Big Compute - A Cloud Startup Story (Part 2)

Episode Date: April 12, 2022

More than a decade ago, a young Joris Poort stepped into a small Silicon Valley apartment for the first time, ready to make an impact on the world.  What would follow was months of rejection from investors to his big idea of how to accelerate innovation in an up-and-coming new normal of cloud high performance computing.  In this second part of a 2-part series about how Rescale began, we hear how Joris persevered through challenges, was accepted into Y Combinator, and how he landed his first check, ultimately launching the business – and vision – he had for the world.

Oh, somebody did try to break into my house when I was living by myself before I got married, and I had to yell in a deep man voice, Get away from me, I've got a gun! And they ran away! Are you sure it wasn't the person who was writing letters to your pet? No, I'm not sure. I really have no idea who it was. I hope it wasn't that person. Hi everyone, I'm Jolie Hales. And I'm Ernest DeLeon.

And welcome to the Big Compute Podcast. Here we celebrate innovation in a world of virtually unlimited compute, and we do it one important story at a time. We talk about the stories behind scientists and engineers who are embracing the power of high-performance computing to better the lives of all of us. From the products we use every day to the technology of tomorrow, computational engineering plays a direct role in making it all happen,

whether people know it or not. Hello, everyone, and hello, Ernest. Hello, Jolie. I know you were feeling a little under the weather last time we recorded. Is it okay for us to take off our masks now for recording this episode? I wish I could say yes, but would you believe I caught yet another illness in this last week? This is illness number four since the new year for me, which I guess is just par for the course for, you know, a pregnant woman in her third trimester. I mean, I can't really complain because it could always be worse.

I'm still kicking. I just sound not myself all the time now. How about you? I mean, your wife is also pregnant. How's she doing these days? Let me tell you, she's doing great, but she's also struggling. It's one of those where when you're this late in the pregnancy, I think you both are pretty much on the same schedule. The later you go, of course, the harder it is and all that. So she's doing fine. But

luckily, knock on wood, neither one of us have been sick in over two years. So we've been lucky. You really have been lucky. I feel like I'm hoarding the illnesses in my family. Yeah, I think it's related to all the masks wearing around here because it went from people wearing whatever mask they could get their hands on to now people are, myself included, are wearing like masks that have certain designs on them or whatever. So it's become like a fashion thing. My favorite mask is the one that has like two different music time signatures on it, like 13 eighths and I think it's like six fifths. And it says, these are difficult times. That's a great one. I ordered some that were like one of them is the face mask that Bane wears.

Oh, I've seen that one. In the Batman movie. And then I got, are you familiar with the Guy Fawkes It's the one that you always see anonymous wearing. Oh yeah, yeah, yeah. Of course. Yeah. So I found one that was like the print of that on the mask itself, but those two, the Bane and the Guy Fox one, when I'm out in public, like at the store and people see them, inevitably at least one person's like, man, I I love that mask and where did you get it and that's awesome like I'm over mask wearing so I don't wear a mask anymore out in public and maybe this is my penance for it but I guess I'd rather be sick than put that thing on my face anymore

I'm so sick of it I think we're all over it but at this point like I said it's turned into like a fashion statement so so it's like fun I put it on it's like putting on like i don't know a tie or a shoe or something it's just do you wear it at the gym no okay good i see people at the gym wearing masks and i i don't know like to each their own but i wouldn't do i used to but then um come new year's every year all of a sudden like your gym is packed with people now i don't go to an actual gym. Our complex here has a little, like, it's pretty much a little gym and you know, you can fit, I don't know, 20, 30 people in there at a time. So of course, after the first of the year, all these people start coming in. So yeah, I wore my mask for a while, but then by the time February 1st comes around,

nobody else comes in. Nobody's in there. I'm by myself or there might be one other person. You don't even need a mask. So I don't even need it. No Nobody's in there. I'm by myself. It's so true. Or there might be one other person. Well, so you don't even need a mask. So I don't even need it. No one's in there. I haven't really gone to gyms much either. In fact, I never have. I've always just been a runner outside. But so I actually did finally sign up for a temporary three-month gym membership for my third trimester because running is getting like really hard.

