Jack Altman & Miles Grimshaw - Building and Investing in Lattice - [Invest Like the Best, EP.345]

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0:25 Operate smarter and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule a demo at ridgeline.ai. Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at joincolosis.com.

1:00 Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast. Guests today are Jack Altman and Miles Grimshawk.

1:35 Jack is the co-founder and CEO of Lattice, an HR software platform. Miles is a general partner at Benchmark, an early investor and board director at Lattice, as well as a former guest on the show. Jack started Lattice in 2015 and has scaled it to a multi-billion dollar business that already serves over 5,000 organizations. In our discussion, we look at all aspects of building and scaling a software business from both an investor and operators perspective, which made this particularly fun to do. Please enjoy my conversation with Jack Altman and Miles Grimshaw.

2:08 I would love to know when and where you guys first met because this is experimental format. I've never done a conversation with a very early investor and founder in a company that's grown to this scale that have been together since the beginning. So hearing about how and where you met would actually be quite interesting. It was two thousand fifteen, I guess. Was you know in the middle of Y C, which is like frenzy time as a founder where Meeting a gajillion investors and all these things. But I actually remember then, and I said this to you, I think even at the time or years later, but like I didn't want to say it at the time because it was kind of overly flattering. But I was twenty six at the time, you must have been twenty five.

2:41 And just talking to him in the depth at that age. And I was young too, but I was like, oh, this is such a young guy. And he's talking at such depth about the business. And I was at a part of my journey where I was just consuming every podcast and blog and whatever. And I was actually very deep on listening to Bill Gurley at the time and I was like, Miles is gonna be future Bill Gurley, and now here we are benchmark. But I remember just even in the midst of like this crazy Y C thing, Miles at the time was just so much deeper and forward thinking versus just

3:09 What's the deal, what's the terms, what's the traction, he was really thinking about it in a different way. Why were you interested in business in the first place? Going all the way back, I don't know, but when I first came into tech, I moved out to California in, I guess, twenty thirteen to join this e-commerce company called Teespring at the time. And I just got there and I was immediately obsessed. I was a big video gamer as a kid and it's just like this adult video game. That's always how I've felt about it. Do you have through all this, and I know you do a lot of investing too, which kinda makes you unique.

3:38 a set of deeply held beliefs about business, like what makes for good business. If there's one view of mine that has somewhat changed, I think Miles, you probably share this. I've probably come to more believe than I used to that The market is the dominant variable in the whole equation. There are always moves you can make and you can take your product from wherever you start to something adjacent. And I think that's like something.

4:00 We've talked about a lot in the context of lattice because we've made all these moves. But The more time I've spent, the more I just think rate markets are a dominant variable in a lot of these equations. And just being in a space where there's good blue ocean, where there's depth to the market where there's a change in the market, those factors just beat out so many other things. What's a good example of a felt sense of that, whether that's with Lattice or a company you invested in, there's this great

4:24 Jensen Huang line that he likes zero billion dollar markets better than ten billion dollar markets,'cause the market will grow and then it's a great. Same thing, but he'd prefer it not be a thing to start. Put like a little bit more flesh on the observation. Gladys is an example that's just easy to speak to for me. There has always been huge category for HR software. Every company needs some set of semi char tools.

4:46 And so then it's like Latti comes onto the scene in twenty sixteen. Why is there any right to exist? People have been doing performance. They've done be able to solve this already. Yeah, exactly. It's been done twice, once on prem, once in the cloud. What are we doing here? Yeah, we're done. Until AI. Exactly. And then that saved us all. We had this moment in twenty sixteen where there was a zero billion dollar market, but it was subtle, but it was very real, which was that HR teams wanted to do performance management differently, and just the sentiment of what the best practice was for talent management just changed. And basically performance reviews, people were so sick of them by 2012.

5:20 Everybody just stopped. Doing them. There was just like this revolt against performance reviews. You see all these big companies like Goldman and Adobe, and a bunch were just like, we're not gonna do anything. People then realize that that's chaos and doesn't work. And then people were like, Oh, there's actually this other way. But it was like a small early group of HR practitioners who were championing this new format, which is what Lattice was built for. And we served that and There was some luck to it, but it just grew and that became the real default. Small markets growing.

5:48 I think about that a lot. When investing and that's actually what I Personally thought when we first started. Partnering was The mid market

5:56 Was sort of sneaky. Big And was far less served. With Software.

6:03 than we might imagine. Really good top down sold software, right? So you had work day. Right, two thousand and four something company, but it's like for big companies. For the function. And then you had like dinky point solutions. If you were a tiny team, you technically needed to do something, but not robustly. And as you looked at a bunch of these categories,

6:24 there was not really anything good for fifty to two thousand. Like if you weren't gonna be at work day or Nestree or whatever, like you didn't really have Anything amazing. So I think that You want the small markets that are growing in part because you can't chew off that much as a start up anyway. And so better you chew off all of a small piece.

6:42 retain the customers then more of the next piece that unlocks each year. And by the time the market looks big You've got a lot of it. Hopefully. In this case the Opportunity for mid market for fifty to two thousand, let's call it person companies, to say we're not sophisticated enough to need the dominant market.

6:59 Adult solution. It's a serious need. That was the spot in some sense, yeah. Brex did that in finance and Oh rampant. Should have done it in more places.

7:08 How did you first come across this group of people that wanted to do this thing in a certain way. Was this an idea you had and then you like you went searching for people that agreed, or was this like an idea that came from Conversations and if so, like why were you having those conversations in the first place? Yeah, it came from building the wrong product first.

7:25 thereby building relationships and getting in deep with these customers who then told us about this other problem. So we built this like okay our software tool, which is what we first hypothesized was gonna be a big need. Which turns out is a big problem. Software is just not a great solution to that problem. So it goes. But we became

7:42 close to a bunch of users who were trying to make that work with us. And then we sort of learned about it through that. Is there a most important or memorable single conversation that you had at that stage of the business that stands out in your memory? Yeah. There is actually. We had this Customer.

7:58 where the CEO of the company it wasn't a huge company, it was probably a hundred person company. CEO was a friend. The CEO was helping lead us down. This wrong path of OKRs and saying we really need to do this. I gotta get my company aligned around goals. This is how we're just gonna like operate the whole business. And then I was in implementation work on the thing with his HR person. And I could just feel that she was just

8:20 This is hard, people don't wanna do it. I'm not sure it's really gonna work. We'll give it a try because our CEO said so. But really if you had this performance review thing. I would pay you right now if you could just give it to me Monday. We need to launch this. It's chaos. The system we're using isn't great and I just need something. And we were like, wait, you would pay like what?

8:38 And she's like, Doesn't matter. We need the thing and Nobody to that point was willing to pay us for anything. They would use the product, they would try it, maybe they would do a month to month thing, but it was hard. It was like pulling teeth. And then here we had this person saying, If you built this other thing for us, we'll pay you annual up front kind of thing. And so that to me was the signal, which has actually come to be one of my beliefs about companies is that going to market with products is how you find product market fit. It's not you build this

9:04 In most cases, you don't tinker, build the product and then go find product market fit. It's the act of going to market that's what helps you. See what people actually want. The very first version of the software that someone paid you money for, what did it do? All it did was a three sixty lightweight performance review.

9:23 That was really all. And It was super configurable and it let you have your peers. It let you do a thing where you could have your peers or other people throughout the company. give you feedback and you could manage that as opposed to like just a manager giving you feedback.

9:37 And This was in contrast to these tools where it was really just this hierarchical performance review that was designed to be really heavy, that required being connected to goals and had ratings, and it just had this old structure versus here we were with this thing that felt closer to just a feedback snapshot where the three of us sitting at this table here could Go into the product, set it up. Go through the whole thing. And be done in like ten minutes.

10:01 That just wasn't possible in the old system. So it was just delight. Kind of. Worked. It kind of worked. I think it took us to

10:09 Three. Every avenue, give or take. And then was linear. And then again to the point of like act of being a market is The way to reform strategy.

10:19 And develop a plan. Over those next two years was when you said It won't be a single thing, obviously. Oh, it's not meaty enough. Was that just a result of, oh, this is gonna be three million bucks and it's not gonna be a huge outcome. So we need to start solving for business growth. That was the driving reason for that.

