Ben Sigelman is a co-founder and CEO at LightStep, a company that makes complex microservice applications more transparent and reliable. The company has raised $70 million from investors like Sequoia Capital, Redpoint, Harrison Metal, Cowboy Ventures, and Altimer Capital. Prior to this, he was an employee at Google for nine years.
In this episode you will learn:
- How Ben and his cofounders shortlisted startup ideas
- How kids change your outlook of life and work
- How to play the cards you’ve been dealt
- Minimizing stress by reframing the situation
- What I learned about pivots and failure from a leadership coach
- A different approach to enterprise sales
- Ben’s unique approach to fundraising and meeting investors
- Why you should build out a full executive team as early as possible
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Ben Sigelman:
Ben Sigelman is a Cofounder & CEO at LightStep, a company that makes complex microservice applications more transparent and reliable.
Ben Sigelman is an expert in distributed tracing, he is the co-author of the OpenTracing standard which is a Linux Foundation project via the CNCF.
Previously, Ben Sigelman spent nine years at Google where he designed several large (~1M-process) distributed systems, including Dapper, an always-on distributed tracing system, and Monarch, a high-availability timeseries collection, storage, and query system.
Connect with Ben Sigelman:
* * *
FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. Today we have a very impressive founder, a founder that is going to tell us all of the good stuff that he learned at Google and how now he’s making it happen with his company, LightStep. So without further ado, I’d like to welcome our guest today, Ben Sigelman. Welcome to the show.
Ben Sigelman: Thanks for having me. I’m happy to be here.
Alejandro: So originally from western Massachusetts. Ben, how was life growing up there?
Ben Sigelman: Western Massachusetts. I’m a nostalgic person by design. I always long for the past. For a while, I thought I was just feeling nostalgic about it, but as I’ve gotten older, I realized it was an amazing place to grow up. You’re surrounded by farms and beautiful things like nature, rivers, and so on. It’s actually pretty civilized. There are a lot of colleges there. It’s a nice intellectual atmosphere without being too snobby. So I loved it. If only I could find any way to build a tech company there, maybe I’d move back.
Alejandro: Nice. At what point did you start to feel this love for math and computers?
Ben Sigelman: That’s a great question. I always did it as a hobby when I was a kid, and I enjoyed tinkering with things. I used to say I was dissecting things. I would get electronics, they would eventually break, and I’d take them apart, and try to figure out how they worked. That’s always been my nature, but when I went to school, I was actually absolutely convinced I would never do computer science. I took one computer science class my freshman year just on a whim, and it was my favorite course by far. So I took the second semester of my freshman year, and it was my favorite course again. Then I realized I loved it. I just absolutely love it, and I couldn’t believe that my good fortune that is also a really great career, but that was a fluke. I’ve always been drawn to the creativity of it and the problem-solving. That’s what motivates me now and motivated me then.
Alejandro: Really cool. Obviously, you went to Brown. You did math and computer science. That was an interesting year. A year where there were some good offers in terms of jobs out there, but you landed a job with this company that was still not public. It was called Google.
Ben Sigelman: Yeah, that’s right. When I started at Brown in 1999, the kids that were graduating that year were able to wallpaper their dorm rooms with job offers. It was total insanity because there was such a hiring craze intact. Then I was in school through the crash in 2001 and 2002. It was a very different picture when I was graduating. I felt fortunate to be able to work anywhere. Google was relatively unknown at that time as an employer for undergrads, although their search engine was popular. In the summers during college for better or worse, I didn’t do internships in tech. I worked at a music camp. I was and am a serious amateur musician. I had no experience whatsoever in the tech industry. I remember my first day at Google, I won’t say whom, but my tech lead was this incredible, incredible guy who is now a distinguished engineer at Google. It was my first morning there. I remember asking him permission to go to the bathroom. I said, “Hey, I need to go to the bathroom.” He’s like, “You don’t need to tell me that.” [Laughter] I had no idea what it was like to work in an office. I had worked in ice cream stores, music camps, and stuff like that. I look back; I was incredibly naive. I loved the technology, but I was so naive about everything related to being in a business, much less running a business. So it’s funny to look back at that time.
