Lessons From A Female Billionaire Business Founder ｜Christina Cacioppo, Vanta

0:00Today on Leaders, Christina Cassioppo. Her story is one straight out of a Silicon Valley textbook. After graduating Stanford, Christina began as a venture capitalist funding Jack Dorsey's early Twitter alongside Tumblr, Etsy and Kickstarter. Then, after her time at the glory days of Dropbox, she set out to build something of her own. She taught herself how to code and turned an Excel spreadsheet into Vanta, a two and a half billion dollar business. Christina, welcome to the show. Thank you so much for having me. Okay, so you once said that you never thought you were going to be the type of person that would be a founder, right?

0:37So what's your view? Can anyone be a founder if you can have that view and then become a unicorn founder? Yeah, I do actually believe that. I think it's, it may or may not, or parts, I think actually, I think the job is so multifaceted that no part comes easy to everyone or really anyone. um I think some people are better at making it seem that way like some founders are good at that and want to be good at that um but I think the job is so multifaceted um that there's a lot of different types of people who can be great at it so the way that you're describing it makes me feel like it's like you know if it's a pie with different slices you're gonna be strong at some of those slices and then all the other ones are going to be the gaps and so the way to become a good founder would be to identify the gaps and fill them in that is how I approached it there is like another strain of maybe even more conventional wisdom which is like kind of screw the gaps and just do what you're great at um and I think again empirically that works for people too I think for me uh doing what I did work better for me okay so also part of this would then be know thyself yes I think that is deeply true yes there's a lot of ways to make it work but you got to make it work for you.

1:53When I started off in entrepreneurship, I just remember being terrified of leaving my job because it feels like a lot of stress. And I still always reflect on that as maybe the biggest decision I ever made. How do you reflect on that? Was it easy for you? I think the first time I did it, no. And the second time, yes. And I think some of it's like everything's harder the first time, no matter what it is in life. I think some of it's the California ethos where you're like, ah, you left your job. But But like, you know what the worst thing that happens is you're interviewing back at the same place in two weeks and you don't want that outcome.

2:23But like, aren't you so lucky that that is the worst case? I think the first time I was, I don't know, probably 25, 26, I had this job that was, you know, quote, unquote, very good. I mean, I liked it. Everyone liked it. People told me, why would you ever leave this job? and I think some actually what was really hard was um people around me with good intention kind of being like why would you leave this job what's wrong with you and I think that caused me to be like I don't know is something wrong with me um which some of that self-reflection was probably good I definitely took it too far in retrospect quite interesting like hearing that because these are moments pivotal moments in someone's life yeah where you're not sure of yourself right you're not sure of the path and you have different voices around you basically trying to sometimes do the best for you and sometimes coming from a place of their own regret and their own world view yeah and it's interesting that at 25 26 you still knew what was the right thing for you what do you think was the insight from that I think it was there was like nothing no no claim to like brilliance or even really self-insight I think it was just um I was in that job that everyone liked and I mean I kind of liked but I didn't want to be in it yeah and I felt that friction and again I kind of had somewhat grappled with the like I you know I don't know what is quote-unquote wrong with me that I don't want this thing everybody else wants but I but I know that is true and I feel that and so I think there's there's something to like that tension okay so you obviously going back to I I guess just before this.

4:03Yeah. You were at Stanford. Uh-huh. Classic. Right, yes. That was just yesterday. Of course. Yeah. Yeah. So you've just freshly graduated from Stanford. What was that like? You know, you hear so many stories about this. Was it pivotal to your entrepreneurial success or just like a stepping stone?

4:20What do I think? I think, so I did four years at Stanford and got a microeconomics degree and very much thought I was going to be a microeconomics professor until the very, very end. Like everyone on Twitter this week. Yes, exactly. excellent yes all right well let's just just dusting that off let's just pivot to a tariff lesson then love macro all witchcraft as far as I'm concerned um but until the very very end and then and the reason I wanted to be a professor was I mean I both really liked and like economics and my parents were professors and so actually it was like a very comfortable job description and I like understood it um I think in contrast to many people who think it sounds very prestigious to me it was like what my mom did literally um but anyway the very end I sort of realized that adults could do other things with their lives um and so I did a fifth year at Stanford and got a master's degree but is that your definition of something else with your yeah exactly yeah exactly with more education um it's like a strong default um but actually took a bunch of design classes and some of it was product design and somebody was like human computer interface and that was so different from doing econ problem sets um so that was really the something different and then that sort of launched me into like kind of this different world than i thought i would be in um and so that part i think it's actually like that fifth year that was probably in retrospect the most um kind of pivotal because it opened up this whole other set of doors and where did it take you it initially took me to berlin um because i'd never been and spoke no german um but they had this kind of post-school, Deutsche Telekom, like German T-Mobile, had this like post-school internship program where they would take design students for six or nine months.

