a16z Podcast - Ben Horowitz and Ali Ghodsi: How to Run a Billion-Dollar Business

Episode Date: October 10, 2025

Ben Horowitz founded Loudcloud in the middle of the dot-com bust and sold it for $1.6 billion, then led Andreessen Horowitz from its founding to $46 billion in committed capital. Ali Ghodsi co-founded Databricks, stepped in as CEO during a crisis, and led it to a valuation of over $100 billion.In this episode of “Boss Talk”, Ben and Ali join a16z General Partners Sarah Wang and Erik Torenberg to share founder war stories, how to hire and make deals, how to keep culture intense without burning employees out, and why founders should raise their ambitions even higher. ResourcesFollow Ali on X: https://x.com/alighodsiLearn more about Databricks: https://www.databricks.com/Follow Ben on X: https://x.com/bhorowitzFollow Sarah on X: https://x.com/sarahdingwangFollow Erik on X: https://x.com/eriktorenberg Stay Updated: If you enjoyed this episode, be sure to like, subscribe, and share with your friends!Resources:Find a16z on X: https://x.com/a16zSubscribe to a16z on Substack: https://a16z.substack.com/Find a16z on LinkedIn: https://www.linkedin.com/company/a16zListen to the a16z Podcast on Spotify: https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYXListen to the a16z Podcast on Apple Podcasts: https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711Follow our host: https://x.com/eriktorenberg Stay Updated:Find a16z on XFind a16z on LinkedInListen to the a16z Podcast on SpotifyListen to the a16z Podcast on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

I was like, maybe they're right, maybe we should just sell. And I remember having that conversation with Ben, which is he said, hey, you can do whatever you want. You can sell, you're going to make a lot of money, and you'll be super successful in life. But, you know, if you're like me, you're going to look back the rest of your life thinking, you know, I missed that one shot. That was the one thing. I should have taken it all the way. And now I'll never know how far I could have taken it. Could have been.

So do you want to live with that or do you want to just have the money? You know, I'll support whatever you want to do. I really couldn't care of us. In 2016, when Data Bricks was on the brink, the board wanted a new CEO. Co-founder, Ali Gotsy, was ready to go back to academia. Instead of leaving, he took the job and turned an open-source project into a $100 billion company. On this episode of Boss Talk, I'm joined by DataBrick CEO, Ali Gotsy, alongside Ben Horowitz and Sarah Wang. We unpacked the 2016 crisis, the Microsoft deal that changed everything,

and how Databricks built intensity without burnout. We also talk about giving feedback to actually lands and why not selling might be the boldest call a founder can make. Let's get into it. Excited to bring back boss talk. This was a series that you guys did a few years ago on Clubhouse. That was a big hit. Yeah, we had fun. It was Ben's idea.

Yeah, excited to bring it back. So in the spirit of boss talk, let's talk about the first time that you became a boss in terms of running Databricks. Let's talk about the moment in 2016 when things weren't as smooth as perhaps they should have been. and we were looking for a new CEO, and Ben, you recommended Ali. What did you see in Ali? Well, that's not really what happened. So why do you tell the thing I'm a story? Uh-oh.

So what happened was Scott Shanker called me, who was kind of the professor in the background kind of founder type character, very smart guy, very nice person. And he said, the guys, the other co-founders, really think Jan probably shouldn't be CEO anymore. and then Ali should be CEO. And I was like, okay. And I didn't know Ali that well at that time.

And I said, you want to swap out one professor for another professor? Because the one professor you have, you feel isn't grinding it well enough. One professor wants to swap out one of his professors for another professor. It's like a professor, too. And I'm like, okay, are you sure you want to look at anybody from the outside? No, no, no, no. all the founders feel like it should be Ali. And I think Martin Micos was running around at that time.

And I was like, well, maybe you should talk to him and see what an outside guy looks like. And I said, look, I'll talk to Ali. There was another factor that was going on, which was the company was in real trouble. Like, it was not going well. And so the idea of bringing in an outside CEO, we wouldn't have been able to recruit the caliber.

Like now you could recruit anybody to be CEO at Database. But then the choices were. weren't that good. So I sat down with Ali and I would say the one thing I remember about the meeting was I was surprised about how clear he was. He wasn't sure exactly what to do about everything, but he knew all the problems. And then he kind of knew who he was. And so I thought, well, we should give this a shot. So then I took that back to the board. And of course, the other people on the board who were outsiders were very skeptical. And I said, we'll give me a year deal, and we'll see how it goes. First of all, like, kudos to yawn for building the company originally and Ben

investing and believing in us. And then also, I kind of couldn't have done the CEO job. Ben basically babysat me the first couple of years. So I did know what was kind of wrong with the company, because I had been there for two, three years. And I had seen from inside what we should change and what the issues were. But we had an open source project that actually became very successful. thanks to those first two, three years. Apache Spark became a worldwide sensation, and we could pride ourselves

on the number of downloads of the software. Well, and the Spark Conference. Yeah, yeah, Spark Conference. Now the data and AI conference. Yeah, we would say we have 5 million recurring revenue because the ticket fees for Spark Summit was like 5 million. And then they would say, well, how is that recurring?

You would say, well, the conference is every year. So it's recurring revenue. But the problem was that, as it is often with open source is that everyone is just downloading the open source version. Actually, your biggest enemy is your open source project. The main thing you have to fight in the market is, hey, why can't I just download the open source version? Amazon is offering it.

The cloud vendors are just offering it. I'm just going to use that. So this was the biggest challenge that Databics had at the time. And we needed to do very serious, aggressive pivots internally, which were going to be very, very painful to lots of people, like, to the whole ethos of the company internally. And so I kind of knew that for almost a year. So when I got the shot, that's what we started doing. The strategy was like makes Spark the biggest open source thing. I mean, I can remember it on all the slides now,

and then Databricks would have the best spark. But Databricks never had necessarily. We didn't do a lot to make it the best spark, or not differentiated enough. And that was kind of the first thing all he did on the product side. And then he hired Ron Cabrisco, which that was transformational. Because that kind of dragged the company into the world. Yeah.

So obviously that was the right decision and paid off. Zooming out, Ben, you've worked with, and you know all the great CEOs, of our and worked with them. Where does Ali spike? Where is his superpowers as a CEO, as a boss that have helped contribute to the impact? I mean, Ali's really good. So I always rate CEOs.

Okay, if I was running that company, would I do a better job or a worse job? And with Databricks, I do a way fucking worse job. So he's good on many, many dimensions. So I'd say, first of all, he is a real technologist, like not a pseudo-technologist, like his competitors. I'm sorry. So he really knows the product. He understands the product strategy in detail.

He also ran engineering before he was CEOs. You know, mostly what I worked with him on the early days was just, okay, go to market and BD. And he's really good at both of those. That's where we had to catch up. Stuff like had an amazing go-to-market. And then we needed a big deal with kind of big partners. And I got him like a little BD tutor, John O'Farrell, who did a nice job, came in and kind of taught Ali about. how you structure a deal, how you do things.

But he learned everything so fast. And then probably the thing that he does that I wish I could get all our CEOs to do is he doesn't hesitate. He trusts his eye. Like he'll see something, and he doesn't know if it's right. And so if you look at the strategy changes data bricks has had, one big one was building a data warehouse. Like that is a pretty big swing and a seemingly like quixotic insane idea

given where they were. He's paranoid enough that he knew that could be an issue and then he trusted himself enough to go get deep enough to decide whether to do it or not as opposed to, you know, ignore it.

