Peter Reinhardt, CEO & co-founder, Charm Industrial; CEO & co-founder, Segment

0:00Carolyn, I'm so excited. Today we have Peter Reinhardt on the show. He was the founder of Segment, which went through Y Combinator in 2011, and now founder of Charm Industrial, which is a carbon removal company. Hi, Peter. Welcome, Peter. Yeah, good to see you both. Thanks for coming on the show. It's been a while. Yeah, it has been a while. It's good to see you. I cannot wait to hear more about Charm. But first, I want to start with Segment because you went through Y Combinator in 2011, in the summer, but not with Segment. I mean, Segment, it's a story of a pivot. And so I want to start with Classmetric and your application.

0:46Can you tell us a little bit about that time? Yeah, fun. Yeah, I mean, we were students at MIT at the time, or MIT and Rhode Island School of Design. And the idea was to give students this button to push to say, I'm confused. And the professor, they'd all have their laptops open or whatever, and the professor would see this graph over time of how confused their students were. We had this notion that professors really wanted to improve their lectures, or that they at least wanted to be able to answer questions in kind of a real time, and that students would prefer anonymous questions and so on.

1:17So, you know, it was a nice idea. You would think they'd want to. Yeah, I think it's a good example of building something that seems right in theory, but people may not actually want. And what made you want to move forward with a startup and apply to Y Combinator anyway? You were juniors at MIT. We were, yeah. Actually, I think we started reading PG's essays maybe like a year or two before that. And so we were pretty amped at the idea of building a company together as roommates. I spent a lot of time talking about it. We spent like MIT's independent activity period kind of hacking on ideas there.

1:54So, you know, I guess it was in the water at that point. But I think it was initially kind of fomented by Hacker News and some of PG's essays. Was it just two of you or was it there's more of you? There were four of us. Yeah. The whole time. Three of us, three of us from MIT and then one who joined right at the beginning of Y Combinator. Oh, got it. OK. OK. So you got invited to interview. And I remember everyone really liked you, the group. And you were hotshot programmers. And I know you were an aerospace engineer, technically. Did you program too? I did, yeah. Okay. So you're all good programmers.

2:39But no one really loved the idea. Yeah. And actually, I got a kick out of this because I looked at the notes and in it, Paul's note was, quote, proposed resuscitating Etherpad, which was an old YC startup that that didn't really take off. And so it was clear if Paul's pitching new ideas during the interview, that said something about the idea. Do you remember the interview? Oh, yeah. No, I do remember the interview. And I remember very specifically one part of it where PG was like, yeah, you know, I always wanted this as a student. And I was like, thank you. Yeah. And then he turned to, is it Rob?

3:22Robert. He turned to Robert. And he's like, Rob, would you use this? And we had specifically gone to Rob ahead of time when we were doing like product discovery. We'd ask like, Rob, is this the thing you'd use? And in person, when we were in his office at MIT, he'd said yes. And then in the interview, he looked PG in the eye and he said, no. The betrayal. Wait, I was just going to say the betrayal. So you actually met with Robert at MIT? Like he took the meeting with you. That's like fascinating. Just as a professor, you could do with a potential customer and so on and so forth. Anyways, I don't think he was that amped on it, but he definitely had a change of tune.

4:03That's hysterical. That is funny. We thought we were toast at that moment. no you weren't toast I would think that too because everyone really we knew we knew at this point because it's 2011 we'd sort of um realized it's not always about the idea if you have a great group of founders who get along well and have good instincts and are good programmers fund them fun for the pivot so um but you guys must have insisted you're still going to do the classroom idea when we accepted you. Yeah, we're more stubborn. Yeah. And so we spent the whole summer basically building out some like building out the application and we just tried testing it in some summer classes at Stanford and so on, which didn't go great.

4:49But we decided, okay, we're going to give this a proper trial, like, you know, kick off with some classes and we're going to move back to Boston because Boston has so many universities that we actually figured it was a pretty good place to launch it. And also my girlfriend was in Boston's wife now. So it was the right move um and uh anyway so we launched it in a whole bunch of classroom we did demo day we raised like 600k it was a bit of a grind i was sleeping on the floor of the code academy guys who were out like you know meeting vcs on jets and i was like scrambling for meetings and uh forgetting to eat it was terrible it was like it was awful um were you were you sleeping on the code academy guys floor because you had moved back to boston and we're yeah the other guys to move back to Boston.

