Craig Walker is the co-founder and CEO of Dialpad which offers a cloud-based business phone solution simplified for every business. The company has raised $120 million from Andreessen Horowitz, Google Ventures, Felicis Ventures, SoftBank, and Iconiq Capital. Previously he led Dialpad Communications Inc., (acquired by Yahoo! for $50 million), a provider of VOIP services, and cofounded GrandCentral (acquired by Google for $100 million), communications services.
In this episode you will learn:
- How to deal with the dark days as an entrepreneur
- Embracing culture during tough times
- Raising capital from the best investors
- Ways to build a powerful board of directors
- Strategies to close with success an acquisition
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 Craig Walker:
Craig Walker brings over 20 years of experience as an entrepreneur, venture capitalist, corporate executive, attorney and CEO at various Silicon Valley companies.
He is currently founder & CEO at Dialpad, the only Voice Intelligence-powered, cloud-native business communications provider.
Previously, Craig was the first Entrepreneur in Residence at Google Ventures, where he solidified his passion for building businesses in the enterprise communications space.
He was also CEO of Dialpad Communications from 2001 to 2005, when it was acquired by Yahoo! to become Yahoo! Voice.
He founded GrandCentral Communications with Vincent Paquet in 2006, which was acquired by Google in 2007 and became Google Voice.
Connect with Craig Walker:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. Today, we’re going to learn quite a bit from the founder that we’re going to have as a guest. He’s been through the full cycle a bunch of times, so that means that we’re going to be learning about fundraising, acquisitions, turnarounds, you name it. So, without further ado, I’d like to welcome our guest, Craig Walker to the show. Welcome onboard here.
Craig Walker: Hey. Thanks for having me here.
Alejandro: Craig, how was life growing up, being born and raised in Cupertino?
Craig Walker: It was a really interesting place. I was born in the mid-’60s and Cupertino used to be pretty much all apricot orchards at the time. It wasn’t until I was in my seventh or eighth grade that Apple computer appeared, and it started to become the hub of the Silicon Valley. But it was a really great place to grow up.
Alejandro: I believe you mentioned to me that Steve Jobs was your neighbor. So, what was that like?
Craig Walker: Yeah, it was crazy. I lived up this little street in Cupertino that maybe had 15 homes on it, and about 8 homes up was the house that he lived in for a couple of years when he was, and a couple of others all lived in that house when they were starting Apple.
Alejandro: Wow. So, I guess the question here is, why did you decide to go to law rather than build a business having all these incredible people on your same street?
Craig Walker: Yeah. Well, I was only nine or ten years old. [Laughter] I didn’t really know what was going on. I had gone to Berkeley undergrad, and I went and got my MBA at Georgetown, and came back and went to law school again back at Berkeley, and really was just drawn to all the action that was happening in Silicon Valley. Being a lawyer was a great view into that because we got to represent startups. We got to represent big public companies that were acquiring startups. We got to represent venture capitalists. Got to represent investment bankers. So, it was a perfect way to see the entire cycle and really see it more than once. I thought that was a great experience.
Alejandro: One thing that I found really surprising – I’m a recovering lawyer as well, so I know the drill, Craig. One thing that stood out for me was that you did your MBA, and typically, when people do their MBAs, they are clear about business here or business there, but you went into law school. Why did you go into law school after having that exposure in business?
Craig Walker: You know, it was interesting. I got out of business school in ’91. Back then, basically, the two career paths coming out were either going into management consulting or going into investment banking. Neither of them was very interesting to me. So, I came back, worked at Apple for a year. While I was working at Apple, I took the LSAT and decided to go back to law school.
Alejandro: Cool. Let’s talk about your years as an attorney. At the beginning, you were more like representing startups and VCs. I think this was around the ’90s, mid-’90s. So, the landscape has changed quite a bit since then. What was it like for you being in that environment, and what were some of the lessons that you learned?