These guys are trying to kill me. I don't want to see it, which is what a lot of CEOs do. And so that kind of thing. But there's a lot of elements to that job. It's a very complicated job. Ali, talk more about the journey about evolving from an academic,

a technologist, to someone commercial. It's a journey our CEOs go through. Talk about what it was like for you and in the context of what others can learn from it. So we were in academia, so we were scientists. And then, you know, I led engineering and product. So you got to learn how to build a product and get product market fit. And then I became CEO afterwards. Each of these has different sort of challenges. I think that in all of them, the thing that is in common is that you really have to understand and be extremely good at the task at hand. And so number one, admit that you don't actually know everything about the job. So A, first step of anonymous alcoholics,

admit you have a problem, okay? And then number two, be a student and learn everything you can about it, right? Go all the way down to the details and try to learn from the best. And then work your butt off. You're nothing. You're zero, right? You know nothing about writing reliable software. I would say that was the same thing. I tried to learn. I tried to network with the best heads of engineering, best heads of products. I try to read every book. I got as much as I could out of Ben and Mark and read all of their blogs, all of their books, everybody else's. But then you do search. Search firms are really great at getting you to meet who's the number one product manager

by reputation in the market right now. Can you get 30 minutes with that person? Just sit down. They're not going to join you because your company is too crappy and too small. Can you get 30 minutes with them? Can you get a dinner with them? Can you get a breakfast with them? And then just ask them lots and lots of dumb questions.

And they'll tell you. They'll happily just tell you like, hey, here's how I do it. The other guys are wrong. And then they'll give you a playbook and you can go to the next person and say, hey, this is the playbook I heard from them. It's like, no, no, no, that's totally wrong. You don't do it that way. Here's how I do it.

And then very soon you learn enough. And if you really have grit and you work hard, you're going to be able to do great things. That's about you yourself. But also, if you hire a great team, because as a leader, you alone can't do much. So can you hire the best people out there? So that's also part of that. Do you know what great looks like? Have you interviewed all the best people?

And then can you now sell them and get the best people to come work for you? Once you start assembling a team of excellent people, then they will uplift you. This is a managerial leverage that I learned from Ben, which is from high output management by Andy Grove. But it's basically, are they so great that you're learning from them. It's like, Ali was a great head of engineering, but actually he was a great head of engineering because the people that worked underneath me were doing amazing things. And I was just standing on their shoulders. So you just have to do that.

And you have to instill everybody else to do that recursively so that you end up with the just amazing killer team. And you've got to continue doing that. Now you have to, okay, for engineering, it wasn't actually that hard because I had written a lot of software. But now you're CEO. So now you have to do that for marketing. You have to do that for sales where they were super helpful because they had done it with Cloud and Ops Square. So they knew how to build a B2B machine, how the game was played.

But you have to do it again. But now you're doing it in a field where you're really clueless. And also probably all your instincts are wrong. And your intuition is completely wrong. So can you be clairvoyant and see the truth? Or do you want to lie to yourself? And that's where I think a lot of founders make mistakes. Like they'll do well in their own archetype.

When they have to step outside of their own archetype, They make a mistake. They hire people that are like their own archetype in other roles where that could be lethal. By the way, that's how we started Databricks was, I think everybody was a PhD in computer science who was running anything, including sales. Yeah. That's probably the number one mistake is you just go, okay, well, like, I'm an engineer, so I want a sales guy who can talk to me and understands engineering. Well, that's not a really good criteria for sales guy. I remember a really early conversation Ali and I had was,

Ali called me up and he says, a little worried about the sales organization. And I said, what's going on with them? He said, well, they're just inventing products. And I was like, well, what do you mean? Well, they're selling stuff we don't have. And I was like, what did they sell that you don't have? They said, well, they sold this training professional services package for $200,000.

And I said, well, why did they do that? And he said, well, the sales guy said, the customer had $450,000. The product only costs $250,000, so he needed to get the rest of the money. And I said, that's a really good sales guy. I think you told me that's called Price to Budget. So those kinds of things, he just learned faster than most other CEOs are in that position. And then he's taking a lot of stuff that, like, I know how to do, and he's done it much better. So one thing that I'm good at is rather than telling somebody that,

stupid and hurting their feelings or so forth. I'll ask them a really fucked up question. I actually did it in a board meeting. I said, well, could you help me with the math on this? Because I don't understand the math. Actually, it was worse. He said, help me with the, I'm just trying to understand basic math. You have all these numbers on the slide. And if you said that your conversion ratio is 5%, but I can't divide any of those two numbers to get 5%. And then the person freaked out. And then the person freaked out. Don't freak out. Just tell me which of the two numbers do I divide to get 5%. Because I've divided all of them. And none of those. on this fire.

Am I going to be fired? So he does a much better version of that, which is if somebody's really, really screwed something up or messing it, he'll go, how do you think it's going? And I was like, since he told me that, I was like, oh, yeah, that's a better way to do it. That's even better. So, yeah, he's a very good student. Can I refund that? You know, there's this book called Radical Candor, and I think people take it too far and

they misunderstand and so on. But I think the essence of that book is that if feedback, if, are you criticizing me? Are you saying I'm stupid? I can't do the vision because my point is not about the 5%. I was trying to make a different point. And now you're just, this is a cheap shot. And now I'm like hurt. And I think, by the way, I think you're wrong. It's not five. I said six and a half. So are you criticizing me? Or is it like, no, no, no, I'm here like to help you. I can like not help you. But if you beg me for help, maybe I'll help you. So which of the two modes? So if you can get people into the mode of, oh, wow, I'm like being helped.

Like they're helping me. And I'm going to get further ahead in my career. And I'll be more successful. Please. No, no, no. Please don't leave. Come back and tell me more because I'm taking notes here. So if you can flip to that, and I think a lot of feedback can be recast into, I'm just here to help you, but feel free to completely ignore this advice. But if you want to be really successful, if you want to get that job, or if you want to get that project next time, if you did it this way, that you probably would have had a higher probability of getting that. But I don't care.

You do whatever you want. And then people are much more receptive. And like, no, no, no, please, I want to know more. Yeah, yeah, yeah. Well, and then just the frequency of it, I think, helps a lot, too, where if I see you once a year at your review and I tell you what's wrong, with you, you're going to be offended no matter what it is. No matter how wrong it is, no matter how correct I am, it's going to be offensive. But if every day, if I see you doing

something I don't like, I go, don't do it that way, do it this way, then you get desensitized to it. And so I think the mistake a lot of, particularly engineers make, is they just don't say what they think when they think it because they're afraid of hurting someone's feelings. But that's how you save their feelings, because they're used to you. You're always doing that. And you're doing with everybody. They see it. They're like, oh, yeah, fuck, Ben's an asshole. He's, like, always doing this. But that's how he is. And that's how we work, and it's no problem, as opposed to the hammer. And you try and put it in a shit sandwich. Oh, you do this really well, this is all fucked up. And this is good. And people are like, well, so like,

now in my written review, you're telling me that for the first time, this is all fucked up, fuck you. And this is very common. And you can see this in the industry that the extreme version of it is like, they get fired. And then head of HR talks to them. And they're like, You know, do you see this coming? It was obvious, right? You knew this. I had no idea. Like, like, wait, you didn't get any feedback on this? No. I only got thumbs up all along for like all year. So I'm in shock. This is super common, right? So maybe on the topic of managing talent, you have this incredibly high intensity culture at Databricks. And there was this thread recently in our CEO thread where they asked everyone, but you had a great response on, hey, we have 50 people. How do we scale? We have this culture of 996, right? You work 9 to 9, 6 days a week. How have you scaled that intensity well into 10,000 employees? I think start with, you know, setting the tone at the top. If you're the hardest working person, you know, it kind of everything will take care of itself from there on.