Alejandro: Obviously, now, Google is one of the toughest places to get in, in terms of getting a job. So what was the process back then?
Ben Sigelman: It was heavily indexed towards Ph.D. level, computer science sort of algorithm stuff. In retrospect, I think their process was actually bad in some ways. They were intentionally biased toward false negatives as in they were much happier to reject people that were good than to accept people who were bad, which is probably the right call. But I happened to love my algorithm classes, so I did great in my interview. I remember once I got there, and I was conducting interviews, I would be asked in the same questions out of the same database of people who had worked in the industry for 15 or 20 years. They often had no idea what the answers were because they hadn’t been in school for 20 years. Many times, the questions they were asking had no bearing on the day-to-day work of an engineer, even a very good engineer. It was a very intellectual kind of Ph.D.ish culture that had seeped into everything, including their interview process. It’s for people who did well in school, especially in computer science. Sometimes, that translated well to being a good engineer, but not always. I can say more about that if you want, but it was a funny time.
Alejandro: How many people were at the time you joined?
Ben Sigelman: I was about employee 1,000. I think it was between 1,000 and 1,110.
Alejandro: Wow. And today, it’s like 98,000. It’s unreal.
Ben Sigelman: Yeah. It was a very different scene back then; although, it wasn’t all roses. It’s like my direct manager, who was a great guy, had 150 direct reports. I don’t mean there were 150 people in this org. We had 150 direct reports, which is to say he had no idea what I was working on. We didn’t even have one-on-ones. I only met him when I was getting promoted. I’d go in there; he’d hand me a letter, and say, “I heard you’re doing a great job.” That’s pretty much all we would say to each other. There was almost no management, which they thought of as being a feature, although, ultimately, I think caused some problems.
Alejandro: Yeah. I can imagine. So you were there for nine years. There you had the experience to be part of one of the most iconic companies of our time. How were those nine years for you, Ben?
Ben Sigelman: It was a transformative time for me for a lot of reasons. I learned so much there, and I’m very grateful for the time I had at Google for sure. The first couple of years, I wasn’t particularly happy with my technical work. I was working on the ad system, and that’s fine, but the particular project I was working on never made much sense to me from a product standpoint, and I do like working on technology, but it has to be for some kind of purpose. The thing we were building, it seemed like a moon-shot to me, but we weren’t launching and iterating. We were just working and working and working. We spent two to three years working on this thing. We finally released it, and I think it made $30,000 a year of revenue. This is something that we spent 20-person years on at Google where you could publish anything at Google.com, and you could be able to make $20,000 a year. It was an incredible failure from a product standpoint. I think even though the technology we were developing was fascinating, it ended up being incorporated into some powerful things. I found that disappointing. To me, it did reinforce that for me. I don’t like working on things just because they’re technically interesting, which this was. It needs to be useful or impactful, and that project was not. I met someone. They had this meet-up thing within Google where you opted into this program, and they looked at everything from how long you’d been out of school, what languages you worked in, your reporting structure, what building you worked in, and they found the person at Google who was literally the opposite. Like the furthest from you in all of these dimensions that they could possibly find. They set up a half-hour meeting between you and them with no agenda. The person who was the furthest from me was this woman, Sharon Pearl, who’s fantastic, who was a very accomplished systems researcher. She had been working on four or five different projects. I really latched onto one of them. It was a prototype of this thing called Dapper, which was a system within Google to track these – Google’s processing whatever it is, 100 million requests per second or some crazy number like that. It tracks every single request of every service at Google and follows it as it hops from service to service. By the time the request comes back to the user half a second later, it’s often traversed thousands of services. I thought it was intellectually interesting and also very useful to pair the thing I was just talking about, this ads project. I committed myself to working on that thing. It was unstaffed at that time. It was just a prototype, but because my manager had 150 reports, no one knew what I was doing, and it was a total free-for-all at the time. So I started working on that. I dove way, way deep into that, and I spent three years on that project, built a team around it, etc. That is the foundation for what I’m working on now at LightStep. It was a hugely impactful thing for Google. Finally, they had a tool to make not just web search, but to make all their products faster and more reliable in ways that were non-local. I could see the whole system at once. I thought that was both fascinating and useful. I’ve been obsessed with that problem ever since. That was about 2005 or so.