Yeah, yeah. So that way I can swim laps. And it's been great, except on the second day that I went, some thief went into the women's locker room and cut all the locks and stole everyone's belongings, including mine. This is last week. Oh, wow. So they got my keys, my wallet, a bunch of my stuff.

I had bought like a brand new gym bag. and I was hesitant to even use the lockers. But, you know, my brother and my brother-in-law are gym people. And I'm like, what do I do? Do I trust the lockers? And they have the same type membership. They're like, yeah, you get a lock. So I went and bought a lock. And literally the second time I go, I get totally robbed and all my stuff gets taken. And I'm just like, wait a minute.

This is super lame. I've literally been robbed 50% of the times that I've been to the gym. In my entire life. Yes, statistics are a hell of a thing, aren't they? However, one thing I will always advise to people, if they ever have keys stolen or identification, is to make sure they change their locks. And if they have a car and it has like a fob program reprogram it because well that's what they did they took all the keys out of everybody's bags and they went out into the parking lot and they robbed all the cars but i drive i've been driving the same toyota tacoma for 18 years and it does

not have any technology built into it and so i didn't have a key fob. So I was spared and I just happened to have my phone with me for that swim because I was attempting to listen to music, find a way to listen to music and podcasts while I was swimming. And it was an epic fail. But the great news is I had my phone with me still. So I was able to cancel my cards. We did change the locks and I parked my car in the garage. Now I got another additional identity theft protection program, you know, because we're in the process of trying to buy a house and this is like the worst possible time to like have somebody hurt your credit. But at least they didn't like physically mug me and like hit me in the head with like a two by four or something like that. Yep. But yep, that was my week last week.

You know, fun times. I guess I'm going to vent about it on this podcast. Yeah. And then our apartment complex has actually been burglarized. And I'm talking about like the storage units that belong to the residents. We had ours burglarized once before the pandemic and then again during the pandemic. Wait, really? Did you get your stuff stolen?

Yeah. Yeah, we got stuff stolen. And then when that happened, every time I was running into other residents, I would ask them, hey, do you happen to have a storage locker? And I would say about 50% of the ones I talked to said that they'd had a storage unit and said, yeah, and mine was broken into. Wow. Well, you're in San Francisco and that's known in the news right now for these kinds of robberies, especially. Yeah. Well, where our apartment is in California is actually in North San Jose. Oh.

And the other day I was, I mean, it's not funny, but I was laughing about it. I went downstairs to get something, and someone had broken into the front office of the apartment complex. Oh. They just, like, busted the glass window. What are you going to steal from the front office? Probably the computers. They only had like two. It was like laptops.

Anyway, the long and short of it is petty theft has skyrocketed during the pandemic and it hasn't really come down. I mean, it got to the point you saw. I'm sure you saw where people were like ransacking luxury stores. Everyone in the country saw. Apparently the trains down there were getting robbed. Yes, the trains in L.A. down here. They're breaking into the boxcars and they're going through every package that's been shipped via train to the point where the train companies are saying they don't even want to go to L.A. anymore. Like, that's not going to do anything great for the supply chain. No, it's a mess.

And conceptually, everyone understands why this happens. But at the same time, it's like, man, could you imagine just hypothetically if no one stole stuff anymore? Oh, it'd be so wonderful. Why can't people all just be honest and work hard and be kind to their neighbor and eat donuts? It's all a mess. But anyway, yeah, I guess we can get back to the main subject at hand. Where were we even with the last episode? Yoris was at Harvard Business School. Business School. He went to business school. That's right. Yes.

And I should note, this is part two of a two-part episode series about the founding of cloud high-performance computing company Rescale. So we recommend you go back and you listen to part one before continuing here, or you might be a little bit confused if you're one of our listeners. And for everyone else, as a refresher, in our last episode, Joris Port, who is founder and CEO of Rescale, he was telling us his story beginning with being born in the Netherlands and then moving in the Netherlands. And then moving to the U.S.

