Parker Conrad’s Revenge Fantasy

21:19Brian Halligan:Parker, you're kind of a contrarian along a lot of lines. That's one of the things I've always liked about you. What do people have totally wrong about being a CEO? Like there seems to be sort of a rule book around it that is kind of getting rethought these days. And I feel like you're rethinking pieces of it. What's all wrong about CEOing? What are these founder CEOs? What mistakes are they making? Well, I'll tell you. I mean, I don't know. I know so little about like any business that's not my own. So it's hard. It's hard for me to have like big opinions about like sort of the ecosystem. But I think that like one thing that I that I sort of believe in that that maybe is becoming like, you know, more, more sort of more, more of the conventional wisdom today is I've always struggled with the idea that as a CEO, you're supposed to kind of manage top down.

22:23a set of deputies. And, you know, you hire people who are knowledgeable about this area, you trust them and you let them kind of do their thing. And that's just never worked for me. Like, what's worked is you kind of have to reason from first principles. And you can do that with some of your lieutenants who can help you through it to sort of convince yourself of exactly what the right approaches in that area. And you have to have like real on an on the ground understanding of what's actually going on yourself. And if you don't have that, like, that's the only thing that's that's worked for me.

23:04And it's really it's tough to scale. It's tough to scale that. You know, it's hard. It's hard on you. I think it's hard on some of the other people. But it's the it's the only thing that sort of worked for me. And the only thing that's the thing that's really worked for Rippling. And so we have a leadership principle that we formalized on this that we call go and see. That's basically like, look, if you're, and it's true for me, but it's also true for, you know, executives and managers that like, you know, you've got to go right to the ground.

23:36Brian Halligan:Coalface. Yeah. And get, that's a good way of saying it, right? And you've got to, you know, something, There was a point in time where things were just like really going wrong with tax operations. And like, you know, we're a payroll company. One of the things that we do is we do, you know, we do these sort of quarterly filings for clients. And, you know, there are thousands of agencies across the country that you need to send these to. And there are a million little things that can go wrong. And if anything's off by like a penny, clients get like angry letters about this and it's really bad. Things were going wrong.

24:11Like the notice, the rate at which clients were getting notices from Rippling, we knew was like higher than the notice rate at other companies. And it was like an existential threat to the business. And like that was something where there was some muscle memory for me that this was actually something that would kill the company.

24:27Brian Halligan:That matters. It was something that matters. You know, the only thing that worked to solve it was, you know, was what happened is I got, you know, like me and my COO and like, you know, the person running the team and like someone else. We sort of wiped out our calendars and we sat down and we said for the next week, you know, we're going to just be tax ops agents. And so we're literally going to, you know, because there was this growing backlog of notices that needed to be addressed that clients were sending us. And we're just going to pick from the queue and start figuring out, like, calling up the tax agency.

25:04Why did the client get this notice? What happened? You know, why did they believe that, you know, the amount was wrong or the money didn't get there or the filing was not on time or something? And then reverse engineer it in our systems and be like – and it was just like doing the actual work of doing – it was the only – and then sort of like by doing that, we developed this understanding of like what was broken about it. the process what was broken about the systems what were the changes that need to be made but it was like impossible to diagnose or understand without sitting there and doing that

25:37Brian Halligan:okay on the matters thing it seems to me from just listening to you and i also spoke to a couple people on your team a lot of things matter and then one of the insights i think you've had is details matter from the ceo on down and you're in the details in a big way for a company that has four or five thousand employees. Is that fair to say? I think more so than me, for sure. It seems like you are like you sit in the middle of the engineering floor. It sounds like you are on the coal face for somebody in a pretty good sized organization. I certainly try to be. And so I that's I view that as like a huge compliment if, you know, from from the team.

26:20I think the place where I try and do that the most and what's maybe sort of most unusual about Rippling is that I'm the only like full admin for Rippling in Rippling. And so like I run payroll for the entire company across dozens of countries. I manage sort of like benefits and, you know, a lot of like, you know, IT policies and other stuff within the system. Yeah. You know, approve expense reimbursements, things like that.

26:51Brian Halligan:I was similar to HubSpot. I was a very active user of HubSpot, one of the most active users for many, many years. So I think it's important. It's like one of the things like people, you know, learn when they join Rippling is like the CEO approves every expense reimbursement over$10. And the reason for that is like not that I'm like this jerk that's like harassing people about their expenses. it's that I'm trying to actually use the product in the same ways that clients would, that like a diligent controller or, you know, sort of accountant would use the system and help review it in the same ways that they would and try and use that to sort of iterate and improve on things over time.

27:32There are a lot of things that we get wrong as a company, but I do think that that element is like a little bit of a superpower because I know that, you know, the CEOs of, you know, ADP or –

27:46Brian Halligan:They're not doing that. No way. They've never run payroll in their lives. No. Like never. No way. You know, there's a sort of on-the-ground understanding of the system, and that doesn't mean that, you know, we always get everything right, but I think that, you know, it's a sort of control on the system. And one of the things that I'm most proud about is that we did this study where we looked at companies that use Rippling and companies that use anything other than Rippling. And some of them use like modern systems, competitors of ours that are sort of more recent market entrants. Some of them use the more old school systems.