10:36 We talked about this a lot early, but one of the things that I found to be the scariest idea of all with starting a company, because starting company is scary in a lot of ways. But Almost more than just outright failing the idea of getting to a medium situation and then stalling That to me was scarier almost, where you

10:53 had something going, but like it wasn't ever gonna get you there. And I had this just like a sense This was partially from customers, although customers were coming in and they were liking us, but like Miles said, it it went linear at some point and a few million of air are still adding, but the second order was not exciting. It seemed by the market shape, even that that product alone, single product like that for the mid market, it was too hard to believe that that would carry us.

11:17 When you run the math on it. What were the discussions like maybe even between the two of you? As you conceptualized the strategy from there. So okay, we've got this nice start, but linear growth. We need to do more. What should we do? What were those discussions?

11:31 Most of the time these big successes do have the first product run for a really long time before the second wave is relevant. And so it's kinda cool that happened very early for Lattice. So what or the debates like? Like or the trade offs you were considering? My push at the time was In some sense what has become a last value Jack and I shares in life in some ways is like what's next. And so We were partnered, there's nothing but what's next, let's figure it out. To cry and create

11:58 Clarity there. forcing the trade off of the question at the time of are we gonna go up market with this thing? Are we gonna be a product? centric company with this thing? Or are we going to which was a natural Obvious thing, right? You build this, now bring it to the rest of the market, take it up market. Or are we gonna be defined by a customer segment?

12:16 and ask what's next for that customer segment. What else do they need? What else will oriented in that way helping employees helping companies succeed with employee success? what would be next against that mission, and to find ourselves more by a customer segment and then building for them versus a product we have And trying to bring it to the most number of people were there.

12:35 And we spent Probably a good like six, twelve months. Proding at that. We need to pick and we should pick. And make it clear.

12:45 And One thing I think about strategy is I really don't believe there's any strategy that can't be authentic to a founder's Strengths and energy.

12:55 And I kind of imagine the idea of us going up market and trying to sell performance management alongside Workday. I was like, I don't think Jack's You're gonna enjoy that. I don't think it actually is his strength. Like I think his strength is building product and brand. and marketing and sort of create a movement around it.

13:12 You could see that touches of that. Even at that point, we could talk about the community side of things. But like that was the strength of that was I think what you'd tell you really deriving from. sort of my strong inclination and encouragement. It seemed counterintuitive. Most people would say Hey, take the thing you got and try and get as much money from it, drive A C Vs up as much as possible. And this was to say no, let's Take all our engineers.

13:32 And do the next thing. But the idea that you could build a set of multiproducts in the market Felt like a hard. But with a great product mind. An open frontier.

13:43 One thing Miles has said different versions of over time. But even from early days. When we were like tiny and this sounded impossible. Is he'd be like If you want the company to really matter, at some point you need to be at

13:56 A hundred million of AirR. Growing fifty percent. And saying that to a founder with two million of ARR is terrifying'cause you're like, wait a second, we're adding hundred and thirty K of error a month. I can't even visualize at all what you're talking about. But

14:08 It sort of helps you highlight that Even when you're small, you're like, we need some plan to get to some market that even makes that possible. And I think having That kind of orientation Not before your pre launch because then

14:21 That would be sort of distorting, but once you're in market thinking. Just along the lines, numbers aside, of this has to be in some swimlin that can be huge at some point. And so what's our path gonna look like there? I think that's really clarifying to say in our case Either you're gonna have to make it so that

14:38 Every company in the world can use this. Which means you then take what does that imply? It implies going enterprise and doing these things that Melissa was just talking about, where you're gonna sell this to Honda and you visualize that experience. Or you're gonna need to build way more stuff. for a smaller customer segment. And so It was almost an obvious

14:56 thing early that one or the other had to be true. And then the prod that you just said. We just did it earlier than what's typical. You made the crazy call when it was like seven engineers. Yeah, we had seven engineers and we had a couple million of Air R. And we put five of the seven on this second product, and it took us nine months.

15:15 How did you decide what the second product would be? Like literally what were the tactical engagements with that? Custom segment that Made you confident that you should pick this thing versus the second best option or something? At that point in time. One of the things that

15:30 We did. I did. That was unbelievably helpful was I would do Probably. two or three dinners with customers per week. Like I was just talking to customers constantly. But you never know.

15:43 As someone who was never an HR leader. But I always think it's interesting the question of how many customer cell phone numbers does the CEO have? Probably. And I was always really surprised by the number of HR leaders Jack would be on text with. friends with them and loved them. Got to a place where I definitely and I still do consider some like real friends. Only that I meant in the context of lattice. There's lots of ways to do it, but there has to be some source of passion and for me Especially in those early days, getting to a place where you really love the customer as much as you care about your employees even.

16:14 Getting to that place was really important, but at those dinners, or even just in talking to them at any time. І вас со авіс. we would have these prompt questions go around what are the tools you're using, what's most important to you, what practices have been most important for you. And obviously people would always be generous and say, Oh, lattice is great, you know, like they're there, but it almost in some ways felt even more passionate to the customer was these engagement surveys. And customers were talking about the fact that

16:39 They had finally gotten by and after all this time to buy these engagement survey products and that they could now listen to their employees in these detailed ways and they would run twice a year engagement surveys with fifty questions and there was some science behind it, but really it was just these surveys. And they described it as though they were like driving a car. And they had just wiped all the mud off the windshield and they're like I can finally see I've got these action plans.

17:03 I can communicate to the rest of my exec team why it's important. I can follow up with employees. I can see where there's smoke and go look for the fire. And they were just raving about just the ability to do that. You open up what's in that product. And you're like, Well

17:15 It's not that complicated of a product. And Maybe more importantly, it's the exact same buyer. as Lattice's current performance management product.

17:24 And they're even coming to it from the same spirit, which is this employee centric mindset. And so we were like, Well, this is gonna be an easy go to market if we can do it. It's not that hard of a product to build. People are raving. Let's go. How do you both think about the frequency of use as an important metric for a product? Because in these two examples, one's once a year, one's twice a year, the frequency of use seems kinda low. Normally I would say like you want really high frequency of use and engagement with a software product. But the database it's creating is certainly valuable and that gets more valuable over time. Is that a variable that you think Matter in general, or is it just depends on the company?

17:58 We had so many internal debates about this because, like you said, these products are designed to be used. quarterly at maximum. We did build some products on top, some smaller products that have daily or weekly use, things like feedback and one on ones and whatever else. But like you said, this is not something that for the most part people are using all the time. And so we had different

18:19 Theses in the company of some people saying the more people use it, the better it's going to be, and others saying really it doesn't matter as long as the customer sort of expresses that they're content, that should be all that matters. What we ended up doing over time was building these customer health scores, which were started as just a hypothesis where we would say, Here's the usage we think it's gonna lead to healthy A B C health scores. And then we would refine it quarter by quarter as we saw the retention come back. We've now gotten to a point where our

18:49 predictability on like an A health score by usage and a D or an F is extremely predictive. And it's not just more usage is better, but it is certain kinds of usage are better. So in fact, some of our F health. Score customers are Using it constantly.

19:05 And they're just using it. If you open it up, it turns out that they're using it in weird ways or using it wrong. But so this sort of process of creating a customer health score based on usage and refining it quarter after quarter has been super important to us to understanding retention. How do you prevent the tailwagging the dog so that you start optimizing this customer health score instead of customer needs? For me, I'm a big believer in The dog and the tail matter. equally in some ways. And you actually want to hold that tension where you've got

19:33 Some Sort of Top down. longer term vision that you're driving towards. And then there's the reality of what's in market right now and what the people on your front lines and the company are saying, but customers are demanding this from us. And so that creates a strong voice of the customer based on what you have in the market today. And then you have this strategic direction and that

19:51 combo and tension I think is actually really healthy. I think about it more from all things being equal, more frequent, better. But not all things are ever equal. And so What should be the nature of adoption for success?

20:04 With the problem of solving. That's what we should make sure. is successful. And some products Aren't as frequent. If we tried to push everyone to do performance reviews weekly, like probably hate us.

20:16 My partner Sarah's proud of my awareness more so of this. I have probably like five thousand notifications on my phone. I ignore red dots. They don't mean anything to me. It's as if they don't exist. Which my wife laughs at me for And so I don't notice sort of many push notifications from apps, but my part of Sarah's like made me more aware of thirsty apps. where they're using the push to like try and drive a DAU metric that they probably are using for a fundraise at some point in time.

