How Kong Was Born: APIs, Hustle, and the Future of AI Infrastructure

0:00He opens a closet and there's like all the bananas falling off because there was one guy only eating huge bananas. You open another closet, there's another mattress with other guys sleeping in a second closet. I say, okay, this is real. We had no money. We just take 600 bucks last left to go to a United flight. And we had 90 days to just make it or break it. We knew that if we couldn't race, we wouldn't go back to Italy broke. And that was it. I think a lot of people don't know or maybe don't appreciate how fast Kong grew when it actually happened. So there was seven years of starvation, right?

0:33I mean, it basically wasn't working. Every year we do the Founders Award. The Founders Award is 2 ,555 stock to the best employee of the company. Why that? It's 255 days of struggle. It's just symbolic. But to remember seven years of struggle, every year is a ritual. What if the backbone of modern software was forged on$1 ,000 a month in a borrowed couch? Today's guest is Augusto Agui Marietti, CEO and co-founder of Kong. He joins A16Z general partner Martin Cassato to trace an improbable path from a garage in Milan to building one of the world's leading API platforms. We get into the seven-year grind before breakout, the near-death moments that forced reinvention, and how APIs became the assembly line of software.

1:21Augie also explains how Kong sits in the flow of everything, from microservices to AI agents, and why the next wave of autonomous systems will make APIs more essential than ever. Let's get into it. So Aghi is the founder and CEO of Kong, which was previously Mashhape. And we're covering his background from a garage in Milan to now being the CEO of a at-scale company with, I dare say, IPO ambitions at some point. Long way to go, but that's one of the steps along the way. Ambitions. All right. So you're doing this kind of API thing. you come to the U.S. on a tourist visa? Tourist visa, yeah. And the idea was to raise...

2:0690 days. The idea to raise funding? Yeah, we had no money. We just take 600 bucks last left to go to a United flight through Cincinnati. We went through secondary room. We landed up, sorry, Atlanta first time. Cincinnati was second, secondary room. And then we went right to San Francisco and we had 90 days to just make it or break it. We knew that if we couldn't race, we would go back to Italy broke and that was it. So did you raise them? Yeah, we raised two weeks before departure. you raised in those angel rounds we're talking about that kind of gold right small checks it was 50k and around who was it from was the founding youtube teams oh there we go and here's the funny story how did you get introduced to them so there's two interesting thing that you say can you redo it again i won't be able to redo it again yeah so number one is we went to the stand for entrepreneurship week at that time stand for was doing the stand for entrepreneurship week in february and it was cool you made all entrepreneurs all the vc were coming there and there was this entrepreneurship mixer big party we arrived we left late at that point it was all paper with all the email and the registration we steal the things with all the email and the registration and we walk home with that and that night till 5 a.m i writes all the 400 emails wow about hey you need to know about my shot we didn't have time to catch up at the mixer but i'm happy to give you a pitch tomorrow wow i think 470 didn't reply 30 reply and 10 were kind of interested and at the end five or six went to meet us and then this one person told like Kevin Donahue, who was one of the VP of funding team of YouTube, came to our - What's his name?

3:34Kevin Donahue. Kevin Donahue. And then he started a company for baby books. He sold it. But he said, look, I think this is something. So he wrote a$17 ,000 check on our earmatch. 17? Thousands, yeah. And for us, 17 ,000 was life versus debt. Yeah. So we came from 600 bucks and a few hundred bucks. And so then he brought two other funding to the red address. Actually, it was 16 ,000, 16 ,000, 16 ,000. We got 15 ,000. The problem with 15 ,000 divided three was six, six, six, six, six, six. It was too many sixes. Like, we don't want too many six in the captive. So we rounded up 17, 17, 17, and we got 51 ,000 check.

4:06Now, the second funny part is we negotiated and closed the deal at Travis Kalanick's house. Travis Kalanick's house. I remember there was an article about you sleeping on his couch. Yes, and Airbnb guys as well. But what happened during the negotiation with these guys, we're negotiating and they didn't want. So Travis, at that time, was this house up in Castro called the Jam Pad, where everybody would go. Aaron Lee would go. And Drew from Dropbox was the data. We're all going there on the weekends. And I didn't have a place to stay. So actually, Travis gave me his place to stay a few weeks, as long as I would cook carbonara for his better half once a week.