Craig Walker: It was super interesting. I was looking at a law firm called Brobeck, Phleger & Harrison in Palo Alto. In the mid-’90s, Palo Alto was dominated by two big law firms. One was Brobeck. The other was Wilson Sonsini. We had fantastic clients. Cisco Systems was our client, and I was on their M&A team. Cisco from ’95 to ’99, I think, acquired 24 companies. We had just a ton of M&A experience on that, but we represented Kleiner Perkins, Sequoia Capital. I remember representing Kleiner when they made their Series A investment into Juniper Networks. Polycom was a client of ours. They were a private company. I worked on their IPO. It’s interesting when you look back, a lot of those companies are obviously still around, still thriving. It really hasn’t changed all that much.
Alejandro: It’s interesting. As you take a look at your career as a whole – I mean, you’ve done the full cycle, and we’re going to talk about these transactions just in a bit. But here, when you were representing companies, doing M&As or IPOs, what did you learn? What were some of the patterns of getting a deal done?
Craig Walker: It was interesting because all the deals that you worked on, whether it was an IPO, whether it was an M&A, whether it was a venture financing, both parties to those deals wanted to get the deal done. So, it wasn’t a matter of lawyers going in and being completely argumentative and difficult to deal with. It really showed you that both sides are looking for a positive outcome here. It really taught me to look for win/win solutions. Business deals that aren’t win/win deals, or business deals that are totally one-sided, never really work out. I think that really created the framework for my business philosophies later in life of seeing just how 1+1=3 if you do the right kind of partnerships.
Alejandro: Was there like one mistake that you saw constantly happening during your legal years here in the mid-’90s that you told yourself, or that you minded yourself not to make that same mistake when you were being the operator?
Craig Walker: We have occasional startups that would appear to be doing great, and then all the sudden, for whatever reason, they falter and then drop business. What I realized is, there’s a tendency to almost grow too fast at times. I’d say to be a CEO of a startup you’ve really got to keep your hand on the throttle. It’s almost like you’re driving a speedboat. Sometimes, it makes a ton of sense to just floor it. Other times, you’ve got to throttle back and work through some choppy waters before you can floor it again. I think one of the lessons that I learned then was the guys who did nothing but just full throttle all the time, sometimes, that works if you’re like a rocket ship, but most of the times, that really didn’t lead to great outcomes. I think just learning how to have some judgement and balance may not just be crazy like spending all the time was one of the lessons that I learned.
Alejandro: Cool. How did you come across the idea of “I’m going to switch boats here? I’m going to join a VC firm.” How did that happen?
Craig Walker: It’s interesting. I always looked at the Silicon Valley as kind of a little bit of a hierarchy of – as a lawyer, you were involved in these deals, and you were important, but you weren’t making the decisions on whether or not you should do the deal. I always wanted to get higher up the chain on closer to making those decisions. I’d look at ads that had lawyers, and then the next rung up would be investment bankers. The next rung up would be venture capitalists, and then the top of the heap to me would be founders. So, I had been a lawyer for a number of years. Then I was going to move to that next step up and was going to go join Hyder Jaffrey as an investment banker. When I started telling my clients I was leaving, one of my clients, TeleSoft Partners, was this venture fund starting in ’96 to make investments come out of the Telecom Key Regulation Act of ’96. He asked me to join him in making Telecom Internet Investments. That was a great step, like moved me up to the VC level. Making Telecom and internet and those kind of next-gen communication investments in the late ’90s was a little bit like shooting fish in a barrel. I think our first eight investments, four got acquired, two went public, and maybe two went out of business. But it was a ridiculous time to be involved in that type of investing. So, that was a really nice way to get closer to the top without having to go through that interim step.
Alejandro: This is very interesting to me because there are so many folks that I speak with that are widely successful that had a background where they were able to really get into the pattern recognition given the exposure that they had to transactions, to founders, or to whatever that was either as a consultant, an investment banker, or perhaps a VC. In your case, you had the chance of working in this firm where you were investing in companies that would later be acquired by the likes of Cisco or Intel. What were some of the patterns that you were able to identify on these founders that you ended up investing that led you to believe that these guys are going to be successful?