20:40 I'm sure we've all gone that. Snap notification not long before the end of a quarter and wonder that question. I think a team should say what's success really look like for our product. We've talked a lot about that being at least biannual kind of performance reviews. And then you still need to be sticky. You need to be the best choice for it all, you need to be sticky. And so What's crazy?

20:59 that sort of his background context to this at the time when Lattice got started. There were two companies that really did performance reviews and engagement way bigger than we were in either of them, singularly, with reflective. Which by the time we'd only raised Fifte million, they raised a hundred million. I think

21:14 Ultimately sold. For like seven, ten million dollars or something. And then Coltram really created the engagement survey. Category.

21:22 But again to this pick the customer segment and be really product have the strategy of building out many products and making that a more cohesive and more interesting and compelling experience to the buyer. We were the first to Actually just build both from scratch on uh architecture, others acquired in to start cobbling together. that create a more compelling buyer experience and then you've just got to be retentive. So I think if you have infrequent products

21:46 that didn't have gravity to the day that was getting creative, right? We talked a bit about the idea of half life in the system. You might actually think that take Other HR category ATSs. They're more frequent. You'd use them every day that you're doing the recruiting process, obviously, but the half life in that data

22:01 Is like a recruiting cycle. really big companies obviously do more for it over a longer period of time. Whereas Engagement surveys you actually are comparing over the course of 18, 24 months. And by the way, you can't get that data out because it's anonymized. And so it's really sticky. And then on your own performance reviews, every employee wants to look back over the arc of a couple year period. And so if you ever were to try and move, you've got actual data migration problems. Whereas usually with some other categories, they could be more frequent, but the data half-life is so short that if you want to go spin up the other system,

22:29 You can spin it up, and in three months, all your data will be there, even if you never copied any of it over. And so I really think about it being what uh should we be And The sort of Genes of long term.

22:40 Stickiness. Do we ever say what should we do next on the basis of frequency? 'Cause obviously we have a many products now. No, not really, but to your point. But this is sort of

22:50 Making me recall is we did say if a lot of these products are twice a year products, which are ones after engagement were as well. Things like compensation cycles, things like managing an employee's sort of like performance and career tracks. All these things were Biannual, but do end up building a journey throughout the year where I might still have

23:10 eight company level moments and they connect to each other. And so the performance review flows into a calibration cycle, flow into promotions, flows compensation. You run an engagement to see how people are feeling. And so you do end up building like a tapestry of end employees journey. To Miles' point about genes, we were thinking what does this sort of stack need most next and what does our customer

23:31 using this current stack want from us most next and then given that constraint we would then think about the use of the launch the Every day. Tool in many ways, the H R S. We're gonna launch this big thing on September nineteenth.

23:44 There's a couple of threads I want to pull on in these early days. I just love these like early DNA setting decisions and strategies, et cetera. There's two that I don't want to lose track of. The first is community. Which Miles said is a natural inclination or an energy giving aspect for you, Jack. And then the other is this knowing when to put the gas on a product. Knowing when you have sufficient product market fit or whatever you want to call it, that it's time to like really go and accelerate. And I guess that dovetails with community quite nicely. So what were you doing on the community side?

24:14 How early were you thinking about this? What was your intention? And what did you do? And why was it effective? We were probably

24:22 crazy early on the community and marketing side on a relative basis. And to be clear, I would say if you looked at it economically. So if you looked at where Dollars of marketing budget went even the early years. It would be ninety percent at that time brand. community versus say performance marketing or sales list leads or something else. Just to paint these economic obviously not a big number when you're early. And even that ten percent that we would spend on Facebook ads or whatever was join our community.

24:52 So we weren't even trying to say I mean we would experiment with like, hey, here's lattice, book a demo, but In our minds, that just like didn't make sense as a user journey. Maybe today we could maybe do that, but at the time you don't know what lattice is. You're maybe not even bought in on this kind of performance management yet. So to take somebody from I'm just learning about Lattice on this social network or in this Google ad for the first time. I've never seen this company before. Two, I'm gonna book a thirty minute demo to see the product that just like didn't compute for us.

25:22 And so instead what we would do is we would have these touch points where we were evangelizing this new way of employee management. And The way we evangelized it, because we had come to it in twenty

25:34 16 instead of 2014, when nobody was thinking this way. But in 2016, there were these practitioners who were already really sharing the gospel of there's a new way to do employee management, and here's what it looks like. And at the time we had no HR experience, we were young and experienced. And so what we would do. Is we would just spotlight them. And so the way that we got started with the content in the community was basically taking these CHROs and even COO like other people outside of HR would care a lot about this too. But we would take these HR leaders. And we would do these really high quality video interviews with them or

26:11 blogs or find ways to basically take their voice and amplify it and really high quality ways that nobody was doing. And that let us make champions out of these people who are already preaching this thing. So our view was Rather than us trying to

26:26 be sort of the cult leaders of a community. We just want to put out an umbrella. under which this community was gathering. And that was always the way we thought about it. You have a nice phrase for it. What is it? Hold the umbrella, but don't hold the microphone. And I think that was really important for us to not be the ones taking the spotlight, but creating the space for

26:44 this underheard, under listened to customer. That's also where the real relationships and friendships come in. Was I got to a point where I even felt frustrated for them, that I was like, they have these important ideas. And their exec teams and CEOs aren't listening to them. That was a fuel for it. You followed it through with There was a Slack community early on, you did a book.

27:04 You wrote a book? Yeah, we wrote a book that was all about sort of this new way of doing People management. And it was taking all these ideas together. That was a few years later, but even in the early days, like Miles was mentioning, we made this big Slack community where we got thousands and thousands of HR people in this place because there just weren't enough homes for it. And so between that and throwing events and these big conferences and dinners, a lot of it was just giving a venue and attention and a space for people who weren't giving as much as they deserved.

27:33 Have you heard of this company, Work Week, that's trying to do this in like a horizontal way? They pick an underserved vertical, let's say like hospital administrators is one that comes to mind. There's no great content vertical for a hospital administrator. Build a big newsletter, then build a product, then build SaaS. They're doing a lot at once, so let's see what happens, but you were doing this ten years ago. But it's smart, at least speaking in Silicon Valley, so much of the infrastructure of Silicon Valley is geared around founders and investors. And that's really important. being a founder's lonely thing. It's great that that exists and that's a big part I think of why

28:03 the industry has done well is that there's this communal support system. But so many people inside the companies building the companies, it's much harder for those groups. It's harder for some than others. There's a lot for engineers, but if you're an HR, there's just a lot less. And so providing that, it's good for them and it's a good opportunity for the companies doing it. I also think it is something that more teams can do. I was reflecting the other day that I think pretty much every

28:25 Even B to B company I've worked with has had a Pretty big community or open source. brand marketing emphasis to it. GitHub's obviously one benching, which is vertical software. A lot of our early years was academic. Nurturing. Scientists.

28:42 Even Mapbox had a big investment in the open source mapping community. And hosting meetups and conferences around all of that. Think the reason why is at some level All of these are simple craps. And what people are really buying is I think about as a way of being, like a way of achieving success.

28:57 And I think community and brand nurtures obviously the economic Of the business. But speak to More than just the feature set.

29:08 Or the competitive positioning. The brand should be You should you're gonna say it way better, but like the brand should be what a company aspires to being a part of. That we don't just sell you a product. We're selling you on being the kind of person who wants to buy this kind of product.

29:22 And this idea that we stand for even though like Miles said Little dismissively that it's just a credit up, but it's totally true. In a lot of these cases, we're also selling you a style of working and a system on which you Do your work. I think if you can get to that point. I think that really matters.