Then to Australia. Then back to the U.S. Where he dabbled in all kinds of computation, mechanical engineering, math, multidisciplinary optimization, and even playing the trumpet, eventually leading him to work at Boeing, where he found it difficult to get access to the compute necessary for the computational engineering projects he was working on. So he surprised and terrified his parents by leaving Boeing in pursuit of an MBA at Harvard, where he also worked as a consultant for a semiconductor company, all the while mulling over what he should do with his career moving forward in order to have an impact on the world. And at this point in the story, Joris has just returned back to Harvard after a summer of consulting in the Netherlands. And he decides to do a field study with a top entrepreneurship professor at Harvard Business School named Shakar Ghosh, who actually has his own Wikipedia page. So, you know, he must be a big deal. That's right. In fact, according

to that Wikipedia page, not only is Shakara a top professor at Harvard Business School, but he has been the founder and CEO or chairman of eight technology-based entrepreneurial companies and was selected by Businessweek as one of the best entrepreneurs in the United States, one of the masters of the internet universe by Forbes, and CEO of one of the most innovative companies in the U.S. by Fortune. So he's gotten the attention of the national media. And spoiler alert, fast forward to today, and Shakar actually sits on the board of directors for Rescale. What a coincidence. I know.

And so I decided to sort of do this field study together of looking at the technology and the business opportunity, the market opportunity of something in the category of sort of solving these computations better and combining cloud computing with the algorithm side of things and the evolution of the semiconductor ecosystem as well. And so there were many different kind of components coming together that I had experience in and that I was kind of really interested in. And that was kind of the starting point of Rescale. Yours was really starting to tie his background together with his new business savvy. And he

started to see a market opportunity that not only had a strong chance at success, but could make a big difference. The idea, you know, of Rescale really came from the last sort of 10 years, 15 years of my life at that point of just couldn't let go of the potential of bringing sort of better computing capabilities to engineers and scientists and like what that would do for the world. So in studying with Shikhar Ghosh, Yoris really focused on what the market opportunity would be if better technology was developed to solve engineering problems. And he looked into a number of different verticals like aerospace, drug discovery and financial services where algorithms motivate stock trading and money printing. And it turned out that if you look at most of the global 2000 Fortune 500,

you know, most companies, so most being sort of more than 80, 90 percent, use computing as part of their sort of core R&D or research as a core capability to build better products or better solutions. Yeah, I think you'd be hard-pressed to find many industries, especially with large multinational corporations, that aren't using computing for any of their R&D stuff. As a matter of fact, I couldn't even think of any off the top of my head. Yeah, that's interesting. You don't really realize it unless you start thinking about it.

Yeah, like even the shampoo bottle that you have in your bathroom, that bottle had to be designed. And they did engineering and computation to figure out exactly what the right thickness of the polymer would need to be for the outside of that for it to retain its shape. But cut down on weight because of shipping costs. You know, once you're cranking up millions of those bottles, every extra ounce adds to your shipping costs. So there's a whole lot of stuff that goes into the most mundane items that you and I take for granted. So yeah, I can't even imagine

what doesn't go through this kind of stuff, except maybe some sort of handmade stuff on Etsy or something like that. You need to do more R&D on paper straws then. Because I had one yesterday and it did not go well. Yeah, those are a bit of a farce. So what's your sort of addressable market is usually the way you sort of define it as starting a company. But when that's big enough, that means you have

the potential to build a good business. Through his studies, Yoris was finding that not only was there an opportunity to make a difference in the world, but that the market share to make that difference was really big. If you want to make a big impact, which for me is kind of the motivating factor, so making a big impact requires generally a big company. But most large companies require a decent amount of funding. And so to get the funding, you know, you've got to have this big market opportunity because they're making a risky bet on you as a company and venture capital. And the Silicon Valley model for venture capitalists was to invest a big chunk of money across multiple companies, knowing that probably only about

10% of them will actually yield a meaningful return, which means those companies that do find success need to find a lot of success in order to bring in funds to make up for all the VC investments made that didn't pan out. So it's got to be a big idea, right? Because if you want to provide 100 times return to somebody, you know, it starts as a small company, but it's got to be able to get really big. And so that's where that market opportunity is really important. And seeing the large market opportunity for R&D technology was an eye-opener for Joris.