5:31And Zach Sims is on a private jet? Yeah, exactly. Zach Sims is like, yeah, I don't know, meeting Coastal on the tarmac or whatever. And, you know, he's got term sheets coming out of his ears. And I was like, you know, struggling to pull together 600k. But did you tell VCs like, universities are going to pay for this? Like your customer was actually the university and they were going to pay for your software. That's how you were. That's right. Yeah. We were competing with Blackboard, really. We wanted to become like a learning management system um and this was like an entry point to dislodge blackboard okay why didn't anyone adopt your software we actually we got like i don't know six or so classrooms professors to adopt it in in the fall like it wasn't it wasn't terrible we had maybe more signed up uh like you know a couple at mit and a couple at boston university and so on we'd worked pretty hard on the go-to-market side and then the problem actually was that we started putting in the classroom we like stood in the back of the class and we were like what are students actually doing during class like are they using it and what we found is that they they weren't it was like a total disaster like the you know at the beginning of class 60 percent of students would be on like flicker and gmail and twitter and whatever else uh shopping on ebay and then by the end of the class it'd be 80 it's like my conclusion was just like oh my god like get the laptops out of the classroom immediately like this is terrible no one should have their laptop open the students weren't even paying attention to the lecture.

6:55Of course they were confused. They weren't listening to the lecture. Around this time, an article came out in New York Times that was like, you know, maybe we should make sure that every student can have a laptop in lecture. And I was like, oh my God, no, like we got to shut down the products. We're going to like get all the devices out of the classrooms. So we did like a, you know, complete 180 on the role of technology in classrooms over the course of about a week and a half. And then you had office hours with Paul, didn't you? Because he was saying he remembered that office hours when you were walking.

7:28That was a year and a half later. Oh, whoa. Okay. Whoa, whoa, whoa. So what happened in this year and a half? Well, we were pretty embarrassed. But we called back all of our investors from down the day and we told them, hey, we're going to pivot. We're going to build an analytics tool. That was the best idea we had. Classic tar pit idea. And anyways, we're going to compete with Google Analytics and so on. So then we disappeared into a hole and started building an analytics tool for a year. Wow. Which turns out to be a reasonably hard technical problem to allow people to query data any which way.

8:04And so it took a long time to build, which was a bad idea. And we didn't really test the go-to-market that well. We didn't know how to do B2B sales. So we weren't out trying to really get customers that way. Yeah, I guess there were two investors that took their money back at the pivot. It was kind of a rough pivot, and then we disappeared into a hole for a year. And all four of you kept working on this for the entire year. You just logged it out. No one got other jobs. You just kept working with the$600 ,000 or less if some of them took their money out. It was$450 ,000, yeah. Still, you could last for a year if you were living cheaply.

8:42so at what point did you say this analytics thing isn't working what are we going to do i think by the time we'd built something that we thought was pretty interesting and then we we actually started like launching it and we finally convinced ourselves like we got to just get over this and start putting out like it's a year it's been long enough like we have to just get off the the bench here and do something and what we started to find is all these people who told us like oh that's really interesting i'd you know i'd love to learn more etc it was really like idle interest and there was not any real interest behind it in terms of like a business actually purchasing anything which was brutal it's like you know the sort of ruinous empathy uh feedback from from customers and so that was like october of october november of of 2012 um i had just gotten married and went on the honeymoon came back and we're like okay like this is probably not working so like what do we do oh gosh is it like your professional morale must have been pretty low at this point extremely low i mean i was getting panic attacks about once a week like i was in the hospital uh yeah it was bad it was really bad what gosh what i think i lost i was already pretty lightweight i was like you didn't have any users right or or did you well that's yeah that's why i was that's why i was so anxious i was like this is not this is not working yeah but peter you were probably only like 25 years old right I was 23 23 so it's like you're not a failure at 23 that is like you could start like you have a degree you did get your degree right nope oh you dropped out okay alright so you're having panic attacks and in the hospital for them no less well because I thought they were heart attacks or whatever and then it turns out it's not but whatever you like you don't know what to do right so yeah it wasn't it wasn't good it was pretty miserable okay so what had then happened what was the next big turning point yeah the next big turning point was when our co-founder ian going from rhode island school design wrote this analytics js manifesto it was like a one-page uh markdown file on github and he was basically like look we built this little library called analytics js a little over a year ago we built it to use just inside of class metric because we wanted to send all of our analytics data to mix panel to google Analytics and to Kissmetrics.