28:26And you just look at how many people those companies have in HR, IT, and finance roles and GNA roles within the organization. based on LinkedIn data. And what you find is that the companies that use Rippling at any given size range, so you have to look at it by company size, obviously, you know, companies that use Rippling have about half the people in those functions than companies that use anything else. I love that stuff. I love that stuff. And that's, look, I think that that, you know, it's not that, you know, our pitch is not like, hey, like, you know, like lay off people if you use Rippling.

28:59It's those extra headcount, they represent all of this administrative burden They represent a tax on your business because those are people that are just moving data between systems, dealing with administrative pain that you could instead redeploy for things that matter within your business.

29:19Brian Halligan:Now, Parker, so you're in the details. You just talk about your own CEO journey from like the four of you to 40 of you to 400 of you, 4 ,000 of you. Somehow you've managed to stay in the details. How has your job changed? What advice do you give to that founder with 40 people on how to scale it? How did your job change? And how did your day-to-day change? I think probably the most important thing was, like, the people a level below me. And honestly, I think that probably, like, their jobs have changed a lot more. Interesting. Than mine has. Interesting. The executive team at Rippling has been like pretty like stable over time.

30:05There's been like – there's been some turnover. But I think, you know, a lot of the people that are there, you know, like our CRO was the eighth person in the company. And, you know, my COO joined when – you know, right after the Series A. But he and I, you know, had known each other since college. So we've been friends for a long time. You know, there have been a bunch of people that have sort of been there a long time. And so there's just, I think, a lot of trust. And I think, you know, everyone's kind of grown, like, everyone's sort of grown in their function and in their job over time.

30:40Brian Halligan:One of the things I've noticed, Parker, VCs do as soon as they make their investment, like, the first thing they say is, like, we got to uplevel the team. Yeah. And when I look at the best companies, a lot of the management teams are kind of homegrown. Like a lot of HubSpot's management team been there since the pretty early days. What do you think of that advice? I think homegrown is really underrated. Homegrown is underrated, but also like if the people, sometimes the people that you're trying to grow are not going to make it. Sometimes. You know, and so I think what I would say is like hiring people that you just are, you're really close to.

31:17I mean, it's weird to say, but hiring people that like you've worked with, that you're friends with, that you enjoy working with.

31:23Brian Halligan:Really lowers the risk. Really underrated, actually. Yeah, lowers the risk. It's underrated, yeah. And so... Went to school with. Yeah. There are people that we brought in that, you know, we hired that were not like that, that had been unbelievably successful as well. Yeah. But there is something to the fact that, like, you know, for a long time, Rippling's CMO, he's now stepped into a different role, but was this guy, Matt Epstein, who was like, you know, I worked with him as CMO of my first company. He was CMO at Zenefits. He joined Rippling, was CMO at Rippling. Like it was just this longstanding like professional relationship that I had.

32:04And there's sort of something to that. I feel like I have a pretty good sense of whether someone's going to make it or not. And I'm sort of wondering like how would I do, you know, your job at Sequoia and advise like an entrepreneur on their team, I would have a lot of humility about it. And I'd be like, man, I just don't, I don't know how I would explain that or judge that. And one of the problems I think for investors is I think it's actually really hard to do from the outside. And so even if you have like done it yourself, you know, you're just not spending enough time at the company to really know about this exec and whether they're going to make it.

32:44And so the advice is like maybe not all that useful. And then, you know, if you're an entrepreneur that's doing this for the first time, I don't see how anyone figures. I mean, looking back, I'm like, I don't understand how anyone figures their way through this because it seems like so hard to know having not seen it before.

33:02Brian Halligan:I'll tell you the one thing I've noticed with so many of the early stage, mid-stage startups is their hit rate on hiring that external been there, done that, CMO, C-whatever. It's 50 % within 18 months. It's much harder than it looks. People don't talk about it. In this vein, you're interviewing somebody. What's your filter? What are you looking for? What's your process? Is there anything unusual you're doing around there that you think you might have some intuition? that people don't. Here's what I do. And I don't, I'm not, I'm not saying that what I do is like the right thing to do, but usually what I do is I send candidates all of the investor materials that I prepared.

33:45So I send them, like, we write up a memo on the business. There's like some metrics and I send all of that to them ahead of time so that they have context and they show up to the meeting. And I'm just like, look, this first meeting is really just a chance for you to ask me questions. So, you know, I'm sure you had a chance to look through this. You know, what, what didn't make sense to you? What were you like? I don't think that's right. You know, what did you have questions on? And let's talk through it. And then usually we sort of talk through their questions and, and, and sort of secretly I'm sort of judging them by how that conversation progresses.

34:21And so some people have like no questions and that's like, that's usually a pretty bad sign. Or some people have like clearly like fake questions. And some people like actually like even very skeptical questions are really good. Like if they're smart, there are some people that like they immediately get to the core of the issue, you know, where they identify like the two things that are going to really be problems. And then sometimes we have a great discussion about it because, you know, I've got I've thought about those things, too. You know, I spent a lot of time like here's how we're approaching it.