If you're not working hard, it's very hard. I mean, if you have, you know, it's a double standard. I mean, Ben has a whole book about that, like, which is, you know, it's basically, you know, what you do is who you are, is the whole title of the book, right? So it's like, if you are working extremely, extremely hard, the rest of the organization is also as well. you know, are you calling people at 9 p.m. 10 p.m. Are you working weekends? Did they expect you? Not that you're going to be angry and yell at them if they're not dropping everything for you. Not that. But the fact that they just know that Ali's working 24-7 and he's working seven days a week and, you know, he's working at 11 p.m. or 2 a.m. or whatever it is. I think that gets a lot of it done. The second thing I would say is you can vet for this when you hire people.

You know, and the easiest way to vet for it because, you know, you got to be careful with it because of people who say they're going to work the hard. artists are not the ones who work artists. Exactly. So don't, so don't. It's the opposite. Yeah, 100% true, right? So the best way to vet for this is to the back doors. You know, ask people, people don't, if I ask someone, you know, hey, how was Sarah? Like, did you like, did you like, was she great? They're always going to say, yeah, she was great. But they're going to be much more honest if you ask them, like, hey, how much does she like grind the midnight oil? Is she like, and they'll tell you right away. It's like, oh my God, she works like crazy. It's like, you know, she's, I mean,

I think she has a good balance, you know, you can like suss that out very easily. From backdoors, people remember the people and they'll just offer it up and say oh that person was like nuts they were like working 24-7 so I think that way you can get people that are hardworking by the way I don't want to over-emphasize

I don't think everything is just work harder you know you have to also work smarter and I think that you want to make sure that it's sustainable I can work insanely hard I'm motivated everybody has a different threshold for how hard they can work I don't think you want a culture

where people are burning out I think you really should avoid that In fact, you know, at Databix, I'm very often going in and saying, hey, this team, like, you know, your scores are really bad on work-life balance. Like, what are you doing about it? Or you guys should take several days off, or you should do some off-sides or you do something. Like, we actually go in and if we see that there's some groups. And other groups at Databricks, you know, their work-life balance scores are like 100%. They're like, you know, slacking off.

You know, so then it's kind of the opposite. But I do think that you can kind of up for that. And I think that also setting the expectation. I would say, you know, one of my competitors, Frank Slutman, wrote a book called Amped Up. That's a great book on how you get, you know, execution into a company. Like getting a high-performance culture read, everybody's always trying to excel and do better and better,

sort of that kind of culture into a company. That's a good book if you want to just study, and he's doing it at scale at bigger companies. So I think that's highly recommended reading as well. Yeah, and I think, you know, a lot of it at his scale ends up being things like organizational design and do are people feeling like they're having an impact when they're like

if people are feeling like they're having an impact and they're good then they'll work very hard but if you're in some kind of weird three-legged race that the CEO has constructed where everybody's got dependencies on everybody else it just doesn't matter you know like you'll just have a lot of people go like I know if I work hard it's not going to make

difference. So, like, why would I do that? And, like, you can't overcome that with rah-rah and, you know, lead by example or anything else. Like, that's just fundamental to how it is. And you see in, like, like, in any company of any scale, you know, even at our scale, like, there are some groups who really can have impact and work extremely hard. And then groups who have lesser impact will work less hard. And you just see that. You know, people who are motivated and they feel excited. about work and they don't see the impact that they're having, they're going to work way, way, way, way harder. Versus if you're demoralized and you feel like it's not going well, I'm not having impact,

I don't have any autonomy, then, you know, you're not going to, you just don't want to even. You're like kind of depressed sitting down working. I do think there's one thing here where leaders can really help, which is to make your team feel like they're winning and that they're doing a great job. You can ask more from people, but if I feel like, hey, I'm losing and everything we're doing is wrong, and I'm putting in all these hours, and it's stupid. Like, there's like, what's the point of this? Then people don't want to work.

So I think it's like feeling like we're winning. Like, we're the winning team. We're winning, like, you know, and wow, they're expecting more from me. And, you know, so then I think you can get, you need that motivation in people. Yeah, yeah. Which is why, by the way, the hard job is when you aren't winning. Yeah. To get the output.

Like, particularly in Silicon Valley, because, you know, you're battling, attrition, this and that, and to get things on the right track, that, that takes a whole. different kind of level of technique and storytelling and show you how you could be winning and all that kind of stuff. That gets very, very complicated. We've both done that, right? Yeah, yeah.

It's been a phases in our company's lives where we weren't winning. Yeah. I mean, especially, you know, the story you had in Hard Thing About Hard Things, which is probably the best business book I've read, which I read, by the way, before starting Naderbricks and influenced us a lot. You know, those are a very important. Yeah, that's a difficult. that's such an important point

because even if you're winning people got to feel like that but if you're not winning getting them to feel like you're winning is we have a paths to win yeah we have a pat you know and it's like rock solid it's going to work but it would demand sacrifice

from all of us you know and there is no feeling as good as when you're not winning and then you get it to winning yeah like that's the best feeling you can't replicate that once you're super successful you never can quite get that feeling Yeah, it's true.

But you also never feel that horrible pain against. Well, it's easier to be the underdog in some ways, right? You know, you have nothing to lose. In some ways. In most ways, not. Well, I want to explore this leading from the top because I was kind of the first thing you started with. We actually hired an ex-Datibricks employee to A16Z. So we have some inside scoop on your leadership style.

And one of the things he said was you have this, and Ben sort of touched on this too, but you have this amazing ability to be strategic, help your team focus, but you're also very in the weeds. Like you're giving product feedback. You respond to emails super quickly. And product launch emails, no matter how small they are, you'll respond to congrats, which, you know, he found hugely motivating. How do you do all that?

Like, and where do you fly high? Where do you fly low? Yeah. By the way, I respond even to progress reports on all those products, and I follow them in detail, every one of them. I try to respond to every product. Insaneate. respond. But look, I think this is, if you're just going to fly high and give high level

like inspirational speeches and then, you know, we'll trust and we'll delegate to people, it's not going to work. So my way is, you know, you got to get into weeds. You got to understand. This is back to what I said at the very beginning. Like, how do you become great at the head of engineering? How do you hire a great head of marketing? The only way you can do that is by being really excellent at it. So you need to study the game and become the best. So I try to stay, you know, stay tuned to all of these things. There's this quote, if you do everything, you will win. And then the question is, you know, have you done everything?

Exactly, exactly, exactly. So, yeah, so, you know, you just, it takes a lot of effort. You know, you need to learn all your keyboard shortcuts. But I think that's, you know, people feel motivated that, hey, I have like direct relationship. You know, we used to say, we used to have one of the culture principles used to be, hey, be a co-founder. And we don't want to have any employees at Databricks. We just want co-founders. So, and the key point was like, hey, you're kind of the owner of this company.

You're not just a renter. Come here and, yeah, we can talk about it. And you can suggest an idea. You might have just joined and you're straight out of school. You might have a great idea for a product. Tell me about it. You know, I'm happy to push it. And so it's making people feel like they have an impact and they're inspired back to Ben's point.

Then it's going to be much more more exciting for them, right, than following some bureaucracy. So I don't follow the bureaucracy, basically. I go talk to anyone I like. I try to go to the person that is actually the closest to the work that's being done at any given time. But there are some tricks and rules around how you do that without breaking the whole organization. So you can't just willingly talk to anyone. But yeah, that's part of it. Listening and giving direction is very different on that.