5:59And I somehow snuck my way in and lived in Berlin and, you know, got paid 500 euro a month, but it was great. And that was when like you could do that in Berlin a bit. You can't really do that of the Berlin of today. But I think one, it was like the work was, you know, design and user interface design and like concept design and then the people we were interacting with were all designers and there was like kind of this emerging tech startup scene actually not in brilliant but mostly in london then um and it was just again this whole other world that was like very neat and from that um i got really lucky and i was reading uh the blog of a venture capitalist in new york called fred wilson um abc and uh a blog post basically went up saying hey you know we've had this great analyst on our team for a couple years but he's moving on and so we need a new analyst so if you're interested in his job send us links to your web presence and I read that and was like what is this you know I kind of knew the firm but you're like what job application is this what's a web presence who would apply for this and both like I want to apply but like what's a web presence kind of um but I'd actually start you know I had a Twitter account I'd started this like design blog in Berlin because I'm trying to be like the other designers um and so basically at the 11th hour right before the forum closed I sent them four links and ended up getting hired off the internet wow what are the four links your twitter it was twitter um my design blog which was quite bad but you know um maybe linkedin and that might have been it wow yeah that's quite impressive I mean and an application I'm assuming yeah yeah no there's funny it was like they actually didn't have another application and um in retrospect uh there are people like professors at stanford who knew um the folks at union square ventures i don't know i was too dumb to like try to be like oh have somebody email didn't do any of that just sent links off into the void um which actually gives me a ton of respect for the folks at usv and how they hire um because literally it was it was three links it wasn't you know and then the stanford person emailed someone who emailed someone didn't didn't do any of that okay so fred wilson hires you yep and union square ventures going to become one of the most successful vcs around so um who are some of the people that they backed um so let's see uh at the time uh they had backed you know twitter tumblr etsy it's a company called 10gen which no one knew of the time is now mongo but same company um um foursquare uh coinbase was uh uh like basically the first institutional investors or one of the first in coinbase um the the thing at the time and this was early 2010 so it's large networks of engaged users which you know i think maybe sounds kind of obvious or like of course you want to invest in like the big successful thing but at the time um again 15 years ago it wasn't it was like lots of people use twitter but would the thing ever make any money um was deeply unclear yeah and merges it with an ai company you know maybe it's still deeply unclear in a different way um but for the most part like you know those business models very much got proved out um but i think again early 2010 if i 2009 2010 is when um fred on his blog coined the term freemium which really just feels part of the at least tech vernacular yeah i didn't know that's where it came from yeah um right but they're just things like that now we kind of call it plg but like that's what it was and this was like this time where it felt like things on the things on that part of the internet were so new and all these concepts were being created and there was something there but we didn't quite know what it was it didn't have words for it and anyway i think freemium is like a neat like case study of that where uh now we all kind of know what it is and you're like oh of course that's a business model like is it yours do you choose it move on um but of the time it felt like more you were excavating something new.

9:56So did you get to work with people like Jack Dorsey? A little bit. I think there were founders that, you know, were very established and so weren't kind of coming through the office on a regular basis. But a big part of the job or when I joined, it was kind of three investment partners and me. And so I probably met, you know, two or three founders a day for two years straight. And so just got to meet lots and lots of founders of all different sorts and stripes. What's the what's a good example so if I'm a you know mercurial founder yeah building one of these companies yeah and I step into Union Square Ventures office I'm probably quite excited I'm probably quite nervous I turn up I've got a meeting with you what are some of the questions that you'd ask me?

10:37Oh my goodness um I think so for me it was funny because like I was you know the young kid basically at the firm and no one really wanted to meet with me nor you know they wanted to meet with Fred they wanted Brad Albert right the partners um which is i think something i struggled with in the beginning because it was like oh yeah i understand why you don't want to meet with me like i'm sorry not what anyone actually wants to hear i think what i realized the job of a like kind of young person investment analyst at a firm is not to apologize and not to gatekeep but to like figure out what that person is working on how it compares to how the partners think and then like direct them or route them to the right partner.

11:16We talked about Fred and his blog. Like lots of people, especially in New York at the time, knew of Fred and everyone wanted to meet with Fred. But if it was like someone working on a developer tools business, they were better served with Albert. If it was someone working with like a new protocol, Brad was the better person, right? And so there was this like router. And so I think a lot of the questions when I actually learned how to do the job, I was sort of this like router and translation layer between the entrepreneur and the partners. And then after that meeting, I'd go to the partner and say, hey, I just met, you know, Paolo and Paolo was working on this thing and he's going to explain it this way.

