Jason Tan On Raising $100 Million To Make The Internet Safer

Jason Tan is the CEO and co-founder of Sift, a San Francisco-based technology company that fights online fraud with large-scale machine learning. The company has raised over $100 million from top tier investors like Andreessen Horowitz, First Round Capital, Founder Collective, Union Square Ventures, and Spark Capital.

In this episode you will learn:

Structuring company culture in a global company
How to handle the dark days and depression as an entrepreneur
The Leaders in Tech program in Silicon Valley
Rotating employees and executives as you grow
How to get in touch with Jason Tan

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About Jason Tan:

Jason Tan is the CEO and co-founder of Sift, a San Francisco-based technology company that fights online fraud with large-scale machine learning.

With the belief that trust and safety are fundamental to every online interaction, Jason Tan aims to help companies navigate the fine balance between growing revenue and protecting their business, all while delivering exceptional customer experiences.

As both an engineer and an entrepreneur Jason Tan is passionate about creativity and great products, with a firm dedication to building strong teams of amazing people.

Jason Tan believes we are constantly learning, whether from books, people or the experiences around us, and is always challenging himself and the Sift team to do and be better.

Since co-founding Sift in 2011, Jason Tan has led the company to $106.6M in funding, with customers including Twitter, Airbnb, and Twilio.

Connect with Jason Tan:

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we’re going to have a very interesting guest. We’re going to be touching on very important subjects: scaling, building, raising, also depression, and personal transformation, too. Without further ado, I’d like to welcome our guest today. Jason Tan, welcome to the show.

Jason Tan: Hey, Alejandro. Thanks for having me. I’m excited to be here.

Alejandro: Jason, you were born in Taipei, Taiwan. You actually grew up in Asia, so tell us about those years.

Jason Tan: Yeah. I guess the first 12 years of my childhood were all over Asia, Taiwan, Japan, and Singapore, which I would say it’s an interesting connection between the three. I appreciate that as an immigrant to the United States, I was able to build a more global perspective in my early years of life. My parents were very insistent on taking us to different countries and wanting to help us build a diverse world view. It was fun to see different cultures and try different foods and be in different worlds apart from our own so that I could be more appreciative of how we’re all connected, but also very different.

Alejandro: Absolutely. Obviously, you came to the U.S. to Seattle when you were 12. You were already quite aware, and you had the background, as well, from having been born and raised in Asia. Was it a big culture shock for you?

Jason Tan: Yeah. I still remember, in 1997, when we moved to Seattle, Washington. We moved to a suburb called Mercer Island. Coming from Singapore, which is a country of a few million people packed into an island that’s less than 30 miles wide — it’s basically a Manhattan of Southeast Asia. Coming from Singapore to Mercer Island was hard. At night, my first week living on Mercer Island, I couldn’t even sleep. There was not enough noise at night to make things feel normal. It was too quiet. I struggled to adapt in that way. Then over the next few years, as an immigrant, there’s always an element of struggling to belong. I had a bit more of an accent. I didn’t understand some of the pop culture norms and stories. It was a bit of a journey to find my comfort in myself.

Alejandro: What was the trigger? What was the thing that got you to come to the U.S.?

Jason Tan: My dad wanted to give us the best possible education. His belief is that one thing that America does so well in its education system is to encourage innovative, creative, bold thinking. He wanted us to experience that because he had experienced it himself going to the University of Wisconsin, MIT for Business School.

Alejandro: And you took this to the next level, and you dropped out of high school. What happened there, Jason?

Jason Tan: Yeah. In 2002, I had a unique opportunity to participate in an emerging program in the University of Washington, Seattle, called The Academy for Young Scholars. It’s kind of pretentious sounding, but it’s run by good people. They had sent out letters inviting students from around the state of Washington to potentially drop out of high school after their Sophomore year and join the University of Washington as a full student, no strings attached. This was the very first year of the program, so they were looking for some guinea pigs to try this on. After some consideration, I was excited to see what this journey would bring, even though I think in my head I had been much more intense on going to a school like Stanford, or MIT, or Harvard. Yet, this opportunity seemed unique. So, I took a chance, and it’s one of the best things I ever did.