For me, it was kind of like, well, if you're going to go spend, you spend a lot of time of your life working in your career on something, you should probably do it on something that's really meaningful and is going to make a big impact, right? He had always wanted to make an impact on the world. And now he realized that he might have the formula to make that impact through a successful business. For me, it wasn't really about starting the company. It was much more about this technology has a lot of potential. There's a lot of impact.

Because I kind of looked at the example of Boeing. How many other engineers are sitting around? Like at Boeing, you know, I was willing to sort of lead the fight to get access to that compute capability. And even there, we're still highly constrained in what we did, right? We could do so much more, right? And so if you sort of multiply that

by all the engineers and scientists all around the world, the sort of constrained potential that computing could unlock is just incredible. And I could not let go of that idea. Yoris kept thinking about it, and the more he molded over, the more he felt like this could be what he was meant to do. Maybe he should start a company that accelerated innovation for research and development across the globe. But if he went in that direction, he knew there would be risks. And back to the minimum regret framework, a lot of these startups don't work out, right?

And it's really, really hard to start and run a company and grow it over time. And so for many people, I think that's a lot of risk. It's very uncomfortable and it's not for everybody. But for me, it was pretty straightforward in the sense of like, if I had tried and sort of, say, failed, right? I spent two or three years working on this thing, you know, building some cool technology, but turned out not to be a good business or couldn't raise the funding or whatever it might be and sort of fizzled out. I'd happily go back to doing something different, knowing that I tried. Which I think is one of the things that sets leaders like yours apart from many people who have big ideas, but then don't actually move forward to execute them, right? Like, obviously to start a company,

you have to have vision, you have to have a good amount of intelligence, you have to understand marketability and be resilient and all of that, but you also have to be comfortable with taking a chance with a risk level that I don't think a lot of people really prefer to embrace. Right. It's a very personal decision. Right. And so, yeah, and it's not just the risk that the company fails. It's also the time involvement. There are a group of us out there who look at this in terms of do I want to make a 10 year plus commitment to a company that could fail? Or do I want to

find companies that have made it past that three-year threshold? So their viability is essentially proven at that point. The time commitment as a percentage of your life is less. So there's risk, but there's also time. And so a founder has to accept both of them. And that's a challenging decision to make. At that time, that's the way I was thinking about it. It was like, okay, well then maybe I've like sort of delayed my career maybe by two or three years because I've sort of wasted a bunch of time on some project that didn't work out.

But I probably learned the most, you know, and I thought that would be really interesting. And it's kind of the first time I really took a shot at something that most people around me thought was totally crazy, including my parents and all the advisors and things like that. But I was like, what better time than now? Yoris knew that if he was going to take on this kind of sort of risk and start a company, he was in the perfect time in his life to do it.

He wasn't married with a family yet, and he was just finishing his Harvard MBA, which acted like a nice insurance policy because I mean honestly it would allow him to always be able to find some kind of consulting job at a company like McKinsey in the future if he wanted to. Ironically maybe the best thing to do when you start a company is that what I would call burn the boats in the sense of like you really should have any backup but I do think that having some fallback always is something that allows you to take more risk. So while Yoris was in his mid-20s, his mind was made up. He was going to start a tech company.

I think our original name was Cambridge Optimization Technologies. There's some incorporation of that sitting around in Massachusetts somewhere. And by the time graduation came along, what better place to really launch this new tech company than the center of the world's tech startups, Silicon Valley. Like many young Californians, Stephen Jobs has a penchant for the Western casual and the love of the scenic outdoors. And in the Silicon Valley, Jobs is the classic example of the computer industry's philosophy, which says, take a chance, you've got nothing to lose. Didn't know anybody. Like I hadn't worked or lived in Silicon Valley at the time.