11:08So it had those three kind of services that it could route data to. And he's like, I think there's a big business behind that. Look, it's an open source library. We've given it no love over a year and a half, aside from just putting it up on the web. And it has like 50 stars or something on GitHub. So like clearly someone is doing something with it. It's the best thing we've done. Like we should double down on it as a business. I was like, dude, it's an open source library and it's 200 lines of code. I just do not understand how you could possibly build a business around this. Like it is, there's nothing there.

11:35Like yeah maybe people want to use it but i don't understand how to turn into a business um which is funny because that became my problem for the next decade but um anyway so that was my argument against it and i just i couldn't i couldn't shake him off of it i couldn't shake calvin off of it i think elia was like neither here nor there on it but was kind of like it's probably the best option we have and so i went home my wife eric and i were talking about it and it's like you know help me figure out how to kill this idea it's like getting momentum and it's a terrible one and so we i think we stayed up late brainstorming like how we could freaking kill this thing and i think i stayed up all night or something i don't know i was exhausted came in the next day i was like all right guys let's build a landing page for analytics js and let's put it up on hacker news let's like let's not disappear into a hole and build something for a year let's just launch it and see what happens uh and so we could all get on board with that we're like okay yeah we don't want to repeat the last year let's do that so then we we put it up on Hacker News and it went straight to the top, like sat at number one all day, got like 3 ,000 stars on GitHub or something like that, a few hundred upvotes on Hacker News, a few thousand email signups.

12:39So it was just like, just exploded on Hacker News. So that made the decision easy. Hold on. Was your and Erica's plan that you spent thinking, how do we thwart this, was to say, okay, let's just make it happen now so that we can move on. It will fail. Exactly. We can move on quickly. Exactly. We get no attention on Hacker News and we'll move on. And it was totally the opposite. Yeah. Totally the opposite. That's hysterical. Okay. So then you said, okay, there's something here that people seem to like. So you sort of moved forward with this manifesto. Well, I think then somewhere right around this time, might've been right before or right after we had office hours with PG.

13:18I think it might've been like the day after that or something like that. Where we were like, should we do this thing? Or, you know, Elia has another idea for like how to find things to do with your friends. i know i know what paul said yeah yeah paul was like oh my god no um so he i think his advice is basically like i don't know it seems it seems like it's there's something here you should just go after this it's my vague memory of it i don't know if you have notes in front of you but didn't he well he told he remembered that he said to you something like you've spent you know half a million bucks and you have nothing to show for it yeah did that so harsh at the time it felt real i mean it hurt but it felt real yeah yeah we definitely were carrying a lot of shame about that yeah but we didn't we hadn't quite like you know put a pin on it okay so he put the he put the pin on that one um and and so you guys launch it on hacker news get some traction you get some signups and you're you're off sort of except it's this open source library and so like what do you what do you do with it so i mean it became the challenge forever of like okay well you know what what do people actually want that's a paying service around this concept of routing customer data first thing it turns out is people don't really want to use the open source library they want to use a hosted version where they can push buttons to say where they want to send the data so that was what we built and built and that became the product and the service and the company and then we kind of focused on growth for like six months and i think the next office hours we had with with pg he was looking at the growth graph and he was like this is the most linear straightest growth graph i've ever seen he's like they always bend one way or the other but this is just he's like what are you guys doing paid acquisition or something like i don't understand how it could possibly be this straight it's like nope that was just like it was just a virality loop or whatever of one exactly one Can I just go back to this analytics JS manifesto thing?