Alejandro: Obviously, nine years, it’s time for doing a lot of stuff, and for learning a lot of things. Now, looking back, you’re looking at it more from a leadership position where you have your own business, and we’re going to be talking about that in just a little bit. I want to ask you three different things, and I would like to learn, and also for our listeners to learn what has been your biggest takeaway. Let’s start with the first one. What was your biggest takeaway or learning about software engineering during your time at Google?
Ben Sigelman: That’s a really good question. Can I give two? Is that possible?
Alejandro: Go for it.
Ben Sigelman: There are two things that stand out. One is a piece of advice that I heard from Jeff Dean, who is at a demi-god-level engineer at Google that I think is well-known outside of the company. He invented BigTable, and Spanner, as well as MapReduce, and Google Brain, and an incredible guy. One thing that he would say is that “You can only design a system of any software system for about three orders of magnitude of scale. Outside of that range, it’s not going to be the right system.” That is to say, you could build something for Google scale. It’s probably not the right thing for a small company. Or you can design something for a small company, and it’s probably not the right thing for Google. It sounds obvious, but over and over again, I see people not just pitching, but actually trying to build software that would work for all scales. It doesn’t work. Like its almost a law of nature that that doesn’t work. The most important thing you can do if you’re sitting down to build a net-new product or a net-new system or whatever is to figure out what scale is this designed for anyway? And make sure that you sort that out before you start writing any code because otherwise, you’re definitely wasting your time because you’re not going to build something that’s going to work perfectly for everyone. That was a huge lesson for me and something, although it sounds obvious, I see people not taking that advice over and over again, especially when they start companies and don’t have a clear focus yet. The second lesson to me was something I got when I was looking at a Ph.D. program. In 2007, I almost left Google to become a Ph.D. student in computational neuroscience. I didn’t know much about that field, but I was excited about it. I was looking for guidance from these people who are going to be my advisors. The first couple of places I visited after I submitted, as you’d imagine, they were trying to sell you on joining their lab. The third place I went, I got a very different pitch, and this was the most influential advice I’ve ever gotten in my career in terms of who I am and what I want to do. This guy was going to be my advisor at NYU, and if I’d said yes to this offer. He set me down and said, “There are three types of people like you and me. There are mathematicians, scientists, and engineers. The mathematicians are the smartest ones in the room. They prove things that are true or false. They can do it in a dark corner without talking to anybody else. You’re not smart enough to be a mathematician. Neither am I. God bless them for their tools.” I’m totally with him at this point. I’ve always loved math, but I’m not as smart as those people who go on and to post-docs at MIT. I just can’t do it. I’m not that smart. The second type of people are scientists. He went on and said, “Scientists like asking questions that are interesting, and they like discussing the results, writing papers, going to conferences, and they’re interested in the pursuit of knowledge for its own sake, and that’s what science is all about.” By the way, this is a half-hour chat. I’m summarizing it in two minutes. Then he said, “The third type of people are engineers. Engineers like to build things because they’re useful. When they break, they want to know why. They want to know how to make it bigger and faster next time and more resilient. They like building things, again, to have an impact and to be useful.” Then he said, “I’m almost positive that you’re an engineer. This is a science department. If you come here, and you’re an engineer, and you don’t want to do science, you’re going to be unhappy, you’re going to leave, and it will be bad for you and bad for my lab. So if you want to come here and be a scientist, by all means, you’re welcome. Otherwise, I think you should stay exactly where you are or at least go and build something.” I thought it was the best advice I’ve ever gotten. I’ve thought about it over and over again. As I evaluate candidates, oftentimes I’d see candidates who are so smart, but I can tell that they’re actually a scientist. And if you put a scientist in an engineering project, they might tell you it’s not interesting because it might not be actually advanced in the state of knowledge, it’s just really useful. It’s an interesting way to think about the world. At LightStep, we’ve tried to structure our engineering interview process to select from people who want to have an impact first and foremost. They want to build stuff first and foremost. But I think for people who have that disposition, that’s a great combination to be an entrepreneur; to want to build things and have an impact as opposed to working on things that are “interesting” which I think is the death now of the small company. You have to want to have an impact – emotionally want to have an impact. Not just because your investors want you to have an impact. That’s something I think about all the time as well.