29:39 What are some of the mechanics around doing that successfully in the early days? You mentioned Slack, you mentioned some content, umbrella, not the mic. What things that you did made the community of pairwise connections within the community thrive. Most'cause it sounds great. Everyone should be able to collect like minded people and nurture them and Give them resources and stuff like cool, but the how of that is

29:59 Really interesting. So what did you learn about like effective how to make it thrive? We've talked about three pillars of it, which we've called content community and events. Community in this case, it's all under the really community. The community piece of that That shows up in forums where people can basically meet and talk to each other. So a big one for us was this Slack group, which today we got like twenty thousand people in it, but we did this

30:21 Early. And we just did the lightest of facilitation. We made a group. You could do this in Slack, but you could also probably do this in like a bunch of other platforms. creating a space that has some structure to it. Within the Slack community, we might have breakout channels that are around. compensation or hiring or performance reviews or

30:40 promotions or executive recruiting. Whatever. And you make these spaces. And then you also do light facilitation where you have somebody creating prompts, somebody getting conversations going, somebody maybe noticing that. These Eight. leaders have similar interests or have a similar problem they're going through and maybe

30:57 creating a group for them. light facilitation plus a community structure like that, and then letting it go. And you're not trying to like overly control it. You're letting it be its own thing. I think that was a big one. And for us, Slack was the way to do that, but there are like other things you can do. Would you let anyone in, or do they have to be ahead of HR? Had to be NHR. had to be an HR practitioner.

31:18 So alongside this community function and this relationship that you're building I think about conversations years ago now with Chain about how to let a great customer segment pull product out of you. And that the key was not to prematurely start selling at all costs once you felt like you had something, but let that great customer that you have an in a text level relationship with keep pulling until there was nothing left before you scaled. And that proved for me building enterprise SaaS to be, I tell Chahan all the time.

31:46 the m single most valuable piece of advice I ever got'cause it was counterintuitive to me. I would have just started selling. And we turned out to be very patient. So what was Lattice's version of that. Knowing When to pull more and

31:59 Focus heads down on product more versus all right, let's sell this to as many People as we can. The nuance for me that I think about here is I do think once you're in market because products are so competitive and categories are just full, like Miles was mentioning.

32:13 We weren't the first year. Like this was a crowd market when we entered these spaces. So I do think once you're in the game. You wanna be pushing. However, the way I always thought about it wasn't take an individual customer and push that one human on the individual human relationship. There's a lot to be said for letting that unfold naturally and people will buy when they're ready and you should be providing value to them along the way. And so this is why I like with the community thing, I really liked the idea of we're gonna bring people into the community and we're not gonna sell them once they're there.

32:41 just gonna keep producing good content for them. We're gonna keep telling the story, but we're not gonna sell them hard. But we did go really hard on top of funnel. We did go really hard on getting A wider set of early conversations. So rather than pushing any individual human. we had the goal of how can we make sure that every HR person Who could buy lattice knows what we are. And that's it.

32:59 And so a lot of our go to market dollars became thinking of before somebody buys, they need to see this thing seven times in seven different ways. They should see our billboard, they should see a podcast, they should read a blog post of ours, they should hear from a friend, they should be at a dinner, and then they're gonna request a demo, and then hopefully we'll have a great product for them. So our orientation in the beginning. Which is a little bit slower than just sell, sell, sell. was more like market, market, market and just get as many people in hearing as possible. We kept it pretty lean. Until

33:28 Engagement launched. And That felt like a very different market reception, just tactically. This is sort of the engagement surveys combined with performance management, which happened in late

33:40 Mid twenty eighteen. Win rates I think went up. Inbound. Even went up.

33:47 It felt like the market was really you could he you could hear the proverbial suction sound of the Hoover. Just playing catch up. Early on I think you can be a temptation to say, let's hire someone to do the thing versus We don't have anyone else right here to do it and we really need to do it now. We could have said when we were working engagement, hey, let's go hire a team to go do it.

34:05 It was like no. We shouldn't do that. Like let's use the team we have. To make it work. And be frugal about it. I think you had this mantra at the time of hiring is a failure. In many ways.

34:15 It was a We gotta do more with less. Mentality, which I think is in general probably a good thing, but it also meant we didn't get over our skis. So we could, if you tried to get over your skis too much with burn, When you were kinda pushing on too much of a rope. It can I think end up forcing you to

34:32 Make more short term decisions. Maybe it would have forced us to go up market, for example. Like if we got and burned to a place, Oh, we gotta do something right now, you might have stretched that way as opposed to be saying, No, it's not that much in the grand scheme of things. Let's build the sweep before we really see how that works. At that time. From an investor's perspective.

34:50 What seemed the most Uncertain. If I had asked you about it back then before you knew it was gonna become this huge company. What things do you think you would have pointed to to say like uh Dre's out on X, Y, or Z? There's a lot to build. Building.

35:03 net new products that are successful. It's a wonderful act, but a painful act just a lot of type two fun. Not most company building is type two fun. Going back down to the bottom of the mountain. And looking at the whole thing again and saying, Hey, this thing's Imperfect.

35:18 And we have a tolerance for that process of imperfection. It's very easy, I think, to as you have some success for organizations for like there to be incredible antibodies to reject imperfection. And to be able to keep building, you have to be able to say, we are comfortable with that process of improving imperfection of things that look small at the bottom of the mountain. But it's almost culturally in the DNA setting that up I think can be challenging. And so And we think about it all the time even now with new big launches. More than whatever is visible today, we have confidence in that. The other I thought about was just it's one thing to say everyone wants it all and we're buy from one person, there's all the economic rationale why

35:55 having one vendor with one s set of interconnected products is great, but a lot of software over the twenty fifteen to twenty twenty, twenty ten to twenty twenty period had gone to Best in breed, single function. And we were saying no for the first segment. The combined suite.

36:12 When was the last time you heard the word sweet and software? We talk about it. all the time we'd say, we're building a suite. I probably even shouldn't say it on a podcast, because it was so it was such erratic erratical in the valley to talk about building a suite. They were like, we can't use the word suite. But I cast about success suite. You know, what's what's the next thing in the suite? We still in some sense haven't come up with a better term. You don't hear that. Ever. Anymore.

36:35 What makes it such a good idea here and a bad idea elsewhere? Is it something specific about H R as a function? Or other people just not gotten the memo yet and there should be more suites again. I think there are more Companies should be sweets than there are. There

36:49 obviously exist a bunch, but my view is basically that a lot of the dynamics of software building in general Lead to a Conclusion or It sort of must be the case, I think, in the long term that the biggest, most winning companies will offer many things to their customers. And

37:08 It used to be really hard to build software and it's now fast and easy. It's however expensive to take things to market because there's so much venture capital. There's so many companies doing this. It's super mainstream now to build products. And so The cost of building quality new software has gone massively down. The cost of winning markets has gone, I think, massively up. And so what do you do in that situation? You build more software and you find ways to have cheaper go to market. And so

37:33 If you've already got, for example, 1,000 or 10,000 customers or whatever, selling into that existing customer base is much cheaper. And so you can spend a lot fewer go to market dollars on the process of selling into that base. And then you can spend more money building a better product. And so even though it's cheap, you can then build more product. So to me, there is a flywheel where if it's possible to do, it's a huge structural advantage for companies.

37:58 Because you can Spend more of your money on Building More better products. And

38:04 Relatively less than go to market. The greatest companies that's obviously the case. I think what should do it I also is my total inclination in instinct at all investing when partnering, like will we suffer the perils of indigestion? Can you imagine in five, seven years from starting Being at the board meeting.

38:20 Having interesting product. Fox still ahead of us. I think that's the exciting place to be. I think many people it wasn't as done in that period. In part. I think because software markets became bigger than we all might have thought. And so single

38:33 Products can go further. than anyone necessarily thought. And again, I do think sort of In terms of organizational DNA. It is painful.

38:43 Trying to bring mediocre V ones to market, right? You have to be able to say Hey, we have all these customers, but the thing we just built only works for this some subset of it. But we know we're gonna go on that arc. You have to have sales teams who sell the whole thing, but now don't know how to sell this thing or won't sell this thing, so you gotta figure out how to do that side of it. So there's all sorts of complexity to it. With software mockers as big as they did.

39:04 fast as they were growing in that period. You can definitely be lulled into The complacency of This one thing works. I don't need to bother. It's easier in many ways. I think if you actually look back at a bunch of teams, you can find

39:16 All the case studies for like It you should just do one thing and do only that one thing. Which is sort of the central dogma, obviously. There's more case studies than people wish to acknowledge, I think, on the No, we did a bunch of things and we did it actually pretty early on. You take HubSpot, I think they started working on sales at about fifty to seventy of Revenue?

39:35 Not two hundred. Fifty or seventy. I think Viva Did Vault? At like twenty? Odd

39:42 You go back and look at Adobe. Way old, right, obviously though. Five years in, I think they'd done Obviously desktop publishing where they started. Illustrator vector work and Photoshop for AstorWork within the first five years. They had three products in that suite. We think of square, really di horizontal. Hubspot, Viva Vertical.

