Latest / Beyond Fulfillment Podcast / What Facebook, a Twitter Acquisition, and Dagster Labs Taught Pete Hunt About Building Companies.

Transcript

What Facebook, a Twitter Acquisition, and Dagster Labs Taught Pete Hunt About Building Companies. · Beyond Fulfillment Podcast

• 0:05
  All right, Pete Hunt, welcome to Beyond Fulfillment.
• 0:09
  Thanks for having me.
• 0:10
  Yeah, thanks for being here.
• 0:12
  So, Pete, you are the CEO of Dagster Labs, and we'll get into what they do.
• 0:18
  You've been there for four years in the tech space, but you've had a very successful career over the past decade, plus as a tech entrepreneur.
• 0:27
  So just to set the stage for our listeners, could you give us your backstory and how you got here?
• 0:32
  Yeah, sure.
• 0:34
  So, first of all, thanks for having me.
• 0:36
  I'm excited to dig in today.
• 0:40
  I always really loved computers.
• 0:42
  Growing up, I was.
• 0:45
  I guess I'm 38 years old now.
• 0:48
  So if you kind of rewind into the early 90s, my dad brought home, like, they were getting rid of the old computers at his office.
• 0:57
  So I got this, like, I don't know if you ever remember these, but, like, the.
• 1:02
  The monochrome green Ms.
• 1:04
  DOS computers from, like, way back in the day.
• 1:09
  I got started on one of those, and I was playing SimCity and really enjoyed that, and then wanted to make my own computer games and learn to kind of program at a young age and ended up going to
• 1:23
  school for it.
• 1:24
  I saw the movie Pirates of Silicon Valley.
• 1:28
  It was like this Cable made for TV movie back in the 90s, and you can actually find it, I think, on YouTube today or maybe like, a streaming service.
• 1:39
  And it was just about, like, the competition between, like, Steve Jobs and Bill Gates.
• 1:43
  And I thought it was, like, very exciting and cool to be doing that sort of work.
• 1:47
  And, you know, I ended up.
• 1:49
  I ended up getting into that.
• 1:52
  So when I graduated, I went to work for what I thought was the coolest company to possibly work for back then, which, believe it or not, was Facebook.
• 2:05
  Back in, like, 2010, Facebook was actually cool amongst kids or, like, new grads.
• 2:10
  And so I went to work there, and that's really where kind of I got my career going.
• 2:15
  I can keep talking, but, you know, that's really where it all started, I think.
• 2:20
  Okay.
• 2:20
  And I read that a big reason that you wanted to go work at Facebook is when you saw the movie the Social Network.
• 2:28
  Well, that one's funny.
• 2:30
  I don't know if you come away from that movie wanting to work there, but, you know, in 2010 or whatever, like, in.
• 2:38
  Throughout college, you know, all of your friends were on there.
• 2:42
  You were, like, posting like, you know, like, most of your communication.
• 2:47
  Man, this is how old I am.
• 2:49
  You, like, moved off aim to, like, Facebook walls.
• 2:53
  And, like, you would do this thing where like, every Sunday morning after you had like a.
• 2:58
  Like a Nice weekend.
• 2:59
  You would, like, post all the photos from your, like, digital camera.
• 3:02
  Roll.
• 3:02
  So it's like, super into the product.
• 3:05
  Used it every day.
• 3:08
  All my friends use it all the time.
• 3:09
  So that was really the motivation for working there.
• 3:11
  But I did watch the Social Network when it came out, and.
• 3:16
  And that was like, maybe, you know, it was right around the time that I signed my job offer, and my mom had watched it too, and she calls me up and she's like, I don't think you should work
• 3:25
  there.
• 3:27
  Does not seem like a very nice boy.
• 3:29
  I'm like, oh, you know, it's okay, Mom.
• 3:31
  Like, it'll be fine.
• 3:33
  So I did watch it.
• 3:34
  It's a great movie.
• 3:36
  I don't know exactly how accurate it is, but it's a.
• 3:40
  It's an amazing movie.
• 3:41
  Amazing score, and it was really cool.
• 3:44
  Okay, so what.
• 3:45
  What was it like once you got there?
• 3:47
  I mean, after having this kind of mystique?
• 3:49
  You love the product, you saw the movie, you thought it was.
• 3:52
  Everyone uses this at that time, right?
• 3:55
  When you get there, what was the experience like?
• 4:00
  You know, it's funny, you.
• 4:02
  You go to Silicon Valley.
• 4:04
  Like, I.
• 4:05
  I'm from, like, like north of Boston, right?
• 4:10
  And like, I'm.
• 4:12
  I'm almost like, in New Hampshire, basically.
• 4:14
  That's where I'm from.
• 4:14
  And so I had this vision in my head of, like, Silicon Valley being this, like, super ultra futuristic place.
• 4:22
  Like, I knew there weren't, like, flying cars there, but it was like, kind of in my head that there were, like, flying cars there, you know?
• 4:28
  And then you get the Facebook office at the time was in Palo Alto, like, right around the Stanford campus.
• 4:34
  And you get there and it's all this, like, disgusting 1970s architecture.
• 4:41
  Like the terrible, like, fake stone paneling on everything and carports as far as the eye could see.
• 4:49
  And I was like, this is where.
• 4:51
  This is Silicon Valley.
• 4:52
  This is weird.
• 4:53
  It's, like, frozen in time.
• 4:56
  And so you get to the Facebook campus.
• 4:58
  It's like ugly office building.
• 5:01
  And you're like, this is weird.
