gonna start to be run by AI. And there's a second layer of that where like entire large processes could end up being run by AI.

38:35And this is where things get really scary. And why we think we've got to build this with trust and transparency at the core, but this is gonna happen. And whether it's Salesforce or open AI, the governments are innovating themselves. We see many governments, believe it or not, that are actually using AI, in some cases ahead of certain companies. They are excited about it. So it's moving extremely fast and it's why we're putting trust and transparency at the core of everything we're doing, but we're reinventing what we're doing. And it's - Well, you've built software that AI agents are probably very capable of using, so we might as well teach them how to do it.

39:08But it's agreed and it's imperative that we run the AI instead of the AI running. And we were talking about this earlier. I still think it's like you might have an apartment that instead of having 20 people, 10 people retire, you have the people who are left use AI to each do be more effective. And eventually over time, maybe three or four times more effective, but the people, but there's still people running those processes. We using these agents. It's, it's, it's about productivity. It's about quantum leap forward and what's possible in terms of government service. Our nation's governments, most people don't realize this.

39:40They can't recruit the people they need right now. It's tough. You have to compete. You have to compete. Yeah. I mean, we have a dozen amazing recruiters that are outreach that are using AI to magnify their outreach. We're building brand. We're doing all these things and you're running a local town and you're regulated like crazy. You can only pay this much. You have all these step functions for how to get ahead. If you do something great, you get a slap on the back. If you do something bad, you're like pockmarked and like run out of town. It's a very difficult environment to work. I've been running out of town a few times.

40:17It's a difficult environment to work in. And so we're seeing our customers and governments across the country that are understaffed. Everyone's upset. Oh, they're so overstaffed. It's not, it's, it's, it's not that simple. And AI holds the tremendous potential to do more with what you have. Yeah. Cause all these people are overwhelmed as well. And so let's help these people. They like their job better. If there's, if certain routine parts are done automatically and they get to spend more time. But also we all get so frustrated. You want to go, you know, renovate your bathroom or build a deck and you need permits.

40:45Let's issue these permits in five minutes and be very transparent about what the process is and the steps. Let's take your payment in and let's tell you we took your payment in and tell you when it's coming and all of that. So there's all these processes. It should just be really fast. Well, but there, but there is one thing. I mean, I do want to mention people get confused. Government is not one size fits all. You know, we're out here in the suburbs with large properties. You don't want a shopping mall next door. We do need zoning. Yeah. You don't want a shopping mall next door. Yeah, that's true.

41:15And yet there are, uh, there are towns like Kyle, Texas. I don't even know, that's not very far from here, that is booming. They want the shopping mall. And so the job number one of a government is to elucidate the wants and interests and needs of its community. And this is something we started off with that I think we weren't very clear on. We thought there is a little more one size fits all. The tech can be useful, but the way they want to use the tech is very, very different. You got to be really clear what the rules are and how to tailor it and how to bias it in different ways. Give them the ability to do for their residents and citizens what those people want.

41:50The people in charge need to be in charge. And then you help them go fast. If it's a horse community in Florida or in California, they don't want massive building and five minute permits. That's true. Woodside, California would probably push back on this use case. They want an AI agent that just like tell, this just like to delay. It's very kind to you and sends you. Yeah. Makes you take three years to get the approvals for your fake horse barn. in order to build something on your property. Zach, we started the American Optimist to push back on the pessimism and cynicism in our country. And a lot of people sadly expect dysfunction from their government.

42:25But what do you think government could look like and will look like over the next decade? Is it still pocket of dysfunction and some really good things? Like how do we make this something that's really great? I'm excited that effective and accountable are not bad words anymore. This is our mission statement to power more effective and accountable government. It is a big vibe shift, huh? It's a big vibe shift. I'm excited that the word efficient is not, I mean, maybe it is politicized, but it doesn't have to be. I want a world where you can hang an American flag in front of your house and it's not a political statement.

42:57And I think that we can return to a land where government works for its communities, not just for the people. I want a world where it's a noble calling to go work in government. You know, 80 or a hundred years ago, our best and brightest went into government. the McNamara's, the Kennedy's, what have you. Like it was noble to be in government. David Gergen said the baby boomers wrecked it. And we're in a generation now where I think there's like a resurgence of like, wow, government could actually be really valuable and really cool. And if we do this right, it can set up our markets and it can help us innovate and it can create a better quality of life.

43:39But I'm very bullish on what's happening in terms of the innovation taking place in government, the people that are going into government, what's happening in government. And this is not at the federal level, just to be crystal clear, in case you're, you want to push me on it. We only sell to state and local governments. Half of our money, half of the taxpayer dollars go to state and local governments. And we never talk about it. Yeah. This is a huge part of our country, state and local that we talk, we talk way too much. You know, I work with Cicero obviously on the state and I'm really passionate about that.

