How Duo Security went Zero to $1B ARR in Ann Arbor | Dug Song, Jon Oberheide

14:50Dug Song:It's one of those things wonderful about a place like Ann Arbor, really, because of the University of Michigan, which has the largest research expenditure of any university next to Hopkins. Hopkins is like$3 billion. University of Michigan is about 2.5. What?

15:03Turner Novak:Second in the country? Yeah.

15:04Dug Song:Wow. Yeah. It's the largest research expenditure in the nation. And actually, it would be first, public or private, if you were to back out APL from Johns Hopkins, because I don't think that's really fair. What is APL?

15:14Turner Novak:applied physics lab so is it like a government federal funded type okay and so i think you know

15:20Dug Song:the the reality is that you know michigan is a powerhouse of this kind of stuff and and though i was not a good student you know i barely got out of yeah i think i think i got a degree yeah i tell people all the time like stay in school because whether whether you know the paper really matters or not and i think it does you know if parents probably paying for it, you know. Yeah. It's the access to resources. Like, where else? And that's what led me here. Because, you know, I was going to go to school somewhere in the East Coast. But when I explored the University of Michigan network from afar, realized that actually there was this, you know, this had, this, it was stunning.

15:59Like, you have, even at that time, the early 90s, had a network that looked like NASA Ames.

16:05Dug Song:Like, the broadest kind of concentration of, broadest diversity of commercial unique systems than I'd ever seen. They had supercomputers, right? They had craze. They had a super-computer cluster. I was like, what even is this? This is available to students? And so that's actually what led me here.

16:21Jon Oberheide:Yeah, some people pick their school by the academics or the party scene. Doug was like, what has the coolest computers? I'm going there, and I already have access to all of them.

16:30Dug Song:Yeah. And so, you know, I think, you know, we get overlooked for that sometimes because, you know, it's like, oh, Stanford, MIT, Harvard. but actually, you know, the ARPANET, you know, which everyone says, oh, I was going to put the internet and even though schools were involved, it was actually the NSFNET, which Michigan was responsible for actually building. You know, we won, the state of Michigan, the University of Michigan won the award to build a National Science Foundation network that didn't just connect, you know, like 10 schools like the ARPANET did, but, you know, 400 research universities, right, across the country.

17:03And that backbone of research networks and, you know, computing merged with ARPANET to become the Internet.

17:12Dug Song:So the birthplace of the Internet actually was here. And that's why the North American Network Operators Group is here, right, governing all, you know, interdomain routing and how networks actually joined the Internet, right? That was all governed here, here, out of ARPANET. That's why Internet 2 was here. There's a long and deep history of that, plus all the systems research. If you look up any, you know, Unix programming book, and Richard Stevens wrote, it's all dedicated to Michigan Thermal System because it's one of the first timeshare computing platforms in the country. And that's because back in the 40s and 50s, as, you know, we're in Blessley Park and the other side of the pond, you know, the Brits were sort of breaking, like, you know, U-boat codes and Germans and Cypress and all kinds of stuff.

17:48Dug Song:Here, we were computing bomb trajectories. And all that was black budget stuff that, you know, there's never, people didn't know about. And being Michigan, we never talk about it. We're like, oh, you know, it's too humble. we built all that stuff here yeah that's crazy i mean i live here i didn't even know that yeah the arsenal of democracy people hear about oh we built the first tank plan we built all the bomber all that kind of stuff but the recidivist all the research we invented small aperture doppler radar holography all these things that back in the day were all black budget research programs but you know like even all the ai stuff right i mean classic ai you know modern ai being what actually would call an L, but, you know, you know, classic AI, you know, all those folks from John Laird and his time with Marvin Minsky and all these folks in my team, like, they built all the first computational model of cognition here.

18:36Dug Song:So the SOAR model and some of the early companies like SOAR Tech that since the 80s have been doing stuff with the intelligence community and DOD, like, we've been doing this stuff forever and we just never get the credit for it. And so, yeah, I mean, you know, folks like Jono, you know, as sort of like the lineage, right, of that kind of stuff. And we just never really get to do, you know?

18:57Turner Novak:Yeah. So is that why you guys always kind of wanted to stay here? Like, did you realize how powerful it was maybe before anyone else did? Or like maybe it was like a subconscious thing? Like it's just there's no other choice. Like this is just the place.

19:10Jon Oberheide:I think it was a little bit of chip on the shoulder to prove that we could do it.

19:14Dug Song:I mean, John was a Michigander, you know, so he has a little more feel for the place. I mean to be honest my first 15 years in Michigan never had gone beyond Ann Arbor and Detroit right just go to shows there I never even been to West Michigan which has I mean some of the gorgeous beaches in the world um and we have we have more coastline than Florida and almost as much as Alaska right so like people don't realize like Michigan has a lot to offer I didn't know that I just kind of learned about this stuff and what happened was I just met through you know I got caught hacking when I was a freshman I ended up fee bargaining into sort of a long-term role with university as a security administrator on probation basically to work for the university but but through i met all these graybeards like all these all these hackers who like marcus watts who built all the kerberos stuff when he was at mit and then adapted to afs here like there's so many of these deep folks nathaniel borenstein who invented mime right mime is the the you know the the basic protocol encapsulating documents for the web and for email, right?

20:17Dug Song:Or, I don't know, some of the most famous, I don't know, famous, is it not right, the word, but the... X509, right? Yeah. All these core protocols. Right. Yeah, like X509, you know, LDAP. LDAP was invented by Tim Howes when he worked at the same research lab as me, you know, City. And he was Ben Horowitz's co-founder for LoudCloud. Right. Ben Hortz's notable experience as, you know, with LoudCloud and HP. And before that, you know, I guess with Netscape technically and AOL, that came from having worked with, you know, Tim Houses, the co-founder from Michigan. And so anyway, all this stuff, you know, there's all these connections too, but it just wasn't really negotiable for us though.

21:04Jon Oberheide:We're starting the company here. We're building here. We're hiring here. You know, we certainly have challenges in the seed round of, you know, investor interests or I guess investor questions about why are you staying there? Is this going to be a disadvantage?

21:17Turner Novak:Because that kind of the non-negotiable is if you're starting a tech company and you're raising venture capital, you should just move to San Francisco. Like it's almost like part of the term sheet, right? It just kind of makes you do it.

21:27Dug Song:Yeah, but here's what I'll say about that, right? I mean, because we definitely struggle with, you know, kind of the initial raise as we're kind of going out and figuring out what we do. And we did one Sandhill Roadshow where my computer ate it halfway through. And so we... We ate it? Yeah. This drive basically died halfway... As we're sitting in the parking lot at the new in Drayton Horace, which had just been set up.

21:49Jon Oberheide:Doug is a perfectionist. So we're making like last minute slides, edits on the way in the car. and like pulling up to meet Frank Chen and Andreessen, our first VC pitch ever, at least in SF. And the hard drive dies and there's no, you know, we didn't have Google Cloud back then or Google Drive. And so we just rolled into the meeting. Actually, I think it worked really well. We could still do a demo. I had some terrible Linux laptops, so I couldn't even like open the slides. Bill O 'Reilly did whatever like, Yeah, we'll do it live.

22:21Dug Song:Yeah, screw it.

22:22Jon Oberheide:It's going to be fine. Whiteboard and Jonna, we did get a, term sheet, some interest from Andreessen, but it was very much like we would expect you to be out here.

22:31Dug Song:In fact, we would have been their early investments. And this I'll go on the record for as well, because, you know, I just want to give some confidence to other founders, right, to follow their own journey and path and heart. There's something strategic about any place that you'll be and set up, right? Whether you know how to tap into it or not and make the most of that. And that's your job as an entrepreneur, right? Take the best of what's around you and really, you know, the alchemy of turning that into some unfair advantage. For us, that was Michigan, right, in Ann Arbor, because, you know, between John and I, you know, I built a bunch of companies here.

23:02Dug Song:He built all this amazing kind of globally, you know, impactful work, but with, again, a research group, it had all been kind of cranking on this stuff in some university lab somewhere, right? And by the time that we got to Dresden, you know, they were like, you know, going to a final partner meeting, we were like, but, you know, but, you know, any great company, any great technology company has, you can start in Michigan, but any great technology company has to be in the Valley. And this is after, this is after, you know, I mean, quite frankly, you know, Ben had tried to recruit me twice. Once to Netscape days, pre-AOL.

23:38Dug Song:And second came back with Tim House to try to recruit me for LoudCloud and picked up my friend instead. And I just never believed that. I just saw all this technical excellence around me for it to change the world and create all this amazing value from here. And I was like, I just don't think that's true. And I also don't, I'll be honest with you, I really didn't like the vibe out there. In fact, when we did Arbor Networks, I had gone to try to open an office in Berkeley. We looked at the East Bay, maybe stupidly, but thinking that it felt most like Ann Arbor, but that's the problem. It was like too much like Ann Arbor.

24:21It's like, okay, this is great, but it feels like it's dirtier.

24:25Dug Song:It's like a dirtier Ann Arbor, much less convenient, much more socially stratified. And, you know, why would we go through all that trouble when we could just live in Ann Arbor and continue doing it? But that was a consideration for Arbor Networks because we got the company funded just at the height of the bubble. It was like February 2000, just before the bubble burst.

24:47Turner Novak:It was in like weeks before, yeah. Yeah, yeah.

24:49Dug Song:So it was$10 million,$11 million in a Series A. And then there's the echo boom of the global telecom market imploding, right? And so that all had to happen. But in between, I tried to figure out, could we go and build more of a business in the West Coast? when the telecom market imploded I just moved to New York with my then girlfriend now wife and we got a lot of business spun up with the banks because the banks always have money and so we pivoted from kind of doing telecom security to then internal sort of behavioral non-detection for banks and that was very successful and then we played both into kind of what Arbor ultimately did but but yeah I mean at the time even then everyone was still looking even if that bubble had burst everyone was waiting for the shoe to drop when rents would fall in the valley.

25:35Dug Song:It never really happened. And again, just the thing I didn't like about it, that place was, and again, I love the valley. I love, you know, it's great to visit. It's great, but it's just only about tech. It's tech, tech, tech, blah, blah, blah. And like, I'm just, I'm just not about that, you know?

25:51Jon Oberheide:I think there's a healthy allergy to the Silicon Valley scene. Like, yes, there's great businesses being built and, you know, a great ecosystem for sure, but it's, there's a lot of, a lot of folks that are like playing startup. Like they're so busy. In San Francisco, you mean? Yeah. So busy, happy hours, doing panels, you know, doing all tech week parties, like accessories to the startup role as opposed to being focused on building their business.

26:20Dug Song:Well, yeah, they're entrepreneurs on the startup B pageant.

26:23Jon Oberheide:Yeah. Right.

26:23Dug Song:Like all these things. And I'm like, I don't know, man, I'm sure I find the folks that are building. Because that's what I saw in Jotto. He's like, he's building shit. And It's like amazing. I'm like, dude, like, you know, there's so many people like that here, right? Just heads down, creating and don't, aren't subject to that shiny object syndrome that happens in the Valley where everyone's like, oh, what are they doing? What are they doing? Jumping every eight months, right? To something else, right? I like that.

26:45Jon Oberheide:So it might've started with like the chip on our shoulder, but it led to, you know, I think maybe we backed into the right talent strategy for the business. One is that we had employees that would really, we would invest in them and their growth and development and they would invest back in the company and their loyalty and their tenure at the company where they're not getting their one year or one year of vesting cliff and then jumping to the next company. They're staying there four, five, six, seven, eight years and growing with the company's needs. And it was also the case that, you know, we were trying to build a very different company in the cybersecurity space.

27:20Jon Oberheide:So if we went out and we hired all the folks from, you know, Symantec and McAfee and all of the sort of legacy security companies, we would have built the same shitty company those companies were. Instead, we're like, let's hire people with a blank slate that aren't, you know, disillusioned by decades of the cybersecurity space like we had been. And guess what? They're going to come at it from first principles. They're going to talk to customers. They're going to design things and build things in a way that haven't been done before because they don't have that sort of, you know, preconceived notion of how things should be done in the cybersecurity space.

27:54Dug Song:Yeah, they'll bring a different toolbox, you know, expand our toolbox with other things and perspectives.

27:58Jon Oberheide:solve problems from, right? I mean, look at a lot of like the great cybersecurity founders. A lot of them aren't from cybersecurity space. I'm thinking of like, you know, like Christina from Vanta. Like she was a PM at Dropbox and she understood the value of, you know, design and good user experience. And you can learn security. That's not hard to do. You don't need the decades of cybersecurity experience to solve cybersecurity problems. So when I look at founders now from the investing side, I'm like, are you a good product person? I don't care if you're an expert in quantum cryptography or, you know, you did threat hunting at Mandiant.