• 5:04
  But you go in there, they had spruce it up on the inside a bit.
• 5:08
  And so my first year was working at kind of like their second office.
• 5:12
  Their first one was, like, spread across a bunch of little offices.
• 5:14
  The second one was, like two big buildings that were like this ugly 1970s thing.
• 5:19
  They're now demolished.
• 5:22
  And then my last couple of years, they were at, like, what they call now classic campus.
• 5:27
  But they took over the old Sun Microsystems campus and renovated the whole thing.
• 5:30
  And that's when you got like the crazy amenities and like the like unlimited ice creams and stuff like that.
• 5:39
  So that was a little more like an amusement park for adults.
• 5:43
  But the first office was a lot more like, you know, it was representative of the company at the time.
• 5:47
  Cause like in 2010, you know, it was, it was a product that a lot of college kids used and increasingly like high school kids.
• 5:56
  And they had just opened it up, I think, to the public.
• 5:58
  But it wasn't some like tech juggernaut.
• 6:01
  And in fact, it was like this company that like a lot of people were rooting for because, like companies like Google and Microsoft were like these giant behemoths that were like bullying people, you know, bullying people.
• 6:15
  Like they were like building products in every category.
• 6:17
  They were like, you know, sniping talent from other companies just like recreationally to like put them to work on nothing so the talent couldn't compete with them.
• 6:26
  And Facebook was at the time this like pirate ship in a really good way.
• 6:31
  People like building a product that everybody love, working really hard, not necessarily like going to be successful.
• 6:40
  So that was like kind of the vibe there.
• 6:41
  Now obviously over the several years that I was there, like, it started to become more of an incumbent and it, I mean, you know, you see this story play out in the tech industry all the time.
• 6:51
  Like, you know, Uber, for example, was started out as this thing that like freed people from this really, these really terrible, you know, like taxi companies.
• 7:04
  Like, you know, if you remember before Uber, like, you just have to wait until taxi decided to pick you up.
• 7:12
  They were like, really, really dirty.
• 7:14
  They would tell you that they would take a credit card when you got in there, but then when you got to your destination, they would say, oh, my machine's broken.
• 7:21
  I have to pocket the money from you in cash.
• 7:24
  It was just terrible.
• 7:25
  Right.
• 7:25
  So Uber started out as this thing that was like everybody loved and was like this product that everybody was rooting for.
• 7:30
  And eventually the public opinion kind of flipped on that too.
• 7:34
  So yeah, Facebook kind of, I think, followed a similar path where like, a lot of people don't remember when it was an up and comer that everybody was cheering for.
• 7:44
  But, but that's what it was when I was, when I was there.
• 7:47
  Okay.
• 7:47
  And pretty soon after that you got involved with your first startup.
• 7:53
  And that was React JS Yeah, that.
• 7:58
  Was, that was an open source project that we treated as an internal startup.
• 8:03
  And it was at, you know, we incubated it inside of Facebook and it was this developer tool that let you build user interfaces very Very quickly and very complex user interfaces very, very quickly and more reliably.
• 8:19
  So it was like you could think of it as like almost a silver.
• 8:22
  Bullet where like if you're still trying to hire locally for every role on your team, you're leaving serious money on the table.
• 8:31
  Ocean's Places AI, fluent executive operators.
• 8:35
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• 8:45
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• 8:48
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• 8:53
  Over 600 companies trust them and they back every match with a three month guarantee.
• 9:00
  Go to Oceanstalent.com to find your perfect hire.
• 9:04
  You might think that the faster that you move, the lower quality bar you have to hit in order to hit that speed or the higher quality bar you want to hit, the slower you have to move.
• 9:15
  But React let you do kind of both.
• 9:18
  And that was a really fun and exciting project for me to work on and it became really successful.
• 9:26
  So when we launched it back in 2013, it's a long time ago now, it was like a lot of people hated it frankly.
• 9:36
  But we kept at it for a couple years and by I want to say 2018, so five years later or so, it became the dominant way that people built web applications.
• 9:50
  So over the course of four or five years, it became the number one way that people built this technology.
• 9:56
  And all of modern AI is built on React js.
• 10:00
  Now every time you log into an AI application, it's using React.
• 10:04
  Anytime it's rendering user interface elements like a map or a data table or something, it's using React.
• 10:12
  And that was cool.
• 10:15
  I basically learned to sell through that era and that was my first exposure really to selling and marketing.
• 10:24
  Traveled all around the world for it for several years.
• 10:27
  It was really fun, but was able to kind of take that experience and then turn it into a startup that actually made money.
• 10:34
  Which was my next one.
• 10:35
  Okay.
• 10:36
  And was just with React, was that a like an intrapreneurial project with like backed by Facebook?
• 10:42
  Basically?
• 10:43
  Yeah, yeah.
• 10:43
  It was basically entrepreneurial.
• 10:46
  It was one of those things where the company originally didn't really get it.
• 10:55
  They were kind of like, what is this thing?
• 10:58
  Why does it matter?
• 11:01
  We get that it's valuable for us internally and we get that you might want to share with the world a little bit.
• 11:10
  But why is this going to be something that we should actively invest in, fund a conference and like fly people around to evangelize this thing?
• 11:19
  And what we ended up doing was Kind of positioning it as a recruiting tool.
• 11:28
  So say, hey, listen, there's this big talent war.
• 11:30
  This thing is going to get a lot of attention and this will help us recruit talent.
• 11:36
  And what ended up happening, that ended up definitely being true.