34:55Here's what I think. and here's what didn't work and here's what I think is going to work and this is why this is so important. And sometimes the people that ask those really challenging questions, they get it really quickly and they're like, oh yeah. And that means also that, and then as a consequence of that, and I think it works because it kind of simulates what the actual working relationship is going to be like where we're going to have those types of conversations in our one-on-one meetings. Love this. And that's going to work. So that's always been the thing that's been most telling for me, that and backchannel references.

35:30You know, I usually ask people, like, give me, like, six references, not two because everyone's got two. So, you know, give me six. And then I call two randomly from that list. And then I try really hard to find people that are not on your list.

35:46Brian Halligan:I'm the same, yeah. And that's been really telling. The thing that I've always – I don't have a good answer for is I found it's really hard to summon great executives on demand. And so – Wait. What do you mean by that? Well, it's like someone – suddenly someone leaves or someone is like – it's like not going to make it. And it's – you know, and you're like, crap. I need a CTO. Yeah. Our current CTO, who's amazing, was someone that randomly fell into my lap, you know, that someone at Sequoia introduced me to. And it was like, wow, like this is amazing. And it was very clear that, you know, this person was exactly who we should hire.

36:33But we'd hired someone else, you know, six months earlier who's not working out. And we hired that person sort of like it was one of those things where we had been looking for so long.

36:46Brian Halligan:Yeah, you gave up. You know, looking for so long. It was like, oh, maybe, maybe it'll work. You know, and we had. Does that ever work? Never, never, never does. But like, what are you going to I mean, like we've been looking. I don't know. I think we've been looking for like a year. You know, it's just. And all the his direct reports report to you in the meantime, which is like brutal. Yeah. And so, I mean, I'll tell you what doesn't work is like usually like exec recruiters don't work. Okay. I was just about to ask you that. Okay. Exec recruiters are, you know, great at sending you solid B candidates.

37:27And there's always the exception that proves the rules. So we hired our CFO who's amazing.

37:34Brian Halligan:Good person to hire through an executive recruiter. Through an exec recruiter, like actually like really incredible. Yeah. And so there are some exceptions, but usually they send you a lot of B candidates. And the problem is that I think the really incredible people, they get snatched up. Before they leave. With an exec recruiter. Like they're like, you know, they've always got people paying them. Yeah. And they get a million options. And they've got relationships with people and someone is yanking them out. Like they sort of, you know, they sort of secretly whisper to their spouse that maybe they're thinking about leaving.

38:12Brian Halligan:And there's five people the next morning that heard about it and are already like, you know, been talking with them for a long time and have worked with them before. And have been nurturing them around drip marketing campaign. They never make it into the. Okay. Let me ask. Related to this. You hire someone. It's a month in. You're like, I might have fucked this up. But it ended up working. Has that ever happened? Never. Okay. So a month in, if your gut tells you it's not right. But I'll tell you this. How long do you wait? Always longer than a month. How long do you wait? Six months? Yeah. And the frustrating thing is I see this behavior in managers at Rippling and I get very upset about it and very angry about it.

38:59Like, why did you fuck this up? You know, like you can see it happening. Like I have this conversation all the time where I'm like, you know, I'm like, okay, here's your team. How many of these people right now? Like tell me which of these people you would bet your career on. And like, whoa. And it's like, well, this person and this person. And I'm like, none of the rest? They're like, well, it's a tough idea. And I'm like, okay, you know, like fire all, like let's start over. And like, well, no, no, no, no. There's all kinds of reasons why not yet.

39:36Brian Halligan:And inevitably – They're all gone in a year. They're all gone. But it takes a long time to get there. And it's so frustrating and so infuriating. And it's like why can't you as a manager just do the job that we expect of you and make the hard decisions? And I make all the same mistakes myself. Right. It's like equally difficult for me when things are not working out. It sounds to me from people who have spoken with inside of Rippling and yourself that it was an intense startup and all startups are pretty intense, but it's now an intense scale up. You've kept that pace and intensity up as you scale through the years.

40:19Brian Halligan:Most of the founders I work with are really struggling around 100, 150 employees to bring in new people they didn't know well. or a couple of middle managers showing up, that intensity and that pace doesn't seem to scale. How have you scaled that? Well, I think one thing that I believe very firmly is that there's ultimately only one person in the organization. There's only one constituency for speed, and it's you as the CEO. And so it's really one of your biggest jobs is to sort of set the clock speed of the organization. And the reason is that everyone else in the organization can sort of solve for all of their problems by just extending the timelines.

41:03You know, like they can get it done to – you know, in the ways that they want to get it done. They can – you know, they don't have to sort of make unreasonable asks of people that they're – you know, like every other constraint can be solved for with more time. What happens is things start to get like really slow and there are real problems with that for the organization long term, but usually not for like any individual manager or executive within the company. And so you're the only natural constituency for moving quickly. And so you really have to be – you really have to care about it. And you have to sort of pay attention when people are trying to slow it down.

41:48And so one of the things that happens is like your team will often come to you and they will present you with what I call CEO in a box decisions where they will say, look, we can do A or we can do B. Like you choose. And it's this illusion of choice.