Craig Walker: Probably, the two biggest things were the team themselves. What was their background? A background of success is a huge indicator of future success. So, that was number one. Secondly, I was always most interested in the size of the market and the market opportunity. If it was a massive market, it was traditionally dominated by a legacy incumbent. Those three were always the most attractive things to look at. So, those were the two things that I always try to identify. Where we had investments that didn’t do as well, it generally wasn’t ever like technology risk. It wasn’t like the tech just didn’t work. It was usually some interpersonal dynamic with the founders or some competitive threat that they didn’t anticipate which is why you can’t – you’ll never be able to see all the competitive threats, but definitely be able to see a team that worked well together in the past was to me had the piece that really stood out to me as your best marker for success.
Alejandro: Got it. Then after doing this for a couple of years, you get pushed or transitioned into one of the companies or the portfolio. Tell us what happened.
Craig Walker: Yeah. This was the Bubble of 2000. We had invested in a company named Dialpad Communications. It was a real pioneer in the voice over IP space. If you think back to 1999 when it was founded, everyone was on dialup for their internet, and also during that time, international long-distance phone calls cost anywhere from 50 cents to $1.00 a minute, and the quality was pretty bad in its own right. What Dialpad had figured out is if you could use your dialup connection, and then move that phone call to the internet, therefore bypassing all the carriers and all the cost, you could basically create this category of voice over IP and lower the cost dramatically for international calls. So, that was one of our outer portfolio companies, but the bubble burst in March 2001. The company had grown way too big and was burning way too much money. Around October of 2001, the board decided, “Hey, we need to make a change. We’ve got to bring someone in affirmatively to lower cost immediately” and try to hold it together so they could sell the company before they had to turn off lights. I was the guy they chose to go in to do that, which was supposed to be a three-month journey, and it ended up being a four-and-a-half-year career where we ultimately turned it around, made it profitable, and got acquired by Yahoo.
Alejandro: We’ll talk about that in just a minute. I want to ask you. How big was the company when they brought you in?
Craig Walker: When I came in, my first day, about 150 employees, and that’s after they had already done waves of layoffs. At its peak, it had been about 300 people.
Alejandro: Why did they choose you?
Craig Walker: I think because I had the business background, and I had legal background. Kind of a combination of “Look. You’re going to need somebody who’s going to have to figure out a bunch of stuff.” There are no real people who have a ton of experience of going in and turning around companies. So, they chose a generalist who hopefully had a little bit of common sense and was going to work hard.
Alejandro: Got it. Tell us about turning around a business is a challenge. For you, what was that day when you came in? What was the day like?
Craig Walker: I’ll never forget it. It was October 19, 2001. I get brought in. They have an all-hands meeting. There were about 150 people there. I get introduced as the new CEO, and they all start clapping. That was the hardest part because I was there to give them the news that I’d been brought in by the board to lower cost immediately. This was at a time when the company was burning 4 million dollars a month, and only had about 4 million dollars of cash in the bank, and had about 10 million dollars net. So, it was a real upside-down situation. Sadly, I had to tell them, “hold the applause. Unfortunately, I’m here from the board to try to save and turn this company around. The only way I can do that is to lower cost immediately, and the only way to lower cost immediately is to make headcount reductions.” Then all the sudden, you could hear a pin drop in the room. One of the hardest things was then figuring out how to get that team of 150 person – I set this goal for myself. I had to get from 150 down to 15 by the next payroll cycle. That was probably my hardest professional thing that I’ve ever had to do before or since.
Alejandro: How were you able to keep those 15 because if they see over 100 of their peers leaving, they’re going to be like, “I’m next.”
Craig Walker: Yeah. It was a really, really interesting time. The other thing that made it challenging was, I didn’t know anyone at the company either. So, my first challenge was trying to figure out which 15 to keep. It was interesting. Every VP came and told me why they were indispensable and needed to be part of the turnaround. What I ended up doing was I said to the seven different C-level executives or VPs, I told them, “If you were me, what would be your list of 15 people?” I ended up getting seven different lists of 15. Then I compared those seven different lists, and there were three names on each of the lists. Of course, everyone put themselves and their cronies on it, but the people that were going to actually get stuff done, these three names kept appearing on everyone’s’ list. So, what I ended up doing was going to those three guys who were on everyone’s list and said, “You guys are with me. You’re going to be part of this turnaround. There were four of us now. Who were the other 11? Then I let them choose the 11. But at the time, it was super disruption in Silicon Valley. Companies were closing left and right, so people were thrilled to be part of the turnaround operation. No one wanted to lose a job and have to go enter that labor market. It was pretty rough.