4:39And I did that. And then we need help. He said, come to my kitchen. We negotiate. So we sit on the table. It was myself and Travis Kalanick. And they were the three YouTube investors. Negotiated these convertible notes at like 50 % discount. Something crazy. We were desperate. And so I said, okay, well, I don't want to take this deal. Screw that. and say, okay, okay, we're going to leave. And I was very naive, 20 years old. Okay, okay, he will come back. And Travis come to me, put the hands and say, if this guy leave, you're never going to see them again and nor the money. Wow. So let me do something else.

5:07So you guys stay here and figure it out, the counter offer. Aggie and I go to the bathroom. We close this other year and we come back in 10 minutes. So Travis brought me to the bathroom, locked the door of the house so these guys don't leave. Went to the bathroom and we sit there 10 minutes. Go back, another run on negotiation. Back to the bathroom. So three, four times. At the end, we handshake on the deal. And what was it? It was finally better, like 42 % convertible. It's kind of set up 50. And it was a higher cap. And that's it. And then we shake the hand and that was it. That's crazy. So I remember you had the Quora, like the top Quora post for living on like$14 ,000 a year in San Francisco.

5:47You had raised$51 ,000. Yeah. And now you had to make that last as long as possible. So maybe talk about the next stretch. What happened is obviously we got 50. We got to go back. We are illegal in two weeks. So we went back to Italy and we came back with a B1, which you could be there. We can be here six months. But how we have no social security number. We have no credit score. Nobody. So you have into this American system, very different than Italy system. You have to enter into a new system and we had zero anything. So we couldn't pay our salary because we didn't have SSN. We didn't have a legal visa to pay ourselves for that.

6:23So the company... Did you have employees at this point? No. It's just you two. It was three of us. It was Mikel, who was the third co-founder back then. But we did about 1 ,100 monthly promissory note that the company would give us and we would have to live in three with$1 ,000 a month. So you were living off$1 ,000 a month? In three. Three people were living off$1 ,000? Yeah. In San Francisco. How do you do that? It was cheaper. What year was this? 2009, 2010. Even then? 2010. Even then, it's impossible. $1 ,000 a month for three people? I'll tell you how we did it. So we live in an Airbnb somewhere else at$100 and all in the same mattress.

7:04Wow. And we were going to Valencia. I don't know if you do this in Valencia. Did you have an office? No, we were working out of Starbucks. And we were living in Valencia and we were buying rice, beans, and tuna and pasta. and the reason is that we had to find the right amount of carbs and probably the cheapest way possible and that was the combination of I guess amount of carbs and probably the cheapest way possible and that's how we made it like we never eat out we never buy it again we did everything in house we cooked in the kitchen Airbnb rice beans or tuna pasta in fact we so much tuna pasta with tomato that Marco and I when we see now tuna pasta we almost throw up because we just running on tuna pasta every single day.

7:44So how long did this last? That last, so March, April, 2010, a year, a year and a few months. And what were you doing this time? I know what Marco was doing this time. He's writing code. What were you doing? I was writing blog, building the website, calling the sign up, talking with every sign up on the website that was talking to us and trying to figure out. I was doing big stuff, BDEVs, HTML, CSS, Slicer, talking with investors too as you start to build the seed rounds. trying to do some recruiting that never worked because nobody wanted to work for illegal Italians that will disappear. So a lot of mistakes and just, yeah, figure things out.

8:25All right, so take us to the seed round. So somebody decided to give you a proper round at some point. So then a year later, we re-architected. So we went to Honolulu, on the beach, Moana Beach, and we thought about, okay, all these APIs we're aggregating. I think the word is, actually, we see now, finally now, But 10, 15 years ago, it wasn't ready. They were to build apps on the fly through APIs with drag and drop. We were too far ahead. We're missing pieces. But I say, hey, we are wrapping a lot of APIs. Actually, that assembly line visual still hold. We just have to pivot it and build an API marketplace where all the APIs producer and consumers, they can come together.