40:01 Take square even. I think within two years of Launching square. The B to B small merchant thing, obviously. They'd launched their first consumer wallet app.

40:10 And I've actually got shut down. eventually they got to Cash App, but within two years they were working on the idea of what's our consumer Side experience of this. I feel convinced to be long sweets and I'm curious what You remember being the hardest or most stressful

40:26 Moments. About doing that. What was the pain or the cost of this decision to do a lot of things at once early on. The way Miles described why it's hard for a business, that

40:37 Is so true. It is the hardest part. It's the last moments before you launch the new thing. Where you have spent so long laying this groundwork, pulling the company Along. Your

40:49 Deflecting resources from an existing business that is working that is Crying out for more resources. As you're doing these things. Your mainline product is just hungry for more, and you've got

41:01 real customers and real growth and can you please build these features? No, we're all in the tank over here building something we can't tell you about. That's awful. And then your customer success team is like Hello, we have this long obvious featureless, and real people saying they'll pay us real dollars tomorrow. Can we build it? Or the sales team is like, This is so obvious on the main product. And you're pulling people through a long period there. And you know, we'll never know'cause we'll never get to run the experiment twice.

41:26 But we spent nine months building And that year, it's a very important thing. Our growth was linear. You'll never know if we had spent instead of putting five of our seven engineers on this thing no one was working on.

41:39 If we had all seven working on the core product, would we have grown faster? Like You'd think so. You'll never quite know. It gets much harder as time goes on. The bigger the company gets, the more dissociation you have from The people who are thinking in mature ways. And the

41:54 scrappiness and immaturity that is inherent to a new product. Now today for Lattice, it's 600 people. We just got through this big launch of this HRS product. We spent over a year and half of our engineering project and design. Team resources on this thing. And that's like a painful thing to go through where

42:11 You've got this mature company. in a hard market and you're spending all of that energy on this thing that doesn't exist yet. And you're sort of holding this tension of this future story out for the company where they're all like, Let's hope. And so the bigger you get, the more people you're bringing along, the more people you have who have less experience with like what an early stage startup looks like. And so basically it's harder and harder and harder the longer you go before the rubber band sort of snaps and catches up with whatever post you are holding. Those last moments are just tough.

42:40 There's one thing that if other teams went that way, there can be a temptation to have a very Shotgun strategy to it. To try five things at once. Instead of early on having put five engineers on the new thing of seven, now we're putting fifty percent of E P D on the next thing. There could be a temptation to say, Okay, so fifty percent on one thing, let's do ten percent on five things. with our fifty percent bucket.

43:02 And I think It was right And I think it is right to sort of sequence Intentionally.

43:09 with expectations of success and desire for success versus hey let's try five things And see what works. We sort of sequencle shots. is certainly more of the experience I've had with most teams. I was actually looking at an old Netflix interview when a blockbuster came and attacked them and Reed was like, We did a social network and you could buy secondhand DVDs from us. And they were like, We did four things and we felt really good about ourselves. I've actually had a few experiences where teams have done a few things at once. I don't know any of them have ever

43:39 really worked out. Netflix shut it all four things down. But you feel good because you're trying, you're doing many bets, but optionality actually Can be the antithesis to the needed intensity. And conviction and expectations to make it. Successful.

43:53 This also reminds me of what I think is one of the nuanced sort of challenges of being a board member or an investor to this type of company. Miles will In the same conversation flip between pushing on what's the current quarter and like where are we with the current products and where's the business. But also like what's next and are you investing enough in this new product? And those are at odds. I think that is one of the nuances. Those two things are at odds, but both have to happen. Like you can't pick.

44:19 You can have a mentality of Oh if only. When X. I've experienced that where you're like, We're just gonna launch this next thing and then it'll you know, then we can grow again or then we can close some more revenue. My view is always

44:31 You're way stronger if you're bricklaying. It should work. Today should be good enough. It might not be perfect. It might not be the very best. We should be able to be better because we're doing this. Today should work. And simultaneously the new thing that you're working on Can't hide. in the organization and so

44:46 When I've Done these multi product journeys with teams. I think about two things. One, we're like how much of the CO's time is on it. The CO isn't on it or founder isn't on it, they're not gonna work. In part because I said someone once, If it's not worth your time, why is it worth the company's time?

45:00 It's either important or it's not important. If it's important, you should be spending time on it, especially because of this organizational challenge, right? The antibodies that exist, the cross functional nature of it all existing, the risk taking that is required to do it. And I also sort of pushed on if there isn't some board metric, I doubt there's like the internal metrics. And sometimes you can be like we're not Measuring that yeah.'Cause it's new nascent like it's okay. It can be ten users.

45:23 But if like there isn't a board metric, then it's not important to the board and leadership. Don't make it just for the board meeting, obviously. Like it should be the outcome of what's happening entirely. But if we can't see it at the top And that is in the board level, the summary level, probably not getting enough sunshine. deeper inside the organization. When did you two most disagree in the company's history?

45:43 I feel like we're constantly disagreeing on small things and resolving them. I don't know if we've helped like a big lingering one was. We have this style of relationship. I've seen Miles do this with other founders too. Where We don't leave it open. We're not the type or our relationship is not the type where

45:59 We would disagree on something important. It almost sounds too personal to say it this way, but I don't think we would go to bed with that kind of disagreement open. Like we would probably be arguing at eleven at night. More likely. A former colleague used to say, Life advice, don't go to bed angry. And I don't think we would.

46:15 That's not that we don't meaningfully disagree on substantive issues. But I can't imagine a situation where we would not be working hard to convince the other one and both trying to be very open minded to the other one.

46:27 uh perspective, which by the way is also I think a really important thing in like a co founder relationship. You can't do this with an entire board, but certainly for Miles he Let our seed and then he joined our board when he led our A. So it's like a long, deep relationship where he's extremely close to me and the company. A lot goes into that. But I think that Type of relationship where

46:49 Just like you shouldn't go to bed angry, leaving something open with a co founder. I think If the CEO and the board member who is closest to the company are really on different pages and they can't work through that, then I would, you know, think there's gonna be a relationship thing that is worth investing in. We can disagree, but like can't enduringly disagree,'cause I really believe

47:09 That's the thing. Board member. is to really help the founder make the best decisions. It's their decision. And if it's that decision, like that's the best decision.

47:19 People talk about being founder friendly and I've really never liked that time. It feels apathetic. And I think if you have a founder friendly mentality, you're sort of scared of that. of disagreement. Jack and I would sometimes say to each other, Do you want me to be supportive or honest? Sometimes you do just want the support. But I think about it as being as found respect. versus being family friendly. And I think if you have that respect and you're oriented to the greatness that's possible, you have a responsibility to challenge, to try and pose the alternative, to try and make the implicit more explicit, to try and frame the trade off the Jack's Making Decision around more harshly to provoke

47:53 clarity of thinking that leads to the best decision. If we wanted the only time we did disagree, and that was like disagree and commit. I really think about It was probably the series B. Go out to raise a series B.

48:04 Summer of twenty eighteen. So this was three million of ARR and we're part way through the build of engagement surveys and growth is linear. Forty employees, let's say. And my view is The burden of proof.

48:15 for who we are in the market we're in is really high. And we haven't met The burden of proof. To have a great fundraise. And We have a theory.

48:24 Which is That's sweet. Connected. Products that will be stronger. And let's get to it. Let's just do it. And so let's not do it now. Let's wait next nine months and go do that. And you were like, No, I think we should do it now. And there's some people who are excited.

48:39 We disagree to You could have said, I don't think it's good, try and not introduce to certain people I was like, no, okay, great, we're doing it. Let's make the best possible deck. Let's really push the way in which we can frame the story. You were right that was not series B fundable at the moment. Empirically it turned out to be true.

48:56 But I'm also really grateful that that happened because we learned so much, both about ourselves, how the market was going to think about us. I learned a lot about fundraising. But that moment when we couldn't raise that led us to This

49:10 internal period that summer. that we internally branded wartime, we ended up becoming so strong as a result of that, where we said, you know what, this Company might not be something that VCs want to fund, but we have so much confidence that we can build something big. So we need to set ourselves up that in case we can't fundraise ever. We can go from a company that was on the VC train to a company that's just gonna self fund. And that's just what it's gonna need to be. And we did end up six months later

49:37 Still a really tough phrase. We got one firm interested basically for our series B. We did get it done though. But that sort of DNA that we Rebuilt for ourselves.