42:04Brian Halligan:The tyranny of war. Yeah. But it's an illusion of choice because the choice has already been made for you because the important choice was the decision that A and B cannot coexist. and usually like my immediate reaction when someone brings me something like that is to just on principle insist that we have both A and B and like understand like what laws of physics are violated that prevent A and B from coexist. It's like the second law of thermodynamics problem. Sometimes it's like it's much harder for the team to do A and B and they would prefer not to do that. But sometimes it's actually just as simple as asking people for a third path, you know, to like say, I don't like these options.

42:51Like, can we just think a little bit harder? And is there some way to kind of get there? When you think about like the pace at which organizations move, I think the natural thing is people sort of believe, man, if you're like tyrannical CEO, that's like driving people really hard. and like, you know, what's going to happen at most, maybe it's like 20 % more. Patrick Collison has this great site that he put together on sort of like things that moved absurdly quickly and things that moved very slowly. And it's this example of like, we, the space program to land someone on the moon was like four years and the Van Ness bus lane was like two decades or something in San Francisco.

43:32And you sort of look at these, at two different organizations that might both have good, well-meaning people. And like, you know, the organization that moves quickly, it's like orders of, it's like an order of magnitude faster. It's not like 20 % faster. It's just amazing what you can accomplish. And so maybe the sort of slightly more positive way of articulating this is I think that people are often capable of so much more than they believe themselves to be capable of. And so if you can sort of challenge them about the perceived constraints on the problem and explain to them the impact of being able to do A and B and why, like what happens if we could do A and D.

44:15Startups are somewhere between completely impossible and very, very, very, very hard. And there's such a narrow ray of light that passes between those two. The companies that make it through usually at multiple points in the journey find ways to do things that are seemingly impossible. And it is – you have to sort of acknowledge that what you're asking for is like really hard and you understand that. And it's just – there's no other way. And so let's sit down together and think about whether it's possible. And sometimes people find clever solutions or new reserves of possibility to kind of get there.

44:56And if you kind of do that enough, it compounds. And like you can accomplish a lot more than the company that isn't doing that.

45:06Brian Halligan:I had a line where somebody would bring me something like that and I would say, When Moses came down from the mountain and he had the tablet, was there an 11th commandment that we all missed that we couldn't do this thing we're talking about right now? Yeah, exactly. You know, yeah. It's like it's not it's not a law of physics. We can figure it out. OK. I hear you've got something like 40 or 50 X founders on your management teams in your company. What's going on with that? Why are you doing it? How do you manage that chaos? I think it's actually a lot more than that now. Okay. But. Why? I think that.

45:49Are you aqua hiring or hiring? Like what's the. Sometimes we aqua hire. Sometimes we hire. It's a profile that we look for. You know, Rippling, you know, we sort of coined this phrase. I know HubSpot. HubSpot's been doing this for a long time. but we coined this phrase of like compound software.

46:09Brian Halligan:You know, I'm really mad at you about this. Yeah. Because we are a compound start, but we never came up with a clever name for it like you. And it totally stuck. Yeah. And everyone's like, yeah, Parker's the original. Like, we're the original compound start. For sure. HubSpot was doing it long before us. Well done. But we, the reason that we do this is because I'm convinced that this is the right way to build software and that actually we've been building software wrong for a couple of decades now. And most people believe, yeah, yeah, yeah, you're doing compound software. There's some like sales and marketing advantages to building, you know, good enough, but integrated products.

46:48And like, that's not it at all. Like, I think the belief is that actually you can build better products by building them in this integrated way. And you can do it because the fact that these things are deeply integrated and seamlessly interoperable on its own makes them better. But also when you're building across like multiple applications, you can afford to invest much more deeply in a set of capabilities that are common to all of the applications. You know, things like analytics and permissions and workflows and custom objects and stuff like that. But I think a lot of, you know, and this was sort of the original, like before we were this articulate about what we were doing and why, it was one of the original founding principles of Rip Lane was that we were going to do more things, not less.

47:34So this focus thing was bullshit. And like, you know, that was like what David wanted us to do, but that's completely wrong. And we should do it this way.

47:41Brian Halligan:And so a lot of... Same with HubSpot. We're like this whole focus thing, like you should do one thing really well. We're like, no, we're going to be very thin, but we're going to get to table stakes at some point. It was the exact same thesis we had. Yeah. So, yeah. But a lot of the history of the company is trying to figure out novel solutions for the very real challenges with that approach. There are a lot of reasons why it is easier to focus on one thing. Along the way, a lot of problems come up and there are bottlenecks that develop in different parts of the organization. And one of the places that, you know, a bottleneck forms is really at the level of sort of executive attention around these things.

48:23And so you end up needing people who can be like the CEO of these products or who can drive things forward, who can find a path. Because a lot of people who are like very good managers and executives in engineering or product or whatever, what they do is they come to you with problems. And so they say, there's a series of gaps we have. Like in order to win, here's like a long list of things we need to do. And they unroll the list and it rolls out onto the floor and goes all the way down the hallway, you know. And like we've prioritized it by sort of most important on down. And I have a team of this size.