• 11:40
  Um, and there was this funny kind of like comment from the CTO at Facebook, like in the later years, like, I want to say it was around 2019.
• 11:51
  And he was basically like, you know, we're doing all this AI stuff.
• 11:55
  We have all this great AI infrastructure.
• 11:58
  We have machines that can talk and can, can like robots that can see.
• 12:03
  And all anyone wants to talk about is this react thing with me.
• 12:06
  Like, what is this thing?
• 12:07
  And like, how did it become so big?
• 12:10
  And it was just kind of spoke to product market fit.
• 12:12
  At the end of the day, when you have a product that people love, you know, it gets traction really quickly.
• 12:18
  Okay, all right.
• 12:19
  And then so you talked about your next startup, which ended up being Smite, is that right?
• 12:24
  Okay, tell us about that.
• 12:28
  Yeah, so Smite's funny when.
• 12:33
  So at basically at Facebook.
• 12:36
  And I was one of the first engineers on Instagram as well.
• 12:39
  And so Instagram had sold their company, Facebook.
• 12:44
  I had kind of helped them out with the integration of Instagram and Facebook.
• 12:48
  And one of the things when you're launching a photo sharing site, Facebook shares a lot of photos, Instagram shares a lot of photos, is that people will do bad things on those services, right?
• 13:04
  Like they will do.
• 13:07
  They will share like, you know, inappropriate content.
• 13:10
  They'll share like, like a big one that like, everybody kind of knows the common, really negative things that you, you could do on a social network, you know, around child safety and all that stuff.
• 13:20
  Another one is like gang and terrorist recruitment is a big one too.
• 13:25
  So like, you know, back then Al Qaeda was like going on Facebook and recruiting people that were down on their luck to go do bad stuff.
• 13:33
  For example, that's just like a representative example.
• 13:37
  And there's a bunch of technology that's deployed to try to address those types of things of issues.
• 13:44
  And so what I thought was that the Instagram founders should not have had to sell their company in order to basically get that stuff off of their service.
• 13:55
  Right.
• 13:55
  Because that's not a great outcome if like you can't start your own company.
• 14:00
  If you're like, if you start your own company and you're like immediately overrun with like cybercrime, you know, you're not going to last very long.
• 14:08
  And so we built this product, Smite, that would basically try to identify fake and abusive accounts and identify them to the operator or service, and then they could come up with a set of policies and then action those
• 14:23
  accounts based on those policies.
• 14:25
  And so that was kind of the idea for the company.
• 14:30
  And what really got me over the edge to start the thing though was I had a pretty cushy job and this was a pretty exploratory thing.
• 14:45
  But me and my, my girlfriend at the time broke up and she was like, she was working at a vc and so I was like, you know what?
• 14:59
  I'm gonna like, start a company, like, get back at you.
• 15:01
  Like, I'm not gonna talk to you about it.
• 15:02
  I'm gonna like, start the next great company.
• 15:04
  And like, you're gonna, your VC is gonna miss the deal.
• 15:07
  And like, I'm gonna be so awesome.
• 15:09
  And so that's like what actually, like, got me to do that.
• 15:13
  My first startup was like, good old fashioned, you know, whatever that is.
• 15:18
  And we ended up, I recruited one buddy that I met at our Halloween party and then another one of my co workers.
• 15:25
  And the buddy I met, he was like dating my downstairs neighbor and he was an expert in the space.
• 15:30
  And so we were the founding team.
• 15:32
  We got it going and fast forward many years later.
• 15:36
  I'm married to her now and we have two kids.
• 15:39
  So it's a very happy ending.
• 15:41
  But, but that was really how it got started, like, not exaggerating it at all.
• 15:46
  Wow.
• 15:47
  I've, you know, I've interviewed hundreds of entrepreneurs and heard all types of stories, and that's the first time anyone ever said they started a company to basically flex on their ex.
• 15:58
  Hey, you wanted raw, unfiltered conversation, right?
• 16:00
  It says right there in the description.
• 16:02
  Yeah, yeah, yeah, no, that.
• 16:03
  So that's so.
• 16:04
  But with that being your motivation.
• 16:06
  Right?
• 16:06
  And then this, this company ultimately became successful and got acquired.
• 16:11
  You, you sold Twitter like four years later.
• 16:15
  But for something that, I mean, that's, that's really like a, you know, a crazy reason to start a company.
• 16:22
  Like, how'd you go from like, with that as your motivation to, to putting it together and tangibly scaling it to, to get acquired by a.
• 16:31
  Another Silicon Valley, you know, giant at the time.
• 16:35
  Yeah.
• 16:35
  So it's not just like a man of my ex, I'm gonna go start some random company.
• 16:39
  Right.
• 16:39
  Like, it was that, it was kind of the, the thing that, that gave me the why now?
• 16:46
  You know, like, so I, you know, again, going back to like my childhood, I watched Pirates of Silicon Valley.
• 16:52
  I always wanted to be a tech entrepreneur.
• 16:54
  I loved writing code and doing computer stuff.
• 16:57
  So I knew that that's what I wanted to do.
• 16:58
  I started my career at Facebook because I just wanted to see how like a great company was built and learn the ropes and, and so I was always kind of thinking that I would do it someday and I
• 17:10
  had this intersection.
• 17:12
  So like what I ended up doing was I had a bunch of bad ideas and then this idea around kind of like trust and safety as a service is what we called it was I started running it by
• 17:27
  just like the smartest people that I knew.