49:47 That was huge culturally. What did you learn about investors in fundraising in that period? I learned there. That They have a job to do, and they have a set of responsibilities.

49:58 That are Nothing to do with helping a founder. who they're not yet invested in. And that's okay. That's normal. That's how capitalism works. That's like why the market is good before I buy it.

50:09 some toothpaste, I've got no sort of obligation to colgate, whatever. Like that's just like how the world works. But The job of doing VC well. requires making founders think that you think things you don't sometimes. And that's the cynical layer that I've added on top is that

50:28 Their whole job is to be out meeting all companies and having all companies think that they might want to invest in them. Like that is What's required in order to get the option to invest at some point. 'Cause I think I probably had heard that before, but when you really watch it play out with somebody who is

50:44 incredibly charismatic and smart and takes you all the way through the journey and get you to a place of oh this fundraise is gonna be easy. They're pumped. I'm gonna crush this. And then you learn that that's all a no until there's a term sheet. And I think that's one of the updates that I think a lot of founders go through this though, where you end up getting hardened through that. one time when you have a tough fundraise and you then don't have to learn that.

51:05 Again. What do you think about that since you are a full time investor? I think it's definitely true. I personally Acknowledge it. It's not a no until it's a yes. there are different degrees of it's not yes yet, though, along all of that. And I personally try to just be really

51:20 It's my disposition, like transparent around Th questions and the things I'm wrestling through, right? Some people Have a mindset of Total selling.

51:29 in that journey, almost to the point of like not acknowledging challenges or Key questions that you're sort of be working through. It's like that's positive. Tell me I try to have more of a mentality of let's start this conversation from a place where we are working together. The future. I often think about the experience I think it's true of a board meeting, as well as true of

51:49 Getting to know a new team. It should feel more like planning an adventure. Than getting a colonoscopy. It should feel like planning adventure, by the way, if you're going out in the backcountry and there's inclement weather, like there's some serious topic you need to talk about. You don't just head off. Take inventory, what can we do, what can we do, plan eight, like there's important

52:07 work to be done in planning an adventure, it's exciting and it's forward looking and you're planning it together versus like, Hey, let me try and give you the diagnosis and a painful examination kind of thing. And so I kinda try to take that mindset and so even if it isn't a A Founder walks away. Feeling like

52:24 You know, they had a really great discussion, maybe got some more clarity on their own. it's sort of pushed and provoked thinking that we'll sit with them. And so in some sense we had like a great Working relationship in that figuring out if we will work together. But just by disposition, you wouldn't be the type.

52:40 where this kind of confusion I think would happen for founders. Which I think is a positive thing. The difference is Imagine like a situation in like a personal dynamic where you were just meeting somebody for the first time. Pretend this is like the founder VC thing. And instead of ending with a term sheet, it was gonna end with being invited to their birthday party.

52:59 There are dynamics where in a regular human relationship, the signals you'd be getting in some of these founder VC dances. You'd be like, if I don't get invited to this birthday party, I will lose all my confidence in what human relations are about because every signal's been positive. They're telling me I'm great, they wanna spend time together, they can see the future of this friendship. You'd be shocked if you didn't get invited to the birthday party. And so I think when you're thinking in those human terms and I think I'm probably in the early days fell more prey to this. Just my default is optimistic. And I don't fault anybody for it. I think it's just the nature of

53:30 private market transactions has some of this inherent where The Capital is choosing the asset and the assets also choosing the capital. It all follows naturally from it. So I don't begrudge anybody. If you could imagine we were having this conversation in front of like it's virtually we literally are a stadium of professional investors of buy side VCs and public equity investors, et cetera. And we did like uh open mic Q and A.

53:52 I'm curious what both you would have to say. What would be the best question? About Lattice. That Someone in that audience could ask.

54:00 Around the platform and the suite would be like Is it really true that things are better together? Does any customer Give a shit. Okay, you can have a suite and I can have Illustrator and Photoshop. But they're separate things and you can buy'em separately.

54:12 If you're saying it's connected and important, which we say a lot less of than We don't need to position ourselves as foils per se, but there are some who would say it's all about the connective tissue and you use the connective tissue to drive any product strategy. We've never taken that view. We said we drive a product strategy and happen to connect it. Just say a bit more about the the employer and the relationship with the employees and how that's changed so the kind of the ZERP question. Obviously there's been layoffs.

54:37 World's a little bit different. I don't know, that seems like a secular knot. Cyclical trend, like Companies. More visibly care about.

54:44 Things like this that Lattice enables. Yeah. So there's this pretty long deep real secular trend. That happened over Like zoom out a little bit to let's say

54:54 thirty, forty years or something like that. And a bunch of things happened between nineteen eighty and two thousand twenty that structurally gave employees a lot more

55:06 advantage in the employment relationship. The internet obviously was a big one. It allowed for remote work, but it also allowed for a lot more job transparency. LinkedIn. So it was much easier to move between jobs. There are a lot of ways in which

55:21 the skill that people have in modern companies, certainly in tech, but I think in a lot of places. Are incredibly transferable. So you think about working at General Motors and spending a 30 or 40 year career at General Motors, and the work you were doing in the specificity of what you've learned in the context of that corporation. in your town where that was like the dominant company versus taking working at say just like a great software company like Asana.

55:47 You think about what are the skills that are being used there and how transferable are those It's obvious that you can move around much more easily to many more substitute companies in today's world than it was in the past. They're of course also with just the rise of tech in general. And then you get rising salaries, you get sort of just like market dominance as tech in the last. Let's say fifteen years went from

56:09 You get to a place where the winning companies are So unbelievably winning and so unbelievably well capitalized. That The wars over talent are just fierce. And then you pull it open and it actually makes sense.

56:23 Imagine what it's worth to Google to put an incredible engineer on AdWords and make it point one percent better. It's worth paying them almost anything. And so you get to these places because of The internet where you have these The superstar effect, where one person's impact is so unbelievably magnified.

56:43 That happens in small ways and big ways where people are not just in today's Economy. It's not that everyone is just I'm doing a thing. on a unit time and that unit of time can go up. It's actually the impact scales way outside of time.

56:57 And so you get to these just crazy dynamics where the competition is just ruthless for talent. And I think you take that backdrop and then you add Zerp on top of it. And Employers were just doing

57:08 anything to hold on to people. You would go in an interview process for a candidate. You'd meet them on Monday. And for the first meeting. And on Tuesday, they're calling you and they're like, Hey, I know you've got an interview process, but I have 11 offers and I'm gonna sign one by three. And here's what I'm getting paid, and I know it's thirty percent over your highest end of your bands. Are you gonna present me with an offer? And you're just like, wow, we got to a place like that. That was at the crescendo of both this multi decade journey as well as this like moment in time journey in the sort of

57:37 Smaller ten year. run that we had, or twelve year run or whatever it was. Things just got to a wild place. And I think now to your point, that long term secular trend still exists, but we did come off a crescendo on it.

57:50 I wonder to what extent the shift from defined benefit to defined contribution pensions like just another subtle variable that pushes that secular trend. Upward where it's just less likely that someone's gonna stick around at one company. It was interesting that you started that Miles had that conversation about you gotta at some point to matter be a hundred million growing fifty percent, and that seemed ridiculous. Yeah, here we are. Now the next one is okay, if if you're a public markets investor or something, you gotta be a billion of revenue growing twenty percent or whatever it is. And I wanna hear about your margins and your free cash flow. And as you face down that next what always seems like such a crazy high

58:22 rate of growth or something. But companies do it and you've done it so far. What do you think about going from where you are now to really like big public equity type status numbers and thinking about margins. What it feels like to think about margins versus product, the balance between A great financial product really for investors and great products for your customers.

58:42 There's the product, there's the team, there's the sort of management of the company. But Miles, I'd be curious to hear you speak a little bit to the genetics piece, cause company, product, and just like market. genetics is something that I think Miles has pushed on for a long time as

58:57 On some level you're going to set up an initial Condition set. And that's gonna define a lot around it. And you're gonna work within that. And I think even for us now with this HRS push, what I'm thinking about, what I know Miles has been thinking about is what is the setup you're gonna need to believe a story where at a billion you can add two hundred a year.