Alejandro: Obviously, being in college at 16, I’m sure that also adds a tremendous amount of pressure. I’m sure you got some really good lessons as to how to deal with pressure.

Jason Tan: Yeah. Being 16 in college, I never felt like I was behind academically. I think I did really well there. That’s something I give credit to my parents for, teaching me how to study, how to prioritize my time, how to work hard. I felt a lot of pressure in terms of the social dynamics. There are a lot of kids at college who are older than me. I was two years younger than the average person. It was not easy for me to break out of my circle of friends who had also done the same program as me.

Alejandro: Got it. You graduated from the university and got your computer science degree at 20 years old, which is amazing. I know that you did your interviews, and probably, there was not a lot of luck. So, what happened there, Jason?

Jason Tan: Yeah. Coming out of college at 20, I was really intense on trying to work at one of the brand name technology companies: Google, Microsoft, Amazon, Facebook. One of the challenges for me when interviewing for a software engineering job is that I get super nervous, and I’m unable to think that clearly. Often, in these software engineering interviews, you’re asked to solve problems on the whiteboard in real-time. I just don’t perform well under that kind of pressure. I bombed all the interviews with these big tech companies and didn’t get any offers. It was a dark moment. I was actually ashamed and embarrassed, and it was hard for me to talk about this with my parents. But out of that process, one of the memorable experiences happened in that this small startup, called Zillow, reached out, and I interviewed with them. They were 60 people at the time headquartered in Seattle, Washington. A friend of mine had interned there the previous summer. I interviewed with them and didn’t feel a lot of pressure in the interview because I didn’t know who they were. I didn’t know anything about startups in 2006. Startups were not part of the culture in Seattle back then. I was very lucky to go through this interview at Zillow that didn’t have too much pressure attached to it. I was able to get an offer, and that started my journey into this awesome world of startups.

Alejandro: In this case, Zillow is a rocket ship. You were joining there when there were 60, and now, the rest is history. What does a rocket ship like that look like, especially when there are 60 employees, and you’re experiencing that explosive growth?

Jason Tan: Yeah. I was also very lucky to learn from people who had done it before. Rich Barton, the co-founder and then CEO and also now CEO took over the reins again a few years ago. Rich had co-founded Expedia and led Expedia before starting Zillow. He was a seasoned entrepreneur and a seasoned leader. I think that also drove a lot of my education into how to build culture, how to build a company and scale. One thing that I look back on and admire Rich for doing was building with Lloyd Frink, the other co-founder. They invested early in a great management team. In my own journey of building Sift from the last eight-and-a-half years, I understand why that is so critical to get right.

Alejandro: Yeah. Interesting. In Zillow, you were doing a very good job, and you were getting promotions and being acknowledged. Then, all of a sudden, the unfortunate event of having to go through a run of layoff is something that affected you. I’m sure that coming out of college where you graduated at 20, joining a startup that was booming, you felt on top of the world. Then, all of a sudden, this happened. How did you deal with that?

Jason Tan: Just for background, there was a combination of events that drove my ego to an unhealthy proportion. Graduating at 20 and at Zillow, they would give me a bonus every six months, and that happened for almost three years. I thought that I could do no harm and that the world revolved around me. I started making unreasonable demands of the business to invest in my career. If I look back on that version of Jason today, and if that version of Jason was working at Sift, my company, he would have been managed out in a heartbeat. So, I’m deeply appreciative to the Zillow management team for putting up with my bull**** as much as they did and trying to work with me because I wouldn’t have had that patience today. In 2008, the economic crash happened, and Zillow laid off roughly 30% of their workforce, and I was part of that layoff. It was a painful moment, but really, really important for my personal growth and career growth because it woke me up to the value and the criticality of working hard, staying humble, and not feeling entitled to anything.