44:07And it gets way less play than it should relative to the, I think all of us have this instinctual thing, like being in a, in a dog pack where you think about the leaders and you're thinking about the leaders in DC, but there's actually leaders in the state. There's leaders locally that matter, matter just as much to our lives in many cases. Well, there's also like a pretty strong dialectic, like the states, and you know, this, you're friends with many governors, they, they get annoyed with the federal government all the time and have fights. And who do you think you are? This is the state of such and such.

44:32Well, the exact same thing happens with the local governments to the state governments. Oh yeah. So, you know, disagreement is definitely American. There are some big ones like that in Texas. Let's end on a fun note, Zach. A few years ago, you biked across the country from San Francisco Bay to Chesapeake Bay. What'd you learn about America? What surprised you? That was a very painful trip. I biked from the San Francisco Bay to the Chesapeake Bay. And we promoted OpenGov and met our customers and did like blog posts. And I don't really know what I was thinking. I thought I'd be able to cycle for six hours a day and then run the company for six hours at night in like a crappy motel.

45:10And, and this is before Starling too. So it probably wasn't ideal for, well, and I was so ignorant. Yeah. I'm on the phone torturing people at the company and then the service fails and I didn't, so the, the route connects the scenic byways in nine States across, it was, it was created at the bicentennial of the United States in 1976. and it's absolutely beautiful, but I didn't know the word scenic was code word for hill. And it was so unbelievably hilly. And I just accumulated fatigue. My body started swelling with the inflammation. And you told me, you're like, Zach, maybe hop on like an electric bike or just get in the sag wagon for a while.

45:50Just like hurry up and get back and like work on the company. No one really cares. And I was like, you're correct that no one cares, but I'm very stubborn. And we've kind of marketed this and I'd really feel badly if I didn't, you know, fight it out. You're the kind of guy we didn't talk about. You run like 50 mile races and stuff. So you are pretty extreme on this stuff. I, you know, I, there's something around and you're a chess player and there's something around, I think it was, it was Winston Churchill who he took a painting and he said, you know, the ultimate relief from statecraft is not actual relaxation and, you know, sunshine or hanging out in the chaise lounge.

46:29It's like, it's painting and using the other side of your brain and doing something creative and getting super immersed and kind of a flow state. He didn't use the word flow. You got to engage in good marketing. There's something I think when you're working so hard on like, you know, building software and distributing it to state and local governments that like, you know what? I'm going to go run in the woods or like cycle all day. Put yourself so hard to leave. You know, kind of clear out the brain. The trip, it's a big country. Lots of hills. It's unbelievably diverse. And the most beautiful states might be Utah and Kentucky.

47:04So lots of roadkill. I almost became roadkill on multiple occasions. And you see how different our states are and the cultures and what we're trying to do in the American project. and so there's lots of cause for optimism, but there's a lot of work to do if we're gonna stay unified and we're gonna stay focused on like American values and Western civilization and market economies and innovation and leading the world. What makes you most optimistic about, you know, why are we gonna make it work? I'm gonna sound like a terrible, you know, I don't know, tech bro or something like that. It's funny because I came from the land of government and, you know, you in many respects taught me a lot about the Silicon Valley ecosystem system and got me involved.

47:48And I was late in the game. You were making jokes that you were like, Zach, you're, you're like 31. I think you're too old. Like, this is going to work, man. I don't think you should be involved. You did. And, and, um, but I'll be honest, the, the innovation that's going on in America, and it's not just Silicon Valley anymore, makes me very optimistic. Chambers wrote his book, Connecting the Dots, and he went all in. And this is a guy running, you know, one time it was the most valuable company in the world. And he does early stage venture and is all in on startups. And occasionally I'll pass him a company.

48:23Hey, so-and-so is doing this larger company. They're amazing. It's too large. I want smaller. I want smaller. And it's going on in not just Austin and not just in New York and Seattle, but it's going on all over the country. And this is a chance for rejuvenation and reinvention and so on. And it's not political. It's people who want to just work really hard and create new things and create value. So that gives me, that gives me hope. And then the fact that the government might be cool again and not at the federal level in what OpenGov is doing and the promise we have, I have, sorry to be a little promotional here, but we sold the company last March.

48:57And I told you over lunch today, it's a weird experience. The company's just beginning. It's literally just beginning. You've known me as a nervous wreck for a dozen years that this thing was going to fail. and it almost failed multiple times. Sounds like being cashflow positive suits you, but I know you have some really good plans too. That's fair. But I actually think that the potential to do good is just beginning. I love it. Well, your energy to build from scratch, the energy to build all over America, that's definitely something to be optimistic about. And confident government is something we all need and I'd love to see it happen.

49:29So let's do it, Zach. Thanks for having me. Thank you.