9:00And so we pivot that. We relaunch it. Then crunch all the stuff. Okay, so you originally were doing this kind of drag and drop composable. Apps builder thing. It's so funny how many companies go through this exact journey. And then you're like, okay. With HTML5. Wow. And then you're like, okay, no, we need to build a marketplace. Exactly. Because, okay, the economy, this API economy will come. It's not just apps. It will be APIs. And we build a marketplace. We launch it. We got disinteractions on long tail. And that was already the summer of 2011. Yeah. After a pivot in Hawaii. So we launched very fast.

9:33Boom, boom, boom. And then we raised after. Was that Hawaii on the last of the money? No, no. because San Francisco to Honolulu, I think at that time, it was like 300 bucks. So it's like with our 51K, we're living like on tuna pasta, rice and beans in Valencia, in Mission, in this historic building, middle of nowhere in Mission. And you guys, same mattress and things. It's like, at some point I remember, I remember a couple of morning, I need to go to Honolulu. We could do our walk on the beach and thinking about our future or no future because we knew this was going to future. Our money were starting to drain and we needed to pivot.

10:07And that's where we had the idea, let's go for the pivot. And then we come back, we did crazy. I remember us building the web, so Marco was going crazy. The third co-founder was building all the Java backends and the launch it fast. And I've got a little bit of TechCrunch press. At that time, it was read, write, web. This other one was mashable. And so somehow, we got covered by all of that, which now like crazy. And then, boom. And then it started to see the round phase. From who? So at that time, we went through a lot of iterations, but where we ended up was NEA, leading the seed round and then index co-leading 20a and then we got a bunch and then in the seats of volpi did the yeah so what happened is actually the first checks were george zacari from crv back then he didn't lead around but he was the first 100k commit and so with that he said we have crv 100k at that point at a seed program very unusual back then so we went to anya and he said we're going to lead this round at that point also they start a seed program 500k and then i met mike volpi that just moved to san francisco to launch index us it was like him and then he rhymed through that somewhere.

11:09And they also started out Angel, a seed program, and they wrote out other big checks. And then we got a long tail, which was likely Jeff Bezos and Eric Schmidt into the funds. And so we got this combination. How did you get Bezos and Eric Schmidt? So again, that's his serendipity that I don't know we can replicate. So what happened is Jeff Bezos. So Jeff Bezos, I knew he was special about marketplace as a business, APIs and developers. AWS was just starting to take off. It was this hidden secret. So... Is it 2011? Yeah. So Amazon was maybe a$50 billion company then,$80 billion company. So what happened is I hired the lawyer of his family office for call, for meshe.

11:54And after we hired for doing the seed round, as the seed round was going along, I said, by the way, since you are also the lawyer of the family office and Bezos expeditions, can you introduce me? getting to lose me to Jeff Bezos. That's what we do. So it's a PG call call. And then he was on the road with his brother, going around with his brother on the road in Texas. And you actually want to put more and invest. Boom. So that was Jeff Bezos. What do you get from Jeff Bezos? You get the brand. So we got a dinners, a year strategy of things. But obviously it was the big brand. And then second, Eric Schmidt, we were working this co-working space.

12:31and what happened is we were the only startup that stayed the latest in the night after this other startup that was doing Expedia for cruise ships that just raised from NEA and Eric Schmidt. And at the end, they saw us work until 3 a.m., 4 a.m. They would leave a chew. They knew we were fundraising and the investor asked, who is the hardest worker they knew? And they said, this guy's next to us. And so they introduced us to the Eric Schmidt Fund and that's how Eric Schmidt invests. Wow. Totally unrelated. all right so now this brings us a lot of luck so what was your total was the total seat fund you raised at that time was very big uh it was 1.5 it's like wow huge seat drum i gotta say 2010 11 i gotta say there's a lot of optimism it's an optimistic retrospective view to be like there was three of you on a mattress for a year and then you say you were lucky illegally that's pretty I'm lucky to be.