11:50And you'll think it's that, but it's actually this and go down this and like kind of try to matchmake a little bit there. Interesting. Yeah. And that's what I think the job actually like was. Like a translator. Yeah. And it took me like six or so months to like figure that out. But then once I figured that out, it got a lot better. Okay. So you actually view your space there in between as someone who you understand what the entrepreneurs working on and you understand what the partners are looking for from a thesis point of view yeah but sometimes the founder's not amazing at communicating the needs strictly to the desires yeah and the way that you know again the partners are wonderful but these like you know three guys kind of think about the world and it's around the idiosyncratic way and so it's just yeah it's like translating between those two as a founder pitching vcs yeah you're quite often told to your point try to get away from the analyst and speak directly to the deal makers I think it's good advice it's good advice yeah how does that impact you and feeling you know do you feel insecure about yourself and your place around that yeah so how does that you know how does that impact your career um what did you do about it yeah I think what I did was try to kind of be like oh that all makes sense I wouldn't want to make it with me with me either this you know of course and unfortunately got stuck with me like what is the best thing I can do for them and that's where I kind of figured out that like translation piece yeah it got it okay yeah so in general your advice for founders is basically do the same as in you've been in that role so you've been the person who's been overlooked as a result of it yeah is it a good career path for people I think those who like invest and really like investing and I do think and I saw that you're sweet investing done well it can be this like really intellectual really interesting job I think there are parts of it that are really similar to academia.

13:33I think that, you know, outcomes and upside are very different between academia and kind of an investment role. But I think done well, you know, you develop a thesis, you go and research it, you have this wonderful excuse to basically call up anyone you want. And they'll be like, I'd love to come to your office so you can ask me a million questions, right? It's this kind of racket. Sort of like podcasting. Like actually, there's like journalism, podcasting, there's a couple of these roles that are really neat um like structured rackets but in a wonderful way um uh but i think it is fundamental and the people are best at it and again i think usb was excellent at this i got to go to board meeting and then see not everyone i thought was excellent at this is their investors not operators like they're not running the businesses and they don't see themselves as someone who's running the business um and that's really like that is i think actually a very important distinction so Anyway, back to your question.

14:24I think it is a great opportunity for someone who is curious and wants to invest. I think for someone who wants to operate, you should actually just go. You want to build something, you should just go build the thing. Yeah. Yeah. So you got to meet the founders of Tumblr, Etsy, Kickstarter, obviously. Kickstarter is a good one. Yeah. You know, Jack Dorsey, Brian Armstrong, or Coinbase. What are some of these traits that these founders had that you could see a straight line through? Yeah. I think one of the really helpful things for me was like, again, even the companies you mentioned, all those founders are really different.

14:52And I think that was actually really helpful against sitting there and being like, okay, the media narrative, especially at the time, was like there's one type of person. And they probably have been coding since they should touch a keyboard. Like a zuck. Exactly. And when they launch something, everyone on their college campus immediately uses it because they're a genius. And that was kind of the narrative. And then you meet just whole swaths of people who are successful and be like, oh, some did that, some did something else. Some went to art school and lived in a Berlin garage for a while. And Kickstarter kind of came out of that.

15:20It's not quite the Kickstarter story, but like adjacent. I think the people who were most successful truly liked what they were doing. And they liked it because they liked the work. Not the, like, prestige that came with, like, other people liking their work, if that makes sense. And, you know, I think those two things are easy to conflate. You see people conflate. I've conflated them at various points in my life. But I think the people who, again, kept doing it just liked the work. and I do actually think there's so much work you kind of have to like it there's just too much to not yeah okay and obviously I suppose mission-led in a category as well yeah you know and there's it's you know I think sometimes this takes like a moral tone of like you know mission-driven founders are good and um you know mercenary or like even though we call it mercenary you know like monet you know money-led founders are bad and I think that's too harsh but again I think Like it does come to like, there's so much work before an outcome or to get to an outcome, you kind of got to like the work.

16:25Do you feel like being around those types of people drove you to want to become a founder? Yes, 100%. Yeah, yeah. And again, that was kind of this tension where I'd, again, I got to talk to people all day. I got to have these pitches. It was so cool. And then they'd leave and I'd be like, now I get to write an email about everything I learned. And it felt so unfulfilling. um and i remember saying this to a founder friend who's backed by usv and he was basically like christina after i have a meeting i also go write emails like you realize that right and i remember just being like no but like your emails are different like they're more impactful they matter more and he was sort of like you're crazy you know like agree it's gonna be fine agree to disagree but there was again there was just something there where it felt like um sort of unfulfilling to sit on the sidelines and analyze all of the time.

17:14Fair. So then you launched Vantra and had a runaway success. Yeah, exactly. Totally. Truly an overnight success. Excellent. No years in the making. Excellent. Yeah. So what did happen in between? There was like six years. So to that, I think, you know, of founders who came into the USV, some could code, some could not. Some could kind of build things, build software themselves. Some could motivate people to build software. I think I knew myself well enough to know that I wanted to be able to build the software. not that I would ever be the best in the world at it per se but there was just something to like un-deeply understanding how it worked to build my confidence and so I saved my bonus for two years and then just lived off that and for the next two didn't get a job taught myself to code built a bunch of stuff that no one's ever heard of and you know I think at the time again people were Like, are you starting a startup?