Alejandro: Of course. What do you think worked because now you have 15 people? Now, finally, you’ve been able to reduce the cost from the 4 million bucks that you were doing a month to obviously the outcome. We talked about it, which is the acquisition ultimately of Yahoo, but what do you think worked?
Craig Walker: You know what is amazing? We got it down to 15 people. Ten of those were engineers of network ops. Keeping the servers running and keeping service running was the key. We had 14 million users around the globe, and maybe they weren’t reading what the San Francisco Chronicle was writing about us. They just liked having this great service. It was shocking, but after a month or two, we looked around like, “What did the other 135 people use to do? We’re keeping this thing running with only 15. But I think what we learned through the process was 1) the company had been giving away the service for free and trying to make it up on apps. We changed that, and we immediately started charging for phone calls. So, that got us an instant cash infusion, and we were able to go shed a bunch of debt and work with creditors and do a bunch of things to clean up the company. Over the next four years, it taught us to be really, really scrappy, and to let every dollar count. As a founder, every dollar in the bank is oxygen. Just don’t waste your oxygen. We took a long time to grow back up as a company, but by the time we got acquired, we were over 50 employees. We were profitable. We had dug ourselves out of it, and we had a really cool, unique technology that Yahoo wanted to buy.
Alejandro: Obviously, Yahoo ended up buying the business for 50 million. Did you guys come to a point with the board, “It’s time right now to survey the market.” Or did Yahoo come to you guys, or what happened?
Craig Walker: We were just staying and operating, and Yahoo came to us in 2005. At the time, Yahoo Messenger was the dominant IM client in the world. They were starting to lose market share to Skype in Europe, primarily because Skype gave you phone calls as well as instant messaging, so they wanted to be able to counter Skype’ phone capabilities, and buying Dialpad [19:55] at Yahoo Messenger gave them that ability. We weren’t looking. We were profitable. We were growing, but then they came along, and it just made sense.
Alejandro: One of the things that I thought was pretty cool is that after the transaction was closed, you only stayed with Yahoo for literally three months. It was a very short vesting and resting. Right after that, you went at it again, and you co-founded what would become your first business that you co-founded. It was kind of like you felt the sense of ownership too because you brought it from nothing where it was to something. How did you guys come with the idea of this next business, and what was that transition process like?
Craig Walker: My co-founder and I, Vincent Paquet, had been doing DialPad for the past 4 1/2 years. Vincent was one of the three names on those lists. We had looked at voice over IP as – up until that time, voice over IP had always been about just lowering costs and how do you make a phone call free. Skype really had dominated that. What we wanted to do, we wanted to use less of our IP to basically give every feature that you could possibly have on a phone call to the end user to control through the web, and basically, we give you one phone number. We give you your GrandCentral number. That’s like my number for life. Then if people called that number, rather than trying to figure out if I was at home or if I was at work or if I had a cell phone, you could just call that GrandCentral number and we’d ring all of your numbers. We’d give you all of your features online. You’d save all of your voicemail to the web. It would be transcribed into text. You could block spam callers. You could transfer calls. We wanted to give the end user their own little phone company and give them access to all the features that used to be controlled by the carriers. In doing so, the carriers who never really treated customers very well because a lot of them were former monopolists. They became kind of dumb pipes in the process, and all the cool features lived in the GrandCentral layer. That was the idea behind it. If you think back to those days, people had a work number and a different voicemail system. People had a home number and a home voicemail system. People had a cell number and cell voicemail. Back then, cell cost a lot, so people weren’t using the cell like water like they do today. It really served the need at the right time and was really cool. That’s what made Google so interested in it. They saw this as an opportunity to provide a really cool service to everyone who had a phone.