28:34Jon Oberheide:That doesn't mean anything to me. It's like, can you build? But that doesn't mean something to each other. Yeah.

28:41Dug Song:You still need, but it's almost a couple of stakes, right? You need some technical kind of grounding in, you know, something. But again, it's just those same skill sets are not the same ones that will build a company.

28:52Jon Oberheide:We already had enough of that nerdery between the two of us that we needed, you know, great folks that could... do design well, that could build amazing products that, you know, would work nine to five and go home to their families and friends and hobbies and weren't, you know, sure we were working long hours, but it was not the same as sort of the traditional lean startup valley scene.

29:16Turner Novak:996. Yeah.

29:17Jon Oberheide:Yeah. I mean, there are a lot of people that worked a lot and we worked a lot because we loved it, but you know, that, that expectation wasn't shared across the team.

29:26Dug Song:Yeah. Yeah. Something else came from me. We had, you know, I had, thankfully had some prior experience having built these other companies with Arbor and so forth to refute sort of that position from folks like in Jason were like, you know, you can only build. I was like, actually, we have Arbor Networks here just fine. In fact, the one mistake we made was that we decided that we'd follow our investors to Boston. for a company called Arbor Networks after Ann Arbor, obviously. We ended up headquartering in fucking Waltham, Massachusetts. Route 128 out there. It was miserable. It was miserable. And I'll just say this.

30:00Dug Song:I mean, for any of my Arbor colleagues, I'm sorry. But at the end of the day, we built a business that was successful, but a culture that was so painful that even I didn't want to be part of it. And I was the first one to leave my day job, right? I think, you know, as first-time founders, we didn't know what we were doing. We had not raised venture capital. We had not, you know, built executive teams. So we followed the lead of battery ventures. And, you know, Cisco is also an investor. But, again, ended up hiring sort of a rotating door of, you know, hired gun CEOs and, you know, go-to-market folks and all the rest.

30:37Dug Song:Go-to-market, it's a little harder not to sort of have that happen at some level. But, you know, see, it was very painful. but that whole experience just led me to realize that you know you don't have to do it this way in fact the kind of compact that john and i had and then others you know like our cfo when we really started to build a company out was that we're only going to work with people we want to work with because life is short and so much we saw of how these companies went wrong is when you know founders didn't really you know want to trust their instincts right to sort of build the kind of teams and also really focus on kind of building sustainable kind of cultures like team cultures and teamwork that would actually survive the stress of hyperscale.

31:17Dug Song:But the other is that you need to grow as founders.

31:20Turner Novak:How did you know when to trust your instinct when you were building Duo? Like, was there like a check you guys had or was it like an instinct on when to trust your instinct versus the playbooks?

31:30Dug Song:You know, I think, and I don't want to speak Regano, but I was very reluctant CEO. So I think at one point, John and I were sort of figuring out who should be. But I was, I mean, there were some pretty sad moments where, you know, I can remember the call I had with one CEO who just, you know, before Cloudera, I think Tom had basically exited his prior one. What was it called? The Arc, I'm trying to forget all the names of these companies now. Arc site? But anyway, but he had, he was jumping, and I was like, you know, that episode I basically was begging him, please come, you know, will you be my mommy?

32:10Like please, we adopt him.

32:10Dug Song:So you're trying to convince him to come and be the CEO? Yeah, because I was like, I was tired, I was like, I don't think I'm right. And whatever.

32:16Jon Oberheide:Doug is a very humble CEO. Like we would go into every board meeting, like private session, and Doug would just be like, I don't think we're doing a good job. Like I don't think I'm doing a good job. you know if you guys need to replace me let me know and the tour would be like you guys are crushing it you just tripled again and you're like cash flow positive and like what like no no no like you're doing great but i think that that almost that attitude is a really healthy one for the

32:45Dug Song:company and in general i mean now as an investor on our side i mean i don't know if johnny feel the same way but i i prefer sort of reluctant leadership right like it's you know it's a hard job. It's a terrible job, frankly. It's not particularly fun. When people ask me, what do you follow your passions? What do you feel fun? I'm like, I don't know. I'm Asian. I understand how to fill my duty and responsibility to my family, my children, my society, whatever. For me, it's more I get gratification of delivering the work. But But again, it's always that. I think for both of us, we're trying to figure out, like, are we...

33:29Dug Song:And we would coach our own team through that, too. Like, we need to work to our best and highest purpose by doing the jobs that, at each turn, we're best and uniquely suited to do. And that changes as the company grows. And every six months, you look around, and half the team is new.

33:45Jon Oberheide:I think it was consistent that we were always trying to figure out how do we obsolete ourselves? How do we, you know, delegate more? How do we hang on to the things that we think are really important to hang on to? like Doug would always say, we're never going to delegate product, culture, or brand. The product strategy of what we're building, the culture of what we're trying to build internally as a team, and the brand is kind of that external promise to customers. People talk about founder mode and should I keep everything myself? Should I delegate everything and be a professional manager? And that's just like a misnomer.

34:16Dug Song:Yeah. When people talk about founder mode or whatever, I don't know. I'm very skeptical. They like to talk about 996 or operational kind of thing, but they have a profile, but I don't think that's it. You know, I think it's, for me, it's always been more about like, you know, versus the math of the business, the soul of the business. That's what cannot be replaced, right? When founders move on. Very hard to sort of recenter and kind of root the company because, you know, founders have more of an intuitive sense of why, why are you doing this at all? You know, why this exists and what problem you need to solve.

34:49Dug Song:And sometimes we're often more empathy, right, the customer, because they have some other kind of connection to that. Or some experience that led them to solving this suite of problems that then allows, that gives them the right for those customers to go solve the adjacencies, right?

35:05Turner Novak:That's one way I've heard people, when you get into the nuances of founder mode, it's that the founder has so much just earned knowledge over time that they just kind of know what the right decision is.

35:14Jon Oberheide:But you also got to teach that. If you want to grow, you do have to scale and delegate. There's no getting around that. So if you want to, you know, be the bottleneck for your entire organization, like good luck with that. but if you want to, you know, 3x, 5x, 10x, the company, you're not going to survive.

35:28Dug Song:Yeah, for me, founder wrote also part of how we thought about, you know, working with a broader team that weren't, you know, obviously not everyone's going to be founder, but everyone's going to be at least some kind of owner, right, through their equity. But how then do you push decision making down so that people actually behave and are able to act and solve problems as owners? And again, we hired a COO who came from Zendesk and MySQL once before, and, you know, He had a nice way to put it, Zachary Locker, who has now gone on to do multiple more unicorns before and after us. But he used to talk about pushing decision-making down.

36:02Dug Song:I'm the CEO, I'm the janitor, so is everyone in the company. And so you have your scope or responsibility, but you have your broader sphere of influence. And so any good executive I've ever worked with is strategic about much more than just their function, how they work with others. but if you push that kind of thinking down to like every employee in the company then you're not having to say oh like if a director or manager or an ic has to like run something up the chain so you know the manager director vp c level to be run back down the other side of it right some other you know department but instead they can just work peer-to-peer right sales marketing figure out kind of the demand gen strategy get it done then all of a sudden you're you know you have everyone in the business innovating right in every part of it remember

36:46Jon Oberheide:one of the lowest moments in tenure at Duo was when I heard through, not a grapevine, but I heard through a secondhand source that someone had said that Doug and John wanted to be this way. And I was like, that is so toxic. That is, first of all, it was completely false. Second of all, like to rely on a higher power of authority for making a decision is like the complete inverse of what we wanted to do we wanted people closest to the work making those decisions and that was one thing that zach was really good at we'd be having a conversation and meeting and someone would be like well you know we could do this we could do this and zach would sit there and say what should we do yeah what do you person the person's like see like i'm gonna make the decision what do you what do you think we should do they'd

37:36Dug Song:say we should do a we're gonna do a do it yeah yeah but that's that's how we end up building well to do that we also had to build what we call a culture of learning together right where it's sort of blameless these decisions and not about who was right but what was right and so it's all this kind of work we did on kind of building a team of that a lot of it came from the kind of culture that John and I came from of like open source or academia where it's like it's not about kind of pulling a rank on somebody

38:05Turner Novak:yeah it's like a high school kid could make a contribution that makes the project better and yeah and it works yeah

38:11Dug Song:And nobody has time to say, like, you were wrong. It's like, well, yeah, I know. I tried, it didn't work. But you know what we're going to do about it? Yeah. And like, in academia, no one's doing that. Oh, you were wrong about that research result. Like, you know, you're just figuring it out. And so, and in academia, and open source, the same thing. And so, it was really important. So that's, you know, I think probably for both of us, as we think about kind of the kind of companies we back or founders, you know, if there's any wisdom that we try to impart, it's just that, you know, you have to focus on that.

38:38Dug Song:And a technology business is still a people business, ultimately. And that's, you know, and so I see those, the kind of weird escalation of like the founder as God mode or whatever in these kind of discussions. Recently, it's just like really bad. You know, it's not really how you can achieve scale, I think.

38:57Turner Novak:One thing that came up when I was talking to people just kind of doing some research for this. One thing I thought was interesting, this might not be interesting, but you gave everyone had kind of a personal development plan, kind of like a path to get promoted. was that an intentional thing of just like yeah everyone should know you know where they're at and

39:14Jon Oberheide:what's next for them and sometimes you know the desires and the growth of an employee matches the needs of the company and that's spectacular sometimes it doesn't so you know we had more of kind of your tour of duty i think talent philosophy where it's like you can work here for a few years and we hope you grow with the company it was so spectacular to see even some of our executives that started you know chester started as our engineering architect first engineering manager, first engineering director, and then VP of engineering for kind of the full history of the company.

39:42Dug Song:And one of the best VPs, but one of the best engineering executives I've ever met, right? Like he just, you know, killed it.

39:48Turner Novak:So what makes a good engineering executive?

39:51Dug Song:I mean, there's the basic, well, I'll let you answer, John, because you managed him.

39:55Jon Oberheide:Our VP of engineering, Chester, he built a, he built a leadership factory. So he was producing managers, directors that can be VPs avenged at any company out there. And team culture, performance, the happiness was always top of any function in our organization. And a lot of the practices that he put in place in terms of his managerial culture ended up being adopted by other parts of our organization as well. So it wasn't like he's not leading the product vision. We've got enough of that between the two of us. He wasn't, you know, on stage rallying customers, you know, on front lines of the sales team.

40:38Jon Oberheide:But he built incredible sort of delivery platform for our product ambitions.

40:43Dug Song:Unlocking the full human potential, right, of every person in the team in a fractal way, right? Where it just like carries through. And, you know, and that's a remarkable thing, right? where you sort of have built kind of a winning franchise. Like, you know, that individual, as U of M like to say, like individual performance, he's a team performance, he's a program performance, right? But if you're able to really build that kind of culture, that's what carries. And, you know, he did a great job with that.

41:13Jon Oberheide:I think those IDPs were just one manifestation or one artifact of, you know, a healthy organization. Of, you know, if you want to go be a VP of Enge, like we've got Chester is probably not going to be here, but we're going to help you find your next job. Like if it's not a fit here at Duo, we're going to make sure you're successful in your next thing. And my, you know, when I would try to recruit people, I would say, you know, Duo is an amazing place to work. But my hope is that Duo is like the springboard. When you're looking back on your career, you know, 20, 30, 40 years from now, you look back and you say, that was the role where, you know, I learned the most, we grew the fastest, you know, I worked with the best people.

41:51Jon Oberheide:I had some amazing experience that allowed me to jump to the next thing, like a new sort of inflection point in my career arc.

41:57Dug Song:We want to do it a bit, be the best company to be from, right? The way that, you know, like Jono and U of M and all this stuff, right? There's a heritage, there's legacies, I mean, means to be from Michigan, right? In this way. But also, you know, from the open source community, right? Like where everyone's a volunteer, you can't tell them what to do. You know, it's sort of like, well, how do you manage sort of teams? There should be teams and something where like, again, you can't tell people what to do. You sort of have to inspire their work in alignment towards to accomplish something larger than themselves, but without the command and control sort of orchestration, right?

42:27Dug Song:Because that doesn't scale anyway. That's also not how you get the best work out of people, right? You need them to come up with their own agency. And so, yeah, I mean, I think a lot of that, at a very corporate level, at a very executive level, it's like, you know, most CEOs with their executives will have something of a career contract. You know, come join me for the next two to four years. you know what are the kind of things you're trying to accomplish in your life or career you know i want to do this i want to have a family i want to learn how to be a cmo i want to make 40 million dollars and like all these things were things that you know we had to fulfill for folks at duo but uh but it goes on the line right like i personally as a open source kind of hippie guy right growing up in those kind of teams i don't know how to motivate anybody to anything i think people have their own intrinsic motivations for life or career and as leaders our job is simply understand that.