18:08And they'd ask. And the answer was like, I don't know, kind of, which is like a really uncompelling answer. If you say that, people think, well, you're definitely not, like, that doesn't sound like founder's answer. But I think for me, at least initially, one, it was just about developing the skills and the taste. And second, I had seen enough people working on something that they probably cared about at some point, but then sort of the shine truly wore off and they didn't really care about it but because they'd raised money or had people working for them they felt like they had to keep going yeah and how much of a slog that is yeah entrepreneurship can be a cage of our making yeah and how you know we like say oh you know the worst thing that could happen is you know everything goes wrong and it goes to zero and it's a crater in the ground and actually it's a pretty like sure it's not what you want to happen but then it's over and actually the median outcome is it just keeps slogging along and you burn years on it yeah and And so I had a probably a lot, probably an unhealthy amount of skepticism on really wanting to work on an idea that I felt like would last for a long time.

19:14Where did Dropbox come into the picture? Because I read in my notes that you were at Dropbox and obviously you must have had a ridiculous like breeding ground of. Yeah, it's incredible talent. Yeah. Yeah. So I kind of taught myself a bunch of stuff for two years. Nothing really felt right. to like keep pushing um you didn't make anything as good as dropbox definitely did not deeply did not um uh and i think i got to a point where i was like okay i i can program i can make staff um but i've never really worked in a company right i worked at this like quirky investment firm that was wonderful but like only sort of had co-workers i did this stuff on my own and a handful of friends but like what is a company um and i had some friends who were at dropbox uh and it was kind of the you know height of uh dropbox's power and press and it um and so got really lucky and joined dropbox to work on what at the time was a new product there um and so spent a couple years what product dropbox paper oh i used to use dropbox paper all the time yes i loved yeah it's quite innovative um yeah there's a lot of actually kind of ui ux things that now are even delightful to use yes kind of thing pasting over a link that's now kind of more of a internet software standard um we at least when i was there or maybe for me i never figured out how to explain what dropbox paper was to someone beside saying something that rounded to it's more innovative google docs you can use emojis in your documents and actually that's awesome and you should switch your whole business or team or personal setup from google docs or dropbox paper like you just when you say that you sound a little um like you had too much kool-aid but there's something real to it yeah and we sort of never i never figured out like how to truly explain it i remember like 10 years ago steward butterfield uh founder cr of slack had some tweet or maybe one of its like long you know medium meditation things was um the true test of a great product is how much it changes human behavior and i always really liked that right and i think under that metric like at least i was not able to get in my tenure was not able to get dropbox paper to that place you did say earlier you know with reflection of the vc model and stuff you want to be a great operator then also just go and do the thing yep so you've done a lot of exploration a lot of talking what was your moment where you're like you know what let's just go do the thing yeah I think it was it was actually when it became clear that the thing Dropbox paper needed was to get closer to the rest of Dropbox and I was not that product manager um for lots of reasons but like that that was clearly the most important thing and I could try to do it I would be mediocre at best like I'd be b - at best and there were lots of other product managers who would be way better at that than me and I think it's I think it was kind of a phase thing right and if you know like the initial task was try to get this thing off the ground and get early users and get feedback and wrap that in you're like okay that I that I really liked and I felt like I was good at that but the like now take that again and like connect it to the rest of Dropbox in a way that people who do like Dropbox and are logging in and see it and and you know work with all the cross-functional teams to do that like that was just like oh again I'm gonna be a b-minus I'm gonna be kind of sad as I do it like so that's not me you mentioned earlier you know the mission-driven founders and you know other kind of founders and you know there is no right or wrong way or whatever but you have identified that people have to love the work yeah do the work you have to love the work yeah because the work is generally a decade long at least project what is it about security compliance that could possibly make you wake up at night in a cold sweat as I imagine you did with a eureka moment it went fucking hell god I just can't wait to solve that problem yeah I think two things actually and truly um you know we used to joke like in the founding story you're like we're never gonna get away with the like ever since I was four years old I've just been deeply passionate about you of security compliance no one will believe that um we don't we generally don't try that um except for here as i like met a point um no um fire engine astronauts security compliance exactly like isn't that what your your kids do um uh no i think two pieces so one um security compliance is actually so broad and as you i like exploring i can be a little bit of a shiny object person especially if I'm not careful with myself.

23:55But like this is a constrained but large area, right? And so we get to think about everything from the cloud infrastructure account at a company to the people who work there to the software they use to, you know, the laptops they use and the application. Anyway, there's just like a whole range of stuff. And so I think it's actually a like neat horizontal and broad field versus if we were, I don't know, just building a security vulnerability scanner, which many people do and most successfully, but that it's like much deeper. So there's part of that that I like. And then I think the other part is, you know, and actually after paper, there's some of this too.

24:31Vanta as a product and a value proposition just is like deeply logical. The first time someone uses Vanta, it's because they probably have been asked by a customer for a certification or a framework. They don't have it, but if they get it, they will sign that customer and potentially many more. And so you're like, okay, so I will do that then. or I can think about how much money might I get from these new customers. Should I spend the money and time to get the certification? Great. And I can make a, you know, pretty logical spreadsheet decision. And then over time, you know, you take something that's sort of like herding cats and like done in spreadsheets and takes a long time and you, you know, make it much more seamless and easy.