Alejandro: It’s interesting because you guys got acquired by Google, but at the time of the acquisition, you had only raised a Series A. You guys raised something like 4 million bucks. Is that right?
Craig Walker: Yeah. We raised 4 million from Halsey Minor. He was the founder of CNET. Eighteen months later, we were acquired by Google. We saw a million in the bank and had built the product and had launched it. We were still a pretty small team. I think we were only about 24 people by the time we got acquired. The day we got that deal closed, instead of showing up to work yet on our startup in Freemont, we drove to Mountainview and never came back.
Alejandro: Wow. Because literally from the moment you founded the business to the moment that it was acquired, we’re talking about not even two years. Right?
Craig Walker: Yeah. You know what I think of it was, it was kind of like a payback for all the pain we went through in the Dialpad line turnaround. This was just kind of like that rare startup that is just like raise money, say what you’re going to build, build it, launch it, public-lights it, someone buys it. That hardly ever happens that cleanly.
Alejandro: Again, did you have Google come to you guys or what was that process?
Craig Walker: Yeah. Google came to us. We knew some folks over there, and the Google Talk Team had a product manager by the name of Wesley Chan who was really influential and a real early Googler. He saw us give a demo at Consumer Electronics Show in 2006. He thought it was a great product. They stayed in touch, and then ultimately, they reached out from corp. dev and suggested we “work together” or work on the same side of the field or some acronym like that. That started the process.
Alejandro: Wow. It’s funny because some of the folks that I speak with that have been acquired by Google, they say that the email is Greetings from Google. Did you ever see an email like that?
Craig Walker: I wish. We actually got some conversations with them for a while, but that would have been a crackup to get an email that said that.
Alejandro: That’s so funny. Yeah. Some people are like, “What is this spam.” And then they look into it, and they’re like, “Okay. I’d better pay attention to this.” So, really cool. Was it kind of like talk about a partnership, or did it go straight into doing a deal?
Craig Walker: It went straight into doing a deal. I think we were considering raising our Series B, and we were talking to Google a little bit about “Maybe you guys should participate in our Series B.” That was the opening. “Well, maybe we should talk about combining the companies.”
Alejandro: Why did you decide to sell because it seems that – basically, you guys were at it for less than 24 months. Why did you decide to sell? Didn’t you guys think that it was a bit early? Didn’t you guys think that maybe the likes of Google were already interested that perhaps you could have raised more money and build a monster company?
Craig Walker: Yeah. It was interesting. Particularly after the Yahoo experience, Vincent and I had said, “Look. We’re not going to sell again. We’re loving this. We’re going to do this and build it into a massive company.” Probably the only one, the only company that would have enticed us to sell was Google. At the time, it was kind of like the little bit of 1) I knew Wesley. We really liked what we were doing, and if we didn’t sell, he still liked that space, so he was either going to build it or buy someone else. So, that was a little bit of a fear. Then the second piece was, Google really made it attractive in that they were going to let us run and launch this product inside of Google, and we did. We launched as Google Voice. As an entrepreneur, you think of like, “How can I reach 100 million users instantly?” How can the thing you created get in the hands of so many people at scale? Nothing gives you that opportunity more than a company like Google. So, that was ultimately the most attractive part about it. You can tell it worked out because we stayed at Yahoo for three months. We stayed at Google for three years. We really loved our time there, and still love that company. They invested in our new company. Rich Miner, the co-founder of Android is on our board. So, we still have a really close relationship with Google.
Alejandro: That’s amazing. This transaction was fantastic all around. You were talking about 20-something employees, 4 million invested, and I believe the Press report that it was a transaction estimated at 100 million. In under 24 months is really remarkable. It’s even more attractive now to myself and then also the listeners to say that I we have here the Father of Google Voice. Craig, just out of curiosity, how many people are using Google Voice today?
Craig Walker: It’s interesting. At the time I had left, we had tens of millions of users. For the longest time, Google didn’t put a lot of energy into it, but it was just another product that was out there. But it’s a crackup. Now, I have a daughter who’s a sophomore in college, and she was telling me that her professors at CU Boulder all had Google Voice number and they gave all their students their Google Voice numbers to them to get ahold of them. It’s just really interesting to see how many people have used it and how many people still are using it. I still run into people who tell me they were original GrandCentral users, and they still love their GrandCentral number. So, yes, we were able to launch it and launch it out to a lot of people.