• 17:31
  And they were basically like, I ran it by some of my coworkers or former co workers and they were like, this is a pretty good idea because it matches like it's a very common playbook where you take basically
• 17:44
  like a company that's living in the future and a company that can be living in the future could be like Google or Facebook, like a tech company or it could be like Walmart, right?
• 17:56
  In the sense that like they have some of the biggest and toughest logistics problems, right?
• 18:01
  And so they run into problems before other people do and so they're living in the future.
• 18:07
  They build internal tools and technologies and best practices to solve their problems.
• 18:13
  And oftentimes a great entrepreneur can identify that from their day job be like, oh, this is something that I can adapt to the market and sell.
• 18:21
  And so that's like one of the most common successful startup playbooks.
• 18:27
  You see it all over the place.
• 18:29
  And, and so this one was no different.
• 18:31
  So I had this idea.
• 18:33
  I never quite like, you know, had the motivation to take the leap and forego a paycheck or anything.
• 18:40
  But like, you know, I had a catalyzing event with my, with my girlfriend at the time, now my wife.
• 18:46
  I have found the right people as well.
• 18:48
  I had a friend that worked in this, in this space and I had another friend who was a really good engineer at, who was my coworker who was like pretty negative on Facebook, wanted to leave and I said,
• 19:01
  hey, let's like I'm kicking around the idea for a company.
• 19:03
  Like I think now might be the time to do it.
• 19:05
  Let's give it a shot.
• 19:06
  And so, you know, the way that we did it and every business is different, right?
• 19:12
  We're you know, Daxter and then Smite before it are both venture backed companies.
• 19:17
  And so you basically get a venture capitalist or a set of venture capitalists to invest money in the business and then you burn it.
• 19:30
  You lose money for the first many, many years of the business in order to get really fast growth.
• 19:37
  These types of businesses do not exist without venture capitalists nodding and writing a check.
• 19:42
  And so before leaving my job, I got some introductions to angel investors, venture capitalists.
• 19:49
  I ran the idea by them.
• 19:52
  There were a couple of iterations of it before, and they were like, no, this is garbage.
• 19:57
  Come back to me when you have something good.
• 19:59
  And then I came back to them a couple of months or maybe a couple weeks later.
• 20:03
  I said, hey, I got this new iteration of it.
• 20:05
  And they were like, oh, this makes sense.
• 20:07
  I understand this.
• 20:08
  This could be successful.
• 20:10
  And so we didn't, like, have money raised, but we had enough, like, positive investor conversations where they were like, listen, like, we'll, you know, we would probably fund this, you know, but you have to be full time and
• 20:22
  have a team, and so.
• 20:24
  And you have to talk to customers.
• 20:25
  So, like, I talked to potential customers.
• 20:27
  I basically had, like, 10 conversations with customers where they said they would.
• 20:32
  They would try the product.
• 20:34
  I had a couple of VCs that said, hey, they would probably fund it.
• 20:37
  I had a team that was, you know, that fit the market that I trusted.
• 20:41
  And so we ended up quitting our jobs and starting the business.
• 20:46
  We did the Y Combinator accelerator back in 2015.
• 20:51
  That was a long time ago.
• 20:53
  And we ended up raising, like, a seed.
• 20:56
  A seed round originally, kind of like pre revenue, but we had a couple of, like, maybe two customers that, like, we had pilots with.
• 21:08
  They weren't paying us, but they were, like, using our product.
• 21:12
  And then, you know, raised another venture round after that.
• 21:16
  And then we sold to Twitter, you know, like, after a little under four years.
• 21:21
  Okay, all right.
• 21:22
  And so in that four years too, right?
• 21:24
  Because you have this idea you're getting.
• 21:27
  You had a bunch of bad ideas, like you said, right?
• 21:29
  And now you have one where people are giving you positive feedback.
• 21:32
  People, customers saying they'd probably use it, potential customers, VC saying they'll probably invest.
• 21:38
  You get the team together, you're ready to go.
• 21:42
  I mean, when you quit your job and you go all in and you.
• 21:45
  You sell the company to Twitter four years later, like, what was that four years, like, in terms of growing, scaling, and then getting to that.
• 21:52
  That acquisition point?
• 21:55
  Yeah.
• 21:56
  You know how entrepreneurship goes.
• 21:58
  It's.
• 21:58
  It's a high highs and low lows, and every.
• 22:04
  Everything is.
• 22:04
  Is up and down.
• 22:06
  And it's.
• 22:09
  There are different eras of it that have different levels of complexity and difficulty.
• 22:17
  And now, you know, at Dagster, I'm operating much, like, higher scale.
• 22:22
  And so I thought that, you know, I thought all my problems were like, the hardest problems at the early stages.
• 22:28
  And now I realize that there's a whole new set of difficult problems at the, at the, you know, larger scale.
• 22:32
  And it's just, you just have to be very plastic and adaptive to different challenges.
• 22:38
  So in those first four years, like the thing is the first, like the first year or something before, before you're really actively selling, you're doing R and D, you're doing market exploration, you're doing like customer development where you're
• 22:52
  like putting a prototype in front of a customer.
• 22:54
  You say hey, would you use this?
• 22:56
  And they can say I would use these parts.
• 22:57
  I wouldn't use these parts.
• 22:58
  I like this, I don't like this.
• 22:59
  And you're like dialing in what the product actually is, who the, the customer actually is, all that stuff.
• 23:06
  And that can feel a bit like wandering in the desert because not a lot of people pick up the phone when you have no brand.