49:08And this is about one quarter's worth of work is like, you know, these things this far down the list. And so we're going to do one quarter's worth of work and we're going to solve these things. And that's what it is. And the problem is, is like, yeah, but the list goes all the way down the hallway. And they're like, well, but my job is to sort of, you know, that's your problem, right? You're like, and so they're asking you to find a way to make ends meet because, you know, they're like, their job is just to kind of move down the list. And then you're still fucked because like at the end of the day, they're going to do those things, but you're still not, you still haven't solved the problem.

49:47Yeah. It's just like you need to win. And so you need people who can find ways to do the impossible that sort of understand, look, like the CEO that's asking you to do unreasonable things. Like I didn't create this situation. Like the market created. Like this is the reality that we find ourselves in, which is like we need to do these things. And if we don't, we're dead. We're screwed. And so we need to find some way or some alternate path or some sort of, you know, there needs to be some effort to solve the whole problem or like it doesn't matter, you know.

50:25Brian Halligan:And you think ex-founders are particularly good at like breaking the laws of physics. Or they just they've been in situations where they've they understand that, like, yeah, like it's like we either, you know, they've sat there and stared at the dwindling bank balance while, you know, while the sales isn't working. And they're like, oh, shit. And like and they understand that, like, yes, it's absolutely true that, like, you know, this is a reasonable set of expectations for the team this week, this month, this quarter, this year. and yet if we do the reasonable set of things, we're dead. Yeah.

51:04And so like we can either give up or we can try and find a way to accomplish an unreasonable set of things.

51:12Brian Halligan:How do you manage them though? Founders are typically a little unruly, want a crap ton of autonomy, often don't play that well with others. Like how do you manage the chaos? I don't know if I've found that to be the case because like, you know, if you've started a company, I mean look there's all kinds of people but like you know man like you've got to convince a bunch of people to work for you you know that you know when it doesn't make any sense you know and like there's a certain amount of charisma or interpersonal skills that you've had to like develop like even if you didn't have it I think that most people are more well socialized than that but there are always I guess exceptions and we do give people a lot of autonomy Because like the best thing in the world for me is someone who can run with something, you know, and sort of take it off my plate.

52:05Like that's that's ideal. So everyone everyone's aligned on there being that kind of autonomy.

52:12Brian Halligan:Just switching gears briefly. Deal. Your main competitor. Been a lot of drama around it. Do you want to talk about it? Sure. Weirdly, I would say Deal is a competitor, but probably not the main one. You know, the companies. You got a lot of them. Yeah, there's a lot of, you know, if I was like, who's our main competitor? It's private space. I would be like, man, you know, in payroll, it's probably Paycom, Paylocity, ADP, you know, Workday for HCM, maybe, you know, Gusto down market. Yep. So we come up against deal in specifically this sort of global part of the business where you're – I need to hire someone in XYZ country and I have like one or two people that I'm hiring there and I don't know anything about it and need some help.

53:04But like that's where we compete with them. But we have much stronger competition with these other companies. it's just that this weird stuff happened with them.

53:19Brian Halligan:Tell me about it. So when was the first inkling you had that there was a spy? That someone was spying on, someone from Dio was spying on your company? The weird thing about spy is like spy makes it sound. It's great. It's a podcast. Sort of sexy and fun. That's the idea part. Which for a podcast is great. But I think it's really like, it's not that Dio was spying, it's that they were stealing. And it was just theft, pure and simple. From the CEO of the company. Yeah, it's worse. And the thing that happened is we got a reporter who was writing a story, sent us a bunch of rippling internal Slack messages that, you know, many of which were sort of cropped in sort of like unflattering ways and taken out of context and was like asking for a comment on it.

54:06And just, you know, because of the context, it was very clear for a bunch of reasons when you thought about it that the only place that this could have come from, like it had to have been deal. Like no one else would have sort of known to send this stuff to that reporter. And so the implication was the deal had, you know, full access to our Slack. And then from there, you know, so we sort of knew what was going on immediately.

54:31Brian Halligan:But even before that, did you have an inkling like in some territory that they were winning an unusual number of deals and like how are they doing it? Was there an inkling before that? There really, you know, once you started looking, you know, there were these examples. There were like when this story came out, you know, there were customers that wrote into us and former customers, you know, that that wrote into us. And there was a guy that was a former Deal customer that took a demo with Rippling and was talking with us, came to us because he wanted to switch. And he spoke with a Rippling account executive.

55:07And within hours, he got a WhatsApp message from Alex Bouaziz, this CEO of Deal, you know, who he didn't know, never met before. Sure. That was like, hey, I hear you're like, you know, looking at other stuff.

55:18Brian Halligan:Like, you know, let's try and find a way to get you to, you know. Seems like an awful big coincidence. And he emailed at the time, and this was before we knew anything was going on. He emailed his rep. He was like, whoa, this is super weird. Like, this freaked the hell out of me. Like, you know, how did Deal know that, like, you know? And, of course, the rep thought nothing of it, so it didn't go anywhere, right? Until later you look back and you're like, oh, yeah, you can actually trace the person who's a Rippling employee that Deal started paying to send them all of this internal steel, rippling internal data, including mostly like CRM data, just like every opportunity we were working, every customer we were talking to, the pricing we were offering them, the objections they had.

56:05You know, it was just every single day just sending all of it directly to Alex Bluzzi.