Alejandro: I’ve heard as well that being in the Google environment and the caliber of people that you get to work with is remarkable. So, there, you have the opportunity to get even more insights on pattern recognition and talent. What have you learned about – now you’re at it again with your next company, and we’re going to be talking about it, but from a talent perspective, in terms of pattern recognition, what have you learned about people that are or could be remarkable?
Craig Walker: We had a really good team at Google Voice. We came in with 20 folks, and we probably added another 20 from inside Google. The Google engineers were just amazing. Our existing engineers were amazing as well, but the combination of the two of them was kind of magical. I guess what I’ve learned through all of this is that you want to work with really smart, hungry people, but humble, fair, honest, kind, good people. We were able to find those. When we left Google Voice and wanted to go start this, my two technical co-founders were both the engineering leads on the Google Voice team. One on the telephony side and one on the product side. Then our first handful of hires were either a former Google Voice folks or even former GrandCentral folks. So, I’d say as a startup or starting a company I think that’s such an advantage when you can start with talented people that you’ve worked with before. You know their judgment. You know their morals. You know their work ethic. You don’t have to worry about any of that stuff. You can just literally go execute. So, it’s probably easier said than done, but the thing I’ve learned is I only want to work with people like that.
Alejandro: Right. One thing that we were discussing is that at Google, you were obviously for a bit more time than the time you spent at Yahoo. So, we’re talking about three months at Yahoo and just almost 4 years at Google. But here you are, you have reportedly 150 million done in transactions. You’re working at one of the best companies in the world to work for. Then you come with a crazy idea of doing it again. What happened, Craig?
Craig Walker: What we realized was – this was 2008, 2009, 2010. We realized that the Cloud was coming. Amazon’s Cloud had launched in 2008. The iPhone was changing everything to do with mobile. The iPhone launched in 2008. We realized business is going to change, and it’s going to change to a much more mobile workforce. All this on-premise stuff is going to go away. We realized that once the on-premise stuff went away for email, documents, and calendars, that the idea of having a business phone system tied to a desk made no sense at all. So, we really started this massive enterprise voice market that’s somewhere between 50 and 100 billion dollars a year in size. We realized it was all going to move away from the Cisco’s and the vIOS of hardware and into the Cloud. So, what we wanted to do was build an enterprise version of Google Voice and really go after all those modern companies as they made the migration to Cloud and the opportunities. Truth be told, we wanted to do that internally at Google. Unfortunately, right around that time, 2010, Google got really obsessed with Facebook and pulled all these teams into working on their social network project, GooglePlus, and we weren’t very interested in working on the social network stuff, so we decided that was the last straw to go and continue working on voice over IP and the next gen of it. This time, instead of focusing on consumers, really focusing on these modern businesses that were moving to the Cloud for things like Salesforce, CRM, email, and docs, and using things like Dropbox and Box. That’s when it just became really clear to us that was the future, and we wanted to work on the voice side of that.
Alejandro: Got it, and you guys have remarkable products here. You have Dialpad Voice. You have UberConference which I’ve used myself, and it’s really fantastic. Dialpad Call Center. How much capital have you guys raised for this because I would imagine that now that this is your third time at it, incredible domain expertise, people were probably throwing money at you?
Craig Walker: Fundraising is never as easy as it sounds even when it’s relatively easy. We were lucky in that we started the company. I’d gone to Google Ventures as an EIR and Bill Maris was running Google Ventures at the time. Wesley Chan, the guy who did our acquisition, was one of the founding partners there. They knew us really well, and they funded our Series A even before we had a real set plan of exactly what we were going to do which to their credit was great. It gave us a lot of freedom to explore and try things. But then we raised our Series B from Andreessen Horowitz, and that came from an introduction from Google Ventures to Marc Andreessen. Marc has a thesis that software is going to eat the world, and these on-premise phone systems are things that are eaten by software. That was a real natural fit. But to date, we’ve done four rounds of financing. We’ve raised 120 million dollars. We’ve spent less than 60, so we have more than half of that in the bank. I think that’s a testament for having gone through those real lean times in 2001 to 2005. We were just really frugal with our cash. As I mentioned earlier, we treat our cash like oxygen, and you never want to get rid of your oxygen. Yeah, we’ve been able to raise money relatively easily, but fundraising is still always a process that generally isn’t a very fun distraction for business.