43:16Dug Song:Like, what do they want to do? And then how do our needs present as opportunities for them? Because if they can fulfill those, right, kind of, you know, our organization, then we're both getting what we want until such time as we diverge. And when it happens, that's fine. We've had people who we hired, I think, three times. A lot of boomerangs, yeah. As they started other companies, as they made fortunes in Bitcoin and still came back to work for us. It's like, you know, it's funny. We had all kinds of folks that were so loyal to the program and so invested in kind of how we're operating. I'm proud of the fact that we have so many Duo folks that have gone on and recombined to start their own companies and their own journeys that way.

43:56Dug Song:We're still there within Cisco. Yeah, that's... Yep.

44:00Turner Novak:Actually, it might be interesting. I don't know if you've actually like, what is Duo for just someone who's been listening to this for like an hour? What are you talking about?

44:08Jon Oberheide:In the cybersecurity space, we love our acronyms, right? We love TLA. So there's like, you know, MFA, multi-factor authentication, SSO, single sign-on. We come up with new words like zero trust or beyond court. But Duo fundamentally, we allow end users, mostly employees, to get access to their, you know, corporate applications that they need in a safe, secure, usable way. That's kind of the end user value. And then we do that via all this industry jargon, making sure that you are who you say you are, making sure you can have a secure device to access those applications and so on.

44:41Dug Song:But we, critically, we do it by making it easier to do things, not harder. We're most secure at each other by putting hurdles and putting up people to jump through. Of course, you know, most people understand Duo as like a factor, which is like, oh, there's a second thing to do. But also there's, you know, there's a password list. There's the, you know, things that we have really pioneered, right, with a lot of folks to do, you know, so you don't have to really worry about logging, but maybe once a month. and we were able to, you know, enable organizations to do that with even untrusted devices, but maybe trustworthy if we can kind of verify them, but kind of make access easier and simplify that for organizations.

45:21Jon Oberheide:I mean, our slogan early on was like, security sucks. Who has time for this? Yeah, we never really used that as marketing, but when, you know, you've used security products sometime in your life, like when has that ever been a good experience? I think of it as being a nuisance that I have to figure out this secure thing to be more secure, and I'll figure it out next week. Has there ever been a security product that is like, Turner, you're doing a good job? No, it's like, Turner, you're terrible at computing. Don't click those links. Don't open that attachment. Why did you do that? And you're like, I don't know.

45:55Jon Oberheide:I'm just trying to use the computer. I'm trying to browse the internet, and it's telling me I'm a bad person. And that was most people's end users' experience with security. It's always telling them when they're doing something wrong or unsafe or putting something at risk. And so we had that challenge and opportunity of like, how do we make security not so painful that maybe it could be a semi-positive experience? Like, there's a reason why I do as long as it's green. It's like, we want to let you in. We want to get out of your way as quick as we can so you can do your job. Like, no one wants to jump through the hoops.

46:25Jon Oberheide:They just want to share a file or they just want to log into Slack or whatever it might be.

46:29Turner Novak:Like 99.9999 % of the people that are logging in are just like trying to do the thing that needs to be done. And then they're trying to be like good employees.

46:37Jon Oberheide:Yeah, good employees. But then you got to plan for the worst case when it's a bad guy that's trying to get in.

46:43Dug Song:Yeah. So that's kind of a key insight for us, you know, was, and this is, you know, kind of trite or cliche in the wake of Steve Jobs and Apple, but, you know, better security by design. right and the way we thought about this was really that security security engineering and design engineering are just two sides of the same coin how do you make the right right things happen by default right where typically people think of security and design as being opposite right designing by saying yes security by saying no they're like no actually there's an intersection of this right where you know between people and technology proper design and security engineering can actually streamline things to make things safe easier, more effective.

47:23Dug Song:And so that was always our goal. Our mission as a company was to, you know, make security easy and effective for everybody.

47:29Jon Oberheide:I think typically, you know, the cybersecurity startup in the world would, you know, they'd raise some money. Their first go-to-market hires would be like three enterprise AEs in New York, and they'd sell to a bunch of banks and Fortune 500. And that would be it. And we started the exact opposite. We're like, we're starting down market with VSB and SMB, and we're going to work our way up over time with product maturity. And that's unusual to have a product, an offering that meets a market need and can be consumed, purchased, deployed, managed, used by companies that are like a mom and pop coffee shop that have a PCI compliance burden because they accept credit cards all the way to your Fortune 50 federal government, your most sophisticated and sizable customers.

48:22Jon Oberheide:So why did you do the same thing? You're using the same product.

48:25Turner Novak:Yeah. Well, so why did you start there? Because like the 101 would be like, oh, hire these, go to New York, sell the banks. Well, so we put it back. We didn't actually start there. You know, like if we end up there. Yeah. So like what was like the seeds of Duo getting started? I know there was like a document you showed me of like all these ideas you had

48:42Dug Song:of like when you first started it. Right, right, right. Because I think, you know, we had seen the shift in MO of attackers. is security become everyone's problem is kind of the internet, particularly via SaaS, it kind of widened kind of the attack service for many more organizations. And we were seeing, you know, not just the banks, hospitals, governments being attacked, but the smaller businesses, you know, auto body shops getting fleeced for$3 million, all that kind of stuff. And their banks actually disavowing kind of any responsibility, like, well, really sorry, you got hacked and that's not our fault.

49:10Dug Song:And in point of fact, you know, there's a case here in Michigan called Experimental versus Comerica where that's what happened. And the customer had an RSA token, you know, a two-factor authentication hardware token, used it. But of course, the attacker, they captured the first password, but they were in line, could capture the second one. And to replay that in the same time frame. And so, you know, the bank was doing all the things that they could do in the market to solve that problem. And yet the customer still got hacked. So whose fault was it? And so we looked at this thing. And quite frankly, by that time, I had left security.

49:42Dug Song:I had gone to go to Internet TV. Oh, yeah, wrong. Was that Zattu? Zattu, yeah. Maybe the only thing more ill-advised at times was security. But, you know, with the rise of YouTube and all, I mean, that was fine. They're a great company, doing well, and all kinds of interesting things. But it was a peer-to-peer video company trying to tone for my sins with what we had done with Woooo and Napster. But that all said, you know, we kind of came hesitating because when we started the company and I was telling John, hey, let's go build the next great security company. I said, well, what are we going to do?

50:15Dug Song:I was like, I don't know. But what I do know is that there's something happening that we need to go talk to customers and other folks about. So actually, one of our very first meetings, we drove, I think, to New York City. And we met with my old customers at Goldman Sachs and Citibank. Had them tell us, you know, Byron Colley, who leads FSISAC, the financial services industry sharing, incident sharing and analysis center, you know, what they were seeing. And the messaging was consistent across all these banks and also big tech account takeover. They just couldn't deal with the flood of compromised accounts that was happening because attackers had figured out, rather than trying to penetrate the firewall, rather than trying to hack this machine or compromise the application, they just phished the user.

51:08Turner Novak:And they could do anything once you got inside.

51:10Dug Song:Yeah, it's like the Ocean's Eleven or whatever. You wear the generous uniform and you just roam the casino, right?

51:16Turner Novak:You're supposed to be there. Because you just look like a normal user. Like, oh, this guy, Jimmy from accounting, is just full access to whatever we should have.

51:23Dug Song:And you bypass all the security investment that was made, right? Just slow them down because, you know, you're the user, you're the employee.

51:29Turner Novak:And it probably got even worse. I think you were telling me a couple months ago at the event at Michigan, it was like the cloud was kind of accelerating this, mobile, everyone had a phone. So this was all just like exponentially getting worse.

51:41Jon Oberheide:This was, yeah, late 2009. So, you know, iPhone had been released in 2007. first Android phone in 2008. AWS was a thing, but it was just, you know, EC2 and S3 and still pretty immature. I think Office 365 was in beta still at that time. And so there was this explosion of cloud and mobility that happened over that next decade. And Duo was a benefactor of that, both from leveraging those technologies to deploy a cloud-delivered mobile-first authentication experience, but more so solving those security problems that were introduced by, you know, this proliferation of SaaS applications and EYOD devices through an organization.

52:23Dug Song:But it wasn't obvious at the time. I mean, I, you know, at 2009, you know, when we were there and, you know, we're sleeping on my friend Jenny's floor in Brooklyn and going to, you know, to, you know, to Jersey City, go meet all these folks and all this stuff. I didn't have an iPhone. I was like, I think it's a fad, you know? And, you know, I don't know if they're going to buy that thing. I'm not using it. I'm a security. I'm a paranoid. Like, I don't trust that thing.

52:45Jon Oberheide:You had your Razer flip phone.

52:46Dug Song:Yeah, forever.

52:47Jon Oberheide:Forever. I held out, yeah.

52:49Dug Song:But Jono, you know, part of his PhD had been security for cloud-delivered security, right? He'd done all this. He'd hacked all these other kind of things, right? Like, you know, you can find the papers now. It's not private, but like, you know, he hacked like all these cloud antivirus systems at Barracuda. My old employer had done all this stuff. And so seeing all that and knowing that, you know, he was actually doing a bunch of mobile security research and all this kind of stuff. I was like, huh, interesting. And of course, there were a lot of points along the way where we really got challenged on the delivery of that because we're like, well, should we start with upmarket?

53:25Dug Song:And then, because based on security, it's hard. If you have even halfway decent technology or product, it's hard not to get to like 10 million in revenue. Maybe it's overstating it. But banks, the banks will pay for all kinds of paid pilots running security.

53:41Jon Oberheide:Maybe 100K to run a paid pilot. Yeah.

53:44Dug Song:And so it was maybe the easiest letting for us to go, but we sort of had a different discipline to say, well, no, no, no, we really want to solve for a different end of the market. And my experience from Arbor had been if we only work with those kind of large enterprise customers, we're going to end up building a Citibank product, a Goldman Sachs product. because I did that at Arbor. We ended up with an AT &T product, a Deutsche Telekom product, a British Telekom product. And I was like, we just can't do that. We need to build something different to achieve sort of mass markets or adoption.

54:14Jon Oberheide:How do you build sophisticated technology? How do you build power tools that your three-year-old can use? It has to work. It has to be sophisticated. But the kids got to be able to use it. And that was, our first few customers were spanning that spectrum. It was COPS-EP Central Ohio primary care physicians. Yeah, that was the first customer, right? Yeah, a bunch of doctors that, I think the CISO over there said, the doctors, their desired technology experience is for them to walk up to a computer and have it recognize how important they are. Like that, you could not, yeah, you could not piss them off or get in their way of patient care.

54:51Jon Oberheide:Like that's what they live for.

54:52Turner Novak:Yeah.

54:52Jon Oberheide:Second customer, I think, was Facebook, which was the whole other end of the sophisticated spectrum. The third customer was the Sioux Tribe of Michigan.

55:00Turner Novak:So it was like the three opposite directions.

55:03Dug Song:But it was an interesting set. Yeah, I'm not sure Facebook was the second, but they were early. But yeah, I mean, it was... And it was a sort of funny experience, right? Trying to build more of a bottom-up motion like I'd seen some other companies do. Because, you know, I come from Barracuda where, you know, they had worked to democratize security a different way. You know, selling a$2 ,500 kind of email appliance versus like, you know,$25 ,000 kind of like whatever blue coat or whatever. And so, you know, so they had kind of built a very different model downstream. and I by the way I'll give Barracuda the credit for all this because before then there were no tech billboards or airport advertisements or as Barracuda were like these small ISP guys who just figured out you know and so they were doing funny things or taking out radio spots they were driving around cars when I when I worked for them I would drive a car that they had a wrapped car like like like I'm like I'm working for Molly made you know it's so funny But, you know, it worked because they knew their customer.

56:06Dug Song:They knew the small kind of ISP kind of customer. And so these are all things we're sort of taking into kind of our strategy, you know, implicitly for Duo as we thought about how we go about it and who we want to serve. But long story short, probably the most important thing that rooted us in our work, you know, even those early days, our North Star was who we wanted to serve. that we knew that, yes, they're like, you know, we will have to serve, like, you know, enterprise customer and all the rest. But at the end of the day, if we couldn't innovate security in the end of the market, where no one really had, you know, around the mid-market and particularly SMB, we weren't solving the problem because that's what attackers were doing.

56:45Turner Novak:Yeah, it almost seems like your customer wasn't actually the security team, like, or your end user. Like, maybe the security team paid for it, but the user was like just... Normal employees.

56:56Jon Oberheide:Yeah, just want to do the job. And that's who we had to design for. It was not for the sysadmin or the security director. It was for the people that just want to log in and be productive. And that was all the things that, as we started down market, that forced us to build the power tool for the three-year-old and make it really seamless, easy for the end user. Every employee, whether you're in a small organization or a big organization, is going to appreciate that. So it was much easier to kind of go upstream with a product that might have started down market. It adds some bells and whistles, but this is also the era of consumerization of SaaS where the way people found and tried and procured software dramatically changed from traditional enterprise procurement to I want to go kick the tires on box trial or something like that.