25:08And anyway, there's just like a deep – the way I could not explain why someone should use paper besides saying things like, but there's emojis and stickers. the reason you should use vanta is like because you pay x and then you make 10x of the business which is very different completely get that but how do you arrive at that insight uh about six months of conversations with folks so go on you left dropbox yeah and what left dropbox um i think did the thing a lot of folks do who like to build just built a bunch of stuff that no one wanted um one of the best like paper no i'm joking i'll stop messing with you you've said it not me um Um, uh, someday.

25:48Um, but anyway, so build a bunch of stuff no one wanted. Then it was like, oh shoot, doing this wrong. No more coding. Um, cause we can probably, I'm a hubris, but like probably build whatever we want to build. But like that, that's the quote unquote easy part. The hard part is like, what does someone want? And so spent six months going deep as deep as we could with like, um, founders, engineers, heads of security, anyone who kind of touched security. and it started just really open-ended and you know what do you do and you're like what would you say your job is like what's the best part of your week the worst part of your week and like trying to kind of find a person with a problem and through that got to security questionnaires and compliance and sort of saw that's the best part of their week yeah as the worst part of their week right like it's basically like the the sort of tldr or security folks are like the best part of your week is like securing stuff right either doing myself working with engineers like like having that impact the worst part of my week is like reporting on that right and so whether i'm reporting to like the team or customers or auditors like i want to do the work i don't want to talk about the work but there's most especially you grow up most of your day is talking about the work and that was that was actually kind of where it started it's interesting because there is an insight there really that's so applicable for all entrepreneurs which is where you've built such a successful money machine is solving problems people can't be bothered to do yes and that that is like there's a zillion problems in the world yep and if you were to ask the questions as broadly as you did I'm sure you used an amazing framework um but you know just asking really good open questions what's the best part of your week right what's the worst part of your week those are such broad questions you unpack so much and there's a real art to that when I was starting my company heights which is exactly the same thing i read a book called the mum test um very well known right you know how to ask good questions yep basically so you don't bias people yes right because you will just ask too many questions right where are you getting the answer that you want yes and it's actually surprisingly hard it sounds really easy to say what's the best part of your week what's the worst part of your week right but because you've now worked at dropbox and union square venture and other stuff you are you are infected with bias and you kind of know the smart answer so it's actually really hard to ask such basic questions and get deep insights back yet you obviously unpack so much that you don't know so you don't know what you don't know you can only get it by asking what sound like quite dumb questions right yes and I think you do have to get a little comfortable being like this is going to sound really dumb but that's okay um because I think one of the things about I don't know entrepreneurship or starting something new is um it doesn't really matter what you want the truth to be the truth is truth and you have to don't it doesn't it doesn't work out you slam into a wall at some point like it just doesn't work and so um I think for me that was so like I can sound dumb now and hopefully figure out something smart later or I can sound smart now and be dumb later I'm like you might rather be smart in the long run than dumb but actually so what do you think is a better way to build a great business focus on what someone says is the best part of their week and making it better or what is the worst part of the worst part yeah why yeah um i think there is actually within vanta we found this there is deeply something to uh building something that does something valuable for someone that they don't want to do themselves right because they will not pay infinite amounts money but like that intersection of i have to do this but i don't want to is a like can you make this go away painkiller yeah right versus the like i really like this and like can you make it slightly better you know i kind of argue team collaboration is a lot of that and why the value prop for those tools are so hard because it's like your team will work better if you use dropbox paper i can't quantify that and i can't tell you kind of to believe that but again it's just a different pitch and i think it's a tougher pitch so you've done this interview process you found a bunch of people saying security compliance stuff is the worst part of my week yep and you're thinking well you know I hate myself so I guess I'll just do all the work that everyone else hates forever yes yeah is that the logic um I think the logic was more like oh these people really don't like this and so much so that they actually don't many I spoke to didn't do it like it'd be really valuable if I did this but I don't know how it'll cost me I don't two hundred thousand dollars and 12 months of my time and like I just got other stuff to do but if they're with an easy button I'd press the easy button.

30:23Right. And so then it seemed like, OK, can I, you know, like, yeah, maybe that's not what you want to do. Can I make the easy button? Can I make the easy button? Right. And then we'd go and talk to people who are doing this work today manually and they would all say you can make an easy button. But then it's like, I'm a consultant and I think about things as one off and bespoke and there's all this nuance. And so, of course, there's no easy button because what I do is deeply different based on every company um and you kind of sit there and you're like well yeah or like empirically that's true and i believe you believe that but like does it have to be true and i think there is something to like thinking about it with like a more of a software scaled mindset than a like one-off services mindset we still find that tension today so how'd you get started with this got started so there was this long year after we figured out you know like well all the consultants think we can't do it, but can we do it?