• 23:14
  You know, you have a, like I had a little bit of a network and that helped.
• 23:17
  But you know, you fill your days basically making educated guesses and you have like one or two data points to help you calibrate.
• 23:28
  But it's not like a big company where you have a bunch of feedback from your manager and from your customers and the other employees.
• 23:35
  So a lot of it is like wandering the desert.
• 23:37
  You don't like, you set off in a direction hoping to find water, make your best guess.
• 23:42
  And sometimes you're right, sometimes you're wrong.
• 23:46
  Then we got into the like selling stage where we built out our first kind of small sales team.
• 23:56
  And that was, I learned a lot during that process.
• 24:01
  I'm a technical guy, as you know and I had developed like I kind of knew how to sell stuff to people from react and from raising around of venture.
• 24:12
  Like I get people excited about an idea.
• 24:16
  But sales is way more than just that, right?
• 24:19
  It is like navigating complex organizations.
• 24:22
  It is like understanding the politics, aligning everybody up and then like you know, having the will to like ask them for a ton of money.
• 24:32
  And when you're startup where like, you know, your product's just like this little rinky dink thing, it's like it can be hard to like, you know, value yourself at the level you should.
• 24:42
  And so learning all that was interesting.
• 24:45
  You know, we, we like signed our first deal with a customer for like 500 bucks a month.
• 24:50
  And like by the end of the business that account had grown, you know, over 10x.
• 24:56
  And so it's like dialing in pricing, figuring out how to sell this thing, you know, Growing a little bit of a team.
• 25:05
  Like we weren't, we weren't a huge company.
• 25:07
  You know, Dagster is like, you know, pushing 100 people at this point.
• 25:10
  But like Smite, we sold at like, you know, we were like 25 people or something.
• 25:14
  So we're pretty small.
• 25:17
  But like, you know, all, all of that from a market and product perspective was tough.
• 25:22
  And then, you know, the people stuff at that scale is not too hard because it's only a small number of people.
• 25:31
  But you know, one of the things that I think is kind of challenging is like a lot of, especially like tech founders, they like to try to reinvent management all the time.
• 25:43
  I didn't really do that.
• 25:44
  Fortunately, I did not make that mistake.
• 25:46
  But I think a lot of, like a lot of founders, they get really, really focused on company culture.
• 25:54
  And that's great, but you can't have it at the expense of focusing on the business.
• 26:01
  And what I found is that, and I advise a lot of companies now.
• 26:05
  And what I found is that a lot of founders, they do this weird type of procrastination and I call it the no fun rule, by the way, which is like, if you're doing something fun, really look at yourself
• 26:19
  in the mirror and make sure, am I doing this because this is the most important thing for the business or am I doing this because this is a thing that's fun?
• 26:25
  And I naturally gravitate towards what I found is that a lot of founders, especially technical ones, they will go and see a problem in their business, they'll try to solve it with technology because that's fun when sometimes it's
• 26:36
  a difficult conversation with an employee or it's picking up the phone and making 100 phone calls a day to go.
• 26:42
  Try to sell your product and learn how to sell it and scale it out.
• 26:44
  So I learned a lot of those lessons in that first company.
• 26:49
  Wow, I love that.
• 26:50
  It sounds some, you know, I used to run sales teams and coach sales people and do all that.
• 26:54
  And I call.
• 26:55
  Reluctance was a big thing that you'd always deal with with salespeople.
• 26:59
  But that no fun rule kind of sounds similar to where you say founders gravitate towards, you know what's fun, because there's reluctance to do the hard necessary work that they actually should be doing.
• 27:12
  That's right.
• 27:12
  That's right.
• 27:13
  There's a certain amount of grinding that has to happen and it doesn't feel like innovative, scalable building of the future.
• 27:24
  But like, everybody knows that you just gotta, you gotta, you know, pick up the Phone a hundred times, you get, you connect 10 times, and then one of those people becomes a customer.
• 27:34
  There's a certain amount of math to this.
• 27:36
  Right.
• 27:38
  One other thing I want to go back to.
• 27:40
  So you said too, right?
• 27:42
  And I love this analogy to where it can feel like you're wandering in the desert looking for water.
• 27:47
  Entrepreneurship, right?
• 27:48
  And you had a lot of high highs and low lows during this, this four year period.
• 27:52
  Was there ever a.
• 27:54
  Where you, you were like, oh, what did I do?
• 27:57
  And you, you thought about giving up and just going back to get a job?
• 28:01
  Oh, yeah.
• 28:02
  I mean, so when we sold the company, it was a very.
• 28:10
  As all M and A is, it was very dramatic and you know, like, so, so just just to kind of rewind it a bit, you know, we did trust, excuse me, we did trust and safety as a service.
• 28:24
  And, you know, I told you that like, investors said that they would, like, you know, invest in this, and then we did end up raising some money.
• 28:32
  But one of the criticisms that we heard was like, they were like, listen, we're going to give you this money at the seed round, but at the Series A, at the next round of funding, you're going to have
• 28:42
  to prove out that the market is bigger than we think it is.
• 28:45
  Like, we don't actually think there's that many companies that have these problems.
• 28:48
  When you think about it, it's like how many companies live or die based on the trust and safety or based on like, you know, the propensity for like fake or fraudulent or malicious accounts?
• 29:03
  You know, we thought it was social networks and marketplaces, right?
• 29:06
  So think about like a fake Airbnb listing.
• 29:10
  Like if you showed, if you bought an Airbnb and you showed up and the house didn't exist, right?