13:26No longer to jail. All right. So now you have your seat phone, Matt Shapes going. So then we raised the seat. All right. Now it's real. We got to get these visas. We got a middleman. So we went back to Italy, go to the American embassy, blah, blah, blah. Do the electoral recommendations. Actually, Sam Altman was one of the guys that wrote me a electoral recommendation when he was CEO of Loopt. No kidding. Which I met. We were going to the NEA retreat and I sit next to him in the bus and we went to Pebble Beach to the NEA retreat and we spent three hours together. And I said, by the way, I'm illegal here.

13:57Can you write me a letter of recommendation for my O-1 visa? No kidding. And he wrote me. So I have this big thing of how great I am. From Sam Elman, that's great. From Sam Elman, that's great. You've got to get this guy in the country no matter what. So we got these five letters and I get this O-1 visa and finally I got the visa. So finally I can come here, I can get a WeWork space and we start to hire and we got seven people and Mark also get the visa. Mark has also, because of the love book, He never got to college or nothing. So it was the hardest visa to do. So we figured it out, more letter recommendations for him.

14:30We brought him there. We stayed here, blah, blah, blah. We built a year. We grow. But, you know, at that time, like, you needed, like, a million, let's say, a million revenue to take a good Cirrus A. For a marketplace, you need a million in gross volume. We were, like, at 50K. So a lot of traction, but not a lot of revenue. But we went through a three, four months series A race and CRV led and then index. Was it Dev that? Yeah. Yeah. Because George Zachary was more a consumer. So he passed the thing to DevTag just more on the enterprise side. I remember DevTag called me like Sunday at 6am to go for a walk to decide to invest or not.

15:12and he knows I'm at Night Hall. And he just signed at 6 a.m. to go down to Palo Alto, which I had to rent a zip car. There were zip cars. There was no Uber. And go down there and then go for a few walks and I decided to invest. Because he was always actually a big believer on APIs as assembly line. He could see that. Maybe he wasn't sure Marketplace was the right execution, but the theme, he was a big believer. And I think he came to see us sleeping in the same mattress. He wanted to really see that we're not bullshitting the big drama story. was really drama. Actually, he opens, he came to the Acre House because we moved to Acre House in South Park at that time where we're sleeping and working there with the 70p.

15:50And he opens a closet and there's like all the bananas falling off because it was one guy is only eating huge bananas. He opened another closet. There's another mattress with another guy sleeping in a second closet. It's okay. This is real. Wow. How big was your pay? 6.5 million. Oh, so for you, that must have been a lot of money. 6.5 million yeah i went out with this powerpoint let's raise a 10 million seriously at that point that was like the big thing we ended up at 6.5 and uh i say that science it was like when we saw it it was like yeah like maybe we got a shot so at some point you decided that the market wasn't working the marketplace wasn't working and um i think so we raised this and we raised we hired more we moved to a new office 25 people like you know the usual post race uh honeymoon um and i remember this thing like six months after uh we the business wasn't really doing anything so it was one born mini that we just cooked pasta for the board members at that time because it was like two years before you join us and it was there was nothing to talk about from business the issue was is you couldn't monetize or there was a graduation problem like i mean these These marketplaces are very tough.

17:04So the idea of the marketplace, when I was staying with Airbnb founders, I learned that the marketplace could be the biggest, more powerful business in the world. Like you don't even have to innovate once you get liquidity. It's just, you can't disrupt it. Look at eBay. You can't kill. So I thought like, there's all this API. You can build a marketplace with liquidity. It'll be like the AWS. And so we noticed though that in our case, it was a developer API marketplace. So to have a marketplace to work, you need to have a long tail of low power people. If you have concentrated in a few high power, marketplace doesn't work.