Hadn't really been to the Bay Area. And just literally like moved out there and, hey, this is the best place to start companies. He literally just found an apartment, moved in and then started figuring out what to do. And all along the way, Yoris found some support from someone who mattered. My girlfriend at the time, now wife, was kind of willing to go along the ride with me. She believed in Yoris and as a consultant for McKenzie herself,

was willing to financially support her now technically unemployed boyfriend, who was also loaded up on student debt, with this vision that he had of making a true impact in the world. Let's be realistic. How many couples are in this position when it's not an issue of somebody starting a company? Yeah. I would take the risk. Like, it's a sound risk.

I think it's awesome. I did a similar thing for my wife. She wanted to go to law school. Oh, no way. And I was like, yeah, knock yourself out. So we moved to New Orleans because that's where they gave her a scholarship and spent three years there while she did law school and graduated. So she was not technically unemployed. She was unemployed for three years.

Well, I mean, in our family, my husband doesn't work. He went back to school for computer science and I'm the one who's the breadwinner in the family. So, like, I mean, that's what couples do. But, I mean, he's my husband. He's not just my boyfriend. Well, yeah. I think it's pretty. Yeah, there's a big difference between a husband and a boyfriend.

Yeah. Right. Because at this point in Yoris' story, it was his girlfriend. Right. They weren't even technically married yet. Right. Right. And the marriage does eventually come,

and he does marry this woman, you know, as he should. Yes, absolutely. But, you know, there wasn't that extra level of commitment, and she was still willing to help out because she believed in him, which I think is really cool. That was, for me, a very important element of being able to start the business because without her support, I'm not sure it would have been the same decision and the path I took. But his academic Dutch parents, they were beside themselves. They were like, so let me get this straight.

So you didn't listen to us to stay at a place like Boeing or do like a PhD or something like that, right? You didn't do that. And instead you loaded up on debt that we spent our whole lives making do that. And instead you loaded up on debt that we spent our whole lives making sure that you don't have. You went to this kind of questionable place,

let's just say it, kind of this evil business world, right? And then you have the opportunity to go work and make more money than you ever thought you would amount to at a place like McKinsey. You're gonna turn that thing down and then you're gonna go and be unemployed and work in your basement. I would have been the proudest parent ever if my kid had done that.

And the company started with, as Yoris puts it, Very humble beginnings. And with a new location came a new company name. I don't think it was very popular with other people. And it was a company name for a while. And our official registration in Delaware still has this name. The name was spelled V-L-U-D-O. Vludo. Vludo, when I first heard the name, it reminded me of Voodoo, that streaming service for movies.

So like this is a very Silicon Valley type name. But I just don't know that it like... Communicates what they do. Yeah. Like what does it do? Then again, what does voodoo do? Right. Like that makes no sense. Or Hulu. Exactly. Hulu is another one. Right. Like what on earth is a Hulu? Same thing for Amazon. Oh, yeah. That's random. Right. And I know there's a story there. I don't remember what it is. The name was chosen because of the largest river in the world, which can be seen in the company's original logo. Bezos had hoped that Amazon would one day be an endless e-commerce marketplace.

This is in contrast to companies like Netflix, which is. That makes sense. It's Flix on the net. Yeah. Like, I mean, just on the nose. I know exactly what that company does. DoorDash. Right.

DoorDash. But think about Uber. Yeah. I was going to say Uber. Uber doesn't make a lot of sense. I mean, if you take the German word Uber, but that has nothing to do with driving cars around. Lyft, on the other hand. Gives you a Lyft. Gives you a Lyft, unless you're from Europe, in which case you're asking, why are you naming a car company after elevators?

But then, what about Apple? That's a great one too. It's obviously not something you eat. Yeah. Well, so keep in mind now I'm not justifying the name. Whatever. I know justification is coming. It's fine. Go ahead. In the beginning, it was actually Apple Computer Incorporated. So it was like, it wasn't just Apple. It was all of it as one phrase. And then when the brand got to what it is today, they just truncated it to Apple.