If you give direction, you can cause a lot of chaos. But if you go talk to people, you listen to understand the problem, and then send it back down the chain of command. tends to work very, very well. But, look, generally, like, if you're a CEO and you don't fly low and fast, it's going to be a mess because you never get the truth

because the truth never makes it to you, like through your people. Like, if you, if I go talk to Ali's executive staff about what's going on in their organization or anybody's, first of all, they're going to spin it. Second of all, they don't actually know. And so, like, you can't, you need to help them debug their organizations because they're, they got a million things going on. They're also kind of going to the problem, going to the bottleneck, trying to figure out what's happening.

And so, like, that, it's just a very unreliable source of information. All the knowledge in a company is with the individual contributors or doing the work and the customers that, like, there's no, there's, no knowledge with the people who are talking to you as CEO who are in your staff. That's not the way information moves. And so you've got to be, now he's like super fast and which enables him to go super low. But, you know, in any given time, the way to think about it as a CEO is it's not like you're spending the exact amount of attention to HR, SUR, to, you know, the key engineering project as you are to the, you know, the key kind of sales competitive deals and that you have to, you don't address everything evenly. You can never do that. It's just a bad

idea. Now, you'll probably get to everything eventually, but you're not spending the same amount of time on every single department. The org chart is not the way that company works. It's just a communication architecture. Yeah, I think the best way I would say it is like it's kind of like a T and one of your broad and then you have the leg that goes down and goes really, really deep. But you want to do that anchoring. And the key thing is to have a really good priority order of what's most important. And kind of drop everything else. Like, you know, you drop that T and go really, really low. Like, it might be HR. I might be deep diving all the way down to HR looking at our HR handbook, our policy, everything. Like, who was this person? What happened?

Why is this happening in that group? What's going on in that group? What's the culture in that group? What happened here? You might want to do that. It might be existential for a company, as we've seen some companies went under because of HR problems, right, or ethical issues that were going on. So I think having a really good priority order is really important. I think some execs, like, they just want to have a perfect ducks in a row. I have my weekly one-on-ones. I have my weekly staff meeting. I have my weekly this. And then I do this. And then we follow the rules and we do all of this. And then that's just like the top part of the T. And then there's nothing that goes deep. And that's the issue, I think. Yeah, over-systematizing or making it

like symmetrical, you don't even, you don't have to have one-on-ones with the same frequency of all your staff, or like some of them, you know, like you can meet very seldom. Well, like, everything is different. Every part of the company is different. You may need to meet with somebody every day. Yeah. And then other people, you know, you can meet once a quarter for now because it's just not that serious.

and you can't get caught up in making everything fair and symmetric, particularly like your staff, they've got to be able to deal. Yeah. And this is actually the biggest conversation that I had with Ali early on is like, if they can't do it, they can't do it. That's it. It's a wrap. Yeah, yeah, yeah.

Don't try and fix them. They can't be fixed. It's not going to have them. And, yeah, it's a sad last. lesson, but important lesson. I want to turn the conversation to an area that Ben was saying you had to catch up on, at least in the beginning, which is the BD dealmaking stuff, which is interesting to me just because I think of you as a consummate dealmaker now. I feel like you're playing chess. Everyone else is

playing checkers. I want to go back to 2017 with maybe one of the first game-changing deals that you guys did, and that was the deal with Microsoft. Can you guys talk a little bit more about how that deal came about, anything you'd do differently. And by the way, founders still to this day ask us about it because it's sort of a model for how they'd like to do deals. Yeah, maybe I should start by saying that, you know, we had tried to get close to Microsoft for a long while.

I think Ben had told us you need to, that's the important partner because they have the biggest distribution channel. You know, today they have 60,000 sellers. If you can unlock that in any small way, it's going to be a game changer for you. And I had been trying, and I had been CEO for a year. So I'd been trying hard to get in there.

And many, many people offered me, you know, hey, so here's, I actually know Satya, so I'm going to get you introduced. And I got multiple introductions to Satya. He just, like, I never responded or just ced his EA, and it went to into an EA loop. You know, like, we're still trying to find time. He's been so busy this last six months, you know. So, but then he had a meeting with Ben. And I think it was here, actually, at A16C. And they actually just talked, and I was not actually in the loop.

And then he called me up and said, hey, I talked to Satya, and I think this is, he's excited. He wants to do this. And I saved the email. So Ben introduced me to Satya. And this was, I think, 3 or 4 a.m. I was like in New York. And the email went to Satya. And then Satya added like four or five people to the email thread.

And then they added four or five people. So like within an hour, I had like 25 emails in my inbox. And suddenly all these people that were not responding to my emails from Microsoft, right after Satya CC them and CCed the next person, they were all like, hey, I'm clearing my calendar. would love to meet you. Do you have any time in the next two days or three days? But really kind of the original pitch of what's the giving get was Ben and Satya at A-Sitzin-Z.

And they kind of figured it out and I was not actually even there. So we had some luck and then Ali did a couple of things that were, or quite a few things that were very, very effective. So the luck was at the time, deal with big companies, there's always a timing element. And there was a company called Hortonworks that had a deal with Microsoft to provide some similar kind of functionality.

And they were basically putting a gun to Microsoft's head saying, like, you pay us more money or we're going to pull our product. And they were on-prem, and they were in cloud. So it was like a big mismatch also. Yeah, so it was real. So Microsoft was like super pissed at them and wanted to stick it to them.

And so that was, you know, so you have Satya going, like, I think this company's interesting, and then this ground level thing going, like, we want to fuck these guys. And that kind of opened enough of a door to get it going. But there were, so, like, one of the most important things in the deal was, which, you know, and John O'Farrell really emphasized this for. for both of us was, look, you got to get them to put enough, they're such a big company that they're going to lose interest many times. So if you don't have them write you such a big check that somebody in there is going to get fired if it doesn't go well, it doesn't matter if you get the deal.

You're going to lose the deal. And so what we did is we're like, and the technique that we had was, okay, give us a forecast. Like, we're a little company. We can't afford to do this deal. You know, we can only afford to have one partner. So give us a forecast of what you'll do. Yeah, because our engineers are busy.

Yeah, yeah, yeah. They're going to do this integration. That wipes out 12 months of our road enough. We don't have anything else. You guys have, like, many thousands of engineers. So this is, we only have one of these. Yeah, so we, you know, whoever can sell them. We know, we think you can sell the most, but we don't know, like, what's your first?

So, you know, like kind of challenged their kind of manhood a little bit. And so they come out with this big-ass forecast. And we're like, okay, great. Just give us a little portion of that. It was a huge deal. It was a lot of them. Yeah. And then, then Ali said, like, you know, when we got all the way down to the deal, he was like, if I don't get this number, Ben's going to fire me.

And so can you help me out? It was very interesting dynamic. It was a very interesting dynamic. So, you know, John O'Farrell had to strategize with us and told us that, you know, they have to do a big pre-commit because then they have skin in the game. Otherwise, they're just going to forget. They'll do, like, the PR, but then they'll forget about you. But then when we were trying to get that from Microsoft, I remember I was talking to Takeshinumoto, who is, you know, one of the main brains at Microsoft, like one of the key strategists there.

And his thing was, I don't want to give you a big commit because you're such a small company. I'm worried you take this money and you get drunk off of it, and you're not going to do anything afterwards. And so I had to really convince him that, no, I'm extremely hungry. Like, there's no way. Like, I will continue to have crazy appetites. Don't worry about it. So both sides were not kind of worried about different things. But yeah, the giving get was important that you said in the beginning,

which was they had a gap in the product portfolio, right? They were competing with AWS. They had a gap at the time. And we had a great product. They have an amazing distribution channel. So like in these BD deals, there always has to be a giving get that actually is kind of commensurate. And this is why most of these deals fall apart and they don't work. There has to be something that you as a small player can give that they don't have.