57:48Jon Oberheide:So having that freemium trial experience for people that just sign up off the website, they don't talk to a sales rep, they want to buy it, they can plug in a credit card. that was not new in the SaaS world, but that was brand new in security. Security had not been sort of delivered and sold in that way.

58:05Dug Song:Even by the time we sold eight years later to Cisco, Cisco security still wasn't really able to accept the credit card. Yeah. To accept it for a product purchase online and that the, I don't know if I should be sharing this, but anyway.

58:21Turner Novak:No one's listening anymore. We're an hour in people. No one's going to hear this.

58:24Dug Song:Yeah. But turning up a new customer for a sign-up for Francisco's other SaaS security products online meant that someone from accounting was sending a spreadsheet over to the engineering team with a list of accounts that were going to turn up. I'm like, this is insane. What even is this? How is your assets and entitlements and all the kind of spin-up of this manual process and passing around Microsoft documents? This is the instances of SaaS, right? Yeah. which is why we ended up spending so much time replatforming Cisco on like RSS kind of stuff. But I'll say this, you know, that commitment to sort of being thoughtful about how to solve the broad, not just the actual technology problem we're solving, but the broader business problem.

59:10Dug Song:The actual problem we're solving was the non-consumption of security.

59:14Turner Novak:Oh, like just getting the average employee to just care about it, like use it?

59:18Dug Song:Yeah, or giving smaller businesses or organizations or bit more attention at scale, you know, like it was kind of funny, but our, you know, healthcare was our first customer, but our other largest verticals early for many years were up in the spectrum. It was high tech, you know, like Facebook, Twitter, Uber, these kind of companies, and higher ed, you know, universities. In the early case, in both cases, they have like large kind of pools of users and stuff. If they deploy security too, simply effectively fast. But in one case, you know, particularly the higher ed case, they don't have the budget to do it.

59:54Dug Song:They're not going to staff out security teams. How do you empower those kind of organizations to do this stuff at scale? But it was really trying to think about how do we reshape the opportunity in the market for security to be actually bought and sold for organizations that don't buy security.

1:00:14Jon Oberheide:Which is why all the traditional early stage startup TAM calculations are nonsensical. The TAM that existed was like mostly RSA and it was mostly large enterprise customers. And then take into account that this need existed throughout the entire sort of spectrum of SMB mid-market enterprise. There was just never a product that could be built and designed that is amenable to deployment in those small organizations. They were certainly getting attacked and phished.

1:00:39Turner Novak:Would you remember what like the TAM number was and then that pitch deck, that first deck you had? It was smaller than what we sold Duo for. Oh, really?

1:00:46Jon Oberheide:Yeah, it was like, I think it was around two billion. Yeah.

1:00:48Dug Song:Wow. And. But, you know, I mean, I guess what I'd say is this, you know, that's where now as investors on their side, where we probably both look at this, right? But like, I don't know. I just feel like those business school exercises of like, you know, estimating kind of the TAM and SAM for these brand new businesses. It's like, if you're building something really of value, you're either reshaping or you're creating a market for it in some way, right? There's, you know, it's inevitable if you're doing something that's really different than no one's done before, right? Otherwise, it's just incremental and someone else is just a product feature set for something else somebody else you're doing.

1:01:19Jon Oberheide:And if you see a pitch deck, you know, you don't need to see a TAM site. You know whether it's a big, crazy opportunity or if it's like this is feature, not a company. Like it's clear from the pitch that this is a small market. You don't need to size it for me.

1:01:31Turner Novak:Well, so maybe that's an interesting question because didn't Microsoft kind of have like a identity login thing? Like couldn't someone say, oh, Duo, this is just like a feature of Microsoft?

1:01:40Jon Oberheide:Microsoft bought one of our competitors, PhoneFactor, and baked it into their sort of Azure MFA platform. We had a lot of that over the years. Google Authenticator was released by Google for login to your Google account, but also any... I actually purchased that app. Yeah.

1:01:59Turner Novak:Can I use the Duo app for that also? Yeah.

1:02:02Dug Song:That app was written by our friend Steve Weiss, who we later pulled out to go to his company with other friends of ours from WooWoo, that they sold to Facebook. So, you know, there's all these kind of things that are happening where, you know, like all of our friends who have been building these, it's like these aren't new ideas. The big difference is that it's not about the idea, it's about can you actually build and execute, again, a go-to-market motion, build kind of an onboarding, build the kind of product experience that leads those customers to be successful. doing this almost in spite of themselves and in spite of, you know, certainly in spite of the easy market because none of the security, the technology that were out there, just an old idea.

1:02:43Dug Song:Two-factor and all these things that existed for like 30 years.

1:02:46Jon Oberheide:Even our like amazing innovations are, you know, world-changing patent innovations. We built a mobile app that has a green button and a red button. You log in, it sends a notification to your phone. You tap the green button to log in. Like not exactly the app, right if it's not you. Yeah. Not exactly rocket surgery. That's funny to say by the author of like our 100 plus patents, but, you know, but it's true, right?

1:03:10Dug Song:You know, underwriting it, there's a lot of, you know.

1:03:12Jon Oberheide:You can cloud code that up in like 10 minutes today. It's not the software components that made us successful or not, but it was the delivery design.

1:03:20Dug Song:And empathy for the customer and the culture we built for a team that's solving every problem for them from that perspective, right?

1:03:27Jon Oberheide:Remember at the time we launched that app and we were really careful about it. We were worried like someone's going to see it and copy it. and we're like, okay, it probably gives us six months of a head start on our competitors. And in true sort of incumbent startup fashion, it took RSA, which was our primary competitor at the time, it took them like six years to build an equivalent app and it was still a way worse experience. They're locked into legacy architectures and just business processes that couldn't adapt. So it was a good reminder. And going into Cisco, you see how the megacorps work and why, you know, the startup ecosystem delivers as it does.

1:04:04Dug Song:Yeah, but being radical advocates for your customer, really, I mean, every employee, every engineer at Duo had been in some customer call, right? Because we had a whole system by which you could sign up and join on, you know, a customer call, a sales call that's happening. But everyone had their favorite customer stories. We had customers at every event we were doing, right? Every all-hands or, you know, kickoff we're doing, we had customers there.

1:04:28Jon Oberheide:That's the only thing that matters, right?

1:04:29Dug Song:Like, you know, I just think people lose sight of what it means to build a business sometimes when there's so much money floating around. Anyone's, you know, figuring out, like, what do I do with this kind of crazy technology or capability? When really it's, you have customers who have real pain and real budgets, right?

1:04:47Jon Oberheide:It's just to solve, you know, and they need a solution that you could see as engineers, we can solve anything.

1:04:53Dug Song:It's just a matter of, like, figuring out can we organize ourselves and teams to go after it.

1:04:57Jon Oberheide:I think that was the Michigan advantage of like, we, you know, we were heads down in Michigan outside of the noise of the valley where we could focus on building great product, great company, great, great customer experience. And just not as many distractions as we could. You know, we could really, as Doug would say, get big before we got loud. Like prove out the business, show our metrics before making a big deal about it externally. We were a little under the radar.

1:05:23Dug Song:And for good reason also. Like, you know, Michigan was our secret weapon and we kept it secret, actually, for a while. Like, we never really talked about the fact that, you know, we never had problems hiring engineers. I mean, you know, obviously, Jono and Jester and the team did a lot of work to get, you know, really great people on board. But by and large, you know, we hired whoever we wanted to in engineering and didn't necessarily have to go to the end of the day to find them. We have, like, amazing talent here. and there have been not just universities and so forth, but the history of all these other startups before us that had some experience and so forth.

1:05:57Dug Song:And of course, our networks, right, from open source, from hacking and so forth. And so again, this was a wonderful place to build because when the average home price, and it climbed here, right, now it's like, oh, we're all, oh my God, it's so expensive, $400 ,000, right, median home price, right, in Ann Arbor. It's just the most expensive real estate market in Michigan. I mean, it's flooring. My friends were moving from Detroit, setting up their companies with us here and so forth. They're like, wait a second. I'm paying more for this giant mansion in my factory than I sold my tiny little ranch house in Mountain View for.

1:06:41Dug Song:There's this real comparative advantage and all this kind of thing. if you're willing to get over sort of the buzzy, you got to be here and blah, blah, blah. Because like we said, we need to have a little bit of Silicon Valley in us, but we don't need to be in Silicon Valley. And our choice of investors reflected that. A little bit from True, our seed investors, Google Ventures, Benchmark. These were all sort of our routes into talent, into perspective, and the value that would merge with our own, but not supersede it.

1:07:19Jon Oberheide:I remember Matt Kohler, who is our board member from Benchmark, he came to a company kickoff and talked in front of the company and described me at Benchmark, like we invest only in, you know, Series A companies in San Francisco. And then he'd be like, and San Harbor.

1:07:33Turner Novak:And I was like,

1:07:34Jon Oberheide:and the B round and duo.

1:07:36Turner Novak:Yeah, yeah, B round, yeah, yeah. Maybe your B round was like valued like an A. No, I mean, so,

1:07:41Jon Oberheide:I mean, I always tell founders nowadays, people are like super dilution sensitive. They're worried about, you know, post money and stuff. And I'm like, we sold 25 % of the company for a million dollars. And then we sold another 25 % of the company for$5 million. Then we sold another 25 % of the company for$13 million. Like, not that much, but not me. It may be more like, you know, 20 option pool, whatever. But our first round, our seed round from True, and I give a lot of credit to Puneet for really taking the risk and making the bet. all the subsequent rounds were like, you just show the graphs and things are going pretty, pretty great.

1:08:14Jon Oberheide:They took the most risk, but it was a, it was a one-on-four post. Right. You know, that was like RB round is what normal seed rounds are. An incubation. Or now, yeah. You're leaving the big corporation. And we had customers, we had some revenue, we had, you know, a product, but that was the market back in, you know, 2010, if you can believe that.

1:08:35Turner Novak:I think one thing that you guys definitely did a really good job was like the brand and the marketing. like what's the importance of that? Like what all went into that? Because you said it was green logo. Like there's, yeah, yeah, yeah. Makes me think of like, I don't know, maybe money, go.

1:08:50Jon Oberheide:Yeah. More of the go than money. Or something.

1:08:53Turner Novak:I don't know. I'm just thinking of like, green is not security color.

1:08:55Jon Oberheide:No, everything's like red and black and scary. And you go to the convention halls and there's banners everywhere of, you know, it's not a matter of when,

1:09:03Turner Novak:you know, the attack is already in. What are you going to do? Yeah.

1:09:06Jon Oberheide:And we're like, this is nonsense. And it was like super defeatist. the negative. And I think, you know, it was, it was deep customer empathy. We would, we would tell the stories of our customers challenges and plights. And there's, there's one that we would tell in every onboarding that we called the duo pizza play, where when there's a breach that happens, you know, a CISO is running around, their hair is on fire. They're trying to respond to this breach. Maybe it got leaked in the news and they're dealing with, you know, PR. Yeah. Yeah. their executives are like, what happened? What's going on?

1:09:41Jon Oberheide:What's affected? You know what happens in that situation? BDRs from every security startup find that CISO cell phone number and they call them and they say, if only you had bought our product, this wouldn't have happened. And it's like, is that what the CISO needs?

1:09:58Dug Song:Especially at that moment in time? It's like, I don't think so.

1:10:01Jon Oberheide:Like that's very obvious. You take half a second to think about it. Yeah. So one of our sales plays was we would send pizza to the company HQ. We just order pizzas, maybe some like Red Bull or Five Hour Energy and say like with a car that's like, so sorry, this is happening. Like, hope this is helpful. You know, give us a call when you come up for air. and the love, the credibility that engendered where people are like, this is the first time any vendor has actually done something like remotely net positive for me in a crisis situation. And that doesn't happen unless you truly understand like what's happening What is your customer actually going to do?

1:10:41Jon Oberheide:Again, it's not rocket science, but it's just like good fun and fun.

1:10:45Dug Song:People do tabletop exercises but you know that you're going to have pizza when you're working late night, right? Getting stuff done and all this kind of stuff and just one less thing to think about. But but it's also, you know, Michigan's a pizza state. So, I'm sure that has something to do with it. Actually, one of our first sort of funny experiments with this stuff was a pizza, your pizza script. Pizza bot. Yeah, pizza bot calling up Domino's Pizza to order us, using Twilio to order us pizza, but we were, before Domino's had their online ordering and stuff, we basically hacked our own.