15:20Did Ian have the idea sort of in response to something you had been working on before? Or was this just a separate standalone idea that he had? It was adjacent to the analytics tool that we were building, right? And maybe it came from the idea of like, oh, maybe we could make it easier for people to adopt us if they could send data to both us and Mixpanel and we could kind of get a bake-off going. That's my memory. But yeah, it was sort of like complicated and marinating, I think, for a long time. Okay. But it just, what I'm sort of getting at is that it wasn't a complete and utter waste of time that year that you spent working on the other company because it sort of planted the seed for segment.

16:06Sure. Okay. Peter's not totally on board with that. And so then was it all smooth sailing for you guys? I don't remember. I mean, maybe it's close to smooth as startups get. did you raise more money oh yeah yeah okay so we i mean we were starting to run out of money so you know when we had like a month of cash left or something i kind of emailed our investors and i was like hey we have something that's working and they were like who the hell are you again um because i hadn't been sending updates or anything whatever that was a huge mistake oh you go you went you went really quiet yeah you know a company's dead when they stop sending updates right oh yeah carolyn especially but we know when you don't hear it's never good news not good news right really one exception to that maybe yeah that then it's a happy surprise so can you explain for our listeners what segments product did and you know the problem it was solving yeah i mean there were all these both software as a service companies that were exploding onto the market at the time, like all these new software offerings hosted in the cloud or online in the browser, right?

17:21And all these new mobile apps getting launched, right? This is like 2012 is like, you know, Facebook's mobile app had gotten big and mobile phones were becoming just everywhere. And so all the mobile applications were like flooding into the market. And so you had all these new software services and apps out there, and they all wanted to understand how people were using their apps, right? Or their websites, web apps. And, you know, in order to understand that they wanted to get data about people clicking things and buying things and opening emails and all that, all that data about how people are interacting with their apps.

17:57And they wanted to send that data into an analytics tool where they could look at charts of what people were doing. They wanted to send it into their email tools so that they could send smarter emails to people based on products they had bought or not bought. They wanted to send that data into their advertising tools so that they could see which ads were actually converting into close one revenue. They wanted to send it into their data warehouse. And so they had all these different places where they wanted to put their data. And to your point, they would have to go and ask their engineering team every time, like, oh, I have a new tool that I want to put my data in.

18:29Can you integrate this thing? And then after a little while, the engineering teams are like, screw off. Like I already did this like 10 times. Yeah. Laborious. Yeah. So you are the one-stop shop. Just give it to give your data to segment and then we'll handle it. That's right. Yeah. And so instead of the engineering team doing the integration, a marketer or whoever could push a button to say, send my data to Salesforce, send my data to Adobe, send my data to Google, send my data to wherever. Okay. One of these sort of unsexy things that consumers don't really know about, but the companies are desperate for.

19:02That's right. This is kind of random, but how did you decide what to charge the customers? Because you were obviously building something that they really wanted. But how did you decide what they were going to pay you? We had no idea. So we started at$10 a month. Wow. Which was very clowny. But we were coming from this open source MIT world. So we had no idea what to charge, to your point. It seemed like it should be free because it was an open source library. So we very awkwardly asked people to pay$10 a month. I'll never forget we got this email back from Eduardo. like maxi store or something like that some brazilian company i think and he emailed back and he was like i'll take ten dollars a month but if you don't raise your pricing in general like i may decide to migrate off because there's no way that you can support this service at ten dollars a month because i don't respect you yeah well he's just like he thought you'd go out of business yeah it's like 100 you're going out of business if you're charging ten dollars a month so he's like i really want you guys to succeed but like ten dollars a month ain't it so that was very kind of him uh and then we hired a uh sales consultant mitch mirando uh i forget how we got connected with him but uh and he he was like peter you should be charging 120 000 a year not 120 a year and i was like that's the most bananas thing i've ever heard yeah and this was 2013 20 around then 2013 yeah yeah summer of 2013 did you charge that well so we went to our first sales meeting which was with nat friedman when he was running his company's amaran and they were they were using us i think on the 120 a year plan and he's like okay at the before we went in and this is in uh downtown san francisco he's like you have to ask nat for 120 000 a year and i was like i can't do that that's crazy it's a thousand x increase in price uh and he's like well then i quit as your sales advisor and he like turned around and started walking away and i was like okay okay okay like i'll i'll ask for 120k tough love yeah so we went in and i asked for 120k and uh i turned you know at the end of the conversation and i was excited or whatever and i just turned like just deep red was very embarrassed uh and i think he asked for 12k and i asked for 18k and we settled at 18k um which was very nice of the sales consultant how did the sales consultant feel about the 18k he was like well you'll do better next time but you know in my mind it didn't really matter because in my mind it was already up 150x right and so i was like my mind was blown you know i was like never in a thousand years did i think that it would be and and so the the whole idea of like value-based pricing where i don't know we were probably saving that like 500k a year or something on stupid integration stuff that his engineering team didn't even want to do um and so for him was a great roi uh and but this concept of like value-based as opposed to like the cost-based side of like it's an open source library took a long time for us to really learn and you slowly raised your prices well i just more confidently asked for 120k the next time and lo and behold we got 24k and then i was like okay well like now it's a repeatable thing and then we got 36k and then we got 54k and then we got 108k and then andrew's list was the first over that was like 240k or something like that wow so i kept going.