Alejandro: That’s very, very profound. The next one. Biggest takeaway from your time at Google around technical leadership, which is not leadership. There’s so much out there about leadership, but technical leadership, Ben.
Ben Sigelman: Keep it simple.
Ben Sigelman: I’m really weary of people coming up with these elaborate designs for things. It’s like good technology is actually easy to describe. It goes right back to what I was just saying. If you want to get a paper published, make it complicated. If you want to build a useful system, keep it simple.
Alejandro: Yeah. That’s a good one. That leads me to the next one: biggest takeaway for product positioning, Ben.
Ben Sigelman: Well, it’s hard to talk about this without sounding like I’m repeating something we’ve all heard a million times, but at the risk of doing that, I think understanding what problem you’re solving and making sure that it’s something that’s like hair-on-fire painful for someone. It’s like it can’t be nice to have. It has to be super painful, and you need to know what problem that is more than you know what solution you have. I do see a lot of people running around with their solution looking to figure out how to apply it. That’s not a good way to build a product. It can be focused. It could be a small userbase. It can be all sorts of things like that, but it has to be super, super painful to somebody, and you have to understand that pain and where it comes from very deeply in order to properly think about your solution.
Alejandro: Wow. Wow. In 2012 – let’s fast-forward to 2012. This would mark over nine years that you were at Google, a senior staff software engineer. All you knew out of school was Google. That’s why you knew about your professional side. Why did you decide to leave, Ben?
Ben Sigelman: That’s a good question. It certainly wasn’t with total confidence. I remember trying very hard to make sure that I didn’t burn any bridges. I think I gave them nine months of notice before I left. I told my boss nine months in advance that I was going to leave. I really love that company, and one of my goals was to make sure I could come back if it didn’t work out. It was with a lot of hemming and hawing. But what eventually led me to leave was the recognition that I was still young. At that time, I was 32, 33. I have no intention of retiring or anything like that. I love working. I didn’t feel I was learning new core skills. Every project I took on, it was a different set of challenges, but it was applying the same basic set of skills to each of those problems. I’m not a religious person. This is my one shot, and I spend most of my time working outside of sleeping. I wanted to work on something totally new, and to stretch myself, and have an impact in some other way. When I got to thinking about it, I realized that not a dig on Google, but it’s almost impossible to innovate at a company like Google in the same way that you can in the wide-open when you can control your own destiny. I didn’t know how I was going to get the experiences that I wanted and have the impact that I wanted to have while still at Google. That led me to leave the company. I spent several months working for a friend’s startup just to help out. He got some cheap technical advice, and I got a lot of experience in other areas. I tried to spend as much time as I could with the people who are not engineers in that company. The people in BD and marketing, etc. to understand these other functions. Then eventually went and set out on my own.
Alejandro: What did that look like because I understand you went and launched a social media company. Tell us about that.