1:11:17Turner Novak:Like you made an online order because it would, the bot would call and place it. Right. Yeah,

1:11:22Jon Oberheide:not even online orders, on phone. on phone okay yeah it was not not very good we didn't have lms back then but but yeah you know it's like the i remember there you know we had an employee who worked at a another company that had gotten breached and when he heard news of the breach the first thing he did he's like i went and i bought a sleeping bag from like home depot he has his first actions i need to get a sleeping bag because i'm going to be responding to this at the office for like the next three weeks straight i'm gonna be sleeping here so i need a sleeping bag that's like if you if you understand like the the situation that customers or responders are in,

1:11:55Turner Novak:you'll do things different as a company.

1:11:58Jon Oberheide:And as the company grows, and we're 2, 3, 4, 5, 6, 700 people, it's hard to scale that industry knowledge, that empathy. But if we told a story like that in onboarding, every time it's a new set of hires that came in, they heard that story. They didn't know exactly how to operate when they cold call a customer or when they're on a, you know, a CS, you know, renewal call. But they knew that story and they could kind of emulate, like, how should I be interacting with customers? How should I be treating them? You know, they're coming up for renewal and they missed a renewal date. Should I turn their service off?

1:12:38Turner Novak:No.

1:12:39Jon Oberheide:No. Why would you do that? Like, you know, give customers some grace. Like, they're working in complicated environments.

1:12:44Dug Song:So we had personas, as many people will do, for users, for the product, but in our case, it can be them for the customer. And, you know, just like, you know, in sales, people will do the kind of enterprise mapping of like, who can veto the deal versus who can approve it and all that kind of things. But in our case, we had to think about, you know, who will operate this thing? You know, what's going to be, so the impact of, again, how security is actually managed, right? And how can we ultimately support, you know, all that, right? including some of the features that we had in the product that were overlapping or would be other entire product suites.

1:13:16But because we could see every product that,

1:13:19Dug Song:every device people were logging in with, we could show kind of full inventory of all that. Here's all the devices that are being used in your environment to log in. And here's what they're running. And here's what their security profile looks like. That was just kind of a whole set of IT asset management kind of capabilities that we can also round up as part of our product and have as the integrated context where people would normally have to figure out when they're dealing with these kind of things, responding and so forth. And so anyway, at the end of the day, and John says, we worked really hard to build this kind of customer kind of culture within the business.

1:13:55Dug Song:But to your point earlier about marketing and positioning, the green, the name, Duo, none of that was from the start. We started with Red and Black. We started with a name called Sciosecurity, which is a terrible name. But I brought on board a friend who was first an advisor, later came in as our creative director, Pete Baker, who now did Anthropic. So he did all of Anthropic stuff. That was pretty good. Of all the AI platforms. They've had a good run.

1:14:23Turner Novak:Yes.

1:14:23Dug Song:Not bad. But he also did Tesla. He also did Clif Bar. He did some other things before Duo. And we specifically gave him the directive, John. know right like do not do anything with like two do not do anything with like keys and shields do nothing and and of course he proceeded to do those things early but but he also took us through the process of like you know of branding thinking about this stuff in ways that would have a a broader sort of appeal broader impact more accessible you were like please to not know to anything and cyber security means i in latin i know security but who cares i didn't matter it was and it was also based off a side of a township right outside Ann Arbor.

1:15:03Dug Song:Doesn't matter. And he was like, no, no, a duo because, you know, dual factor authentication, all these kind of things, you know.

1:15:09Turner Novak:Oh, yeah, I didn't use that.

1:15:10Dug Song:But then also the duo or duality of security and design, right? These kind of things. So there's all kinds of, you know, brand potential and all this stuff. But, you know, part of it was also for John and I, having been at these other companies, just not wanting to repeat all their mistakes. So I guess they were just not inspiring. in a way that we we need to be inspired you know one thing i appreciate about jono and getting to know him better beyond his hacking was that he was also a rap fan you know and the east coast hip-hop yeah good good and you know the 90s hip-hop which is the best the golden era of hip-hop and you know and as a skateboarder i was like you know but i told pete i want to build something that's you know that sort of legacy brand and you know i think your goal for Duo's brand was like, be the best skateboard brand.

1:15:58Dug Song:That was an aspiration. And now we actually have a skateboard company.

1:16:03Jon Oberheide:Yeah. But I think if you could ask pretty much any employee at Duo, describe the customer journey, describe all the touch points, not just the end user perspective, but describe how they work through our sales team, through marketing, through procurement, through legal. And we had just interesting experiences experiences where there's one point where our legal team instructed our engineering team to remove the EULA. We had a click through, EULA, you install a mobile app, there's an end user license agreement, you click accept, right? And our legal team was like, we should remove that from the mobile app.

1:16:38Jon Oberheide:And the engineering team was like, why? Like, this is like a legal thing. It's supposed to like cover our ass if, you know, the app causes your phone to explode or whatever it might be. Legal team was like, well, first of all, these like click wrap agreements aren't actually enforceable. And it makes the user experience painful. Like we know there's like support requests that come in where people are like, I don't want to accept this. I'm, you know, not going to use the app. And to have a legal function that's thinking about that customer user journey is, you know, it's remarkable. Yeah. Legal would be the only department that knows you don't actually need that.

1:17:10Turner Novak:Yeah. Like everyone else, of course we need that.

1:17:12Jon Oberheide:Or how that legal team can design a customer contracting process that works for, negotiating one-off customer paper agreements where they've got negotiating close 10 enterprise deals per quarter, but then also design a process that allows us to close 1 ,000 S &D customers per quarter. So every function in the organization had to figure out how to design and service both this low end of the market, high volume, transactional business, as well as the more sort of typical market enterprise. Being about legal, someone told me the first expansion into Europe in the Middle East,

1:17:54Turner Novak:semi-related, maybe not. Who told you that? Who told you it went bad? There's actually two people that brought it up. So what was it like trying to expand into Europe and the Middle East?

1:18:04Jon Oberheide:I think there were a lot of things in our Duo experience where they went really well. and I always think of the late Daniel Kahneman who said, you know, success is talent plus luck and great success is a little bit more talent and a lot more luck. And like we had as a business, we had so many tailwinds. I like to think that we built an amazing product, amazing SaaS transactional model, but we had the tailwinds of cloud adoption, of mobility, just these massive industry drivers that if we were bad at everything, we might have still done okay. But I think, you know, hopefully doing things better than bad made us more successful.

1:18:55Dug Song:Yeah, but we actually will say this, I mean, you know, there was an incumbent market that was not very forward-thinking and never would have gotten, in my opinion, to some of the scale that we had. At the same time, we had to engineer our luck, right? Like, there were points at which there was a customer who came at us and when we were very small, they were offering basically double our entire annual revenue with a single deal if we would put our product in a box and have it on-premises stuff. Gavin Belson, can you just put it in the box? And we ran a whole exercise, quite frankly. We ran through a kind of design treatment trying to look like, well, what would it look like?

1:19:31Dug Song:It's a beta. Yeah, we ran through this thing until we had a board meeting and our independent board member at the time, Stratton Sklavos, who was the former CEO of Verisign, but also he was on Intuit's board and Juniper's board, Salesforce's board. He left Intuit's board, joined ours. But he was like, wait, wait, wait, Doug. Like, don't do that. And we're like, wait, Stratton, but like, don't we want to double the revenue of the company with, you know, big enterprise, referenceable company? Like, he's like, you built this company with a vision and a commitment to, you know, and a vision of kind of leveraging Jono's, like, you know, so you're here from the cloud.

1:20:07Dug Song:I'm like, why would you, why would you just stick to your knitting? Because he said, it was very remarkable. It was remarkable to me. He said, you know, the last guy to tell me that, tell me to give him this story was Mark Benioff sitting in that same chair in his office. They're like, Mark Benioff sent the same shit to me. I need to put Salesforce on a box. And he said the same thing at the time. Do not do that. He said, follow your gut, follow your intuition, stick to your, you know, have the conviction, right, to follow through and the courage to do something different because everyone's seen that.

1:20:34Dug Song:you guys are doing something different and you have customers that have demonstrated that it's possible to build, deliver in that way.

1:20:42Jon Oberheide:That same customer also said, we're on Blackberry and we would never adopt the iPhone. And so Morgan Stanley.

1:20:51Dug Song:Yeah. And so Stratton's advice was, you know, again, you're going to get to where the puck's going on. But he said, you are building the future, right? Don't let the past hold you hostage. And so it was, I mean, one of the most impactful things that Stratton had done for us, right? And sort of giving us the courage to go after that.

1:21:10Jon Oberheide:Which was not trivial. You know, our organization is going to outsource their most sensitive, from a security and availability perspective, authentication process to a third-party cloud service. This was, you know, the cloud was not proven and this was a high-risk bet. But I preface that with like, Duo did a lot of things well. We had a lot of success.

1:21:31Turner Novak:Yeah.

1:21:31Jon Oberheide:So even the things that did not go as great as we hoped, you kind of roast into glasses in hindsight. You're like, well, it didn't sink the company, but we certainly could have done a better job. And I think our media expansion, now when I work with companies that are considering international expansion, I always encourage them. The culture and institutional knowledge transfer is so huge. And I think that's a place where we miss. We spun up teams in Amea that had no experience with Duo, no connection. You're literally across the ocean. That made it more challenging.

1:22:06Turner Novak:So it was just like a mercenary, like go sell this?

1:22:08Dug Song:Well, not quite that bad. But we did have a guy who went there for a year, Patrick Garrett, who was about as culture as you can imagine. That was helpful.

1:22:19Jon Oberheide:We needed to transplant that culture of knowledge.

1:22:21Dug Song:But there were things that didn't translate, right? Because the U.S. market for security is not sold the same way as in Europe, right? Europe is basically all through distributors, right? Resellers. The U.S. is a lot of resellers as well, but there's more of a two-tier distribution system. And so again, there's more things and it's a highly fragmented market and all this sort of stuff. And it requires localization, there's our markets and, you know, different from the cloud, there's even more subrogatory stuff. So there's just a lot to work through and it just took us longer to kind of get through it all.

1:22:51Dug Song:But ultimately, you know, we had, you know. Slower start.

1:22:54Jon Oberheide:New line of business, new region, and the rest of the business just kicking butt. Like the rest of the business is, you know, 200%, 300 % year-over-year growth. You start this new thing and you're like, all right, we expect it to like at least keep up with the same growth rate. It's smaller, it should grow. And it's like, you know, sometimes your expectations are misplaced and it takes longer for that ramp to start.

1:23:14Dug Song:But I think one way to rationalize and think about that is the overlapping kind of eskers of growth. Because, you know, where we're at kind of scale, right? From startup to growth to scale mode, different sort of behavioral profiles, operating profiles, things to do. You know, we were at scale with our U.S. direct, you know, inside SaaS business, right? Inbound marketing, all that. Where we hadn't kind of figured this out was, you know, Europe, enterprise, certainly federal, right? More public sector folks. Outbound channels were all new investments. Yeah, and so there was a layering of that stuff we need to do, but there was also this reflection of, you know, one of the ways that we would do that would be to there's a lot of routes to success for startup talents, for people in the company.

1:24:00Dug Song:Sometimes they'll go through the linear sort of like, oh, IC, manager, director, VP, whatever, executive. But sometimes it's sort of like working across because often startup folks who are really happy dealing with the chaos, startup journeys, they're great at that stage, but not great as operators, just doing incremental stuff or optimizing later or managing sort of, you know, large teams or through, you know, a first and second and third line management. And so, so again, it was one of the big bets that we did make was to send this fellow Patrick over there because he's a startup by through and through.

1:24:40Dug Song:He will always be the zero to one. And, you know, he was, he was a good culture booster as we carried over to Europe. It's just that he himself was sort of unprepared because it was this, I think it was for some in Europe.

1:24:53Turner Novak:and you know living there was like a double culture shock importing culture flashing culture

1:25:00Jon Oberheide:like different culture founders are always like hey i've got this early team and they're like not making it to the next level i feel like they're getting left behind do i fire them what do i do and it's like you just have to find new projects for them to work on you got to find the new initiatives that are that zero to one where they're awesome at that you can't always expect them to grow to the kind of scalar or growth basis so different different place where the

1:25:21Dug Song:the tree-offer expansion went really, I mean, much better than we ever would have imagined was actually Austin. As we kind of outscaled, you know, Ann Arbor's, you know, available commercial real estate or even it's, you know, residential, we needed to figure out where else to expand. And so we opened that office in Austin, but sending a bunch of people, it was like a whole crew, like a welcome crew from Duo here down there who liked kind of the early kind of build and could be sort of a microcosm, right, of all the functions represented because we didn't really think of these offices as like a sales office, whatever.

1:25:55Dug Song:They were sort of, you know. Like the everything office.

1:25:58Turner Novak:Yeah. All the functions.