22:13Oh, wow. Not too bad. Peter, this is so random, but I want to ask you the story. You talked about how you hired this new sales guy who was not someone you thought you'd hire because he was very slick, but you learned a lot from him and he crushed his sales numbers. Can you tell that story? Because it's sort of counterintuitive. Yeah, it's definitely one of the more humbling. I mean, of the many humbling experiences in building the company, it's definitely of one of the more humbling ones so our first sales guy rafael uh parker who was incredible like you know could sell i don't know could sell anything to anybody uh and and he was really successful we got to i don't know like a million or two million arr um and then was like okay it's time for us to hire our second sales rep and i was like great raf you hire like i don't i don't know anything about sales you should just hire this person so he came in and he brought chris 30 in and for an interview and yeah new like born in born and raised new jersey slicked back hair uh like real bro-y attitude tatted up um but in like a suit you know uh it was like a vibe and and i was like i don't think this guy can sell to developers ref like i don't i'm not seeing it um and he's like just trust me on it and i was like okay like let's do it uh what do i know about sales so uh so we we hired chris and yeah he um he he beat the number every guy i think he was the top sales rep for like six or six of the next eight years or something like that um and and the whole thing really didn't make that much sense to me even for like a year afterwards until i started going on sales trips with him, like to New York in particular.

24:01And what I sort of noticed is that some of the conversations were a little awkward, but he actually just was more aggressive about understanding what the customer's pain point was. And he would kind of push through the awkwardness of trying to get to that, sometimes in very awkward ways. Like, you know, there's one conversation in New York where he had done some cold outbound to get this person to take a meeting. and we then got there it was like me and him and a sales engineer and we sat down and the guy was like cool welcome you know like energy is on you to like start pitching yourself and chris 30s like so why are we here and like my heart stopped i was like oh my god like what is going to happen next and like everyone from segment was just like like like mortified and literally very awkward, like 10 seconds of like recalibration happening in the room.