Alejandro: I hear you. Man, it’s interesting because it seems like here you guys went to literally the Hall of Fame. You were eluding to it. Andreessen Horowitz, Google Ventures, Felicis Ventures, SoftBank, Iconiq Capital. This is the family of I think Mark Zuckerberg is in there. Right?
Craig Walker: Yeah. It’s Mark Zuckerberg, Sheryl Sandberg, Jack Dorsey, and a few others.
Alejandro: Really, really cool. One question that came to mind is you have these people that in all these VCs that back hypergrowth companies, and in many instances, institutional investors like VCs, they are like growth above everything else. How do you balance this? How do you go about growth versus profit, especially when it’s about controlling your own destiny when you have people like this?
Craig Walker: Yeah. I think when we were talking about lessons that I had learned as a lawyer in pattern recognition, you see I didn’t want to be one of those CEOs who just burns cash to just drive topline if it’s super inefficient. So, luckily, I tell you Rich Miner from Google’s on our board, Marc Andreessen’s on our board, Will Griffith from Iconiq is on our board. Wesley Chan is now a partner at Felicis. He’s a board observer. John Kim from Amasia is on our board. So, we have this great board, and they’ve given us a lot of freedom to run the business the way we think the business should be run. We’ve continued to make investments in the platform so we can provide service anywhere in the world. We’ve continued to make investments in different products. You mentioned UberConference and Dialpad and our Call Center products. But they haven’t been forcing us or pushing us to get irrational. They’ve been really, really sane and rational investors and great partners. Again, when we talked earlier about as a founder/CEO, you have your hand on the throttle. You have to decide when the market conditions are right to really put on your gas, and when you have to throttle back. I look at the market now that it’s obvious that businesses are moving to the Cloud. It’s a question of when; not if. I think we have the best products out there to help them do that, and now we’ve got artificial intelligence to all of our products. If you’re in a call center, your agents can get coached on the right answers in the middle of a call, which is pretty amazing. I think now we’re in position to put a little more gas on the fire and really push the advantages that we have, but frankly, I wouldn’t have done that a year ago. I’m doing it now because I see our artificial intelligence just being a really big differentiator in a really good market.
Alejandro: Got it. You have all these different products. So, for the folks that are listening, what does the business model of Dialpad look like?
Craig Walker: It’s a subscription-based SaaS business, but it replaces a business’ phone-to-phone. It’s PBX. It replaces a business’ call center. It provides a dialing solution for their sales teams. For your BDR functions, it will place a ton of outbound calls. Across all those, it gives you real-time artificial intelligence. So, we acquired a company called TalkIQ last April. They were also built in Google Cloud. Their CEO was really good friends with one of my co-founders at Google. It was just a real natural fit, but what that means is if I’m on a business call or if I’m with a sales rep, that artificial intelligence is listening in real time. I’m getting a transcription of my conversation on the screen in real time. If the customer or the prospect has an objection or asks about a competitor, it will pop up on the screen how to answer that objection or how to talk about that competitor. It really is dynamically changing how business conversation should go. Five years from now, every business conversation will be that way, but having made this acquisition, we’re the only ones who can do it today.
Alejandro: Got it. I wanted to ask you here, in a future in which you have fully realized the vision for Dialpad, what would that future look like?