1:25:59Dug Song:And so that's what it was. And, you know, I remember when we opened up a 30-person office there during Austin Startup Week, right, for an open house, right, for a big company. 3 ,000 people came through. It was crazy, you know. And in large part, you know, we had, you know, these cultural ambassadors who did such a good job kind of finding, you know, rooting themselves in the community, really being great, you know, not just brand ambassadors, but helping to build, you know, like Jono had been doing all these like tech talks here, right, in all the community. And that translated very well down in Austin.

1:26:33Dug Song:And, you know, so anyway, so, you know, I think the important thing here is that when you build something to scale, it doesn't have to just be that you're now this giant corporate entity, but you can be sort of fractal, right, in this kind of startup way where you have like pods and teams and the engineering team was managed the same way. We had like pods that were also cross function of a designer, a, you know, security engineer, you know, developers, a product manager. And so, you know, in John's role where product and engineering, they were kind of creating kind of like whole engineering, whole teams kind of unto themselves that could operate independently.

1:27:09Dug Song:They didn't have to raise something up through the leadership team to get something done. They could just actually execute. You know, kind of like Jesus' two-piece of rule or whatever, I guess.

1:27:17Turner Novak:Yeah, I was going to say that. So it reminds me of. It's just like the small team. Actually, I think I might know what this means, but I don't know for sure. There's a saying, say no to dope.

1:27:28Jon Oberheide:Say no to dope was what we described with the on-premise. Duo on-premise enterprise was our acronym for Duo in a Box. So you just like say no to on-prem. That's where it ended up. Yeah. We said maybe at first and then we, you know, stricken and help clarify. You should say no. So, okay.

1:27:48Turner Novak:Maybe, I guess I missed the timing on that question, but I just thought that was hilarious that that's, I mean, it was a great.

1:27:52Jon Oberheide:Don't do dope. Great line, yeah.

1:27:55Turner Novak:And then you also, you played a role sort of in the SolarWinds, the very high-profile SolarWinds. Like, what was the, what was Duo's kind of like relation?

1:28:04Jon Oberheide:Yeah, I don't think that was ever fully disclosed. Yeah, I couldn't find it.

1:28:08Turner Novak:I was like, yeah.

1:28:08Jon Oberheide:So SolarWinds, there was the company, SolarWinds, they sell like network management products. And there was this very, probably one of the most significant breaches in history of a supposedly Russian state actor broke into SolarWinds, backdoored their product, and then all of these SolarWinds deployments across the internet, federal government, enterprises, it was a backdoor into those networks. And SolarWinds was a security company, right? Yeah, security, network management.

1:28:44Dug Song:At SolarWinds, we had some earlier kind of connection too because Kenny Van Zandt, who was the president and CEO at the time, who later went on to become the president and CEO of... Asana? Asana, I think. But Kenny had a really, I mean, he was a growth hacker kind of fellow, but he was one of the guys we also sort of took some cues from is when SolarWinds built their product, they're focused on what he called the wow moment or something the golden motion he called it so the tipping point between marketing and sales where again it's the product kind of value that leads you through it and so you know when they showed up at like you know trade shows they would just have demo booths and and pull people in say hey you want to see something i was like well what no no come just put your hand on the mouse check this out and then within 30 seconds of them sort of playing with the product like whoa this is actually really interesting like tell me more that insight was a large part of it and also some of the things that we actually did with duo our trade shows kind of had similar demo booths with not a lot of marketing around them right and all that kind of thing but so we felt bad when when that happened at filer wins because we we knew kenny we knew the the journey they'd been on um this is like worst case incident was like

1:29:53Jon Oberheide:russia was in u.s treasury email systems was in yeah careful you say everything everything you across highly sensitive organizations. And they also were going after security companies. So they had compromised Mandiant, which is a security incident response company that eventually got bought by Google. While the attackers were sort of exploring, trying to move laterally within Mandiant's network was a Duo customer. They logged into an account that was protected with Duo, which set off some red flags within Mandiant. Mandiant ended up catching that intruder, tracing it back to the SolarWinds, you know, software, discovering that SolarWinds was backdoored and then exposed this, you know, sort of worldwide compromise.

1:30:42Dug Song:This was the point of some of the interaction that, you know, Jono and team had designed into the Duo app, which is that you could report fraud, right? If it wasn't you logging in, it's like, no, that's not me. That becomes positive signal, right, to a security team saying, like, actually, wait a second. like our our entire user base which is basically been deputized right as security you know monitors right personnel for our organization see say see something say something and that's what happened and so so again there were there were a number of incidents like that where you know duo was sort of the the canary in the coal mine the bellwether for kind of what would happen uncovering some larger larger breaches um but yeah that that that was you know having a lot but maybe not at the scale that SolarWinds was at.

1:31:27And you, I think I saw that you burned only$14 million

1:31:32Turner Novak:to get to$100 million. Oh, yeah. Like that's, I think that was, you know, there's a lot like,

1:31:38Jon Oberheide:we over-raised, but. Yeah, we raised more money than we needed. Should have done a stock buyback. I mean, there's, we thought we were growing quickly. Like we did a T3D2 triple three times and double twice.

1:31:50Dug Song:And like, that was, you know, that was really good. That's a metric.

1:31:53Jon Oberheide:The other side of the story was we were doing that while being close to, you know, we were cash flow positive for a couple of years of that. And so I think, you know, even now that's like a T3D2 is like, oh, that's that's cute in the world of, you know, AI.

1:32:09Turner Novak:Like VCs will like get on and be like, I would triple every month. Yeah.

1:32:12Jon Oberheide:If you haven't gone from zero to 100 in less than 12 months, you're not a real company anymore. Yeah. But if you look at the other side, so the bottom line efficiency, I think that's a place where we were really special in terms of the, you know, sort of net burn to get to 100 million. You know, we still like...

1:32:29Dug Song:I think Tomashton Guse wrote about this early about Redpoint, but, you know, we were, I think we were the best Sass metrics I've ever seen.

1:32:36Turner Novak:Oh, really?

1:32:37Dug Song:Yeah, yeah.

1:32:38Turner Novak:What were the metrics? I think you sent in an email, I guess, tell me what was like the general, like...

1:32:43Jon Oberheide:I mean, in the growth, we had that T3D2. I think once we burned$8 million of capital, we'd get to$100 and maybe burned like$20 million at the time of exit overall.

1:32:55Dug Song:Yeah, it was like$1,$3,$10,$30,$75,$140 something, you know,$200 something in our ARR. But the burn ultimately was very low. I think it was about$14 to get to, by the time we were about$100. We weren't trying to be cash flow positive in those years.

1:33:14Jon Oberheide:It was our own fault. We grew faster than we expected and we couldn't hire fast enough to hit our hiring plans.

1:33:21Dug Song:Yeah, our plans are always to actually, you know. Burn more. Spend more, yeah. But, you know, the other part of it is, you know, part of that was we raised later rounds with, you know, LeadEdge, Capital, Meritech, you know, the growth investors kind of as a mezzanine to what we've been in our IPO. and some of that was because, you know, strategically we had been doing things internally and the team looking at, well, what could we do to do inorganic growth? Or do we, because we have friends who had great companies and we were, so yeah, we even had like a target company we were looking to buy. And I remember having this conversation with Jeff Lawson, who was very helpful, and Twilio about what he had done, you know, on route to their IPO, which was tank up 100 million cash on the balance sheet to go, you know, experiment and gain some experience doing this before you try to acquire the public eye, right?

1:34:11Dug Song:It's a public company. And so those were lessons we had taken because we had well over 100 million cash on the balance sheet when we exited, which is to say that we didn't need to raise additional money. We never touched it, but, you know, it's fine because it was also cheaper.

1:34:26Jon Oberheide:It's always that balance of, you know, we would walk into the board meetings and we'd have done our three acts or we'd overachieved our, you know, first half plan or something like that. And of course, board members would say, why can't you grow faster? We'd sit there and we're like, I don't think we can. And I remember Zach, our COO, had a slide with a roller coaster, loop to loop, and like people falling out of the roller coaster. And that's how it felt. Like we were trying to grow responsibly without doing a bunch of dumb stuff. Like we certainly could have pulled more marketing levers, but we didn't have ones that were not, we didn't think were wildly inefficient.

1:35:11Dug Song:It was also, I mean, we were pretty explicit with the team because the team would ask these questions too. Like, you know, and we were also open book, right, about all this stuff. We had, you know, some of our management systems were so funny, but we had a board report. We did before every board meeting, before every mid-quarter board call, where every one of our, you know, VPs would write three to five paragraphs of the plans, progress, and problems of their function. I write sort of a preamble about the kind of story of the business in that time frame and we share it with the board for comment and also calibration at every board meeting so we don't spend the time just doing the weather report off the slides but you know really focusing on two or three topics for each concern that we had and they had but also we share it with the entire company and so they all knew kind of how we were investing to the money where growth was coming from what our big bets were and why and you know some of our most I mean our CFO thought it was so funny that some of our most insightful SaaS metric questions would come from guys like Martin Thoburn, one of our video engineers.

1:36:10Jon Oberheide:If a software engineer is like, Paul, can you tell us why the CAC ratio changed for the in-market segment last quarter? And Paul would be like, I'm so glad you asked.

1:36:17Dug Song:It was kind of ridiculous. We loved it that people were sort of deep that way. But at the end of the day, as we're kind of building this all out and together with a team and kind of looking at all these kind of things, the one thing we said we would never break would be our culture. The governing factor kind of limiting our growth was cultural coherence. And not that we were hiring people for cultural fit because we always talk about hiring people for cultural contribution and all that kind of things. But what we weren't willing to risk was the worst outcome that I'd ever seen of startups, right?

1:36:51Dug Song:When you have people running around not knowing what they're supposed to be doing. Oh, so just, yeah, okay.

1:36:56Turner Novak:So just causing chaos probably.

1:36:57Jon Oberheide:They're lost. There's no one to point them in the right direction. There's no way to get, hopefully all of your employees are roughly pointed in the right direction. Obviously, there's some natural variation, but...

1:37:06Dug Song:But we saw that some of our customers, frankly, as they were hyperscaling, growing much faster than us. I remember we had a funny question during one of our board meetings from our team about on the firing of Travis Kalanick from Uber by our board members. Yeah. Oh, so there was concern is like, will you guys get fired? Yeah, there's this question. So how do we, you know, to me, like, so Doug, how do you feel about, you know, having an investor who just fired, you know, a portfolio CEO, right? And I was like, well, you know, I know them well. I know he's asked what happened to the extent that they can share it because, you know, the holder report at Uber never was published.

1:37:46Dug Song:thankfully for them but but you know as as our board member matt color got tagged in by bill gurley right to go you deal with us with now right and matt you know was good and and we would buy drinks for him after his board meetings you know i was like i'm proud of the fact that we have an investor for whom i mean there are more ways a company can fail than just financial but also you know moral and ethical and so the fact that they've taken sort of care to kind of do this because there were lots of reports of things that were like really deeply disturbing that were happening at Uber that, again, move fast and break things, sure.

1:38:21But when you have some of the disclosures

1:38:23Dug Song:that were happening of like, you know, you know, sexual assault or abuse, all these things are like, that's not, that's never going to be on us. We're never going to suffer that kind of thing. That's not what we built an organization, right? That's never going to be on our conscience or our responsibility. We have, we care for, again, that the broader journeys that our people and teams have with us than just what happens at work. And so anyway, so I've, you know, I was proud of that fact that, you know, we had ethical, you know, investors and all that kind of thing at the same time, like questions.

1:38:55Dug Song:So why are we, why are you guys invested in Snap when like Evan's like, we're never going to IPO? Or we're never going to make a profit. Yeah.

1:39:03Turner Novak:Right. Anyway, they did. I mean, that's on that. No, I think probably the craziest line was, it was a couple of years ago with OpenAI, Sam Allman did an interview, a journalist was like, so how is this open AI non-profit thing going to make money? And then he said the AI will figure out how to make money or something. And this was like five years ago or six years ago. It's always a great product pitch

1:39:23Jon Oberheide:when you're like if our product succeeds there won't be a need for money.

1:39:29Turner Novak:And I think so what is the scale of Duo today? Like I know if you look at Cisco's earnings page I think the security line is like 2.1 billion in revenue and like that might be That might be more early. Oh, it might be more early.

1:39:43Jon Oberheide:It's more than that. Maybe that was a quarter. They don't break out Duo. They don't break out SaaS. But it's, you know,

1:39:48Dug Song:it's a billion plus ARR now. John left, I think, two years earlier than I did from Cisco. But even that time frame that I was there, you know, we had doubled the global security business there, right? But it was no surprise. And I think, you know, it was in all the earnings calls. So I mean, Duo was the fastest growing business not just in Cisco security, but in Cisco.

1:40:11Jon Oberheide:I saw that, yeah, fast-growing way. For all four years straight.

1:40:14Dug Song:And so, you know, we did a lot there, I just say.