Alejandro: Then, what happened next? What happened after Zillow?

Jason Tan: I tried to get a job at one of these big tech companies, again: Google, Facebook, Amazon, and Microsoft and failed again because I **** at those types of interviews. So, I was lucky, though, to become the first employee at a venture-backed startup in Seattle called Optify. I was the first engineer there. I helped build a lot of their early systems and built a lot of the early team. Then 18 months in, I had another opportunity to become the CTO of a startup with a college friend of mine. We started this thing called BuzzLabs. That was an eight-person team in the social media sentiment analysis space. We were acqui-hired in early 2011 by Interactive Corp., a big multimedia conglomerate. Then a few months later, after that in 2011, moved down to San Francisco to help start Sift.

Alejandro: Very cool. Tell us about Sift. How did you incubate the idea, and how did you bring it to life? What was that process like?

Jason Tan: My co-founder, Branden, and I were very lucky to go through this startup incubator program called YCombinator, here in the Valley. In the process of going through the YCombinator boot camp, we had the hypothesis that machine learning was going to disrupt a lot of industries. We, ironically, were a solution in search of a problem. We didn’t know what problem we wanted to solve, but we knew that there was something we needed to build if we could find the right problem to solve. We asked a bunch of our friends, “What are some problems that your business needs help with?” Oftentimes, they would talk about fraud. We didn’t know anything about fraud at the time. I didn’t even know what chargeback was. I had to go research that. But as we dove into the space and did more digging, it seemed like the status quo incumbent solutions were not innovating whatsoever. These were often legacy Google-space systems that were highly reactive, unscalable, difficult to maintain, and were not ready to work at today’s scale at the internet, especially on multiple devices. That seemed like a great opportunity for us to come in and modernize and democratize this industry. If you look at how Amazon, Google, Facebook, and Microsoft build their own internal systems to solve these problems around protecting themselves against bad actors and driving trust with their end-users, it’s all powered by large-scale real-time machine learning. That was, for us, the interesting insight of: could we help make that type of technology accessible to everyone else that isn’t one of these powerful tech giants.

Alejandro: What kind of an impact did YCombinator have for you guys in the before, and then also after you graduated?

Jason Tan: I think YCombinator is just so good at creating a culture of focus and ruthless prioritization. I think in the earliest years of a startup, especially as a first-time founder, I felt overwhelmed by all the things that we could do or think about. There are a lot of distractions that come our way. I think YCombinator instills the right mindset on what matters most, which is finding a real problem to solve and making a solution that helps the people suffering from the problem. As simple as that sounds, it’s hard to practice. When we were going to the YCombinator boot camp, they surround all the founders with this mindset, and it becomes infectious, and we’re all laser-focused on their model of being laser-focused on trying to build something that people want. By the end of the summer, for us, we had zoned in on the problem a lot more and were starting to come up with a solution that seemed to have some promise. Then, also, through YC, we were able to meet a great set of angel investors for our seed round. Max Levchin, the ex-co-founder and CTO of PayPal, a very successful entrepreneur in his own right, was a guest speaker at one of the YCombinator dinners. He ended up leading our seed round in 2011. He had a personal interest in what we did because one of Max’s many accomplishments is that he built the anti-fraud systems at PayPal, which was so critical to PayPal’s success and helped PayPal survive all the abuse and fraud when its competitors couldn’t.

Alejandro: Very cool. In this case, how much capital have you guys raised to date?

Jason Tan: We’ve raised about 106 million dollars.

Alejandro: What ended up being the business model? What’s the business model of Sift, so that the people that are listening get it?

Jason Tan: We’re a typical B2B SaaS business. You subscribe to the Sift service. We typically build on transaction events. Whenever one of our customers has a transaction occurring on their service, we charge x-number of cents per transaction. We like this model because it aligns incentives. We grow with our customers, so we have a strong net-dollar of attention numbers. It’s a win-win.