Ben Sigelman: Yeah. That was an interesting experience. I didn’t like Facebook as a product. My complaint about Facebook was that as a human being, I’d go on Facebook, I compare my experience as a person which is always complex. Like most people, I have good days and bad days. I’d compare that to the vacation photos of my high school friends. It’s just not a good experience. It made me feel upset. Not like devastated or something, but it wasn’t a fun experience to go and compare my inner world to other people’s vacation photos. I did some reading, and I realized this has been studied, and it turns out my experience at Facebook is pretty ubiquitous. I wanted to build a product that had the good aspects of social media, and that it would connect people, and make them feel like they’re not an island. But it would do it through a more sincere and authentic means. Long story short, I raised a Seed Round for that, which I’m very grateful for and hired a great team. We built the product that I had in mind, and it worked. We would retain people. The people who the product appealed to would say things – direct quotes like, “This product has changed my life. It’s gotten me through hard times. Most important app on my phone.” Things like that. Then I’d ask the same people who said that kind of stuff, “Who would you tell about this?” They would say, “I would never talk about it. It’s way too personal; way too private. I realized that we’d built a product that it did appeal to certain people, but they were almost all depressed introverts. I like depressed introverts as people, but they’re a rotten audience if you’re trying to build a growth product around viral marketing. It just doesn’t work. They won’t talk about it. So I went back to the investors and made a very detailed analysis of why this product was literally never going to work. One of them told me that she had subsequently anonymized me by taking my name, taking the company’s branding off of it, and had shown it to other consumer companies in her portfolio to say, “This is how you should measure failure.” We failed so profoundly but measured it very carefully that it was obvious that we should not proceed with that product. If we had continued, we would have had to pivot into either some kind of paid-therapy app, which I have no judgment about, but that’s not interesting to me. Or like a perv-hookup app, which I also don’t have a judgment about, but definitely, don’t want to spend my career on. Or maybe like into a bullying app for high school kids to bully each other, which I do have judgment about, and I’m not going to do. So I saw no path forward for the product. I gave the investors the option to take all their money back, which I felt was the right thing to do. I’d spent less than half of it at that point. And said, “If you want to stick with the company, I’m loving this being an entrepreneur thing. I love it, but I’m not doing this anymore.” I told them if I did something else, I wanted it to be technically deep and interesting, partly because I like doing that, but also because I realize that my skill set is deep technology. That’s what I’m good at. And if I want to start a business, the risk in the business should be technical. I should be choosing a problem where the main reason it won’t work is that it’s too hard to build it. What I had been doing in social media, absolutely was not like that kind of problem. So I was bored and not that effective on social media. I also wanted to build something that was immensely valuable to somebody in that it does have a high price point. To my unending gratitude, they stuck with me. I may have been able to raise another round to that point, but I think emotionally I was so exhausted by the failed startup thing that I don’t know if I had it in me to go through that whole process again. I recapped myself to bring on two fantastic co-founders. We’re still sitting in the same cap table as that crazy social media thing that was a total failure. LightStep has been very successful since that period. That was 2015, and we’ve stuck with the vision, pretty much unaltered this entire time. We’ve had a good run of it. But it was a weird transition going through that profound failure, and then coming out the other side with a clearer idea of what I wanted out of my career and what kind of company I wanted to build.
Alejandro: What were those days like because failure, not a lot of people talk about it. But finding out from failure is where you get your biggest learnings. So how were those dark days for you? How did you deal with those dark days, and how did you bounce back?
Ben Sigelman: It was plenty of failure to go around during that period. I think I leaned on what I’ve always felt whenever I’m challenged in that way, which happens from time to time still. It’s like there are always good days and bad days. I think about some advice I got from Jay Krebs, who’s the CEO, co-founder at 25:19. He focuses on taking pride and playing the cards he’s dealt. You can’t control the cards you’re dealt in this industry. You can have a bit of influence on them, but in any given quarter or any given week, or whatever it is, you only have certain cards you can play. I didn’t have those words for it at the time, but that’s how I think about it. When I’d get stressed out, I would return to the things that actually were under my control and take pride in making the best decisions I could. It’s too stressful if you try to take control over everything, you just don’t. You don’t have control over most of it. Actually, the definition of stress in a textbook is responsibility without control. If you feel you’re responsible for the outcome of a company, especially a venture-backed company where someone has some high aspirations for you, it can be incredibly stressful. I think if you can bring yourself back to feeling primarily personal responsibility for the things that are under your control, you can make it through those periods and hang your head high the whole time. That’s how I thought of it.
Alejandro: How do you determine what you can control and what you can’t control?
Ben Sigelman: Frankly, there’s not a lot you can control.
Ben Sigelman: Most things you can’t control. I think the things I can control are the people around me, the way I spend my time, and not just at work but also at other things. I’ve always been meticulous about trying to spend enough time with my family. Not because it’s the right thing to do, although I think it is also the right thing to do. But it’s not selfish for me. Like having a kid at the same time as I started this company was an interesting experience for me, and it felt risky at the time. Like, “Oh, my gosh. Is this going to be this crazy bargain?” And it wasn’t. For me, before I had kids, work was absolutely the most important thing to me, and also the way I was trying to justify my own existence. I already said I’m not a particularly religious person, so it’s like work was the way I justified my existence. After having kids, that went out the window, and my kids are the reason, that was my most important thing, entrance to my contribution to the universe as far as I’m concerned. That was actually a great thing for work because now, I don’t feel the fear of failure professionally is restricted to the professional domain. If my company fails, it would be a dark thing for me, and I’m sure I’d have a tough year or whatever, but the earth will continue rotating on its axis because it’s not literally the most important thing to me psychologically. The things I control are the things that are simple things: emails, hiring, stuff like that. The things that are out of my control, they may give me a dark day here or there, but I’ve constructed my life in a way that it’s not going to be a catastrophic failure for me, which it frees me up to take much larger risks.