31:20And kind of spoiler, the answer ended up being yes, especially for a small company if you rely on best practices, because best practices are best practices for a reason. We didn't know that at the time. And so to really like figure that out and test understanding, we went to a friend's company and built them a SOC 2 process and a spreadsheet to go follow and interviewed all their engineers. And it was, again, this bespoke custom plan basically which is exactly what everyone had told you is what you had to do yeah and it was like okay we'll just go do that and both by doing that and then looking at the output we'll learn a lot we can test our understanding we can also see if they even believe us and find any of this credible because they like they knew our backgrounds they knew this first time and that they actually quite liked it and learned a lot and they're like okay then we went to a second company and basically gave them the first company spreadsheet we did not tell them we did that we did some interviews we like did this thing but then it was kind of a find and replace the company name and that was like can they tell you know can they tell they just got a best practice spreadsheet and not their bespoke spreadsheet and you told them it was software magic software no we told them we did it themselves we said it was like very bespoke this is deeply custom to you and it was not deeply custom to them but it was kind of like and you're like how does it feel like it fit like did we make something that feels you know deeply relevant to you and they said oh yes and you're like oh man that's great um and so that was kind of the beginnings of it okay and at some point i've read that you know you did do this sort of oh it's definitely software yes yeah so so i think that was um very common right very common part of the journey i think it's very and i think more people should do it again even if you can build software um everyone should just get christina to do their spreadsheets but say it's software but the reason you say it's software is because I think if you tell someone, hey, I just spent 40 hours custom making your spreadsheet, they'll be like, oh, it's really good.

33:11You know, like that sounds like a lot. And if you're like, I don't know, I wrote some code that spit this out. Is my code any good? It's kind of a level removed. And they can be like, oh, you're great, but your code is bad. And so it's this way to like get people to critique you without the truly asking them to do that or kind of tricking them into doing that in a way that again i think is helpful for finding ground truth and also helpful for at least overcoming the american like but i'm trying to be nice to you um so what were those scrappy early days like then um scrappy um you know i think the lived experience it was both exciting and um i don't know kind of yolo by which i mean it's like you don't have anything because you're solo founders so like who are you doing this with other founders basically are their teams in san francisco and i think you know that was one advantage of new a handful of folks who um were willing to engage with us and again they knew they like we didn't know security and compliance really but it was something they needed and they trusted us to basically work really hard and try to get to the right answer.

34:25And that's why we, that's kind of why the door opened. And sometimes other founders asked me, like, how did you get your first customers? Why did anyone believe you? And it's sort of like they didn't, or it's because we'd worked together previously. Right. And it was like that, that sort of kind of belief, which I think was a really good hack. It wasn't like a super conscious strategy at the time, but again, in retrospect, I think, I think that worked well. One thing I found particularly remarkable about your story, and maybe you don't, I'm interested if you do, is that you didn't raise money until we hit 10 million of ARR.

34:57Mostly, yeah. That's quite unusual. Yes. So how did you manage to maintain a pipeline, costs, etc? How lean was the team to get to that point? Can you just paint the picture for us? For sure. So we raised kind of$3 million at the very beginning. So that's the mostly part. But on that 3 million, we got to basically 10 of ARR. Team was about 50 when we eventually raised. The magic is cash flow. And I read this blog post by Peter Reinhart from Segment that is still online. If you Google his blog, I think it was called like Finance for Founders or something. And he talked about cash flow, which is not really something I really knew it was, beyond a line on some accounting statements.

35:36But basically, we would charge our customers annually up front. And so every month, we'd like get all this money from new customers and then turn around and immediately pay everyone that month, roughly. and then the next month it would happen again and we pay people and and we it just let us kind of build off of cash flow that's like practically how we do it and the closest thing i have to cheat code in startups is charge your customers annually up front i think it's also a good sign of product market fit um if you can like take all the money initially and they someone will like agree to that and they might be like hrump but they agree which is pretty well watching whenever you're on a software product and you see god i get two months free i'm a genius right like well yes sure yes there's a reason they're offering that you are being psychologically hacked go for it um and then i think the other part of that so i think actually having worked in early stage vc firm i understood how that worked i understood how vcs can think and realized that yes everyone wants to fund a 1 million revenue business but they want to fund a 2 million revenue business even and a 5 million dollar revenue business is even better and so it actually it's easy easier to raise money over time, not harder.

36:42And your terms get better and your negotiating leverage gets better. And so if you can wait, wait. I'd love to know a little bit about that because negotiating leverage is, I think, one of the least talked about and most important things. In my experience with all my entrepreneurial friends, etc., the more mature we've got, the more gravitas we've got, the more everything else. You realize that it isn't really about raising X on Y valuation. It's about how much control do you have and who led negotiating the terms? What does it look like when things go well? What does it look like when things go bad?