56:11Brian Halligan:Do you think Alex and crew targeted someone or took an employee and got them to work for you or there was somebody working for you that they got to. It was definitely a collater. They collopted somebody. And, you know, the thing is that hasn't been talked about a lot is it really seems like it was, you know, wasn't just us. There were a bunch of other companies. So, you know, there was sort of. That they were doing it too or in the industry writ large is a lot of this going. No, no, that deal was doing this. I see. You know, like we were not the only ones. Yeah. And that really— It was a defined play.

56:49Yeah, this was—I think—I believe that that company was built on this foundation of theft from competitors. And that that was like a critical component of what they're doing. And so, you know, one of the things that we decided to do is we decided to be extremely public about this and come forward.

57:10Brian Halligan:Even before that. So you get this thing from your press guy like they have to have access to our slack. Yeah. And then you ran a honeypot operation to kind of prove what you thought. You just talk about that meeting and what was going on. Can you just give us a glimpse behind the scenes of what happened in that meeting? Well, so actually first before that, what happened is we needed to figure out like who was doing this. And I – my assumption was that this was probably a former employee that left – you know, because sometimes people leave one company, they go to another. And sometimes people are like, you shouldn't do this.

57:53It's wrong. It's illegal. But sometimes it happens that people take some stuff on the way out. Yep. And so I was like, maybe there's someone who kind of like, you know, did their new employer a favor on the way and sort of unethically instead of, you know, what we would do in a situation like that is we would say, whoa, whoa, whoa, like don't, you know, delete that. We don't want, you know, and unethically they said, goody, you know, like great. And then what we did is, you know, the sort of light signature of the behavior that really popped up was the search history in Slack. Like what, you know, there were certain searches that this person had to have been doing.

58:31Brian Halligan:So did you invite your IT guy in? Like how did it do? Well, so this is the crazy thing is the search logs in Slack are not visible to Slack clients. Oh, you pinged Salesforce. And so, and in fact, like cynically, I think they were doing it in this way precisely to avoid detection as they were doing searches and then getting things from not joining the channels, but getting things from the preview, from the search, from the actual searches. And so really the only way we were able to do this is we got introduced to some like very senior people at Salesforce who like to their credit, you know, sort of agreed to help us track this down.

59:11And they pulled from their own internal logs what the search history was. And it was very clear exactly who the person was. And that person was still an active Rippling employee.

59:20Brian Halligan:Who is the one who came up with the idea to look at that particular thing? To look at the searches? Yes. I can't even remember. But it was so obvious. You called a meeting of a bunch of smart people and were like, how are we going to catch them? It was like, I mean, it was a very small team. It was like, you know, me, my general counsel, like, you know, the deputy GC. It was like two or three people in legal, two or three people in security. And it was like, hey. How are we going to catch them? You know, to get this, the slacks that we saw, they must have done these searches to get, you know. Yeah.

59:56And these are weird searches. Like someone, and so we've got to be able to find this. And so then we clearly, there was one person that was like doing this and it was very clear who it was. The big kind of insight was like, well, look, it's actually, because we were thinking like, is there something that we could do where we could put something in Slack? Slack, you know, like maybe like put like a fake customer in Salesforce with a phone number that like goes to our law firm, put that in Slack and like see if a deal sales rep calls that phone number, you know, and like kind of triangulate that way.

1:00:28It was just it was too hard to sort of know because it was too hard to see what deal would be doing with it. And so the insight was realizing that you could flip it around and you could actually the thing that we could see was the searches. And so we could see what this guy was searching for. And so we had to do it the other way. We had to give some information to deal and see this guy searched for it. How did you get the information to deal? So, you know, look, a lot of companies that are in competing spaces have some somewhat regular exchange of like legal letters where, you know, for whatever reason, you know, they send you a letter and they're like, were angry that this person joined and make sure that they're, you know, or this person recruited someone they weren't supposed to recruit.

1:01:18And, you know, and so this is a sort of fairly formed, there's a sort of low level of that that was kind of happening. And so there happened to have been a letter that they had sent us about something or other related to a deal employee that had joined Rippling that we had, you know, sort of, I think at the time I had decided we're not even going to bother responding to this. But we suddenly said, well, let's respond to it. And when we responded to it and we said, OK, we decided to put together like a screenshot of a Slack message that was like basically like a fake Slack message. Although to make sure that it wasn't actually fake, we actually had someone send that Slack message so we could we could be like, no, no, it was a real Slack message.

1:01:59But we put this thing together and the Slack message – what's actually the funniest part of this is that initially this was designed by the legal team. And, man, the Slack message was so boring. It was like no one would have cared. It was so uninteresting. And so – and this was a very closed circle of like you weren't allowed to tell anyone about what was going on. And so I called up our former CMO who was like – he had moved into a new role at Rippling. But he was like – one of the things about him that's so amazing is he's like just great at writing, coming up with like cold email messages. And so he was always the guy we went to when we needed like a new cold email to send people that was – and so I called up Mepstein and I said, Mepstein, we need you to write a cold email that's going to have a 100 % S1 to S2 conversion rate.