Alejandro: Wow. That’s very powerful. I remember that one of the profound pieces of advice that I learned about this was from a leadership coach, really fantastic. I recommend anyone that is running a startup to have one. I remember we were doing a pivot, and he said, “If the company fails, you’re not a failure. The company just failed. That’s it.” Because one of the mistakes that founders make is that they get so attached to their business, that they think they are the business. Ultimately, just like you said, the sun is going to continue to go up, and the company is going to be in the past, and you’ve got to continue to move forward.
Ben Sigelman: Yeah. Exactly. I want to be clear that it’s not because I don’t care about it. I care deeply about this company. To me, learning how to care a little bit less is actually necessary if you want to take risks. If you can’t detach yourself a little bit, it’s too frightening to take big risks. That’s death as an entrepreneur, I think.
Alejandro: Yeah. Absolutely. Here you are. You went through this bumpy ride, and then after this, you made a list of 60 things that you thought had some type of market opportunity. Then you recruited your founders, and LightStep was born. So walk us through the early days of this. How did it happen? How did you incubate this? Tell us about it.
Ben Sigelman: Sure. Just one point of clarification. I made a list of 60 things with my co-founders that we could imagine spending 10 or 20 years of our life on, and only three of them had a market opportunity. [Laughter] Most of them were things that were like, “That would be really cool and kind of impactful, maybe, but the timing is that we’re off by a couple of decades.” Unfortunately, 57 of them had no market opportunity. Three of them did. We decided on this one of the three because it felt better. You know, at some point, you have to put the spreadsheets away and think about what feels exciting, and this one felt the best to us. We did a couple of things right early on. We were wise to focus on getting into production as quickly as possible. Our product, what we’re working on is a piece of technology that large engineering organizations put into production and leave there 100% of the time, and it allows their development organizations to move with a lot more confidence and agility as they build faster products. We’re a performance tool as well as a way for engineers to spend less time on operational fire-fighting actively. None of this works unless we’re in production. Getting something like what we’re building to run in production in a real large, deep system is a hard thing to do if you have no brand and no customers. We were laser-focused on making that happen. We absolutely were not trying to get paid for those first contracts. We just wanted to get the software some use. We were able to do that quickly. We had real data coming in from real companies within a couple of months. By the end of that first year in 2015, they were from companies we’ve all heard of. That was a good call because a lot of people when they’re building products that have to sit somewhere like that spend too long in an internal-focused R&D phase without getting real customer data. We probably shaved years off of a process than if we’d gone in from root. The other thing that we did that I thought was smart early on was, we structured our contracts to be – typically if you’re doing enterprise software like this, it’s expensive for a reason, but it’s not cheap. You try to get customers to commit and even pay the year out front and things like that. That can slow down the sales process, and especially if you’re a small company that hasn’t launched yet. We did a lot of work to structure the contracts, to be a bit of a handshake at first. We would get the benefit of a pricing conversation, which, for us, was less about the money, and more about the understanding what language the customer’s using to even think about value. We would have the pricing conversation upfront, but in actual fact, the contracts are very loose. Like the buyer, if they wanted to make us squirm, about six months into the contact, they could have canceled and paid nothing. We did about five of those deals with a handshake on price essentially, and the rest of it was the standard legal productions. One hundred percent of those five renewed. None of them backed out of anything. They knew that we’d built something valuable and wanted to continue with it, and that got us into production much faster. I think that was a hugely beneficial thing for LightStep as well. This is all to say that by the end of a year or so, we had a bunch of name brand logos who were using LightStep and were excited about it – getting to that place that quickly was a huge thing for the momentum of the company in many ways from getting additional customers to fundraising to whatever.