59:16 And to me, I think so much of that is putting in place today. the product market customer segment genetics that are gonna make that possible. But I'd be curious for you what you think about from here to a billion. At some level just because you needed something now. You might say you should have started with that. And so th that's where like H R S I think gets to.

59:36 Which is like the cool system of record for employee data for the mid market. I think it would have been actually pretty hard to start there. and displaced it versus having a set of products that connected to that. Make it much better. But to that next arc.

59:49 having that central system of record that has best in class products on top of it and interconnected with the fabric of all the other tools you might want to use on your journey. I think about that fifty to two thousand person company. Many companies stay there forever, and it's a pretty long journey. Even for really exceptional ones in the grand scheme of things. And there's a bunch of Lego blocks. Do you add in.

1:00:10 over time. You might start with just one thing and we can get you on that and then you'll build up and then t if you graduate off at two thousand or five thousand, you'll start turning off Lego blocks. That's how I would hope that the product is working for customers and therefore the sort of business implications of that. I would say we raised a bunch of money, like many did, in twenty twenty one and twenty twenty two. And At some level you could run the company today more lapsidasically than w we aspire to right now because it doesn't really matter. I guess if we go out of the next two years people might see today's, you know, financials. But

1:00:44 You could be more loose about that and I think we've Trides. Today. We really

1:00:53 Talk about it not being burned, but investment. We look at the performance absent, you know, accounting for, obviously, but also like independent of the investment in the new initiative and like that should be getting operating leverage in it. We acknowledge that we're In a Competitive

1:01:09 not totally new greenfield market and so things like G and A performance and sales and marketing performance like Has to be good. And there's excellence for that that people have accomplished in the past and we should aspire to be as good as at least. maybe NVIDIA is proving to be the only exception here, kind of at the moment of just radically defying the odds and defining in a crazy nerve. But a lot of companies it's important to have like

1:01:32 As much excellent rigor Day to day along the way. And The financial performance comes out of being the very best. Of that and I think

1:01:43 That's at least the mindset. That is a critical stakeholder and constituent, and you don't suddenly turn that mentality on. We've Push to Go on the journey of that mentality. Starts when you're a small company just at some level like adoption metrics.

1:01:57 And cash payback. But l obviously leveled up. This is why I think it is actually valuable to think have to actually plan five years out, but visualize what needs to be true five years out and then at least try to understand like what are the beginning steps I can take to getting there. One new lens that is on my mind now that there's not a way I've been thinking to date and still not quite how we're like managing the company, but

1:02:19 I think it's gonna be important between here and A day when the public market investor would be asking those questions. As Imagine a world where you have twenty percent.

1:02:28 cash flow margin on a business and like something that public investors would be really excited about. For me, it's really easy to just like think in simple terms. And when I'm thinking about like a new product, just price times quantity and simple is good. So if you're like okay We get to spend eighty percent of our revenue on the business because we need twenty percent left for cash. We know that we are like a multiproduct company. We know what public sort of comparably on engineering and product spend. So

1:02:54 Let's say that the most of the market's at twenty two percent of revenue is being spent on R and D. Maybe we're gonna spend thirty percent. Okay, so there goes thirty percent. G and A, like what are public companies spending? We don't have a real reason to believe then the long term will look different. So there goes another sixteen percent or whatever. We've got some amount of customer success we need for us, our long term Gross margins are basically all to do with people costs. We think it's gonna be Whatever percent, eighty-two, whatever it's gonna be, there goes another eighteen percent that's just gone there.

1:03:25 We know that we market and sell in these kind of ways, but we only have twenty six percent left or whatever the number is. And it all has to happen in that. And then when you start to Think in those terms. And then you look at where you are today. And you start to think about things like, geez, what does our net dollar retention need to be for this all to have a chance of working? What's our CAC payback period gonna need to look like for this to make any sense?

1:03:48 What ACVs do we need to have implied? What are we gonna need to do on all of these different functions? From there, you can start to say, gosh, what we have today is structurally not set up yet for that to be a believable story. So we're gonna need to do different things. We might need to open offices in a different location because this cost structure is never gonna make any sense because I know we're gonna need 400 engineers by this date, and there's no way the growth is gonna get there. Or we need our cost of acquisition to look like this. And you say, well, we know that selling a net new customer costs this much today versus a current customer costs this much today. Maybe I can believe a story that we improve either by twenty percent or forty percent, but I can't believe improving it by two hundred percent. So I gotta sell more to current customers. Oh geez, I gotta

1:04:31 Sell more new products to current customers because it's cheaper. And you can like walk through those exercises from that. And that can start to paint a picture for I'm not gonna have just a fantasy about 20% cash flow margin. I need to have actual tangible ways that I can see that coming to fruition. So I think that is one method I think where the framework can at least help you see where something is structurally broken and it's a multi-year journey to fix it. And I got to start now. What do you want?

1:04:57 Laddis to ultimately be. I think for Lattice to reach its full potential. What it'll look like. It's still grounded in the original insight, which is that

1:05:07 what companies need is A modern set of tools that help them Do HR processes that put employees first and sort of honor the fact that employees are

1:05:18 The most important. asset that the company has and treating talent You know, the same way that Salesforce treats the quality and clarity of insight that you get from the whole pipeline.

1:05:30 or what you get in finance with the finance suites where you can track things with. Incredibly meticulous detail. I think in the HR realm that has not been possible in the past, where you don't have good connection points between the whole journey from their first interview to the way they got onboarded to Did that interview make sense? How are they performing now? Which managers are being effective? What happens when I change compensation in these different ways? I think there's a depth of insight that it's possible. With

1:05:58 H R where you can elevate the employee sort of dynamic for a company from one where you're just employing people to one where you're incredibly strategic about all these details because all that information exists. It's all knowable. In some sense it's harder to get and to massage than sales data or finance data. But It's all there. And I think it starts with this very human lens, but it requires building

1:06:21 a huge amount of product in the long term because you need to connect all of these things. And so my hope for Lattice is that we end up with a suite that Treats Employees with that. Level of

1:06:32 respect for how valuable they are. And is warm, not cold, and is sort of human, not process oriented. And so to me, I think that is what we need to build towards, but it still is full sweep build because you want to own as much of that employee. journey in life as possible.

1:06:48 Kind of a similar question because obviously if it comes everything he just said, it will have turned out to be a great investment in all likelihood for you. When you're assessing something like this. Early on, you let the seed and the A. What are you thinking about? How do you triangulate on some of this kind of stuff that's relevant now at a big size, thinking about a much bigger size.

1:07:08 When it's nothing, like is it just The founding team? Is it The market now, in your opinion, has become much more important. What does it feel like early on to be sussing? this sort of thing out. It's easy to say it was great and fun now that it's worked, but

1:07:21 Before it worked. What was that like? A lot of investing thinks about just this side of the equation, which is making great decisions. And I think there's a lot to then Making decisions great.

1:07:31 And What I mean by that is that we could try and analyze the whole thing up you know, you can't really do that. You get going and you try to make that Decision to partner. Turn out to be a really great one. What sets up for that? I think a lot about what's the

1:07:44 quest that you're supporting a founder on. When we get to face the perils of indigestion, is there an arc there Seems sort of crazy, seems far out to be talking about, but like there'll be a lot to build. There'll be a lot to serve in the market. Do I think that the business can have I use this word great genes. Do I think we can have sticky customers, we can have decent market share, there's high willingness to spend in the category All margins aren't competed away. You know sort of like the the genes that were set up.