24:54And then the person on the side was like, well, well, you know, I guess, well, you know, it's not easy to integrate software. And Chris is like, what do you mean? Like, you know, and he started digging in and doing all this discovery. And so he ended up doing like 20 minutes of discovery before it was health discovery, asking questions about his problems before he was found like, okay, well, cool. Let me show you what segment is. and i was like went from mortified till then like 10 minutes in i was like oh shit like i mean i see what's happening outreach yeah like he went in knowing nothing and he like very cleverly got all the info he needed to like pitch the right thing that's and it's like it's fair they took the meeting so like why did they take the meeting why did they set aside an hour to talk about this but he was almost like incensed of like how why are you using my time this way it's like the whole thing was just like totally reversed um but that's so interesting because i'm not a very good sales person at all but it's interesting because by the end of that like his his questioning he could then say well this solves your problem and this and this and like tailor the pitch yes and in fact someone who looks like they're doing sales who comes in and like gives this really hard pitch so like totally missed the mark with the customer the customer is not going to feel heard or listen too like it's not actually good sales uh and so whatever reason he's got the energy to like push through the awkwardness of discovery and like customers actually then love it because then he's speaking he's speaking to their needs because they've told him what their needs are was chris surdy at segment the whole did he ever leave i think he was there the whole time and turned out to be a huge culture carrier too like teamwork makes the dream work was like you know tattooed on his leg and was like a it was like a thing inside segment yeah oh my gosh i love that i want to ask about like when you thought about getting acquired or did you think about it or did you just get approached by twilio yeah jeff for a couple years prior to the acquisition had been uh kind of reaching out once a quarter once every six months being like you know we'd be better together you know we've we've got the communication layer and you've got the data layer and like turns out communication plus data is you know communication is how you action the data and data is what makes the communication better and so like these two layers are better together and for a long time i didn't really buy it and then i in like 2019 beginning of 2020 i started to see customers actually asking for that and so that was the that was the key shift for me it was like customers actually were starting to view these things as being adjacent to each other They were wanting to integrate them in interesting ways.

27:30So that shifted things in my mind. Sorry, just to go back. We sort of skipped ahead like six-ish years, right? Sorry. Well, no, no. Just more like I was thinking to myself, you had this really rough start. You got married. You were super stressed out, all this stuff. Those six years, obviously, there's all these stresses that come from running and growing a company. But for the most part, were these like happy years because things were going well and you weren't going to the hospital anymore and all this? I mean, it's definitely better than that month. Yeah. That month was about as bad as it got, thankfully.

28:05Yeah. I mean, I think there was another period in like 20, let's see, I don't know, 2014, 2015, something like that, where we, I think in 2014, we launched a new product where you could send the data, not just to analytics tools and email marketing tools, but you could send the data to data warehouses. And that was like a new category, cloud data warehouse, Redshift and so on was like a new category that was growing really explosively. And the type of data that we were handling for people was exactly what they wanted in there. And actually it was, I believe it was a trip with Surdy, the sales rep we were talking about before, where we realized that this sort of had product market fit.

28:43And it was like, we were going to, we had like five meetings in New York over the course of the day. and every single one was getting their data out into a particular format of just storing the raw data somewhere. And I was like, why would you want that? And now I was like getting this vibe of like more aggressive discovery from Surdy. And so I just started like really drilling into these customers. Like why, why are you putting the data on S3? And it turned out they were all doing the same thing which is that they wanted to load the data into a data warehouse, cloud data warehouse and specifically Redshift.

29:12And so it was like five for five meetings and I came back from New York and I was like, we're building an integration into Redshift. And so actually to wrap up on, on, on Surdy, I actually credited not only with helping me understand sales, but actually also like totally changing how I think about doing product, um, by doing like much more aggressive discovery of what customers really want. I'm glad I asked about Surdy. I knew that he played an important role. For sure. And I think the, at any rate that, that was then started growing explosively. So the next year we went from like two and a half million in revenue to 10 million in revenue.