Craig Walker: That future would be UberConfernce, Dialpad, Dialpad Support, and Dialpad Cell all tied together with the artificial intelligence across all of them. If you think of what’s the last offline data set, it’s these conversations you’re having with your customers or with your prospects. Emails can be captured and analyzed. Chats can be captured and analyzed, but the vast majority of the interactions are voice interactions. Today, those just kind of go in the ether in like all you get are the notes that the reps take and potentially enter into the Salesforce. With Dialpad, every single one of those conversations is turned into text, and that is stored into Salesforce and stored into Zendesk. It’s stored wherever you want. Then you can go back, and you can search, or you can get on another call, and you can go review the action items in the prior call. You can go to a search. Go back to your analytics and say, “Over the last six months, how many times was this competitor mentioned?” It literally allows it to be the Google of the spoken word. Let’s you search and find great insights about your business that currently today you don’t have.
Alejandro: Really cool. After being involved, you were talking about the investors that you have, the board members that you have, which is remarkable. What would you say, and especially for the people that are listening and that maybe are thinking about raising a round, what are the top traits that makes an investor incredible?
Craig Walker: It’s interesting. Every time I’ve gone fundraising, and I’ve gone fundraising a lot. I did it for GrandCentral. I’ve done four rounds for Dialpad. I did it at Dialpad 1. Every time you talk to investors, I’m always looking for kind of that spark. A lot of times you’ll go in there and there will be – they just won’t get it, or they don’t see the vision, or they want to talk and go really super, super deep into the numbers and projections and things that are really hard to quantify because as you know, when you’re starting a company, your projections of what’s going to happen are probably wildly different from what’s actually going to happen, but no one knows. So, I’m always looking for that connection of “This guy gets it. He believes in this vision. We’ll go on this journey together.” I’d say probably the two best fits for that: Wesley Chan, who now is at Felicis because he and I have shared this vision since he acquired GrandCentral in 2007. Marc Andreessen was the second. I had never met Marc Andreessen before. We had given a bunch of pitches to people. Half of them got it, and half of them didn’t. But talking to Marc, it was like he was finishing my sentences. He had been on the board of Skype. He totally understood voice over IP and how that is a software-based solution that’s going to completely disrupt this massive, massive voice and communication’s market. That just gave me absolute confidence that he was the right partner. We had multiple alternatives, and it was a pretty easy choice to choose Marc and Andreessen Horowitz.
Alejandro: Got it. All of these rodeos, Craig, that you’ve had. So many times that you’ve been at the trench really pulling things and making things happen with all of your different companies. One of the things that I always ask guests on the show, and I want to ask you the same question given your background and track record is, if you had the opportunity to go back in time and talk to your younger self and be able to give that younger self one piece of business advice before launching a venture, what would that be and why?
Craig Walker: That’s a great question. Let me think about that. There are a lot of times where you’re not going to have the answers, and you’ve just got to be true to your core beliefs. My core beliefs are in all circumstances we should do what’s right for the customer. Let’s always take everything from the customer’s perspective first. Then from there, you go to your values of the company like how do you treat your employees and let those drive your decisions? I think like trusting your gut when you don’t have all the data – I’ve done a pretty good job of it, but there have been times in my career where – you know. You can get talked into things or things that don’t feel completely natural, but you do them because someone else has a really good argument on why to do it. I’d say more than anything, just trust yourself because, at the end of the day, you are ultimately responsible for it. Being a CEO is a lonely job even though you have co-founders and you have really good friends and people you trust. At the end of the day, the decision lies with you, and the outcome is your responsibility. So, I’d say, just trust yourself more. I remember reading a comment from Andrew Mason when he left Groupon. It was in his letter to his employees as he was leaving, and it really struck a note. It was a final comment of, “I wish in some cases where I didn’t have all the data, I had just stuck to my gut and just done what I knew was the right thing to do.” I think that’s sometimes a really hard thing to do because you have different opinions and people telling you why you should do other things. So, that would be one piece of advice I’d tell my earlier self to trust yourself and stick to it.
Alejandro: Very powerful, Craig. For the people that are listening, what is the best way for them to reach out and say hi?
Craig Walker: cwalker123 on Twitter; cwalker123 on LinkedIn; if you want to shoot me an email: firstname.lastname@example.org.
Alejandro: Amazing. Craig, thank you so much for being on the DealMakers show today.
Craig Walker: Yeah. Thank you. It’s been great.
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