And usually you don't have anything to give them. Usually I find all these small companies show up and they come, for instance, to Databricks now and say, oh, we'd love for you to partner with us. But what am I getting out of it? Right? You don't report to me. I don't report to you.

So the moment we've closed the deal, if it's not good for me, neither of us will just do our side of the bargain. So there has to be something in the deal dynamics, in the construct, that inherently is extremely beneficial both sides. There has to be a trade that makes sense. Microsoft really wanted that product.

We really wanted their distribution channel. So that made it a perfect marriage. that time. You know, if you don't have that giving yet, it's not going to work. And then the other thing that I think a lot of entrepreneurs understand is any big deal of that size, you lose at least three times before you win it. And we lost that deal. Ten times. Ten times. And like, including, like, the day before we were supposed to launch it, you know, the antibodies came out of the company, and Ali had to fly up to Redfin and sit There was one engineer that just said, not doing this.

This is not going to go. They actually put a guy in place at Microsoft who was actually super, had a great reputation, but he was a builder. So he just had huge problems with this. It's like, this is not a product I built. Why would I make this successful? So yeah, usually there's like many times. So like if you don't have grit, those deals will die.

Because this deal died multiple times, as Ben said. It was like completely over. Like it was completely blocked by some exec that. said absolutely not. I'm blocking it. It's veto. It's over. And no one wanted to overrule him. So you have to go in there and work. And the only way we do, like they call it the nerd bird. I would take the, you know, SF, Seattle flight up there. I was up there so much. I knew all the buildings, all the rooms, everything. So you just have to just spent time on the ground and talk to as many people as possible and sort of influence that organization from within.

I will say, look, you know, with all the difficulty of the deal and, you know, and Microsoft being Microsoft, they've been as good a partner as not only we've had a Databricks, but in the entire portfolio. I mean, they've really, you know, lived up and delivered what they said they would do, which is, I think you have to give such a huge credit because, like, in the whole Gates and Balmer era, they were never that good a partner to anybody, and he's really turned that around. And, you know, they've been fantastic with us. This was around the time where Satya had taken over, And, you know, he was giving to everyone at Microsoft the book, Growth Mindset or Mindset, which is about growth mindset. So there was this kind of aura in the air that, you know, we should, we should try.

Like, let's try to make things happen. Let's have a growth mindset here. Let's see. Is there a way we can partner? So this would have been impossible five years earlier. So it's good to Satya and they put us on the map. And he's been a great partner ever since, you know, whenever there's been issues, they always resolve it. So, you know, we are very thankful.

We wouldn't be where we are without them. Yeah. Just amazing. amazing really i want to open up the conversation to deal making more broadly now that you're not a small company anymore and you're a big company making acquisitions you know tabular neon mosaic just to name a few what is sort of your approach in terms of when to build versus when to buy slash how do you think about sort of acquisitions more broadly yeah i mean what we try to not do so let's start with a simple thing uh is a lot of companies especially at scale they'll buy

revenue. So they'll look at a company, they'll say, hey, this company is this size. We'll just buy that company. We'll put more salespeople on it. Then we can accelerate the revenue. We're buying that revenue. And that's how they're doing it. We're not doing that. What we're really doing is, number one, we spend a lot of time with the team and the founders. So we're trying to see, hey, can we build together? Like, you come here and you build together. That's very different from that buying revenue model. The buying revenue model, oftentimes you part ways with the CEO from day one. You can see the big companies, they literally have a a plan. I have some execs that come from

these big companies to say, hey, our plan usually is to part ways with the CEO. You make a deal and the CEO can leave. But also the key people in those companies quickly leave, all of them. Like at the top management and then you keep promoting the people from below that couldn't get promoted before. And then eventually you bring in your own people to take over the

company. And then the company is dead. There's nothing left of it. And there's no integration between that asset that you bought and the platform that you have. So to avoid all of those, can you get people that really feel like they're your co-founders? So we spent just enormous amount of time with who we're about like the company

who are the founders. How do they work? Are we culturally the same? Spend time with them. Do we get along? Do we see the world the same way? You know, are we going to click? Are we going to do this together? Are we going to be able to build in the next five years? So that's where we spend number one. Number two, we spend a lot of time on the product. You know, what's the product experience? How would we integrate

this? What would it look like? How much can we rewrite most of it? Can we rewrite it? What programming? I always ask this and people like, why that's such a dumb question? I say, what language did you write it in? Like, why do you want to do that? What does that matter? No, because we're going to integrate the codebases, right? It's like the build systems won't work.

It's not going to even compile. So the product is something we spend a huge amount of time and talking to customers understanding what the excitement around that product looks like and how the integration would look like. The last thing we do is we'll look at the financials. You know, what's the revenue multiple and, you know, how much can we grow it

and what's the three-year plan, five-year plan, and so on. And I feel like big companies, corporate departments do it exactly in the reverse sort of this. They start with, hey, the revenue is this, but we could accelerate it. And the multiple is so low and like, you know, in this, in my Excel shoot here, it just makes perfect sense. You know, and then second, they go to like, hey, is this a good product? And then lastly, like, hey, how do we come into these knuckleheads? I mean, we probably don't want to have him here, but we got to pay him off somehow. So I think, you know, thinking about it,

that way, you get more longevity out of it. Yeah. And this is, this really comes. It sounds like he's talking like a product guy, but this is really the thing that people get wrong on the go-to-market, because what happens is if you've got multiple product architectures, that's going to mean multiple SE forces, multiple post-sales things, and your entire sales efficiency is going to go through the floor. And because, you know, they have a keen eye on that. Everything they buy ends up looking like a Databricks product. You know, like, and that work is going

in. They're not just selling some shit to get some money to, you know, go on a corp-deb thing. And I would say so many like, when you bring in a professional CEO, this is what they screw up. Because they don't understand that, yeah, engineering goes,

yeah, yeah, we can take it on. There's another set engineers. We don't care if they work on that, blah, blah, blah. And engineering gets less efficient too, but it wrecks the field. And then the customers hate it. Customers hate it. Yeah, like, okay, I've got to learn another access control model. I've got to do this.

I got to, you know, these are not things anybody wants to be part of. Yeah, 100%. Yeah. It's the go-to-market side that you're worried about that, you know, that experience that those customers will have. You know, they're going to come back immediately and say, hey, we were already upset about these things before the acquisition. Maybe you can fix them now.

It's like, no, actually, you know, several of those people actually quit, and now we're going to just work on integration. And that thing, though, got pushed out another two years. So you don't want to be in that situation. So there's a lot of companies that do that. And by the way, what they're doing works, revenue-wise. They are getting the revenue. They are getting the stock swap works.

Like, you know, if they're multiple of the company that's... It's in a creative deal temporarily. Yeah, yeah. Yeah, it works. And then the first year, you get the bump in the revenue, and you get a second-year boost in revenue growth as well. So the financial engineering actually works great for those companies. It's just long-term.

It ends up being, like, you know, a bag of crap that doesn't work together. And it affects a brand, you know, like one of the things is, one of the reasons Databricks is so powerful is all their customers want to buy all their products because they're like, we know that's the best software we buy. And as soon as you start shipping away at that with these financial strategies,

like you can't get it back. Because the reputation is every customer's experience. There's no marketing through that. It's the best software because it was written by the engineers and built by those that were the best, including the acquisitions that we got. They were phenomenal people that came in, and they continued. And since we gelled, they continued building it.