29:43Uh, Oh, wow. Yeah. For SAS, that was, that was great. I don't know, AI companies are doing crazy things now. But at the time, that was pretty quick. And then it all suddenly decelerated because everyone was coming up on their renewals. And we had a pricing and packaging issue. And so we were going to go from 10 to 20. The next year was the plan. And by the middle of the year, we were at 12. And we had actually shrunk 500K in the last month of the first half. And so I was like, oh, crap. Yeah, this is not good. and I had this feeling that like everyone was there just because it had been growing quickly and so you like didn't want to really share the problem that much and so I was like working I was getting pretty frenetic and like stressed about how do we solve this this pricing and packaging problem and I felt like it was really on me to figure it out and then our part-time CFO and part-time uh chief HR um officer basically like shunted me into a room and they were like Peter nobody knows what to do i was like what are you talking about like yeah nobody knows what to do nobody knows what the goals are or whatever like you're holding it all inside and like you're not telling people what needs to get done and i was like that's crazy everyone knows what to do and they're like well why don't you go talk to like 10 people and ask them what the top priority is right now and i was like yeah nobody had a shared understanding of what to do so that was like a that was like a real tough leadership learning moment for me where they were like you need to get up in front of all hands you need to tell people exactly what the problem is and what you expect each of them to do to solve it so i did that i felt very guilty almost of like putting the burden on on the people in the company as opposed to you know shouldering the hard part myself in particular i felt very guilty that there were you know all these people on the product team i you know was like i need this particular product team to go ship a pricing and packaging update and i'm really sorry but like because it's now the 11th hour i need you basically to stay up non-stop and like just deliver it in the next like four days so that we can turn things around I felt so guilty about that for years and and wow years yeah to jump to the end well because it was like it was asking a lot of like very sudden massive disruption in their personal life and then jumping forward several years to the acquisition after the acquisition was announced we did like phone calls with a bunch of the early people every single person who was on that team said that that moment was their favorite moment in the whole company oh I love that and that blew my mind blew my mind but it makes sense in in retrospect because it was like they got to rescue the company they got to be the heroes i feel like i'm gonna get a little emotional over that it's crazy that you carried all this guilt and they were meanwhile like that like that was awesome ever yeah like what a what's a crazy disconnect that's a really cool story though do you remember what you said at this this meeting how did you present this do you remember any of the sentences you used i remember it feeling pretty dark and basically being like we obviously aren't growing very quickly we're in negative growth this is a big problem like it was just like here's the problem we're not going to hit the goal unless we fix this thing and so all the pressure is on you this team of four or five people to like go fix this thing which felt and they did and then they did and then we hit we actually hit 20 million in air are at like 11 50 p.m on the last day of the year and it was like a crazy crazy scene that's kind of familiar i feel like i knew this story from someone told this story about that timing and everything that's crazy at 11 50 p.m on december 31st yeah i think we had a deal i think we had a deal in asia pacific that like closed technically on their jan one on our december 31st and everyone was still at the office like waiting waiting waiting for the signature yeah on new year's eve on new year's eve oh that's a great story yeah oh wow i'm so i remember paul and i came to your guys's office in san francisco just to visit and check in and things seemed really flourishing and good i forget that was probably the next year probably the next year after that okay yeah after that we like the and we had told the company that if we hit it we would take everybody to harry potter land uh the next year so that's what we did we all flew down to like we ever went down to la in january or something and celebrated at this point oh um i went close to 100 oh that's a that's a crowd to take to an amusement park did everyone want to go there is that where that was the collective choice by the time we wanted everyone wanted to go there.

34:14Yeah. Oh, I love that story. And I bet it was like sort of a growing moment for you too. Cause a lot of founders, I think do sort of internalize all the problems and sometimes you need to, but sometimes you do need to say, look, team, we need to do this. I mean, for the most part, people sign up, good people sign up to be at the company because they believe in the thing that you're trying to do. And so they want, they want to be part of it. Yeah, that's right. We should go back to Twilio. We should, because we have to get going on charm. Yeah. So any any highlights that would be interesting in the acquisition process?

34:53And I also want to know what point you were thinking about doing charm, because I do know that it was at Segment in 2015 that you bought, you know, you're buying offsets and realizing this all sucks. and it's very opaque and I've, this doesn't feel good. Can you tell us, I know that's about 20 questions in one, but see what you can do with that prompt. Yeah. In 2015, I started buying these offsets. Uh, and then 2016, as I started to inspect what happened a year earlier, you know, it's like earth day 2016. I was like, Hey, we bought that stuff at earth day last year. What did, what did it add up to?

35:29And I was like, Oh crap, nothing good. And specifically I was like, Hey, there's these, you know, fires raging in the Amazon and Indonesia where we had nominally set aside for us like are they still any good or did it like burn down i just want to know it's impossible to find out and so that was like oh i don't really trust what happened here um so then you know we did something slightly different we started buying things that aren't really scalable like refrigerant destruction but we're a bit i had a bit more of like a tangible um supply chain that you could uh audit um which i maybe feel better from a climate perspective but it's like refrigerant destruction is only like, I don't know, it's like 0.1 % of the problem.