It's a little bit more understandable. Now, appropriately named companies, Microsoft, on the nose. Yeah. Microcomputer software. Like that was like- What about Google? That was interesting because that's actually named after like some kind of mathematical thing. Oh, it is? I didn't know that. They named their search method after the mathematical term for one followed by a hundred zeros intentionally misspelled. But I think this is the natural evolution, right?

Like you start off with, what was it, Cambridge optimizations or something like that. And in many of these companies that don't nail it on the first try, like there's an evolution that happens, right? And this is kind of just making their way along to find something that kind of fits overall. And I think Rescale fits incredibly well. Yeah. Rescale totally does. But I actually like the name Vluto. Yeah. If I was going to launch my own like video on demand service, I would name it Vluto. That's great. Because at least it's like video something or other. And then like DO is like on demand. I don't know. But it was a good name. It just like didn't really tie in. It's pretty hard to even at that time to get a good.com domain name. And so this was one that I had registered that was still available. And I thought it was

a cool name. But obviously, later got lots of constructive feedback on that name. I asked Joris where he got the name, like, was it some cool Dutch word or something? But not so much. Yeah, I just totally made it up. And with that, Vludo, or Riesgel, was born. And there's another person we mentioned earlier who we need to bring back into the story now. When Yoris was working at Boeing, he reported to a man named Adam McKenzie, who was with Yoris through all the time scrapping for compute resources and also part of the team that was ultimately responsible for lightening the weight of the wing on the 787 Dreamliner aircraft. And over the years, while Yoris went to Harvard, the two of them kept in touch and they bonded over their vision for what computational engineering

could be. Adam had also moved on from Boeing to work in, and I'm feeling like there's a trend here, consulting. And he had held on to his excitement about, you know, what this technology's potential really was. So at one point when Yoris had the opportunity to present at a Microsoft research conference, the title of this is cloud-based product development, not far from where Adam was located and working at the time, the two of them had some time to catch up over some sushi or something, kind of planted the bug of, hey, like, we should really go and pursue this opportunity. And, you know, I would say maybe a year later or so, finally could convince after a lot of arm twisting Adam to jump on board.

And so then it was two of us. Two co-founders of Rescale, although they started small. On the weekends, we would kind of, you know, hack together some software and stuff. And like many software companies in their early days, Yoris and Adam began by just writing a lot of code, aiming to build the first version of the product they wished that they had that would solve the problems they were looking to solve. Run these large-scale aerodynamics problems in the cloud was kind of where we would start because that's where our experience was. Cloud computing was just starting to emerge.

I mean, AWS had been around for a few years and now Microsoft Azure was just getting into the game. The time was right, it seemed, for Yoris and Adam to be able to make their dreams a reality. But in order to make them a reality, they would need funding. Lots and lots of funding. So I went and sort of pitched this idea to many investors. Around 70 investors over a nine-month period.

It was rejected by every single one of them. This was during a time when it was all the rage to apparently invest in social local mobile companies, or Solomo, as you may have heard it called. And Rescale in its beginning stages was not solo mo. Man, I remember the episode of Silicon Valley where they made fun of this. Oh, really? There's an episode about this? Yeah. And there's this pitch event that happens every year, TechCrunch. I think it's called Disrupt or something like that.

Oh, yeah. Okay. And it's where the companies come pitch to a large audience and whatever and they made fun of that in the show silicon valley where like every single pitch is coming up on that stage it turns into just a montage of the pitcher saying social local mobile mobile local social and we are truly local mobile social and we're completely so mo low and we're mo low so we're low mo so bro we were so so mo low. And we're mo low so. We're low mo so, bro. We were so low mo, but now we're mo low so. No, mo so low.

No. That's why I stopped watching that show. It was too close to home. I couldn't deal with it. At the time, it was kind of like this really complicated piece of enterprise software that's going to run in the cloud, which still a lot of folks were pretty skeptical of, that that would be something, you know, like an aerospace company would be willing to put their IP on a public cloud, right, on servers that weren't directly managed by them. Additionally, the fact that URUS was pitching the aerospace industry as a starting point was kind of a turnoff for a number of investors because at the time,

aerospace development cycles were really long, right? They often took seven or eight years to design a single airplane. So implementing new technology into those design cycles would be a slow-moving slog. So, I mean, needless to say, investors were not really chomping at the bit. You know, it's pretty demoralizing to be rejected over and over again. Yeah, you got to have a lot of grit, a lot of resilience to sort of make it out of that period of time. But, you know, it's pretty common for founders to often sort of persevere through times like that. But it was definitely very tough. But Joris persevered despite the setbacks. Having no money makes it pretty hard because, you know, it's pretty frugal at the time.