So that's why it's great. It's like the, you know, so we pay a lot of attention. That's like back to the, you know, who are you getting into your company? Yeah. Yeah. Oh, that's the other thing, right? Like, you can buy something that's got a lot of sales where you're downgrading your whole, like, company. Ross Perrae actually wrote about, in Citizen Perrault, his biggest,

sphere, which definitely came true, was he built this elite thing at EDS, and then they would actually acquire IT departments. And they're like, he was like, they're going to absorb us, not vice versa. And that does happen. Yeah. There is one really good company that, well, one really successful company that we never acquired. And I always vetoed it whenever it came up, because I just think that the quality of their employee base is not great. And I didn't want it to dilute databases. Otherwise, from every other angle, that deal always made sense and I always vetoed it

because I felt that you know it's just they're all going to quit or be super unhappy let's just not do it so yeah tell us why like

merger of equals are because the cultures aren't equal the people aren't equal the people aren't equal and what made you feel that way you just spend time with them

and they just didn't exude to a Databricks culture well I mean it's look it's like everything else like it's like when we were grading students at the university it's like okay the rock stars are super easy

to find out so they're like there and then the people that are really really bad that's like it's not hard And then there are people in the middle that's in the gray zone. This was a company that was, you know, I feel like the talent is not phenomenal,

and you don't need to be a genius to know that. And then there's some startups you know immediately. Like, you know, okay, these guys are Olympia to win Arizona. They're like phenomenal and they're like executing like crazy and they have a track record. So I don't think those are that hard. And we try to hire these and this is the one that I vetoed. The hard part is what do you do with the ones in the middle?

That's always where you spend all of your energy, you're trying to suss out. Like, you know, okay, they're not stellar stellar, but maybe they are. Maybe they just didn't have, maybe they didn't have the go to market, They didn't have the funding. They didn't have the support that they needed and so on.

Maybe they could if we give them a chance. Or maybe they're just mediocre. And that's where we spend a lot of your time. But you've got to spend time with them. You have to interview all the people. You know, you have to have your people interview all the people. This can't be an Excel sheet exercise. Yeah.

And Silicon Valley has a lot of left-sighted companies. So, you know, you'll have a great engineering team and a bad company because, like, you know, bad leadership, bad, go-to-market. You also can have, like, guys who can sell anything. with a ridiculously, like, poor engineering team, and they can just sell it. And, you know, you've got to be very, very careful about that. Actually, our, you know, our CRO at Databricks is,

you know, he came from a company that, you know, he'd sell anything. Yeah, he was, he was selling SFTP, secure FTP, which is free, and it was selling it for a lot. He was selling it for a lot. He was making a lot of money. He was saying, you know, the electronic medical health records, you know, how important are they?

If they got dropped, you know, how much of a risk is it to your business? Well, this is secure, FTP. You need it to be secure. Yeah, and somebody grabbing that file. He's good. Yeah, the only thing I'd add, too, is this strategy is probably making you more attractive to the people you want to acquire, too. They don't want to sell if they're going to get fired right away. Yeah, for sure.

It's very competitive. Yeah, 100%. Yeah. I mean, you know, there's also a reputation, right? People know, like, they'll look back and say, okay, well, what happened to your previous acquisitions? Yeah. You know, was there a huge fight and everybody's quitting left and right, or, you know, did they work out? you know, how are you taking care of those people?

You know, what roles do they have? Do they have influential roles in your company? You know, that's also important. So you're setting a precedent. You're setting a precedent in many, many ways with acquisitions, MNA, you know, deal dynamics, the price. You know, when you go through, the lawyers come back and that you're spending all those 20, 30 days doing the definitive agreement. Every little thing you agree to there is a precedent for the next deal. Yeah, totally.

Maybe actually just to turn, so we're talking about Databricks as an acquirer. if we go back in time again to maybe a moment where you thought about selling. And maybe that, you know, you didn't actually seriously consider that. But I wanted to actually just sort of quote this infamous email sort of circulating our firm that Ben sent to Ali. Yeah, Ali brought it. I had forgotten about it. He brought it up at a board dinner. And I was like, oh, shit, I said that. But actually, this wasn't, this was not pertaining to selling the company, but it was, I think, selling a candidate, right? And you talk about, hey, Ben, can you sell this candidate

on the fact that it will be worth $10 billion, maybe $25. Yeah, because the company was worried about that company getting involved. He wanted to have a double trigger because the company, if Databick sells, and they fire me as a salesperson, what equity am I going to get? So give me double trigger, so I'm protected. If we get bought and I get fired, I vest all my equity immediately. Yep, exactly. And so, you know, in response to this, Ben, and I'm going to paraphrase this a little

bit, but he writes back to you, and I'm like thinking about Ben's tone in this, you are severely underselling the opportunity. We are Oracle in the cloud, and we will be worth 10x what Oracle is. But what was your reaction when you saw that? And did that give you more fortitude to not sell the company? Yeah, Ben's crazy. I think the first thought was exactly Ben's crazy. But no, I think both Ben and Mark always kind of pushed us to think bigger. I remember we did the pitch at Day 16

Z for I think our series D which would have been around 2017 or so and the question was asked, you know, what's your biggest bottleneck? And I said, biggest bottleneck is hiring. I said, okay, well, who are you losing to? And I said, well, it's Google, you know, it's the fangs. And the response

I got back was, well, you need to just add the database to fang. It needs to be fang DB. With a straight face. And it was like, and I'll And my reaction was I laughed. I literally said, I mean, this is not serious. It's like, yeah, that's the ball.

And I'm like, no, I'm serious. You need to add the other weeks to fang, you know? And then there was like a pause and there was like this. And I think it's doable. And so then I actually went back and thought about it a lot. And I was like, is it doable? Like, is it, am I the crazy one or are they the crazy one? Who's the crazy one here?

Like, who's nuts here? And, you know, and that kind of pushed us to think about how do we change our calm philosophy. How do we, if we wanted to go. go and get the best of the best side of Google, what does it require? And we developed a new model, but we're like, actually, the way to think about it is your market cap divided by number of employees. That's how much money you can give away in terms of dilution. And actually, we did the calculate the number at that time. And we're like, wait, we're actually richer than Google in terms of, you know, how much dilution we can afford per engineer because

at that time, this was like, you know, before the Twitter downsizing. So all the companies were oversized. So we did the calculation. It turned out that. We actually can probably pay P95 percentile. We did the math on P95 percentile for, you know, and you know, you know, engineering. And it's like, yeah, this actually the math works out. We moved all the compounds. And we told them, and we told the employees about it. It's like, hey, we're paying your peanut 50, you know, and we can afford it. And so that came out of that simple, you know, so these simple, you know, your trillion dollars, just add your acronym to the to Fang and so on. They're silly and they're kind of crazy, but they do push you. And you go back and think about, hey, what is the fundamental reason from first principles that we couldn't do something like that? Why couldn't we be a trillion? What's the bottleneck from being a trillion or being part of Fang?

And then you think about it and you start to zooming in on, like, can we unblock that? So it has helped us and it has been a driving force, even though it's, you know, it's a little annoying, you know. It's like, you know, hey, he's right. You know, hey, mom, dad, I got the A plus. It's like, yeah, but we ranked. I was number two in the class. So it was someone better than you? Yeah.