17:40Like Airbnb houses, like millions of people with low power. So that was one. Two, you need to have exclusivity somewhat, like the door to access that marketplace supply has to be through the marketplace. APIs, you could Google and go through the website, you wouldn't go through the marketplace. APIs at that time, power of law for public APIs was on the Twi 'o, the Stride, there were 30 that matters and 3 ,000 that didn't matter much. so it was also this long tail power and third thing is was quality like you couldn't you were running a cloud marketplace you couldn't actually maintain the quality of the supply you would always get blamed for it and there was no trust and and so i think because of that it got to a million and a half in gross revenue but it never became this airbnb of uber of apis that is like 10 yeah and it was it was also losing margin on aws so they i could never make the economics in that model i could never make the economics works even if this thing would have scales.

18:30So then we go there. It's like, okay, this is where we're here. We're burning out. We're running out of money. And so we build this massive API engine behind the marketplace, API Gateway, that was firing 20 ,000 APIs of this long tail, doing billing, rate limiting, routing, caching, authentication, authorization, logging, all of that. We build it three times. And the third time was the great one. And we say, wait a second, every company will become an API company. Why we don't take this engine and we give it to the whole world? And that was the beginning of open source, Mongo. And so boom, we open source Kong.

19:03What was your runway at the time that you open sourced Kong? So we open source in April 15. We had to take a bridge of two million to go another year. Was it an insider bridge? Yeah. We had to take an extension because we were out of gas. From DevTut and Mike? Yeah. They gave us an extension on the two millions because we're out of gas. Like we would have died otherwise. Wow. So you released, I remember when Kong released, it was actually a really big deal. When was that? 2015. 15. Yes, I think 2015. That was a really big deal. I remember. It took off, boom. Yeah. So this is when you and I started talking about your raise.

19:41You're raising the B. You came at the right time. Before like, these guys make no sense. Okay, now it starts to make sense. Well, that wasn't even a tough raise for you just because the company had been around for seven years. Yeah, I didn't remember. Like a marketplace. like Kong had just come out and it was taking off, but like it only been a couple of weeks, maybe a couple of months. And so honestly, I'll tell you what, what did it for me is, you know, we were doing all the work and like the GitHub stars checked out. Your story is phenomenal. Your command of the business is great, but it just wasn't enough.

20:16But then while we were doing the diligence, like I kept getting these kind of serendipitous, like somebody had used Kong and loved it. I remember, didn't like somebody stay in like your Airbnb and like loved Kong and then you forwarded that to me? And so they're just kind of like all of this zeitgeist around Kong. And as a result of that, I'm like, oh, this is clearly a phenomenon. Yeah, I remember it was spamming you with emails of every prospect or customer user that were saying, it was just using Kong, Kong usage, Kong usage, just nonstop. It was blowing up the inbox. Yeah, yeah, yeah. So how close were you to running out of money for it to be?

20:54So after Breach, there were weeks. Yeah, but I was very... Nothing is ever going to stress you again in your entire life because you've been so close to at least business so many times. I actually remember when we went to the office, it felt dead. No, we were dead. We just didn't know about it. You were like two weeks from being dead. we were like Bungal B you know that it flies but it's not supposed to fly and we keep going no I remember that very very well yeah you were like you're like yeah this guy's been there a while I think they're gonna you know whatever they raise money and then they're gonna give up you work I said I said and it was tough uh and I think I think if if we go back and say I don't know we were able to replicate all the sequence that happens all all the things that happens and And then I remember we went, yeah, and then we had that great sushi with Mark Andreessen, you and I, and we sealed the deal.

21:50And Marco. The end of 2016, we closed. And since then, the company's just been remarkable. I mean, there was kind of an announcement recently that across 100 million, which is now actually quite a while back. A year and a half ago, yeah. A year and a half ago. Yeah. So. We, yeah, it was in a year and a half, it's 10 years, where we were like, when you invested, we were ARR less than a million. Yeah, yeah. Less than a million of ARR. Not even a million ARR. 500K probably. Do you remember once? I remember. So yeah, so you had a great first year. And then I told you, I said, listen, if you hit 10 million or whatever it was, I'll buy you a car.