37:17To your point, if you're raising at a 1 million ARR, you've got 10X less leverage than 10 million ARR. Right. Yes. So how did your experience as a VC help you negotiate the best terms possible? I think I understood even what you just said and understood that like, yes, headline valuation and you know dilution and all of that but board like who's on the board what the board looks like because i think um it's even it's almost easier to remove a founder from a company than a board member often which is kind of a crazy statement but that means like who is on the board and how that works is like really important um and how much control the folks on the board have and so i think some of it was understanding a high level and some of it was understanding oh no there's these things again that aren't actually often talked about or talked about as like oh but like do you like the you know potential investor over beers and you're like that that is nice and ideally you have that but really you actually agree on a like more fundamental moral values level um and how do you suss that out and you should suss that out i guess so really more things like that and in terms of negotiating you went to y combinator right yeah so this was the same year that both OpenSea and Substack were four?

38:33Yep they're both same batch winner 18. Yeah yeah pretty illustrious company. Yeah so you one of the one of the lucky recipients I mean I read I've read before you know Y Combinator you do get a handful of unicorns like yourselves but obviously most of them raise a bunch of money and then don't make it so right you know what was that experience like for you? I think I think YC is great I think they're excellent at what they do and most of what they do is they take whatever you're working on like whatever idea you have and they push it like it is an accelerator but in they like they take the thing and shove it um and they shove you and if you have something if you have something that resonates that's i mean kind of painful but like deeply helpful at 10 million ar you have some product market fit those we went into yc at zero oh right okay really yc was zero to basically 200k okay fine so good shoving yes good shoving Painful shoving, but like good shoving.

39:26Yes, okay. And if you have something that's not ready to be shoved and it gets shoved, like it kind of splats, right? So my advice actually to folks considering Y Combinator is as much as you can, make sure you have something that's ready to be shoved because you're going to get shoved regardless. What is some advice that you received at YC that you think has stayed with you that's worth sharing? Oh, yeah. I mean, stuff we still do at Vanta. YC, I mean, people talk about group partners and office hours. And my experience with those is basically you come in in the beginning. They say, hi, this is a 10-week program.

39:57Please set a goal for week 10. It should be a goal that's important. So if it's a B2B, it's probably a revenue goal. If it's a consumer, it's probably like an active user goal. But like set something for 10 weeks from now. And then every week, come in and tell us what you did last week, what you'll do next week, and where you are. And it sounds so elementary. And yet, you know, he said this. Basically, it was like going from zero to 200K. It seemed reasonable. I had a spreadsheet that was like, here's roughly what you have to do. It was hard. But you have to show up every week and be like, well, I said I would get to 45K this week.

40:29I actually only got to 37. But here's what I'm going to do to get to, you know, like 52 by the end of next week. Right? And you have to stand up in front of your peers every week and basically say that. And it's exceedingly motivating. And again, it sounds so silly. But there's something that's like psychologically deeply impactful of doing that. And we're actually still, you know, this is how we run forecast advantage. that we run a lot of stuff still to this day is sort of tell everyone where you'll be in a week or a month and then come back and check in and then at the end of the week or the month you have to say well did you get to the place you thought you'd get to yeah I think it's such a very simple but perfect example of leadership training because actually so much about leadership is just being accountable yeah it's like saying the thing out loud of where you need to get to in order for things to work and being accountable having you know the group of people around you hearing you say that thing is incredibly cringy yeah if you have to then go up the next week and say we didn't do it right you have to reflect on that yeah and I think that process over 10 weeks you know and hopefully longer in a career yeah drives you to figure out whether you do want to take on that responsibility or not right because some people actually crumble at that yes and that's okay right but it's a good forcing function in terms of the shoving yeah that's a good forcing function to be like there's so many different ways to complicate leadership right actually accountability i said i do that thing yeah did i do that thing yeah or should i actually change the thing that i'm saying i should do because i've over egged it and you've learned xyz and short yeah that's so that's so valuable yes yeah so at vanter you basically operate it all like yc yeah we've done different versions there was a period in the i don't know two or three years in where i'd kind of we'd do that everyone had weekly goals and you had to get on a zoom call and do it no one liked that phase um i think there's something i don't think i i don't think i set it up as well as it should have been um and now it's kind of a more structured version of that but we still do this yeah and avanta i i know you're a unicorn but i've also heard a rumor that you're 2.5 billion unicorn yep yeah yeah internet reports that yeah a fact it's reported on the internet yeah okay excellent thank you internet yeah um i wasn't sure if it was public knowledge yet um okay so um as a founder of a company worth over two and a half billion dollars how does that hit you like genuinely is it like oh you know it's like part of a journey whatever or are you able personally and with the team to reflect on those moments and think fuck yeah that's great um somewhere in between uh i think no i have like the classic founder disease of you're like yeah yeah sure but like what's next what's next yeah which is um both helpful and as uh folks i've worked with over the years have taught me like not always the most motivating thing to work for so there's more adjusting you know like celebration is even pre-Vanda not in my DNA and um uh there is now more of it but that is again kind of a learned thing that great folks I've worked with have made clear in a way that's helpful um I think that my number look there's like two schools I don't know I'm two ways I think about it one is like oh that's great and again when you start one of these things you both want to do that and that's the plan and you know the chance of that happening is very small um but like oh sure yes this was always the plan it was you know everything's going at pace um and then the other side is you know when I talk to my family in Ohio about it they're both very proud but like you kind of say these numbers and they're just like they sort of laugh and not in a mean or malicious way at all it's just like you know what are you talking about right like what are you California people like why do you have so many zeros on your numbers that doesn't make any sense and on some like they're right on some level too you know there's this kind of level layer of um I don't know Californianess over all of it and the Californianess is wonderful but uh I think being able to see it as someone from like outside of the bubble in the world is is also kind of helpful how much of your identity do you feel like is wrapped up by banter i mean probably more than i'd like is the honest answer like certainly at peace um but i think even doing the thought exercise of it disappeared tomorrow again i'd be like quite sad and quite like a shoot what do i what do i go do now but um i'm gonna be like shoot i figure it out uh you know and again that might be kind of a sad and painful thing but it's it's something one can do sort of how i think about it when you're in your role at vanta um so ceo with your leadership team how would they describe you um i think at my best i've kind of tried to borrow the demanding and supportive framework and so i think there's you know probably some of both and the demanding bit is like it cares a lot about the company like can can be intense about it but again at my best a bit of a like care like a lot of a like caring supportive overview overlay on that but trying to again keep those keep those two things both true okay and so what about feedback culture oh I think it's gotten better at Vanta over time I think you know we jokes aside Vanta's culture can be very midwestern midwestern U.S.