1:40:19Jon Oberheide:Yeah, so it's kind of fun, even though we're both not involved anymore. There's not that many SaaS companies that have reached the billion-dollar ARR milestone. I don't know, 30, 40? I'm not sure. But 100 ,000 customers across all industries, organizations, shapes, and sizes. It's fun to see the company and the team succeed well beyond our individual tenures there.

1:40:43Turner Novak:And Cisco almost didn't acquire you? Like, wasn't there some false starts?

1:40:47Jon Oberheide:Cisco almost acquired us and then almost didn't acquire us and then almost acquired us.

1:40:52Dug Song:No, no, no. They didn't really acquire us. They made a bid and were like, no. That number's like not even the zip code. But, you know, they made overtures and so forth. They had interest for a couple of years at least.

1:41:04Jon Oberheide:And then they ended up paying like three times more than they originally. More than double. We had corp dev exercise in like 2016, 2017. And a bunch of folks around the table. But this was, you know, the price tag at that point was like$700,$800 million range. and we actually signed a LOI, surprisingly, with Workday, which is a little bit out there in terms of product strategy. HR. Your HRAS, which is really your ground truth of identity. And that flowing down into Duo to kind of apply security controls. It was an interesting strategy. I don't think the go-to-market would have worked given Workday's heavy enterprise customer base and our broad market applicability.

1:41:57Jon Oberheide:But that deal fell apart a couple days before we were supposed to sign the merger agreement and announce. And in hindsight, that was a really good thing. Because instead of selling for$750,$800, I don't remember what the price tag was. It started with the one.

1:42:12Dug Song:But even then, it was something that our board was sort of like, why do you have to train now? Because we were continuing to double the business, right? And that's kind of what happened between the year in Wachisco company offer and then actually consummated one.

1:42:29Jon Oberheide:I give a lot of credit to Matt Kohler that when we first brought him, you know, one of the offers in that go round, Matt said, you're not worth, you know, 800. You're worth at least 2 billion. And we're like, oh, that's cute, Matt. Like, thanks for the feedback. You know, we understand you've got this amazing portfolio with Uber and Snap and all these things. We only got one portfolio, one. And then sure enough, 12, 18 months later, we came back with an offer from Cisco that was around two, two plus. And Matt said, you're not worth two billion. You're worth 10. Like Matt, you were right last time, but this time I don't think you're right.

1:43:07Jon Oberheide:But in reality, if we'd kept going, especially in the height of 2021, the public markets. I don't talk about it.

1:43:17Dug Song:I don't talk about it. It was only a couple of years ago that I finally put S1 away, you know, put it under my, you know, no regrets category. Yeah, I just got it on my site. Yeah. But, you know, it's fine. Yeah, but, you know, but it was, you know, it was, I mean, it was at the time the largest multiple ever paid for a private stock acquisition. The Catalyst folks would know. It also was followed by, you know, others that kind of superseded it, right? GitHub, I think, yeah.

1:43:44Turner Novak:Nealsoft, there were some big ones after that. Right. It was like 2.1 billion, was, is that the number?

1:43:50Dug Song:2.35 was the way they liked to count it. But the total was more because we kept our cash.

1:43:59Turner Novak:Oh, got it. Okay. So it makes sense. What all did you learn after the acquisition? So you guys mentioned some things about like enterprise go-to-market, people staying at Cisco. Like what was kind of the lessons you guys learned?

1:44:11Jon Oberheide:I think you learned a lot of lessons of just things that we took for granted in terms of like that staying close to the customer, that customer exposure. You know, you go into Cisco Megacorp, and I don't want to pick on Cisco because it's true of many large organizations,

1:44:26Turner Novak:where you just don't have the exposure to the customer.

1:44:30Jon Oberheide:Your engineers are not on calls with customers. They're not interfacing with the end users of your product. And, you know, just understanding why startups win so frequently because they have that pace of innovation, that rapid decision-making cycle.

1:44:47Dug Song:It's also just a matter of scale, too. I think Cisco, as being a hardware company, really dominated, obviously, that market.

1:44:55Jon Oberheide:I think it was like there was so much effort put on when you're inside an organization like that. There's so much where you're kind of working in the business as opposed to on the business with customers where so much of the time is dedicated to, are you managing within 5 % of your monthly OpEx envelope? Are you preparing for the QBR? Are you making the business case for your new asks for the next fiscal year? And you just kind of lose that sense of like, what are we doing every single day that's building value for the customers? You can kind of get insulated within the big organization. On the plus side, Cisco is, the best description I heard is a carrier strike fleet.

1:45:37Jon Oberheide:Like it is slow. it is massive coordination across not an aircraft carrier, but an entire, you know, platoon, a foothill of boats. If you can move that and send it to the destination, you know, craft it to your desires, you have unstoppable power. If you can take that massive go-to-market machine of 300 ,000 sellers, both direct and through their channel, then you will just grind away at that market over time. But you have to invest for that long term. It's not like, hey, we make a decision and then we're going to go do this tomorrow. It's like, how do we influence the system and organization to get the recurring offer component of the, you know, general AM's, you know, comp plan for the next year to favor a SaaS product or favor a security product.

1:46:32Jon Oberheide:It's those kind of long-term influence operations.

1:46:35Turner Novak:So they were probably all set up around like just selling routers to people every whatever period. And then you have to figure out like, okay, well, there's like some software.

1:46:42Jon Oberheide:You're a Cisco AM and you wake up, you say, what am I going to talk? I got 200 products. What am I going to talk about with my customer today? They have a$10 million Catalyst switch refresh that they need to buy. I'm going to focus on that. This 200K duo deal, like maybe they need some MFA, but I'm going to close this$10 million deal. Maybe I'll tack on some security along the way. And so those were sort of the structural challenges when you're going into a bigger company. And that's not just a security company. And that's not just a SaaS or software company.

1:47:15Dug Song:And if you build other emotions and sometimes real understanding and respect for the opportunity. Like I remember we had a later independent board member who recruited Hillary Coupland McAdams, who was the president of Salesforce. But before that, she led the build of Oracle Direct at Oracle, something that Larry Ellison was like, I don't think this is going to work, and I don't know if I even want to do this. But it'd be like a third of his business, right? What is it? Oracle Direct, basically all their direct SaaS business and so forth.

1:47:44Turner Novak:Oh, so all the software. All the software, yeah. Oh, okay.

1:47:47Dug Song:So sometimes what we kind of learned is that our experience, And again, for any founders looking at a large company, kind of acquirers to merge with, there's three ways that goes. It's either sometimes their way, right? As you're assimilated into the Borg. Sometimes it's your way where you're so peculiar that they don't know what to do with you and you sort of stay independent business unit and they never really sort of get the benefit of why they acquired you. Except everything's just hardest for everybody. And then the third way, which is what we pursued, which is it's truly an integration, right?

1:48:26Dug Song:It's not our way, it's not your way. It's a third way we need to come up together, right? And, you know, someone coming with fresh eyes, coming with some of the old eyes, experience, success, scale. But finding the intersection of that is a lot of work, but it's very intensive in terms of people. Like we spent so much of our time with our early journey in integration of having our leaders spend all this time with all of Cisco's corresponding leaders to the point that our head of security became the head of security for all of Cisco, right? And later GitHub and now GM. But we spent a lot of time elevating our leaders, not sort of forcefully into positions of kind of control or anything like that, but giving them sort of the platform within the business, whether it's just broader Cisco, to really kind of have influence, right?

1:49:17Dug Song:And help pull together and kind of share platform learning where, you know, a design community came out of kind of Duo coming into Cisco, partnering with all the other kind of design leadership within actually having a, again, established kind of a culture, right, of how we did this stuff. That, again, other design leaders there could finally feel like they could plug into or could build something larger, right, for Cisco from. And so there are a lot of these kind of things that, you know, we were really proud to be able to contribute. But, you know, at the end of the day, you know, once that all was done, you know, I mean, like Jado says, our job was to obsolete ourselves.

1:49:53Turner Novak:Yeah, we did.

1:49:55Jon Oberheide:And it's, you know, there's a lot of puts and takes with going into a big company like Cisco. But there was, you know, the people were excellent. And we would come in and say, I remember walking in and being like, hey, so what's Cisco's zero trust strategy? Like, this is kind of what we're doing. You know, how do we fit in? And, you know, the leaders were very open there. We don't have one.

1:50:18Turner Novak:That's why we bought you. we paid 2.4 billion for zero trust

1:50:22Jon Oberheide:you guys tell us what to do and that was certainly refreshing of coming in and not saying this is the way we do things but being open to how do we dualize Cisco in the right places and how do we Ciscoize Duo

1:50:34Turner Novak:were you able to like suss that out ahead of time or was it just complete luck that it turned out that way I wouldn't say

1:50:40Dug Song:yeah I don't think we

1:50:42Jon Oberheide:can suss that out there's no easy path to it

1:50:44Dug Song:yeah once it was like you know day one or day show or it was a lot of scrambling quickly like let's meet each other let's do all this stuff but

1:50:52Jon Oberheide:everyone wants to touch and feel the shiny new object and there you get outreach from 70 ,000 employees no thank you oh but they were very welcoming in that way and also different than

1:51:02Dug Song:what we see in other companies do like when Palo Alto acquires companies they sort of just rip the face off of you know the products they just you know slap them right behind kind of panorama they kind of have this force I mean they have a dedicated integration engineering team where it's like, yes, you have engineers, but we have ours and we're going to take your code and figure out how that's just allowed into what we do. And so it's just, you know, there's different ways different companies do it. Jessica was felt like more like welcome to the tribe kind of thing.

1:51:30Jon Oberheide:Yeah. Spend the time to understand our business and what makes us tick and us spend the time to figure out theirs. So in hindsight, you know, I think it was the right home for the business for the long term. Yeah. And I think long term, like

1:51:43Turner Novak:Doug, you, we were, before I start recording, you're talking a lot about you're really focused on Michigan now, really excited about doing stuff. Like, what are you up to day to day now?

1:51:53Dug Song:You know, post Cisco, I was there for quite some time. But the last three years, I've been traveling to 22 countries, sort of, you know, getting kind of a lot of my system, not doing a lot of security. John has been doing a lot more in security, I think. Yeah, you're on like some boards.

1:52:10Turner Novak:You're like, tell me about all these different products.

1:52:12Dug Song:but by and large you know trying to help you have a family foundation but we established a family office to try to help strengthen and serve the communities we're part of mostly here in southeast Michigan so between Ann Arbor, Detroit but up to Flint and yeah but it's tech in a nutshell it's tech media and real estate but in a way that we think we can combine because Michigan is so rich in all these forms of capital like obviously intellectual capital our own research universities human capital right just amazing kind of talent and then just work ethic and all this kind of stuff. Physical capital.

1:52:48Dug Song:Brooklyn, Detroit, where we have all these amazing buildings and all this kind of stuff that's been built for a city for 2 million people, but it has 600 ,000 left in it. An amazing, I mean, a lot of financial capital, actually. Michigan's still one of the richest places in terms of individual wealth. A lot of old money that's here from what had been the second wealthiest kind of city in America and all this. but we're in a lot of cultural capital certainly this place represents from birthplace of punk rock, wiki pop in Ann Arbor to Detroit Rock City and Motown and techno and jazz and all the things but I think the thing that's sort of we're really focused on is the social capital how do we build, how do we intersect these things and build more opportunities for folks to come together, to co-invest, to build upon these forms of capital so we create shared prosperity in a broader way.

1:53:40Dug Song:Because that's a lot of what we saw coming past Duo. Ann Arbor is very successful. Ann Arbor, we were the first unicorn, we were the first multi-billion dollar tech exit in Michigan. There have been 12 more since. In fact, my -

1:53:54Turner Novak:Wow, I did not. That's way bigger than I would have thought.

1:53:56Dug Song:Yeah, yeah. In fact, my neighbor sold her company last fall, just a couple of months ago. I walked my dog with her in my neighborhood. I didn't know she had a company. She sold for 2.2 billion, right? It has the Sonics, right? And I'll say, Jen, you didn't tell me you had a company. And she's like, well, I didn't think you'd be interested. You know, it's like life science. I'm like, are you kidding me? But it's a lot like that. And, you know, and even beyond that, there's so many more. You know, you have just amongst its graduates, it's had 46 unicorn founders. But only three of them, the only three of those companies represented actually stayed.

1:54:29Jon Oberheide:Yeah. We were the first. PitchBook data is pretty crazy. U of M is the seventh or eighth biggest educational institution worldwide. We're tied with like Tel Aviv University for producing founders that go on to create venture-backed tech startups.

1:54:46Dug Song:And so I just think this is like a, it's not a missed opportunity, but it's just tremendous opportunities. And I guess I still don't like to talk. I'm so quiet. You don't see me doing a lot of stuff publicly because I'm just like, this is great. There's a lot of great companies, opportunities for us to get into. Only here, exclusive to the peel.