Yeah, for what it's worth, when I joined the firm in 2019, the series F of Databricks was the first deal I worked on. And I think the valuation was $6 billion. Ben says to us, oh, well, it's going to be a $100 billion company. And we're like, yeah, yeah, sure, Ben. Lo and behold. They're doing all this work. I'm like, what are you doing? Like $6 billion and $7 billion doesn't matter.

I was right. Yeah, that's when you have proven to be right. Yeah. Still have ways to go for $2 trillion. Well, the thing that you almost never get, and Ali and I had this conversation, though, the one time we did have a real acquisition offer on the company is you just don't get this good a market opportunity with this good and entrepreneur.

Like that's the rarest of rare things. Like we see great entrepreneurs, but their market opportunity is limited. And then we see, you know, companies that have a great market opportunity, but the entrepreneur is not big enough to fulfill that. But this was a case where we have both. Yeah, I remember actually the conversation that kind of flipped me. the acquisition offer was on the table it was six times bigger than the valuation we had at the time and I had done the mistake of telling my co-founders

and they were like let's go they were like we're done so everyone's like stop to work stop working take your hands off the keyboard nobody work anymore we're done here right and let's count my money like you know how much money do I have you know what would you buy for that amount of money you know so they were like completely like not doing anything

and there's just this crazy gossip going around and then it was like they had told some of the exec and then they were calling each other every day like hey what do you think like you know he looked in a bad mood to do you think he's going to say no no it's like what did he said this thing he said this one so there's just a lot of politics going around and nobody was doing any work anymore and and i was like you know maybe they're right maybe we should just sell and i remember having that conversation with ben and i think we were in a car both of us and uh and you know he says that he drops the f bombs and he pisses people off and so on and they don't take the feedback but

actually he did exactly the radical candor thing with me which is he said hey hey, you can do whatever you want. I'll support you either case. And actually, if you sell for this number, it's really great for me, me being done. Like, we make a lot of money at A6 and Z. I'll pay the investors back many times over. So honestly, if it's for me personally,

that's probably the better option. But I'm just thinking back, I was CEO, LoudCloud, Opsware, and, you know, just the cards that were given, that company wasn't the company you have. And when I look back, how often do you in life get a chance to even have a company like Cloud Cloud

or ops were, let alone a data bricks. And it's just such a freaking big market. You can sell, you're going to make a lot of money, and you'll be super successful in life. But, you know, if you're like me, you're going to look back the rest of your life thinking, you know, I missed that one shot.

That was the one thing. I should have taken it all the way, and now I'll never know how far I could have taken it. What could have been? So do you want to live with that? Or do you want to just have the money? You know, I'll support whatever you want to do. I really couldn't care less. I really couldn't care less. And I was like, okay, thanks, hang up. We're never doing it. doing this. We're done. This is not happening. What a pep talk.

Yeah. So that's how we did it. So it was excellent. I think I also said, I guarantee you you'll never have an idea this good again as long as you live. This is the best idea you're ever going to have. Yeah, yeah, yeah. Well, an idea that also takes off and works, right? So I want to tie one thing that you said in all of that is you were company building, but then also just sort of the calculus that founders, but also your employees are making, and that's around comp. So in the early days, you could afford to pay 95th percentile, right?

Today, there's crazy AI talent wars going on. We've talked about this, a bunch of the summer. And we know that you can bring the best talent in the house, right, to Databricks. How do you keep them with all of this craziness going on? Because now 95th percentile, I don't even know what that means. Is that like you pay a billion dollars? Yeah, exactly, exactly. Yeah, the joke is which company says we're P50th?

You know, we pay 50th. Like, who does that? There's no company that does that. So how does this action? There is, yeah, the 75th percentile is the single biggest lie in Silicon Valley. Probably. It's like a complete fabrication. Probably, probably.

So, but, you know, I think that the, it is a crazy time with AI. And I do think, I feel bad. I did actually an exit interview with someone this morning. I feel bad for the kids right now because there's, like, too much pressure on them. Like, they feel like, oh, they have to start companies and they have to, and I've never actually had anything like this because every year I talk to the interns. And, you know, I get questions about how do we build our own company? You know, how do we succeed at Databricks and so on?

The last two years have just been crazy. All the kids are like, when should I become a CEO? When should I start my own company? What's a good valuation? Am I missing out? If I do like an internship here for three months at Databricks, well, I have wasted my opportunity in life. And this is like the time for AI.

And I could have like been one of the guys that's super intelligence. And like, you know, how would you time that? How was it for you? How old were you? When you were 22, what did you do? And, you know. And so I do think it's kind of crazy times. And I do think it's also exaggerated.

Like, you know, I don't think anyone's getting $100 million offers. You know, I mean, yes, there's like one, you know, character. That AI and so on. But I don't think it's actually true. And it's also in the interest of CEOs, you should know, to say that, hey, you know, people try to approach people from Databricks for a billion dollars and they said no. It's in our interest to say that, right? Because that kind of sets the bar at the billion.

And then any employee that is not for half of that, it's going to feel really insulted. When did I get a billion dollar offer? I heard like on the news that the other people are getting a billion. So I do think that the most... By the way, Sam used that in reverse on meta. He's like, oh yeah, they offer it all our guys $100 million. And so the next guy who got the $15 million over. Now I have to pay $100 at least, right? That's like the smart move. But I would say that look, you know, and not all startups have the valuation of tariffs. We weren't 100 billion and, you know, with 10,000 employees, we actually can't afford to actually pay significant. And we do pay significant for the right talent.

But, you know, what did you do when you're smaller? Like, we were smaller at some point. Well, then it's talk about how big you are going to get and what the opportunity is and what you could do together and what it would work, worked together. But I think most people earlier in the career, they really want to learn and they want to really feel that they can have impact. So if you can really bring them in and you can sort of mentor them, you can stay close to them.

And as a CEO, you have huge power. If you just spend two minutes with, you know, a kid out of school, it's immense to them. And you say, hey, you know, I'll even mentor you. I'll help you. Like, what do you want to do in five years? I'm thinking about starting my own company, actually, in six months, you know. But I'll work at Databricks for 10 years.

But in six months, I would love to be a CEO. So then you can say, hey, I can coach you to, you know how the fundraising, I know the early days and so on. And you can actually mentor a lot of them. And that's actually worked a lot to them as well. But in general, like, help them be successful and help them build their careers. And also, if you've done it before, like, we have, you can kind of calm them down a little bit and say, hey, you have, like, a few decades, you know, don't worry about

it. It's like, it's not, you know, it's, the FOMO and the pressure, you know, has to be kind of reduced. And I think that's also calming. They feel good about it. Yeah. Yeah. I always say the best cure for starting your own company fever is to start your own company. And that'll teach you. It's not that easy. By the way, they come back. Like, after start companies, oftentimes they come back to Databricks and they're much more thankful and you understand. And actually, I didn't mention this earlier when you asked about acquisitions. My favorite acquisition, because I said to start with the people, right? And then the product.

With the people, I love to hire people who have seen great at a big company. Like, or I don't know if it's great, but they've seen process scale big company. They've been at Google. They've been at Amazon. They understand the processes. So they understand how to navigate a bureaucracy and work with it. And they're not going to just be inundated by it. But then they've gone on and done their own startup.

And that's really, really hard, right? It's like extremely hard trying to do everything yourself. And you don't have any help. And then, you know, you're trying to do this in this crazy market. And you're trying to compete with $100 million offers when you have, like, nothing. So that takes a certain amount of grit, and it's really humbling. So I love the people that have done both of those. They end up being actually the perfect employees at that works because they come in and they're really thankful.

They're like, hey, what these guys have done at database is actually really, really hard. I tried it. And I'm really good. I was like one of the best at Google or somewhere. And then I did my own startup and we absolutely failed. And so, hey, show some respect here. Like, you know, these guys know what they're talking about. So those are great employees, actually.