• 29:13
  Like that.
• 29:14
  It's the thing that happens in those types of marketplaces all the time.
• 29:17
  And they really try to fight fake inventory.
• 29:21
  You know, like cybercrime and terrorism on social networks was a big area.
• 29:26
  But like, when you actually think about the number of marketplaces and the number of social networks and the price point of the product and how many and like, you know, you have to basically multiply that number of customers,
• 29:40
  potential customers, by the price point of the product, and that has to equal like $10 billion in order for venture capitalists to be excited about it, right?
• 29:48
  And no one could ever make that math work.
• 29:51
  And like, our bet was like, there's way more of these companies than you think.
• 29:56
  And one of the things we discovered during our four years was that, like, probably weren't enough of those companies.
• 30:06
  And so we had booked a great first couple of years.
• 30:11
  First two years or so of selling.
• 30:13
  You know, it's like a year of R and D, then like two years of selling.
• 30:16
  That were awesome.
• 30:16
  And then like a third year and we raised a series A and then a third year where it was like, oh, man, we're like running out of market here.
• 30:24
  Like, what do we do?
• 30:25
  And we had worked on pricing and we had fixed kind of our price point.
• 30:31
  That helped a lot.
• 30:32
  We had booked a couple million dollar deals, which was great.
• 30:35
  But.
• 30:37
  But we realized that, like, we were looking ahead in the sales pipeline.
• 30:39
  We were like, wow, we're about to fall off a cliff in like three quarters.
• 30:45
  And at the same time, Twitter, which was our second largest customer, had kind of like approached us and said, hey, we want to buy your company.
• 30:52
  And we're like.
• 30:53
  And, you know, kind of.
• 30:55
  We had gotten some inbound acquisition interest in the past.
• 30:58
  We were like, no, no, no.
• 30:59
  Like, we're doing our thing.
• 31:00
  But when we saw that, like, kind of like, like we didn't know what the future, like, there was just like we were running out of Runway, basically.
• 31:09
  Not, not, not like cash Runway, really, but it was like, like think of like a plane trying to take off.
• 31:14
  And like, we were like running out of space, running out of pipeline.
• 31:19
  And, and so we, we talked to Twitter and we eventually like, got them to a place over a period of a couple of weeks that like, me and the founders would take, but our board rejected it and Twitter
• 31:37
  wouldn't move on it.
• 31:38
  And so, like, the whole deal fell apart and we had run like a competitive process with other bidders, and there were no other bidders at anywhere close to the same price point that like, Twitter was going to pay.
• 31:49
  The other bidders would have basically like, returned.
• 31:53
  It would have been.
• 31:54
  It wouldn't have been a good outcome for anybody.
• 31:57
  And so we, we were like.
• 32:03
  I was, it was a real gut punch, man, because you're like, our business is going to run out of pipeline and everyone's going to figure it out, like, in a couple of quarters.
• 32:11
  I don't know what we're going to do.
• 32:12
  Like, I guess we're going to have to pivot or something.
• 32:16
  I don't know how I'm going to raise money.
• 32:17
  I don't know how I'm going to hold on the team.
• 32:19
  And around this time, like, we had a key engineer said he wanted to quit.
• 32:23
  We were able to hold on to him for a little while, but, like, you know, people were starting to get antsy.
• 32:29
  And so I was like really in, in the, really down low at that point.
• 32:35
  And so what I realized about myself was I had put 100% of my focus into this business.
• 32:45
  All the eggs were in this basket.
• 32:47
  If the company wasn't doing well, I wasn't doing well.
• 32:50
  And I firmly believe that, like, as human beings, you need to have like two tracks basically, right?
• 32:58
  Like two things going on in your life where if one of them is not going well, you've still got the other one.
• 33:05
  You can still like, be, you know, be okay and feel positive and be energized in the morning.
• 33:11
  Right.
• 33:12
  And so I ended up, you know, going to Hawaii and getting engaged.
• 33:17
  I, you know, I had dated my, you know, my girlfriend for a long time.
• 33:23
  I kind of been holding off on going to the next level because I was like always on the edge of something great at the company.
• 33:28
  And I realized that like I said, to have like my personal and family life, like moving along, I can't like hitch everything to startups 100% of the time.
• 33:37
  And that was a great decision.
• 33:39
  I wish I had done it earlier.
• 33:42
  And so, you know, now at this company, Dagster, it's like when the business is going great, I'm like, everything's great, right?
• 33:51
  Well, this is not going great.
• 33:52
  You know, obviously I care about it.
• 33:54
  I work really hard.
• 33:54
  But like, I've got this great family at home that I can kind of like, you know, see my daughter and she's developing great and all that stuff.
• 34:02
  And so I learned a lot about, about how to make these things sustainable.
• 34:09
  Like, I'm not like a woo Woo, you know, 2021 era, like work four days a week type of sustainable.
• 34:15
  But I do think that this, like go all in on your company all the time for five years straight, it like doesn't work.
• 34:24
  And I learned that during that process.
• 34:25
  And so, you know, we ended up having to basically like step away from the M and A, continue to run the business for another three months or something in this purgatory state.
• 34:34
  And then eventually Twitter came back around at the point, price point that we wanted and bought the business.
• 34:40
  And it was a great return for the investors, great outcome for the founders and the employees kind of basically hit or beat what they would have made at Google.
• 34:55
  And so we weren't cursor or OpenAI but it was a pretty good outcome for everybody.
• 35:03
  Okay.
• 35:03
  And I love that perspective too.