22:25Remember that? I did. Oh, actually, we have it in the new office now. I need to send you a picture. Well, there's a funny story about this. And so like, you know, you do it. So like, I think you grow like 10X that year. So that year we went from 2 million of ARR to 10. That was right. And the plan, I think, was six or seven. Yeah, yeah, yeah, yeah. And then I went and I checked with compliance, and I'm like, can I buy Auggie a cheap car? And they said, the maximum for a gift is whatever it is. So I'm like, crap. So I ended up buying you the best model car I could find. From Japan, I think. Yeah, yeah, yeah.

23:00I spent a long time actually looking for this model car. Is the 280 GT. Yeah, yeah, that's right. So great. So I would love to shift. I think this is the most remarkable Silicon Valley startup story that I know of that I'm close to. And I kind of having one. That will make a movie one day. They will have to make a movie one day. Yeah. I would love to like kind of shift towards how you think about product, how you think about markets, and then kind of move towards AI. So you actually have seen a number of shifts now, right? You saw the cloud come. You saw the shift to APIs. So maybe just talk a little bit about how you view this current shift with AI.

23:38Is it fundamentally different? Is it the same? Does it change how you think about yourself as a leader? How is your view at a high level? So the big thing is, I'll start with API first. So obviously, we become this API infrastructure company. Yeah, maybe we should just describe what Kong is right now before we actually do that. So we left with this pivot, and we open-source Kong API Gateway took off, and we become an enterprise company. We became a brand Kong Inc. and we start to build all sort of API infrastructure to run, manage, and secure your internal or external APIs. So you have software, you have microservices, you have 10 ,000, 100 ,000 of APIs.

24:19We're kind of this highways that makes them run and you have rate limiting. Like if APIs were the cars, you got guardrails, speed bump, speed cameras, gas stations, stalls, bumps, guardrails, everything, ambulance. and that we provide all the infrastructure to make sure that the API connectivity runs for small company, big company, all of that. Now, in this transition you mentioned, what really drove, I think, this explosion of cloud APIs was the workload moving from on-prem to the cloud. The second transition is breaking down the monolith to microservice. It creates more and more APIs, the big data and all that.

24:56It creates event streaming, all that. So this just data in motion is much higher than, is becoming much higher than like data rest or data in use than before. But in a way, when you were starting the company, you were drafting on a big transition, right? Which was the breaking down of the monolith and the shift to cloud. Yes, that was the killer. Right? That was the key. Yeah. I think before there were all these archive legacy solutions in APIs, but they were not built for the transition to the cloud and breaking down the monoliths into microservices and high-scale decentralized architecture. I mean, you know, from your time on this year, We kind of invented a control plane, data plane separation at the API management, API control plane level.

25:35Nobody was doing it before. I got to say, I think a lot of people don't know or maybe don't appreciate how fast Kong grew when it actually happened. So there was seven years of starvation, right? I mean, it basically wasn't working. No. Actually, and you know this, but every year we do the Founders Award. Yeah. The Founders Award is 2 ,555 stock to the best employee of the company. Yeah. Why that? It's 255 days of struggle. No kidding. Every day, which is seven years. That's amazing. It's seven years. I didn't know that. Every year the company has to go, they get 2 ,55. It's just symbolic. Yeah, of course.

26:12To remember seven years of struggle, every year is a retool. And there was this crazy diving catch, which, you know, Marco does the greatest con. He throws it out on the market and it catches off. But once it did, the company grew incredibly quickly. And we had 45 competitors when we started. I remember that, yeah. Now it's probably 30. But even then at the time, yeah, well, Kong broke away pretty quickly. So, I mean, you know, in recent years, it's clearly been the leader on this. And that only happens, I think, if there's just clearly a market need. The market also kind of did you a favor in that like MuleSoft got acquired and Apogee got acquired too.

26:49Yeah. Right? It was right. Yeah, 17 MuleSoft got acquired. Apigee got acquired in 16. That's right. Yeah. So like in a way, kind of like there was consolidation and you broke out this later. So you kind of navigated this transition from, you know, cloud to breaking up the microservices. You know, you built the control plane for APIs. You're considered now like the, you know, the leader independent for sure. In the API space, Kong is the leader independent. There's no question of that. But now you're facing another market shift, which is kind of this movement to AI. And so do you view this as directly impactful, adjacent, accretive?