36:09Like it's not going to get you very far. And so 2017 then, I started spending my Saturdays around segment trying to figure out if there were like pathways where you could take an existing industrial process and turn it from being an emitter of carbon dioxide into a sink of carbon dioxide. And that morphed into the idea for Charm Industrial. And the name is Char Farm Industrial. condensed and the idea is that we would take biomass off of farms leave behind the char and then you would have this bio oil it's like liquid biomass if you will that could be used as an industrial feedstock to replace natural gas and coal and so on and economic models looked promising still look good and uh were you doing this on your own on saturdays yeah yeah one other one other friend uh who became a charm co-founder and then um you know we hired uh two engineers to kind of that i funded mostly or i guess i put in about half the money and other angel investors to um start hacking on it who became co-founders as well so that was the that was the kind of group the core saturday crew and they were they did they have jobs too and this was all just sort of a side project to see.

37:28Yeah, it was a side project for Kevin and I for 2017. And then we formally incorporated in February 2018 and brought on Kelly and Sean as like full-time engineers, co-founders. How far back does your interest in this particular topic go? Has it always been sort of like a hobby that you were curious about it? Or was there an event? Or what happened? Well, I was always more a hard tech, hardware person than a software person, I fell backwards into software, mostly because my roommates were, of course, like software engineering at MIT, and I couldn't convince them to do something on the hard tech side, which it probably was.

38:05And then I somehow found myself having to solve the business problem of how do you make an open source library into a good business for 10 years? But that was very accidental. So really, more hardware is what I had done previously in intern shows and stuff like that. But climate specifically was relatively new. And that was more like, I actually felt like I understood it as a customer. I probably would have loved, I mean, I would have loved to build something in space, you know, like satellites are very cool. But I just could never find a compelling business model. I think Elon found the only compelling business model in space, which is Starlink.

38:39But I don't know that I would have had access to like, you know,$5 billion in capital or whatever to get Starlink started. You do. Yeah. This is so random. So sorry for the weird tangent, but how did you guys decide that you'd be the CEO of Segment? Because you just described how you were so different than your three co-founders and it was a SaaS company, ultimately. I think the other guys didn't want to talk to investors. Oh, God. So fair. That's so fair. Yeah, they didn't want to do sales. It was like the business stuff that they were just like, I just want to code, but I want to start a company.

39:15but like and i was like so you were basically like you drew the short straw you're like i don't want to talk to investors or do sales but okay like make the hardware guy do it i i i think that's true i think i also had some ego bound up in it um i don't know maybe more than some of the time but anyways i i think i i wanted it so how did the acquisition overlap with charm then because it was 2018 you incorporated charm yeah and i talked with my segment board members and i was like like look at this point this is a stamina game like the thing is growing 60 to 100 percent a year like the longer that that i've got stamina to just keep running the better this outcome is going to be and so the way that i'm going to survive and mentally like be able to handle doing enterprise software here um you know it's some people's thing i was like look it's not my thing, but like, I'll, I'll keep pushing, but you got to let me have a little bit of, uh, a little bit of fun.

40:11Um, and so that was, that was sort of the, the deal with the board. And it was, it was funny. It was sort of like, yeah, it's fine, but like, don't ever talk to me about it again. Like, I don't want to, I don't want to hear about it. Not really, but like, that was the vibe, which was fine. So that's, that's how it was. It was, you know, probably like a half day to a day a week, um, for most of the time. And then, yeah, I mean, like what, what, what, what ended up happening in 2021 post acquisition was um you know i was up front it was like on my linkedin profile and so on and eventually it came up in conversation inside twilio where i was like what's going on here and i was like well i started in 2018 like it comes to part of the package like um and they're like okay it's a little unusual but like you know godspeed and then i i hit the breaking i hit the limit where I where my own ability to do both started breaking I was able to do both really well I think like even inside Twilio I got promoted um to like manage more of the organization and and run the SendGrid business unit as well so clearly I was doing well but I hit a breaking point in like fall of 2021 where I like I needed to be at COP26 for Charm in order to like meet with potential buyers and I had the opportunity to be in the room with a bunch of like regulators and policymakers and so on.