45:45and there's great parts about that there's like you know do good work work hard head down like not too much noise like just the facts and then it also can be a little conflict averse um i've worked a lot on the conflict aversion over the past few years do you feel like you're conflict averse definitely was a couple years ago yeah i think i've tried to reframe it for myself as like yes you can avoid the thing now but it will in fact just get worse and one of my kind of life principles is everyone is more obvious than they think they are very much me included right and so you're like you can say the thing now or you can just not say it but it will become obvious over time and that is so much more frustrating to everyone else you should probably just figure out how to say what you're thinking in a supportive constructive way at the start of our interview we're talking about that pie right and that you think that that version is you know these are things I'm good at so anyone can be a founder because these are things I'm good at and these are my gaps and the way that I think about things are these are my gaps yeah so what are some of the gaps that you've just had to force yourself to learn at the unicorn stage that weren't so important at the early building stage yeah I mean And I think for a lot of founders, the kind of management piece, certainly probably some pieces of leadership, too.

46:56But I think it's how do you sort of easy, I think, for a founder generally to be demanding and to see what's wrong. And there's very few folks who find 100 percent like that 100 percent of the time motivating. Right. And so figuring out that balance and again, figuring out like if there is something you think is wrong or how to say it in a constructive, supportive way. and again still say it and I think I went through a like I just said it that went badly and so it's like okay then I stopped saying things and that kind of went badly in a different way and like find that middle ground of um again saying what you or like getting the point across you want in a way that the other person can understand where you're coming from and what you're saying and and like work with um so there's probably something in that journey how much you think that your experience of failing although micro failures but like the companies that you were working on beforehand yeah how much of that experience do you think helps fuel you at different stages of making banter a success oh i think quite a lot but not in the like i don't i mean i think at times i've had a chip on my shoulder but actually i don't that's not something i think about now because it's like oh this is kind of working again you're not quite playing It turns out the charging everyone annually up front was a really simple solution.

48:08Who would have thought? But I do think there's actually something to the like, unlike Facebook, unlike Dropbox, I have never had the experience of like, I went and built something by myself and then launched it and the world loved it. It would take me, you know, two, three, four, 10 iterations. But if you keep iterating, especially in B2B, I think you get there. and i think that frame of um and it's something i try to try to very much enforce in vanta culture is launch something like try something it probably won't work that's fine your job is to get it right by the fifth time not the first time iteration yeah and like again you're not judged on the first it's the fifth but like get to the fifth quickly go for it um obviously now that we're talking you know you start you start your journey of talking about you know these spreadsheets we would make, et cetera, et cetera.

48:58I mean, now the assistance you'd have from AI at doing so many of these things would be, it was just fascinating. You know, that journey could have been shrunk so much. So there's so many startups that are starting right now using a lot of the philosophy that you're talking about, you know, talk to customers, ask the broad questions, but then solve through AI. So how much do you think AI has currently simplified your business or is it at creating more of a like competitive tension? No, we're quite excited. Or like my kind of, I mean, related to Vanta, but Vanta's side, my take on this is AI and the new technologies let us build these magical product experiences that we've thought about in the past, but haven't been able to build.

49:39A Vanta specific example are these security questionnaires. Basically when you're selling software, at some point you probably get a long spreadsheet of questions that, you know, say, where's your data stored? How's it stored? And already the worst part of your week is still even having to answer those. Exactly. Right. And so, you know, the idea of like, oh, well, can't you just have it, you know, have some technology like a script? I'll look at the old answers and write in the new ones. Like we thought about that. We tried to build that in 2017. Total. Like not a novel idea, but the tech wasn't good enough.