1:08:14 To You can imagine having a public company, take a bunch of H there's a bunch of HR public companies, there's a bunch of HR acquisitions. Like there's a ton of market cap in the pace. Yeah, Paycom Pay soft, et cetera, let alone others. And so the idea here was that there's a mid market opportunity Who knew which direction exactly it would go on, but there's genes that say precedents or where it says, yeah, compute businesses here. And then lastly

1:08:38 But probably should be first on the re ranking of these, obviously is Does the founder really want to go on that quest? And will they derive energy from that and fulfillment from that and motivation from that? At some level that's the feel. But I would say when I met Jack

1:08:53 Anyone would have been knows that Jack definitely wants to build a company. I don't think that's enough. I think there's gotta be some authenticity and having Jack building HR company like seem counter Intuitive in many ways, like what does this guy know about HR? Why does he care about HR? But when he spoke of it at that point, just sort of okay, but we spoke more generally. He was really s reflective on his time at Teespring and sort of like

1:09:14 employee success, development Goal setting, alignment, In a way that wasn't Hey, I need a company. Okay, let me do this thing. But was really

1:09:25 Latis' mission is like make work meaningful. And it wasn't encapsulated in those words then, but you felt that there was real Interest and authenticity. Two episode and could also tell at that point that but you can tell today. I think to go into that market and just be especially the mid market and try and create when I was already

1:09:43 Competitive. And it can do a lot with Not a ton. I think Jack

1:09:50 to the point of how many customers you have relationships with had that spirit. You could have said go get a pavement pounding salesperson. I think some of our competitors were kinda that. Great, you g you got to fifty million Ever having you, you're gonna have to go on that product arc.

1:10:03 Could have got some airy intellectual engineer who was gonna perfectly try and measure performance of Jira tickets and it'll like it would be too cerebral and not what anyone really actually was gonna buy. But the intersection of reflective and authentically curious about combined with Product.

1:10:20 chops combined with like that scrappiness and energy. Was In some sense I think a lot about like Rare combinations of qualities coming together to go attack a market. I have three words that come to mind for whatever reason.

1:10:32 I'll give all three to you and you can reply however you want. If you think About Gladys' history at this point. The thing that you are most

1:10:40 Embarrassed about? The most proud of. And the most excited for. What comes to mind? There are a ton of just

1:10:48 regular ongoing. daily winds and embarrassment. But I would say if I like many years after the fact think about the real Critical parts of the story. I think The thing I'm

1:11:00 most proud of is that we've been willing to Not quite bad at all. But bet a lot more than usual on the next product and Miles pointed out one of our company values of what's next. I think we've been really willing to

1:11:15 in the face of things going pretty well on what's happening with the core business. to divert resources to keep pushing because we know that there are like higher peaks. And that's been hard a lot of times. A lot of it's been obvious in hindsight, not foresight, so I'm proud of the company for Doing that.

1:11:31 Over and over. To that point I think the thing I'm maybe I don't know if embarrassed the right word, but maybe or regret or something in this flavor of word. We knew I think

1:11:41 Yeah. this product that we just launched, the HRS, we knew this was important a long time ago. And We knew it was a hard build. We knew it was gonna take a long time.

1:11:51 We knew it was a whole big thing that would require us taking a ton of energy away from the company. And I'm embarrassed that we took as long as we did to get to this place to

1:12:03 Put this product out and to Invest the resources to see if we can go And become sort of the dominant platform in the mid market. Because we didn't just realize it two years ago, we realized it like five years ago.

1:12:15 And there were moments when we could have started planting seeds earlier. And even if we didn't give it nearly the resources that we're able to give it today. Time is one of the like huge dimensions to any software project, even with a small team. So I feel like if I And Some of the leadership qualities that I think of

1:12:34 accrued over time then I think we could have pushed faster on that. But that also brings me to the last one, which this is the thing I'm the most excited about is This new setup that we have as a company where we're not just providing our customers with applications around people management, but we're really giving them a full HR platform where they can do so much more.

1:12:53 This can be Their sort of system of record for employees, and we can give them this thing that I think people have wanted to see exist for a really long time, where There's been companies like Workday that are fantastic up market and for real enterprises, give them like An incredible depth of

1:13:10 The functionality. There have been some really special companies at the lower end of the market who bundle a humongous number of products together. And give new startups out of the box like a really great

1:13:21 Yeah. And then I think companies in the middle, Lattice being like an example of them, when you've got hundreds of employees and you're not yet ready for the enterprise, but you do need a system with real maturity, I'm really excited for that future. So this is the thing I'm most looking forward to now. It's incredibly fun to hear an investor operator dynamic in this way. I hope we had this idea last time we were together, and it's incredibly fun to do. I hope I get to do a lot more of them. I'm lucky that I got to ask Miles already my traditional closing question, so now I just get to ask you, what is the kindest thing that anyone's ever done for you? I don't know if this is the kindest thing that anyone's ever done for me, but this is something that turned out to have one of the biggest impacts on me professionally. It was actually before I had fully decided to leave Teespring.

1:14:01 We had hired somebody new into the company as our CRO, a guy named Robert Chatwani, who then went on to be CRO at Alassian. Who is just a fabulous manager, and I only Had him as my manager for like several months at the end. One of the things that as an aside is being managed by somebody who's incredible at it.

1:14:20 It's such a treat. In the same way that being sold to by like a certain kind of salesperson is just delightful. being managed by somebody who's truly expert, it really makes you better. It really makes you appreciate The nuances of empathy and human understanding.

1:14:36 It helps you see what it looks like on the experiential side of somebody who's pushing you but also supporting you and so That experience I think was Even in just a few months was a big part of what I think gave me like a love for the craft, even though I loved it before. But that was my first time really getting to be managed by somebody excellent at it.

1:14:55 But the thing that turned out to be really kind for me that I think set me on the path to doing lattice. It was the early formation of a lot of my values. I had a huge amount of trust And I shared with him, look, I'm not sure what I want to be doing with my career. I don't know what I want to do. I'm thinking about A, B, and C. Like what do you think? And he's like

1:15:13 I wouldn't go there yet. Why don't you do an exercise For me, for yourself, but for me. And next week at our One on one.

1:15:20 I want you to tell me what are the things that Bring you joy at work. That's it. Three things. Just tell me what do you care about? What drives you. And I go away and I think about it and I realize it was actually hard for me to get to my answers.

1:15:33 But talking it out with people and thinking about it. I got to answers. I bring them back to him next week and he helps me and he pushes on them. He doesn't just say great. He says Well, is that really this? Like give me an example of that. Well do you actually mean this other thing? Why don't you take one more rev at this? Cause this is going to be really important. So I go do another rev and I come back with these things that really matter to me. And this time I feel very solid in them.

1:15:54 And It was obvious to me at that point. that I wasn't gonna be able to do those things in the context I was in. And that I would Need to go

1:16:03 start my own journey and make those things. Extremely central. And that exercise like along the journey of getting there, I was just so much more clarity about what I needed than I had had. And if you've ever been in those career moments

1:16:15 seventeen things are swirling and you have no clarity, that's so stressful. You know, you can't sleep at night every Things don't feel right. And all of a sudden I had this set of guideposts. And that was something for me as a manager that now I try to do that as often as I can with everybody that I've worked with. And it helped me create my own values. So I think that exercise. Even if it didn't cost him a lot to do, that turned out to be hugely impactful. One of them was that I wanted to work with people who were Energized

1:16:43 Optimistic, inspiring, smart, pushing for greatness. And that when I was around those people, I was happy. And when I wasn't, I wasn't. And I realized that I had that in my earliest Days at Teespring, and then I had lost them. And there were various other things, but I'm like very people oriented in general, and I can't be happy if I'm not working with. People who sort of share a bunch of those values.

1:17:05 Another that I realized was that I don't want to be ego driven. but I also recognize that I'm human and I wanna do something that matters. I wanna feel like I have impact. I wanna feel a certain sense of importance. And I don't think it's an ugly value, but it's maybe not the purest, but it's like something that matters to me. And I recognize that. And I'm like, I'm just gonna admit that to myself that like I wanna be working on building something, doing things that matter.

1:17:28 And that I care about. And then the last was that I realized that I feel best when I'm working on something that's hard and not just the kind of hard that is Not like Daily challenge hard, not weightlifting hard.

1:17:40 But intellectually hard. Something where there are puzzles that need to be answered, where there are real questions that require stretching your brain a little bit or a lot of it to get there. And I realized I didn't have those things, but I also realized that That was what I cared about. And I think having or sort of professional values for yourself. But that

1:17:59 Fidelity that is pretty generalized, but somehow specific. I think that for me That was really important. People are gonna start to get very sick of hearing me say this, but I don't care because I think it's important. My definition of life's work is a lifelong quest to build something for others that expresses who you are. And I love that your answer is someone helped you on that last piece. Someone helped you get the things to go then express. And I wish everyone in the world could have that guy do that exercise for them. Everyone's life would be a lot better. So what a cool closing story, a very unique answer. Thank you guys so much for your time.

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