Alejandro: You were talking about Max Levchin, co-founder of PayPal. Incredible, as well as the other investors. I’ve seen that you have people like Union Square Ventures, Spark Capital, so fantastic investors. How has the experience been over time, because you guys have done different rounds? I see all the way up to a D round. What has been the experience and the different expectations that you have been encountering?

Jason Tan: Great question. I would say that with each new round of fundraising, it becomes more and more about the numbers and the results. I think in the first round of funding, the seed round, it’s a vision and a dream at that point and a team. There’s nothing else. There’s not much more to show. In a Series D, for example, there’s a lot more data and track record of execution. In my experience, investors are a lot more analytical in the later rounds of fundraising. They’re just trying to draw trend lines based on your past performance to understand where you’re going. Yes, the story still matters, and there’s more expectation around the maturity execution business.

Alejandro: Got it. How did you go about building the team? What did that look like? Once you had your co-founder, you guys were clear about the approach, you got the money in from those angels, and coming out of YC, what did the picture of building the team and the process look like? How did you guys go about that?

Jason Tan: Branden and I were both software engineers. We were actually college roommates at the University of Washington. We were both in computer science. I think from day one, the DNA of the company was rooted in engineering and product and technology. The first ten people we hired were all software engineers. A lot of them, we had previously worked with. There’s often talk about how the first ten people set the ton for the rest of the company’s history. I believe that to be true in my experience. Today, we are roughly 200 people, and more than half of that is sales and marketing. The sales and marketing team adds incredible value, and yet, I think we are still at our core, a technology-led business. I think what we are often known for in the industry is the strength of our product and technology. I trace that back to how we were founded in 2011 and the first ten people we hired. In my journey, too, I would say that I think this is maybe a lesson for other engineering-driven founders where I did not appreciate enough how critical sales and marketing is to building a successful business. I wish I had studied that sooner and invested more in that earlier. I had the fallacy and the wrong belief that if we build a great product, it will sell itself. That’s usually not true. Having great people to help tell our story in a way that’s differentiated and compelling, and having those conversations with people because at the end of the day, people buy from people. That’s it. I’ve come to appreciate that truism, so there’s no shortcut to that. You have to have sales and marketing folks to drive those relationships.

Alejandro: Absolutely. How many folks do you have today? How many employees?

Jason Tan: Just about 200 people. We are headquartered in San Francisco. We also have an engineering office in Seattle; a sales office in Phoenix, Arizona; a sales office in Dublin, Ireland; and a few folks sprinkled elsewhere.

Alejandro: Very cool. So how do you go about culture with all these different offices?

Jason Tan: To be honest, we’re figuring it out. I think scaling culture globally is a new puzzle for me, and I’m excited to take a crack at it. I use this framework that was given to me by the Academy. Federal, state, and local, where I think not just culture, but everything in the business needs to be appropriately scoped. Some things need to be set at the federal level, and other things can and should be set at the state or local level. With culture, I think that’s the same thing. We have five core values at the company that everyone is trained on, and we try to champion and live by. But then, I appreciate that the Dublin office is going to have its own derivative of the core values, and that’s okay because I think we need to adapt to the local and specific situation dynamics.

Alejandro: Got it. Very, very cool. When it comes to the journey of being an entrepreneur, it’s quite a journey, it’s remarkable, and it’s also mentally very challenging too. Not long ago, I published a piece on Why Entrepreneurship Involves Depression (And How To Overcome It). In this case, I know that from 2014 to 2017, this is something that you experienced firsthand, Jason. Maybe you can give us some insights into that.