• 35:05
  Meaning where you can't.
• 35:07
  Sometimes you have to step away from a problem.
• 35:09
  Right.
• 35:09
  And focus on other Things and you can't.
• 35:12
  And like you said, it wasn't going well.
• 35:13
  You had sacrificed so much.
• 35:15
  You wanted to make sure your personal life was in order.
• 35:17
  So no matter what, you have your family and you're always going to work hard at the business.
• 35:21
  But.
• 35:22
  And then it sounds like by just, you know, stepping, backing off, getting that in order, you continue to operate in purgatory.
• 35:28
  Things eventually worked out and you got the outcome that everyone wanted.
• 35:32
  Yeah, that's right.
• 35:33
  Okay.
• 35:34
  All right.
• 35:34
  So Dagster, what made you decide to start Dagster Labs?
• 35:39
  So, I didn't actually start it.
• 35:41
  I am a kind of late arriving.
• 35:44
  You could almost think of it as a late arriving co founder.
• 35:46
  That's the vibe.
• 35:48
  However, I would never call myself a co founder because I got to miss.
• 35:53
  I missed that whole wandering in the desert phase.
• 35:56
  Right.
• 35:56
  So my good friend Nick Schrock start a company.
• 36:00
  While I was vet, you know, kind of vesting at Twitter, I made an angel investment at the seed round.
• 36:07
  And so I'd been riding along with the company for a while.
• 36:12
  And towards the end of my vesting at Twitter, he approached me and he said, hey, I need help hiring a VP of engineering.
• 36:19
  Like, do you know anybody good?
• 36:21
  And I helped him look around for a little while.
• 36:24
  I.
• 36:25
  I helped him, like, kind of interview some people.
• 36:27
  And I said, you know what, pretty bored here.
• 36:29
  Like, I'll just come over and do the job and, and hang out for a while and, and we'll see how this thing goes.
• 36:37
  And this was, you know, for context, this was like late 2021.
• 36:41
  So it was, you know, still, at least in San Francisco, it was still the pandemic.
• 36:46
  I was, I was in the process of moving to Boston from, from San Francisco.
• 36:51
  And so I took this job that could kind of let me work from Boston.
• 36:57
  This was all before, like, the Elon takeover of Twitter.
• 37:01
  This was completely disconnected from that.
• 37:03
  And, you know, what I found was the reason why I wanted to join was I wanted to get some startup experience, a company that wasn't mine.
• 37:17
  You know what I mean?
• 37:17
  I wanted to see somebody else run something.
• 37:20
  And what I found was like, I learned a lot about how they had set up things and how they run things.
• 37:26
  They had been going for like three or four years at that point.
• 37:29
  And I joined right when they started selling.
• 37:32
  And so what was really cool was like, I was able to jump in and apply a bunch of stuff that I had learned to this new space, even as VP of engineering, right?
• 37:43
  So I was like, helping out with marketing, helping out with Devrel pushing the sales team, I was pushing out like I was making product decisions that the engineers thought were trivial, like weren't important.
• 38:02
  But I was like, hey, I think this is really important.
• 38:04
  And I made like two non consensus bets in my first year that paid off big time.
• 38:09
  The first was all these products have version numbers and the team at the time was ready to push out version 0, 9 point something and that was going to be the first release that people would pay for.
• 38:24
  I was like, guys, has to be 1.0.
• 38:27
  Has to be 1.0.
• 38:28
  People are not going to pay for this unless 1.0.
• 38:31
  And got a lot of pushback.
• 38:33
  That was like, well, version number doesn't matter that much and blah, blah.
• 38:37
  Trust me, it does.
• 38:38
  It's called 1.0.
• 38:40
  And you can see right when we cut the 1.0 release in the analytics, like an inflection in our numbers and I'm convinced it's just because of change the version number, people actually trust it as a serious product at
• 38:53
  that point.
• 38:54
  And then the second was we offered a serverless, fully managed product which is like getting in the technical weeds a little bit.
• 39:01
  But basically it was like perceived to be risky, but we found a way to do it in a low risk way and it became, you know, two thirds of our business overnight.
• 39:10
  And so I kind of jumped in there.
• 39:14
  You know, that was my first.
• 39:15
  My first year was like head of engineering.
• 39:16
  And then my friend Nick, who's a founder and CEO, he's like, hey, I'm like a solo founder.
• 39:23
  This sucks.
• 39:24
  It's like too much work.
• 39:26
  And he really wanted to do technical and product and customer stuff.
• 39:31
  You didn't want to like, you know, deal with HR and all the stuff that CEOs have to do.
• 39:38
  So he was like, how about you be CEO Pete?
• 39:41
  And then I'll be the cto.
• 39:43
  And I thought about it for a little bit and you know, being a CEO last time around it ended like towards the end it was like pretty intense as I mentioned, but I was excited to get back in
• 39:57
  the game and, and so I took it.
• 39:59
  And so I've been CEO for like the past three years.
• 40:02
  Okay.
• 40:03
  And so what's the growth of the company been like since that point?
• 40:07
  Yeah, you know, we, we, we started when I started.
• 40:10
  We were at 0 in, in ARR.
• 40:13
  And now we are, you know, in the, the double digit millions.
• 40:18
  So like, well, North 20.
• 40:21
  Wow.
• 40:22
  Okay.
• 40:22
  Yeah.
• 40:23
  All right.
• 40:24
  And then so you raised in your series B, you just raised $33 million.
• 40:30
  Yeah.
• 40:30
  Is that right?