Alejandro: How do you guys make money with this?
Ben Sigelman: We make money through large enterprise contracts. If the units of pricing and so on and so forth, I’m not sure if that’s something your listeners want to hear all the details about, but it’s a SaaS basically. Because of the size of the agreements, they’re almost always annualized SaaS subscriptions.
Alejandro: Got it. How did you go about fundraising for the business?
Ben Sigelman: That’s a great question and something that I’ve learned a lot about over the course of the last couple of years. In the beginning, it was a haphazard thing about who I already knew combined with a bunch of meeting certain people I didn’t already know. I realized that I don’t like meeting people while I’m fundraising, and I also don’t like pitching for fundraising. I think it actually sets up the wrong dynamic. I think the best way to fundraise, in my mind, is to figure out which people you’re going to want to fundraise from in your next round, and as soon as you possibly can, set up meetings with them with a very transparent, “I’m not pitching to you. I’m not looking for money”-kind-of stance. Have those meetings, and go in there and say, “Listen. I want to open the books a bit. We’re not fundraising right now, and I want your advice.” And have a conversation where you actually get some advice from them about something real. Talk about something that’s not working. Don’t pitch them. Tell them something that’s not working. Everyone knows every company has some problem all the time. I have one right now, right? It’s like we all have something we’re working on. Go talk to them about that problem, and see how that feels. If it feels good, their going to be super helpful to you, and they’ll probably get excited because they’re going to feel like they can solve this problem too. That generates and gives you a signal on what it would be like to work with them after the fundraising is closed. News Flash: after you close the fundraising, you have this person on your board for seven or ten years. You’d better like working with them. It gives you a signal on how that’s going to feel, and it gives them a signal on what it’s like to work with you, and how that’s going to feel for them because they actually have the same concern. Then best of all, if it feels good, it’s going to make them a thousand times more excited about investing in your company. I think when it came time to raise money for us, we already knew the people, and they already knew us that we wanted to work with. That made the whole process feel more honest, and it also felt easier. It wasn’t just this crazy dog and pony show for us. Part of that was due to excitement about the company. But I think part of it was because we set up the conversations to be on the same side of the table instead of us pitching someone really hard, which immediately creates an oppositional dynamic where they have to question whether or not you’re being honest. I think that was a nice way to structure the fundraising years out from the actual date.
Alejandro: It’s like the saying goes, you go for money, you get advice. You go for advice you get money twice.
Ben Sigelman: Exactly.
Alejandro: I’m there. I’m there with you. So, Ben, how much capital have you guys raised for the company that is publicly reported?
Ben Sigelman: I think the exact number is 71.5 million dollars or something like that, but it’s a little over 70 million dollars.
Alejandro: Got it. And how big is the company? How many employees do you guys have today?
Ben Sigelman: We’re past 100 people now in the last month or so. Honestly, the exact number is such a moving – I’ve seen the last couple of days, we’ve hired several new people just over the weekend, in fact. So I can’t even keep track of the right number anymore.
Alejandro: To follow-up on the fundraising side, you guys have unbelievable VCs. Without going too far, Sequoia. One of the top firms in the venture world. How long was the process of going for the first piece of advice until you were able to get them to come aboard on your Series B?
Ben Sigelman: That’s a tough question to answer. I was an incredible admirer of Bill Coren when he was SVP of Engineering of Google. He was not like my skip-level or something, but he was five levels above me when I was at Google. Once a year, I’d get to have a one-on-one with him, and I always really looked forward to it. He’s now a partner of Sequoia, and I’ve known him for a while. RF 38:15, who is the partner who led the round. Bill goes to our board meetings, but RF I met closer to the fundraising than I’ve known Bill, but RF – I think I met him about a year and a half or two years in advance of the Series B when Sequoia came in. I’ve always had a great relationship with him, as well.
Alejandro: What do you think makes a firm like Sequoia so legendary?