Jason Tan: This is something I’m really passionate about. I think that we don’t talk enough in the community about mental health, and it often got stigmas. Some things are changing. I’m happy to see some athletes and celebrities starting to open up more about it. I think we still have a long way to go. This journey of being a founder is so tough. I don’t think we are equipped with the tools and the resources and vocabulary — I wasn’t equipped, at least to be open about my struggles and to feel comfortable about sharing that and to even understand what I was going through and to be in tune with my emotions and how I was feeling. My armchair psychology is that if we don’t talk about how we’re feeling, over time, that compounds into depression. We are all human. We all have feelings, and that’s okay. We need to get better about creating space for others to share how they really feel and honoring those feelings. That’s where the connection and the love and the support really happens is when we can truly be open and vulnerable about what’s going on. But especially in Silicon Valley, there’s often a culture of “fake it, so you make it.” In my experience, there’s a lot of masks that we’re wearing. I wore that mask, too, because everyone else was. I think that’s part of what held me back from telling people how I really felt, and then I got really depressed from 2014 to 2017. Yet, even though I was depressed, I was very good at hiding that from myself and hiding that from other people. For me, there was a big expectation that I need to carry myself a certain way at the office. I need to be a “professional,” and I need to be a CEO. That often has a certain image that we’re trained to believe on how that should look. I’m hopeful that we can change that. I’m hopeful that we can be a lot more human and open-hearted with work and leadership.

Alejandro: So that we pour out a little bit more of the civility, for example, what you experienced; you know about this. Is depression like being unexcited about the future, or how would you define it?

Jason Tan: Good question. Depression, for me, what I do remember most vividly was that oftentimes, on the weekends, I would come home from work on Friday, and I wouldn’t want to leave my room. I would just stay in my room the whole weekend and not want to see anyone. People would invite me out to things, but I’d always find an excuse not to join them. I don’t want this to be a pity-party for myself, but it’s more that’s what was going on for me, and I was unexcited to connect with other people. I was unexcited to be social and experience life more fully. What was driving that was that I was very disconnected from myself. I didn’t feel like I had a lot of support, even though, I’m sure, that my family and friends, had I had the courage to be more vulnerable about what was going on for me, and had I had more of the tools and vocabulary to talk about what was going on, I’m confident that they would have supported me all the way through. But I didn’t even know where to start.

Alejandro: It’s like they say, “You don’t know what you don’t know.” Probably, you didn’t know at that time that was there for you. What was that breakthrough moment for you?

Jason Tan: I’ve been very lucky in the last two years to participate in this program called “Leaders In Tech.” It’s a nonprofit organization, here in Silicon Valley, that’s just getting started. It takes a lot of the concepts taught in the Stanford Business School class called “Touchy Feely,” and this business school class has a legendary following. Stanford Business School students typically rate it as one of the most impactful courses of their time at USB. I didn’t take the class. I haven’t been to business school, but the instructor that popularized it and taught it for 30 years, Carole Robin, left Stanford USB and started the “Leaders In Tech” program. Her vision alongside Joe and Sue is to try to build more open-hearted, vulnerable leadership cultures in Silicon Valley by starting with the leaders at the very top. Some other founders, CEOs, and I have been going to this vigorous training and workshops and sessions where we learn how to talk about how we feel. I think at Silicon Valley, we are hyper-intellectual. We love to think big. We love to solve problems. We love to be analytical. We need to add to the mix something for the heart. It’s really the head and the heart. It’s not the head or the heart. We need both to succeed. That was a breakthrough for me, was being equipped with the tools and the vocabulary to discuss what was going on for me and being vulnerable.

Alejandro: This is super powerful, Jason. Thank you for sharing this. Going back now to Sift, I know that for you, evolving the leadership team has been a big one. When you go through different phases, different cycles as a business, also the people need to adjust. There are different challenges that perhaps require different skill sets. How has this transition been for you guys?

Jason Tan: Yeah, it’s been really tough, honestly. We hired a bunch of great executives four or five years ago that came in and did a stellar job with helping the business grow. I think the unfortunate and ironic price of success is that sometimes that new complexity, that new stage is no longer a mutual fit. It’s a really painful process to say goodbye. That was for me an experience, because I’m fiercely loyal, and I appreciate those who took a chance on us early and invested their careers in Sift. It’s unfortunate, but I guess that’s how things work sometimes. So, for the last two years, we’ve been going through an extensive overhaul of our management team. One thing I do think about is that we often sometimes judge the exiting person as worse than the person that comes in to fill their shoes, but I think this should change. I think that it’s only because time is veneer and moves forward that this dynamic is happening. We need to give credit that the opposite is also true that oftentimes, the executives that come in at a later stage of business are not the right fit for the earlier stage of business. They each require different skill sets. The skill sets are not better or worse; it’s just all part of the journey. I’m very grateful to those who have worked for us, and I’m also really excited about the executive team we have in place now to help us get through this next stage of growth.