1:02:55Like definitely someone's going to have to click on this. And he came up with the actual thing. It was this message that sort of suggested that there was this channel in rippling Slack called D defectors where ex-deal employees were talking about deal maybe in ways that were unflattering. And there were, you know, we sent them the message and then just for added sort of theatrical effect,

1:03:17Brian Halligan:We like blacked out like parts of it, you know, to just be like, really be like, what are the blacked out parts of it? And it was included in this letter that we sent to their CFO, who is, you know, the CEO's father and their outside counsel and their head of legal. That was the sort of person's title. So there's only three people. One of them, you know, presumably it's not the outside counsel. And then the other two are quite senior within the company. and we sent them this letter, you know, at like, I think it was like 8 p.m. And then we waited. And I remember waking up at like four in the morning and checking my Slack and there was just all these messages.

1:04:01It was like, holy shit, they did it. And we were getting –

1:04:04Brian Halligan:Somebody was searching on that channel. He was searching and going into this channel and like, you know, it was purposefully a weird search term. It had never been searched before. We checked. you know, it was not a real channel. You know, so there's only one way that this could have happened. Okay, now you know who it is. Your month and a half search is over. Then what happened? Well, then, you know. Who approached him? So this, the employee was based in Ireland. Yes. And Ireland has, the Irish legal system has an extraordinary form of relief in civil litigation that allows you to file an ex parte process.

1:04:44So basically you don't have to alert the other side. You can go to court and get without the other side being aware of it an order from the court that's effectively sort of like a warrant. In the U.S. legal system, that exists in like a criminal case but not in civil litigation. And so we were able to get this because of the sort of strength of the evidence that sort of there was a court order to get access to this guy's phone. And so there was a court officer that came to our—

1:05:15Brian Halligan:Police officer-ish person. I don't know about police officer, but court officer. It was like a solicitor is the term. I actually don't know. But in the Irish legal system, there are solicitors and barristers. And so maybe more like a lawyer. Wait, wearing a white wig or— Man, I don't even know. Now I'm going to look that up. But anyway, you know, they showed up at the office, met this guy was taking, you know, sort of, you know, went into a room for a meeting. And there was this team arrayed with, you know, sort of forensic IT people, the sort of officer of the court said, look, I've got this order for your phone.

1:05:52And he sort of said, I don't have my phone with me. I need to go get it. That turned out not to be true. And then he sort of, while he was like going to get it, kind of ran into a bathroom and locked himself in the bathroom. And what we later learned is that in the bathroom, he did a factory reset on his phone, tried to flush it down the toilet, and then came out of the bathroom. And, you know, the court officer was telling him, look, you're violating the court order. There's, you know, this is something that you can be in prison for. And he ran out of the building and took off. And then over the next sort of 10 to 12 days, there was this sort of ongoing legal process to try and get sort of like real like police enforcement of this to get this guy to get a lawyer to sort of – and get like contempt charges filed.

1:06:44And eventually what happened is he, you know, sort of facing, you know, sort of these legal consequences. He eventually sort of like turned and sort of started cooperating and said that he had destroyed his phone. But he also he told us and this is all, you know, in the sort of the sort of court proceedings and the affidavit that he produced. But according to these proceedings, you know, allegedly what happened is that he immediately after he left our office, he got called Alex, the CEO of D. told him what had happened. Alex said someone would reach out to him, you know, allegedly. And then two attorneys at Deal, like employees of Deal who were attorneys, called him back and they told him to destroy his phone, which is like, that's a bad thing for anyone, but it's really bad for attorneys to be saying that.

1:07:47Told him destroy his phone, get a new burner phone, call them back, delete all of his accounts, and they offered to relocate him and his family to Dubai and get him out of the country. Dubai is... No extradition. You know, not a lot of extradition options. One of those lawyers, by the way, who was based in the UK, practiced law in the UK, has since relocated to Dubai himself. I see. This all came out. And so there was this crazy thing where he detailed, You know, like the person who was doing this detailed everything that happened and how he was recruited by the CEO directly and sent all of this information to the CEO and was paid how he was paid and all, you know, sort of all of this stuff.

1:08:34Brian Halligan:Do you think this is going on a lot in tech? I don't think it's going on a lot. And look, I think the reason that we really came forward with this. Yeah, you went very public. You know, obviously there's a reason for rippling that, you know, for the business, we need to defend the business. But, you know, more importantly, I do think that if deal sort of moves forward like in a way that's unscathed, there is this risk that the overturn window shifts and that this becomes a norm. You know, that it's sort of like, ah, you know, your competitor paid someone to steal your CRM data. if you can't stand the heat, get out of the kitchen.

1:09:17You got to be doing the same thing. And everyone's got to have an espionage team and a counter-espionage team. And I just don't think that that's not the way I want the world to work.

1:09:30Brian Halligan:Okay. Anything else you want to tell the audience? Any other advice you would give to founders and people who want to go from four people to 40 to 400 to 4 ,000 and 40 ,000 someday? I think like everyone kind of needs to find their own path through this stuff. It's one of the things that's kind of hardest. Like I don't really think that there are a lot of rules. And recipes. And so, you know, it's why I probably have like a lot more, you know, there was a point in my life when I was like very angry at investors. And I think I've sort of reached some point where I actually have a lot of empathy for investors and like how hard it is to be in their position and how impossible the job is.