1:55:01Turner Novak:Yeah. A lot of secrets exposed to here. Yeah, I think I saw that Michigan has a top five business and engineering school. And it's like the only college, I mean, some of these rankings, who knows how they do them? And it's incredible. It's like top 10 programs in like 100 plus.

1:55:20Jon Oberheide:Different like schools, like nursing or information systems or whatever. The breadth and diversity of excellence is wild.

1:55:27Dug Song:But we just have to do more because we also realize that keeping it secret this way means that we stay more siloed, which means that there's not the flywheel or the reinvestment. Like we just had another fellow just, you know, last month. So Jim Scapa sold Altair Engineering for$10 billion in Troy, right? John is from town just a couple months ago.

1:55:47Turner Novak:What was the company called? Altair Engineering. At that point, I mean, I've never heard of it. I don't even...

1:55:53Dug Song:Any mechanical engineer in the world knows it. It's simulation software for aerospace, for automotive or anything advanced manufacturing. I sold his Siemens and I think he's in Athens, California now. But he's a University of Michigan tier-born grad.

1:56:08Jon Oberheide:And was it OneStream that just, I think, went private for$6 billion?

1:56:13Turner Novak:Yeah, OneStream. It's also like HR software. Owned with accounting. Yeah. I have a friend who's worked there. It was owned by KKR, I think, bought them out. Yeah. Did they go public? I think they went public and they got taken private. Yeah, they are.

1:56:26Dug Song:Yeah. So that was, you know, Tom Shea is a great heads down entrepreneur, but again, sort of like, you know, I've done one podcast with him and I haven't seen him since. And it's a lot of stuff is like that, right? Where we have all this great sort of things happening. And now we need to talk more about it, you know, and sort of like connect more of the dots and stuff, especially the founders that are,

1:56:45Jon Oberheide:you know, coming out of the university and just allow them to understand that there is a path if they want to stay here. I think of Ethan Gibbs from Embedder, who was, I think, a sophomore, or junior, started a, I guess you'd call it, a cursor for embedded hardware development. Won a pitch competition in school, decided to move out to the Valley, got into YC, raised a great seed round. But the reason he left was he's like, all of my customers are in San Francisco. I guess software city, that's why I would go there. And we need to show that there's a paved path that if you do want to stay here, if you want to build a different kind of company, that you're not taking on a huge other chunk of risk in addition to the risk inherent in building a startup.

1:57:32Dug Song:Yeah, but also Sparks and Barters is also just selling the place. We invest in another company in John O's hometown in Troy, Viscom, the AI, which is like an automotive engineer who worked at Honda and his co-founder. And he moved out to San Francisco for that Friedman's thing. AI Grant did that whole thing. and he's like, I kind of like it out here. You know, I'm going to stick it out and, you know, like, no. And his co-founder's like, yeah, Kaylee's like,

1:58:01Turner Novak:yeah, I'm going to move out there too. I'm like, no, like, dude, like, why? Because their customers are here.

1:58:07Dug Song:Yeah. Their customers are automotive and, you know, all this, it's like, and granted, they raised like a 20 million, you know, seed round or whatever. So they're great, but, you know, like I say, you need a little bit in Silicon Valley and you, but you have to leverage with strategic and a little bit about where you are, and I just think it's kind of nuts to try to build, you know. It's hard to build optionality for companies, even in AI, out in the valley when, you know, talent's expensive and, you know, the valuations are so crazy. And, you know, I don't know. And our advice, I think both the founders always has been like maintain optionality.

1:58:48Dug Song:You know, don't because like you say, like Jon said, you have you have one portfolio company, right?

1:58:55Jon Oberheide:You know, in all those rounds of financing, the one on four, the five on 20, we could have pushed more. We could have pushed for higher valuations and less dilution, but we didn't want to paint ourselves into a corner.

1:59:05Dug Song:Yeah. Don't ride over the top. Right. Don't don't block yourself out from the things that could happen next.

1:59:09Jon Oberheide:And if things go well, it's not going to matter. Right. And as you know, start as a binary. outcomes right so i'm very jealous of doug's placemaking particularly here in southeast michigan because my my scope is is all over the place uh working with startups in san francisco austin dc funded mostly through through board service like trying to work with i think back of the the different phases of duo and that you know kind of years of hyper growth from 10 million arr to 100 what's the most fun and chaotic and that's where i like to work with companies now like i'm not useful in zero to one like i'm not going to tell you what to build or how to build like go talk to your customers yeah one to ten is kind of interesting as you start some commercialization distribution but i think the the fun meaty kind of softer the challenges of 10 to 100 are where where founders need to go from that you can sell 10 million of anything and once you get to there you kind of got to throw out most of your practices all the things you do that don't scale to get you to 10 million, you've got to figure out a set of different tactics for that next order of magnitude.

2:00:17Dug Song:And also level up as a leader, which is always, you know, that's hard. Yeah, founders need friends. And again, that's one of the biggest challenges you have here is they don't have enough density sometimes for folks to feel like they belong. Like they see, like, founders want to be where founders are. And again, there's not as many here, but that's why we have like Michigan Founders Fund, which has kind of created a, yeah, somewhat artificial, but you know geographically unbounded you know community of those kind of founders here but increasingly that's why I mean to be honest that's why we're doing real estate I don't really want to buy hotels or you know do neighborhoods scale a little bit but

2:00:50Jon Oberheide:create center of gravity

2:00:51Dug Song:yeah but we have to we have to create the kind of place and product Detroit needs to create the product where scaling companies want to be the nice thing is that there's a whole category of them that are all fighting to sort of come here which are all the industrial companies right all the anyone building anything that needs a factory they come here like oh my god like you have factories come out your ears and and you have the talent for it more importantly and so that's the thing that we still need to kind of pair up and and see but you know and and you know we have companies like remora right like paul gross came here from yc and built like this amazing business that has like you know nine figures of off day doing like carbon capture out of like trucks and trains and but he's not from here he's like no it's the best place to build my business and you know he's doing it here and there's more that coming so the general thing i'll say is that you know also whether it's whether it's for you know direct investments and working with founders or the words with like you know lps you know mission is also kind of a sleeper kind of thing you know obviously you know you need different kind of work to get either sort of over the line right here where sometimes people aren't as oriented here but there's there's great family offices great institutional lps here they're great founders that you know just but sometimes what they're doing i gotta wrap my head around like you're doing mushroom what?

2:02:08Turner Novak:Wait, what is the mushroom? What's the mushroom one? Psychedelics?

2:02:12Dug Song:No, no, no, it's a cool one. There's one that's doing, it's actually a tech transfer. It's out of, not even from here, but out of the University of Minnesota. They're applying, and they have a SIBIR with DOD for army-based kind of PFAS remediation, but they use fungi to do PFAS remediation.

2:02:27Turner Novak:Oh, interesting, like in the ground, sucking it up out of the ground. Yeah, it's cool stuff. PFAS is like that forever chemical that just gets in your body,

2:02:35Jon Oberheide:never goes away. that's now part of our food pyramid, apparently.

2:02:42Jon Oberheide:Minimize your consumption, of course, right? That's, I mean, you know, the university environment is so much deep tech, you know, climate tech, hard tech, pharma, medical devices. It's incredible to see what comes out of there. It's not a lot of SaaS because you don't really need, you know, if you want to build some software, just go build some software. But to see the pipeline reports coming out of University of Michigan and other universities is awesome. Yeah.

2:03:06Dug Song:So I'm meeting people here. I'm like, wait a second. Someone was told me, I'll just go invest in some Chinese biotech ETFs. They'll be good. And then I looked at who's doing them. And I'm like, wait, there's a dude here who is my friend has taken four of these companies public in Hong Kong. You know, the most recent, which is like four billion. And they live in Ann Arbor. I'm like, wait a second. Like, what are we doing here? Like, I'm like begging this guy, please kind of get into your company. He's like, no, we're finding our own like 20 million until we get to a point of like 100 million valuation.

2:03:32Dug Song:Then we're going to go out. I was like, please, please, please

2:03:35Jon Oberheide:I was getting this damn thing and I'm trying to find every

2:03:37Dug Song:you know, hire a guy who can do like life sciences coming from a different family office and stuff. So for me it's been like all this, like I like feeling like a beginner again like not, you know, and learning all this stuff from the ground up and navigating it but it's been really fun because we have, you know other things we have to from our experiences and networks and access to bring to bear to them but it's really fun to do in the context of of a community, right? Where we're going to build together here and stuff.

2:04:04Turner Novak:Did you wish there was more of that in Ann Arbor or in Southeast Michigan?

2:04:07Dug Song:We always did when we were doing it. Yeah. Yeah. I mean, you know, and that's why this exists, you know? Like, you know, we helped Bamboo expand from Detroit here and then Grand Rapids and Royal Oak and so forth. The co-working space that we're sitting in, you know, we've been doing real estate. We're the real estate partner for. But, you know, I don't know. just yes we I have gotten comfort with and also a lot of interest in real estate particularly now is you know if it's not gold if it's not crypto you know you need some assets hard assets too you need some hard assets right now we need more

2:04:41Jon Oberheide:we need more GPs we need more you know emerging VCs and solo GPs like Turner Novak

2:04:47Turner Novak:I gotta convince more people we all gotta convince more people to move here

2:04:49Jon Oberheide:we got Blake Roush Southeast Michigan with Hidden Roger Ehrenberg back here Game Changers yeah

2:04:57Turner Novak:starting a movement yeah yeah there's a lot cool well this is a lot of fun thanks for thanks for taking the time to do this thanks sir thanks sir love what you're doing and love that you are doing it here you almost need to find people have like a weird bias to michigan of like my family's here or like my customers are here like that's specifically why i would stay here because

2:05:15Jon Oberheide:like for me it's like you have some some sort of ties but then you still have to you still have to show them that it can be done there's supportive infrastructure around you there's a path but There's stories that you've heard.

2:05:25Dug Song:But it just depends. Like, you know, I remember when I met Alex Wong from Topiary Capital and realized that, you know, he's been my neighbor for like three years down the street, but not realizing he was managing director of Intel Capital, not realizing that, you know, he has all this money he's raised from his time at, you know, 15 years he led D.E. Shaw, right? And all the, like, he, the dude's here. And he's like doing this stuff on his own. And he's only here because he wants to raise his kids here and like thinks it's a great place to do so and all this kind of stuff. He has no connection to Michigan.

2:05:51Dug Song:i'm like it's just weird right like there's like these sleeper kind of folks throughout here you know as a founder we just talked about earlier i'll mention this because i don't want anyone else going for him to invest in but like you know like there's some like amazing you know world-class talent all just like doing their thing and no one knows you know it's like um and so it's fun to uncover this i think some of the san arbor is such high sort of talent density

2:06:17Jon Oberheide:like super educated everyone's like way overqualified for everything and so you know you throw a rock and you hit like 10 super qualified people and you might not know in depth what each of their you know areas of expertise are what they might have done in the past and

2:06:31Dug Song:yeah so so the the open you know invitation will be that if there are any funds out there that we'll do this because we host this stuff all the time tours right of folks coming come through ann arbor and detroit whether it's for tech investing whether it's for art collecting whether it's for you know I don't know other stuff we we're we're happy to sort of get people sort of plugged into kind of the ecosystem that that does exist here and and again now increasingly there's going to be some places like like again I think we're going to be at a point pretty soon where if any VC wants to have like a a temporary office like they want to work from Detroit I've

2:07:04Jon Oberheide:got multiple buildings they can do that from like we can kind of help set that up and just you know

2:07:09Dug Song:help create more of that opportunity.

2:07:11Jon Oberheide:There's more like scout programs and sort of incubators that are being set up, particularly around university where there's so much like untapped pipeline that is not maybe fully exploring like research commercialization. So there's some folks that are setting up programs here where they're getting first looks at the pipeline coming out of the university. But it is more specialized expertise than just, you know, technology and software.

2:07:34Turner Novak:Nice.

2:07:35Jon Oberheide:Well, this was a lot of fun.

2:07:35Turner Novak:Thanks for that.

2:07:36Dug Song:Yeah, thank you.

2:07:36Jon Oberheide:Yeah.

2:07:38Turner Novak:And thank you for listening. Thanks again to Numeral and Flex for supporting this episode. Put your sales tax on autopilot at numeral.com and upgrade to Flex Elite to get$1 ,000 on your first card using code Turner at the waitlist link in the description. If you like this conversation, please like, comment, subscribe, and I'll promise to stop suggesting you name things after me. Somebody changed that. If you missed it, make sure to check out the back catalog of over 100 episodes. Tune in over the next few weeks for guests that include Gary Tana, YC, Chetaputigante at Benchmark, Jake Stoke at Serval, Mike and Nikhil at Footwork, and Scott Stevenson at Spellbook, one of the fastest-growing startups in Canada.

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