So, you know, I think keep a great relationship with people who leave your company because they'll, they can boomerang back in a couple of years. Yeah. Yeah. And it's very hard to make these things work. And it also requires a lot of luck. I mean, I think one of the things people don't realize is a lot of things have to go right that should never go right. And a lot of things will go wrong. But like, if you can grab your lucky moments, that's a rare, that's a rare thing.

Yeah, one way to prove that is if Databics started in 2013, if we had started in 2012, you know, that rocky year, that difficult year, 2015 would have done happened in 2014, right, to start the funds or we don't have the revenue. But we were a cloud, AI, open source company. Those things didn't take off in 2014. So, you know, even if, like, if we had to do the CEO change on all of that, and I had become CEO a year earlier, it just, we were too early in the market. The cloud hadn't taken off.

AI was not. nobody, that was not even a phrase. AI meant robotics. People used machine learning as a phrase. And so company would have failed. We wouldn't have had enough momentum. There's not enough cloud, you know, Tam there to be had. If we started the company in 2014, a year later instead, so a year later than we actually did, then we would have had our difficult year in 2016.

But by 2016, the cloud was starting to happen. AI was starting to happen, you know. So we would have done the fixes in 2017. It would have been too late to the party. And probably the hyperscalators would have taken it away. you know, our competitors were taken away and we just wouldn't have get enough momentum to be able to

succeed. And that's timing of when we started. So how did we clock it so well? We had to wait for Matei to finish his PhD thesis. That's it. That was the whole thing. So there's a lot of randomness. And you've got to get lucky.

And it was so on the edge as it was that on the series C, Jan had a handshake with the Red Point with Red Point. And Red Point just stopped returning his calls to the point where the series C was led by us who also led the series A

and NEA who led the series B like we co-led the series C because nobody else would do it. It was that close to going under. And most companies went even right. That would be it. Yeah, it was very close because we couldn't get funding for anyone. It's just funding freezed up

and nobody wanted to invest anymore. So it was really a lifeline from A-Sid and Z. Yeah, we were just, you know, It was burning a lot of cash. We weren't generating much revenue other than Spark Summit. We had a lot of downloads. We had a lot of downloads.

A lot of downloads. And recurring conference. Yeah. And recurring coverage. How confident were you in that time when things were at their time? Oh, I mean, I seriously consider taking the professor job at Berkeley

because I, you know, I seriously thought this was going to be very, very hard to pull off. You know, it's like, you know, I think the sentiment at Databricks was, or at least my sentiment was, look, you win some things and you lose some things in life.

We created Apache Spark and we made it a worldwide sensation. Everybody's downloading. The downloads are through the roof. We have this greatest conference. Like, you know, thousands of people come to our conference. It's awesome. Let's go back. Let's do it again.

Let's publish another paper and do those kind of things. We're just not business, guys. We just don't understand business. You know, that's okay. You know, we don't want to be business guys. So that's kind of how I felt about it, right? But what I knew was that, hey, you know. By the way, Mattie went back and became a professor.

Like, all this stuff happened. Yeah. John went back, you know. And, but, you know, in 2015, we knew that we had tried everything. And by the way, PLG is something that we had tried very hard and it didn't work for us. Like, actually, one of our biggest failures was PLG at Databricks. Everybody kept telling us, PLG, PLG. And we're like, okay, product lets growth. And Amazon did it. And you just wiped their credit cards. We don't need salespeople. But so in 2015, I had to kind of like... Except cranny. Exactly. Yes, that is true. Good us to Mark. So that year we had like formed some high. hypothesis that, you know, we have nothing to lose. What if we just pivoted these things? What if we went all in and to B2B enterprise sales? You know, because certainly it's not, you know, PLG is not working, you know.

At 3 million ARR, that's not going to take you anywhere. And, you know, and they're just taking our open source software. So we have to have proprietary code around it, you know. And yeah, the execs team are all PhDs, you know. So what if we bring in someone that doesn't have a PhD and see how it goes? So, so we never forget Arsland going, we made the number. and I was like you made a ridiculous

stuff like you made the number like if you keep making that number you're going to go bankrupt like that you didn't make the number you made a number that you said that was way too low like you haven't figured out Ben was very nice

and complimentary in our board meetings that year 2015 we were in a bit of trouble let's say it was very truth seeking but yeah so we had nothing to lose so we didn't know that we were going to succeed but we had nothing to lose to make those big changes

and we made them in 2016 and it turned out those were the bottle You know, giving away your software for free, not having execs that have seen the movie before, like Ron who came in. And, you know, just the PLG motion is not going to cut it. So maybe we should just try. We weren't certain that B2B would work, but we knew that PLG is not working for sure. Yeah, well, another, like, I mean, you know, we got Ron.

I mean, like the fact that the first sales guy we hired was a sales savant, like a genius, shock. I mean, like, that never happens. And he was a guy we didn't know. Like, we, like, our talent team, like, found him from some company we never heard of. Yeah, the French company, ex-way. And the only, really, the only reason we hired him was because he was the only guy

Cranny ever liked. Like in all the sales guys he ever interviewed, he was like, this is a guy. Wow. And, yeah, he is a new generation, Mark Cranny T2. But we just like stumbled into him. Yeah, yeah, like unbelievable. And without Ron, very hard to see us, this company getting to where it got to. Yeah.

So there's some luck involved in us even finding him. But then that he was phenomenal. And also, good us to John, who actually led the search in 2015. Yeah. So, you know, but, yeah, Ron was game-changing for us. But Ron was a very uncomfortable hire because he did not have a PhD. I did have an engineering degree. Yeah, he does have an engineering degree from Stanford that helped a little bit.

But he's a sales, you know, true and true sales guy. Like, he's not a, you know, he's not one of these. He's like he's a classic salesperson, right, who grew up in sales, even though he has an engineering degree. So the comfortable thing would have been to pick someone. And we had some candidates in the mix who were they super technical using the product giving us feedback, but they probably would not. And that would have been much more

comfortable for us. Yeah. Yeah, Ron was uncomfortable. He was a very uncomfortable hire, and he made it very uncomfortable for us for many years, and he still does. But that's a lot of the key to the company. Yeah. It forces a customer focus that would be impossible to have

without somebody that smart and crafty about getting his way. I mean, just like, unbelievable. Yeah. If you can keep also the original team together, that's important. We're, you know, seven co-founders still. Many of the co-founders, like, you know,

you said data warehousing was a big push for us. My co-founder, Reynolds, was really the one that kind of pushed this. Yeah, like, well, the contribution level from a large number of co-founders is unique in the industry. I mean, you've got Patrick, you have Reynolds, you have Matei, You know, Arsalan, I mean, like, it's crazy how much the original team contributes. Yeah, so the PhDs all contributed. Like, Arslan really made the go-to-market work, you know, and he really made the sort of

Ron work with the rest of the company that was super critical. Matei continued doing lots of innovations over the years. Patrick led all of engineering in big chunks of it and, you know, so on. And we've had other people. We've been lucky to get such folks. So hiring is critical and keeping the original talent, I think. Those were some of the things. Yeah, usually founders, usually.

only one of the co-founder contributes long-term and so to have that going and John's still on the board and Scott's still on the board I mean like it's very unusual

we have a lot more we can get into but we're at time so we'll leave it for future episodes of Boss Talk but this is a great list episode

that was fun thanks so much thank you so much guys thanks for listening to this episode of the A16Z podcast if you like this episode be sure to like

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