Alejandro: Got it. On the journey of realizing this vision for Sift, let’s say, Jason, that you go to sleep, and you wake up five years later. Imagine it’s like an amazing snooze. You wake up in a world where the vision of Sift is fully realized. What does that world look like?

Jason Tan: At Sift, our mission is to help everyone trust the internet. This is something that I see more and more in the headlines. There’s a risk that this isn’t happening. I think that we’re often raising our children and coaching our grandparents to be default skeptical of everything they read online, default skeptical of who they interact with. There’s no trust, or there’s very little trust these days, and that pains my heart. I think that at least one of the principles in America is innocent until proven guilty. I would love to see more of that world on the internet. For us, we’re on a mission to help everyone trust the internet all around the world so that we can achieve our full potential for what the internet has promised to do, which was to break down barriers and level the playing field and connect anyone everywhere. If we don’t have that trust, it’s not going to happen. Five, 10, 20 years from now, that’s going to be the thing that gets us up in the morning is helping everyone trust it.

Alejandro: Very cool. One of the questions, Jason, that I typically ask the guests that come on the show is, knowing what you know now — it’s an amazing journey, the ones that you guys have had with Sift. We’re talking about nine years pushing this forward from nothing to what you guys have created, which is remarkable. If you had that chance to have a chat with your younger self, perhaps that younger Jason that was thinking about launching a business, what would be that one piece of business advice that you would give to your younger self knowing what you know now, and why before launching a business?

Jason Tan: The advice I would give myself is not really business advice, but I think it has such huge impact on the business. My advice would be to look within and do the hard work of understanding myself, understanding my motivations, understanding my triggers, and trying to increase my self-awareness and consciousness. I think when I look back eight years ago, I often made decisions back then more from a place of fear and ego. These days, I’m still not perfect, but I try to do things more today from a place of love and compassion. It’s easier said than done, but I think that has really served me, and it served the business and served those around me to operate from that place.

Alejandro: When you’re doing that, let’s say that you’re looking deep or someone is looking deep within themselves, maybe like the folks that are listening to understand those motivations and where they’re coming from, is there a specific exercise? Is it taking a walk? Is it meditating, or how are you able to connect with yourself to understand what those motivations are?

Jason Tan: I would give a couple of pieces of advice on this. One is to not underestimate the value of therapy or something like that. I think therapy often has a stigma of “It’s only for crazy people,” or whatever that stereotype is. I think that’s really unhealthy. We’re all humans. We all have baggage from whatever has happened to us, and that’s okay. We all deserve to get support, and therapy is an incredible vehicle to help unpack what’s happened to us. The second thing, for me, has been surrounding myself with people that are willing to give me feedback. There’s always the risk of those around you just want to tell you what you want to hear. For me, it’s pushing people to tell it to me straight. The critical thing to make that happen is to not get defensive when people tell you what you don’t want to hear, which is really hard. But practicing that mindset of, “This is all coming from a place of love and support, and this is in the interest of helping me be my best self and not being too self-critical and judgmental about the things I need to work on. That has helped me in my journey.

Alejandro: Very profound, Jason. Very profound. Thank you for sharing that. For the folks that are listening, what is the best way for them to reach out and say hi?

Jason Tan: My email is ja***@si**.com. I’m passionate about a lot that we talked about, so I’d love to help in whatever way I can to connect with those who need help.

Alejandro: Amazing. Jason, thank you so much for being on the DealMakers show today.

Jason Tan: Thank you, Alejandro. This was a pleasure.

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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 al*******@pa**************.com.

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