And so every little expense feels like, you know, it's money coming out of your pocket. And I asked Joris what it's like to pitch in front of investors, like if it's more like giving a book report in front of a very important teacher or if it's more along the lines of the TV show Shark Tank. I mean, have you seen that show, Ernest? I've seen it like one time. Yeah, I think I've seen like 20 minutes of it. Yeah, it was complete garbage, but I get it.

Who are the sharks? They're self-made millionaire and billionaire investors who are entrepreneurs themselves. Usually not in the TV show setting. But I think the reality is somebody doesn't write a check, it's a no, right? However, for the entrepreneur, it's usually, I mean, this is like your baby, right? Like you really care about this thing. So as an investor, you got to be a little bit careful. It's kind of not an investor's interest to give you really critical feedback, even if that might help your company the most. Because ultimately, one of the beautiful things I think about Silicon Valley is this sort

of meritocratic system of nobody really knows, especially not when it's sort of one or two people with a PowerPoint deck who's going to be successful. And just because a venture capitalist doesn't want to jump in and invest right at the beginning, it doesn't mean that they might not want to come on board later in the process. And so they want to provide honest feedback to the entrepreneur without crushing their hopes and dreams and shutting the door on them completely? To me, a no just means not now, right? Might mean tomorrow, you'll say yes, right? That's really what it means. But you know,

usually never get really going to get a no because it's pretty demoralizing to get a hard no. And this way of thinking totally makes sense when you're trying to stay motivated and get investors. Though I will say that the same way of thinking should not always be applied to like the dating world as it has created one too many stalkers for me and many others over the years. Like, Ernest, I had a guy who I did actually give multiple hard no's to literally write and mail letters to my dogs thanking them for being good pets to me this is what a true story yes weird what weird weird weird and that was just one thing that he did oh so bad i i do not understand but i mean i guess because that's not i mean i don't maybe that's normal. No, no, it's not normal.

I don't think it is. No, you don't write letters to people's pets if you have a crush on them. That's weird. That is that is almost like Hannibal Lecter level. Right. I know. Yeah. You can imagine my reaction opening up those letters.

Jeez. First of all, they were addressed to my dogs. And I'm like, what is this? Maybe something from like PetSmart. No, it was it was a stalker. He's moved on. Thankfully, married somebody who seems much more his match. So, yay. Happy ending. So, yes, no means no in the dating world, usually, I will say. But in the business world, okay, I can see how no means not now. And I can see how that would easily apply. I mean, and I mean, at this point, I know that Rescale has gotten up to the extended Series C, and I don't know this for sure, but I wouldn't be surprised to learn if some of the later investors were originally people who said maybe not now to earlier investing. You know, I don't know.

That's probably true. An investor who's trying to get a return, they're not going to burn bridges, so to speak. They will say, you know, not right now or it's not the right time or whatever the case is. But if that opportunity comes back around and it is now solid, they're going to take it because they're after money. It's not a personal thing for them. Right. 100%. But writing letters to investors about their pets being good to them is not acceptable. Right. Just in case anybody is wondering about that. It is unacceptable. Thank you. That's kind of the general sales process, I would say, and fundraising is essentially a big sales process. And an investor pitch is often only 15 or 20 minutes, which means that the investors

only really have 15 or 20 minutes where they're solely thinking about a business idea. And then they take the opportunity to give the entrepreneur a bunch of advice. Some advice can be good, some advice maybe not so good, right? And you've probably, as a founder, been thinking about this problem, in my case for over a decade already without a soft as well so you know i generally encourage other founders when i give them advice on fundraising is to really think from first principles and people can help you know it's great to change your mind and learn and improve but usually the founders