Ben Sigelman: You can’t mess around with their track record. That’s a big part of it. I’m not privy to the internal working of VC firms, but I get a sense from the people I know there, and the way they do business that they mean a lot of what they say around, especially in the generation of Sequoia partners that are investing now. I think they mean what they say about having a second bottom-line. Their LPs are an impressive group of nonprofits, and so forth. They cap their fund. If they wanted to raise a fund that was larger, I bet it could be like six times larger than it is right now, and they’d still be way oversubscribed. They cap their fund. The LPs that they work with are all mission-driven organizations. The people there, I’m sure they’re depositing their checks. It’s not like they don’t get paid or something, but I think that they enjoy the fact that most of them were ex-operators and they love the thrill of the fight. They’re all obsessed with their jobs, but they’re also in it for the right reasons. They love identifying and disrupting big markets. I think they really love it. When you talk to them, and you have that conversation with them, you can feel that fire in their belly. A lot of them have impressive training as MBAs as well, but I sense an entrepreneurial spirit in the partnership there. I’m not saying they’re unique in that regard, but it’s so overwhelming when you talk to them.
Alejandro: Yeah. I hear you. Going back to LightStep, in a world where the vision is fully realized, how does that world look like?
Ben Sigelman: We’re making the world a better place. No, I’ll give you a real answer.
Ben Sigelman: When our vision is fully realized, to me, the way that software is evolving right now is both exciting and kind of terrifying. You have our entire economy – the global economy is moving to be built around and on top of and within software. It’s absolutely the fabric of the economy. It already is, and it’s going to get more and more profound as time goes on. That’s cool and everything, but the way that these applications have been built by thousands of developers, it’s kind of terrifying. It feels a bit like we’re asking people – what’s the right metaphor – to build cars and we’re handing them a bunch of iron ore or something like that. And we’re saying, “Good luck. Figure it out.” The tools that people are using to build software are so fragile compared to the reliability we need from the software itself. LightStep’s start is about helping developers of software build more reliable systems with more confidence and faster. But the long-term goal for me, for LightStep, and the thing that the founders got together and got excited about was that everyone involved in this entire process, certainly including end-users should feel way more confident about the software that we’re building than we do today. The only way to make that a reality is to get in there at the fabric of the software itself and change the way that is being built. We started with this performance and reliability stuff because that’s an easy place to insert, but our vision longer-term is to change the way people develop software to make it reliable by default, reliable by design, and that requires rebuilding the infrastructure all the way up. That’s what I’d like to see happen for LightStep in the long-term.
Alejandro: One of the questions, Ben, that I typically ask the folks that we have on the show is, knowing what you know now – you’ve been around the block. You’ve seen many, many things on building, scaling, financing, all of that good stuff. If you had the chance to go back in time and have a chat with your younger self, and to that younger Ben that was coming out of Google and perhaps thinking about launching a business, what would be that one piece of business advice that you would give to your younger self and why about launching a business?
Ben Sigelman: It’s a good question, one I think about all the time, and I try to advise other founders just for fun. I like doing this stuff. The advice I typically give them, and I would give myself is to think sooner about building not just a bunch of engineers and product managers, but building a full executive team as early as possible. It was something that I don’t think I really thought about as a serious teambuilding exercise until we had already raised the Series B. We had some of the executives in place, but it wasn’t focused as a team. It’s a bit hard to put into words what the difference is, but I think where you end up is you have more dissension, and more arguments about the way the company should be focusing and spending its time and resources, but that’s actually a good thing. I think, in the beginning, we were so maniacally focused on product, and I guess to a certain degree, sales. But only in the sense of getting it into individual customer’s hands that we didn’t think about the rest of the business in a holistic way. I think having a full exec team earlier would have – or even as appointing people to represent certain aspects of the business earlier, we would have been working in parallel on other aspects of the business in the early days that we didn’t focus on until a couple of years in.
Alejandro: Very profound, Ben. For the folks that are listening, what is the best way for them to reach out and say hi?
Ben Sigelman: I love getting email. So you can reach out to me at firstname.lastname@example.org or at email@example.com, either one. Twitter’s good too. I’m @el_bhs and my DMs are open. Those are both great ways to get in touch with me.
Alejandro: Wonderful. Ben, it has been a pleasure to have you on the DealMakers show today. Thank you so much.
Ben Sigelman: Thank you so much.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help whether it is with your fundraising efforts or with selling your business, you can reach me at firstname.lastname@example.org.