• 40:31
  Okay.
• 40:31
  Yeah.
• 40:32
  All right, all right.
• 40:33
  And then, so what's, what's the vision, you know, for, for Dagster and where it's going?
• 40:38
  Yeah, you know, I, I think it's, it's an interesting question because when we, when the company started, we had this very focused, clear vision and mandate to go after this very particular set of this market.
• 40:57
  It's called data orchestration.
• 40:59
  It's very in the weeds, but just like this is basically infrastructure that underlies all the, all the data in an enterprise.
• 41:07
  So, you know, modern organizations, basically, like if you're running a business, you know, it is all about making the right decisions every day.
• 41:21
  And you need like eyes and ears to be able to make the right decisions, right?
• 41:25
  And in modern organization, those eyes and ears are data, right?
• 41:29
  It's looking at the right dashboard.
• 41:31
  It's knowing how many widgets are in which warehouse, it's knowing how many people are hitting your website today versus yesterday and what pages they're looking at is all, all this data, right?
• 41:41
  And so you need, just like you need to bring oil to the right place in order to fuel stuff.
• 41:48
  You got to bring oil to a refinery and you got to bring the refined petroleum to the power plant to generate the electricity.
• 41:55
  There are like these virtual pipes that move data around.
• 41:58
  We call them data pipelines.
• 41:59
  And we're a framework and infrastructure for like running and monitoring those data pipelines.
• 42:03
  So again, like, thinking of it in terms of like natural gas pipelines or oil pipelines is like the right way to do it.
• 42:10
  You need people to build them, you need monitors on them to make sure that the pressure is right and that they're in good shape.
• 42:17
  And then if there's a problem with one, you need to be able to automatically remediate it.
• 42:22
  So shut it off and then alert the right technician to go in and take a look at it.
• 42:26
  So that's what our software does for data pipelines.
• 42:32
  We obviously want to continue down that journey and continue leveling those things up.
• 42:39
  But AI is really transforming our industry and many industries.
• 42:44
  And so like many businesses, we're trying to figure out what does the future look like.
• 42:48
  And so I think more automation, more AI kind of applied to this problem is one area that we're looking at.
• 42:56
  So like, you know, when a pipeline has issues, rather than paging a human in the middle of the night to go look at something, can we use AI to automatically remediate that?
• 43:07
  That's one thing.
• 43:08
  Then the other thing is how are businesses fundamentally going to change through AI?
• 43:17
  And I actually think we're going to see way fewer dashboards and Salesforce reports and way more AI Just doing that first level of analysis for you and then coming to you with the conclusion, and then you can kind
• 43:34
  of like, you know, make.
• 43:36
  Make the decision based on that.
• 43:37
  So I don't know if that.
• 43:39
  If that makes sense at all.
• 43:40
  But, like, as that category and the way that people consume data changes, like the way that the pipes deliver that data to those systems are going to change.
• 43:49
  Okay.
• 43:50
  All right.
• 43:50
  And so, Pete, we've gone through a lot here with your journey and how you.
• 43:54
  You came out of grad school, you went to Facebook, multiple startups, a lot of ups and downs with your career.
• 44:00
  You've read, you've landed in a great place and really enjoying what you're doing.
• 44:04
  CEO of Dagster.
• 44:05
  Now, when you look back at your whole entrepreneurial journey, what's been the best part of it for you?
• 44:18
  The best part of it, because there's an easier way to make a buck, for sure.
• 44:23
  The best part of it is I feel like I really learned a lot, and you learn a lot about how the world works in a way that most other people don't.
• 44:42
  So, like, when you're starting a company, like, you've got to deal with compensation, human nature, capital markets, customer markets, labor markets.
• 44:55
  You've got to.
• 44:56
  When you go in to sell a customer, you got to learn about their business and you got to align what you're doing to their problems.
• 45:01
  And so you have to have, like, this fairly facile understanding of a ton of different things.
• 45:07
  And so when I talk to friends who are, like, doctors or lawyers or whatever, they're like, very deep in their area.
• 45:17
  And, like, I couldn't tell you how the thyroid works or whatever, but.
• 45:22
  People.
• 45:22
  That go really deep, they're often surprised with things that happen in the world.
• 45:27
  They don't have like this because they don't, you know, they're not responsible for everything.
• 45:31
  Right.
• 45:32
  So they will see things that happen in the world, whether it's on the news or in their own career, or they'll hear stories and they don't have a mental model for the world for, like, why that happened.
• 45:40
  I feel like as an entrepreneur, it's a lot easier for me to, like, assemble that because I've, like, touched so many parts of the economy and, like, I know a little bit about everything.
• 45:50
  So that, to me, has been, you know, one of the most rewarding things about this.
• 45:55
  Love that.
• 45:56
  Okay.
• 45:57
  And, Pete, if other people are hearing this and they want to get in touch to learn more about Dagster or reach out to you for any other reason.
• 46:04
  What's the best way people can connect with you online?
• 46:07
  Yeah, you know, I post a lot on LinkedIn, so I'm just like Pete Hunt on LinkedIn or like LinkedIn/Pwhunt.
• 46:14
  That's the best way to find me.
• 46:16
  Okay.
• 46:17
  All right, we'll link that in the show.
• 46:18
  Notes for everyone.
• 46:19
  All right.
• 46:19
  Well, Pete, thank you so much for taking the time to be here and sharing all this incredible wisdom from your journey with our listeners.
• 46:25
  We greatly appreciate it.
• 46:26
  Thanks, Dave.