1:10:17And because I think it's really hard, you know, even if you have a lot of experience yourself, you know, they're like people all find their own paths and things change. Like Rippling was like a business that was like so close to what we were building at Zenefits. Like it wasn't – it was the same industry, slightly tinkered with kind of the sort of principle, kind of the foundational principles of sort of what we were building. But like the world was like four years into the future from when I had started Zenefits. And that one thing like changed everything. It was like, you know, all of the things that, you know, or many of the things that had worked for us at Zenefits didn't work at Rippling.

1:11:02And like, you know, just like everything was different because of a few changes to the starting assumptions. And it really sort of made me realize why so much of the advice that people give out about how to do this is so useless. Because everyone is fighting yesterday's war, you know, from their own experience. And like things are very different. You know, things have changed just because of the slow advance of time, if not because this is a completely different business and a completely different industry with a totally different set of people. So it's a real struggle. And it's probably one of the reasons why I'm like, man, it sucks if you have any other thing that you can go do.

1:11:45Like maybe that's the right thing to do instead of getting involved in this whole thing.

1:11:50Brian Halligan:I appreciate you. Thank you on behalf of the listeners. You're an inspiration to many. Congrats on all your success. Congrats on your revenge chore. Well, thank you very much. Appreciate you. Okay, hope you liked that interview with Parker. I really liked it. He's a smart guy. On hiring, he's got a bunch of cool ideas, some of which I'm definitely going to borrow. I like his idea that if he's got a candidate that's coming to meet him, he sends them an old board deck or his investor memo, lets them read it, And he spends like the first half of the interview just talking about that. And the reaction of the candidate to that memo and the ideas they come up with really says a lot about them.

1:12:29Brian Halligan:I love that he does that. He relies a lot on reference checks. He does something interesting there. He asked the candidate to give him six references, which is kind of a lot. And he only calls two. He's trying to figure out if they have six references or not. But then he leans much more heavily on the blind references. And this is something I did as well. I would say 60 % of my decision criteria was around the third party references of people who used to work for them. So I thought that was interesting. This is something we didn't do at HubSpot, but I really liked how he hires a lot of ex-founders.

1:13:04Brian Halligan:And he talked about how ex-founders are used to breaking the laws of physics. They're used to just really tight constraints and having to really do hard things. And so he has some sprinkles throughout his org, and he's had a lot of success with them. He likes his senior team to be a mix of homegrown talent and been there, done that talent. And this is pretty consistent across most of the CEOs I interviewed. And I feel like it's a little bit of conventional wisdom and skill up land that you just hire a bunch of been there, done that people. I'm not sure that's right. A lot of HubSpot's team over the years was 50 % homegrown and 50 % been there, done that.

1:13:42Brian Halligan:And that mix, I think, is just about right. I took some things away on pace. He's at 4 ,000 people. A lot of companies slow down when you hit 4 ,000 people. He seems to be keeping the pace up. And he does a few things that I think are smart. And a lot of the CEOs I interviewed do a couple of these things. First, he really tries to stay on the cold face with the customer. He's one of the most active users of rippling the product. He runs payroll for all 4 ,000 employees in Rippling. He's very close to the customer experience through that. He stays on the coal face with the employees too. He sits right inside the engineering organization where you can see what's going on, hear what's going on.

1:14:24Brian Halligan:And he talked about the CEO sets the pace. CEO slows down, the org slows down. CEO speeds up, the org speeds up. One of my big takeaways on Parker is he doesn't have a chip on his shoulder. He's got a boulder on his shoulder. and that boulder really drives him. He calls it his revenge tour, the whole company. I think this is pretty common amongst some of the best CEOs and can be a real motivator. And in his case, David Sachs put a boulder on his shoulder. I have a chip on my shoulder and I had an old boss put it there. I had a guy work for for a decade. When I went to resign, he said, you'll be nothing without me.

1:15:02Brian Halligan:And this is like 30 years ago and I still remember it. And if I really want to get fired up, I think about the day I resigned from that company. So boulder on the shoulder, super useful. Channel it. I think it can be really useful for you. My last thought on Parker and about scale up startup land writ large. I meet with lots and lots of founders these days. There's a new breed of founder I call five tool founders. Now, a great baseball player can hit, can hit with power, can catch, can run and throw all at an elite level. And I'm noticing a new breed of founder who is kind of like that. And I think Parker's one of them.

1:15:40Brian Halligan:I think Brett from Sierra is one of them. Mati from Eleven Labs. Gabe from Rogo. Dara from Delphi. Where they're very good at coding. They're very good at design. They have vision. They can recruit and they can sell. Those are all five tools that they have in their bag. And I'm noticing more and more of them. and if you're one of those founders that's deeply technical like them but can't quite story tell and sell, I would work on that and get some coaching on that and get some feedback on it because those five tool players are worth their weight in gold and if you can be a five tool player, that really opens up a lot of doors for you.

1:16:19Brian Halligan:Okay, those are my thoughts. Lots of takeaways from Parker. I'll see you on the next episode.

1:16:30you