themselves actually understand the market opportunity and the business themselves the best. So, you know, generally you can take investor advice with a grain of salt. But after nearly a year of being rejected by investors, there was a glimmer of hope. What changed the game for us was meeting with folks from Y Combinator. And Ernest, are you familiar with Y Combinator? Absolutely. Awesome. Yeah, I think people like you who've been in this business for a while know much about it. I, coming from the entertainment world, actually hadn't heard much about Y Combinator because it just wasn't part of my atmosphere, I guess you could say. So for those who don't follow Silicon Valley or the startup world, Y Combinator is one

of the most successful and well-known startup accelerators that exists. And what I mean by that is it's an organization that offers mentorship, capital, and connections to investors, all designed to help select startups, launch their companies, and have the best shot at success. And Y Combinator is actually the big boy in startup accelerators, having launched over 3000 successful startups, including companies like Stripe, Airbnb, DoorDash, Twitch, Reddit, just to name a few. Their program typically lasts a few months

and only around 2% of startups that apply these days are actually selected. Anybody anywhere in the world can sort of apply a very simple application. Most of the questions that they ask are really helpful as well for a company. And although it wasn't typical for Y Combinator to accept the type of startup that was aiming to, let's say, build enterprise software for aerospace companies, Vluto, as it was known at the time, was accepted into the program. I think Paul Graham and other folks at Y Combinator were willing to make a risky bet and hopefully it will pay off for them. Paul Graham, a computer scientist

turned venture capitalist, was one of the original founders of Y Combinator. And he still held a day-to-day role there at the time that Yoris applied for the program. And now Vluto slash Rescale was in. And Yoris still remembers the moment they were accepted into Y Combinator. I mean, he was out to dinner, I think, at a Chinese restaurant in San Francisco with his girlfriend, Flora, and co-founder Adam. And in the middle of dinner, Yoris got a call on his cell phone from Paul Graham himself. I just jumped up in the middle of dinner, Yoris got a call on his cell phone from Paul Graham himself. I just jumped up in the middle of the restaurant, and Flora still makes fun of me about this. And I forgot exactly what he said,

but, like, we'd like to offer you the opportunity to stay in a white Combinator. And I pretty much shouted very loudly, I accept. This was the opportunity Yoris had been waiting for. It was a very different time. The entire company was just two people, and you're just scrapping, trying to make it happen.

And now they would be among a select few companies to go through one of the best startup incubator programs in the world. And what they do is create a really intense program over roughly a three-month period of time that sort of all leads up to this one event called Demo Day. And leading up to Demo Day, founders listen to invited speakers and participate in Q&As, they go to networking dinners, further develop their pitches, have office hours where they can interact with other companies, as well as meet with people who may help them move forward, often Y Combinator alumni who have gone on to run successful businesses.

At the time, we did it with folks like Paul Graham, Gary Tan, Sam Altman. We're all move forward. Often Y Combinator alumni who have gone on to run successful businesses. At the time we did it, folks like Paul Graham, Gary Tam, Sam Altman, were all kind of partners. They'd come sit down with you and help you solve whatever the biggest problem was in front of you. Questions like how can Rescale land their first customer? And after three months of this intense and beneficial sort of mentorship, demo day arrives. Y Combinator was really built, I think,

to provide the founders a level playing field. You know, like when you're fundraising like through this process I went through before Y Combinator, it's not a level playing field, right? You're coming in, you're desperate for the money, you're trying to make the best fits you can, you've worked really hard on it for months, if not years. And the chance of them investing in you is

pretty low, right? So it's a pretty sort of excruciating process. And then the investor usually has a lot of experience investing in companies. And so there's a huge power imbalance between the founder and the investor. On Demo Day, which is actually multiple days long for the program now, each Y Combinator startup founder takes a turn to stand on a stage next to a big projected PowerPoint screen in front of hundreds of top startup investors, and then they make their pitch in hopes of generating some funding.

It does provide the founders and the companies the opportunity to have a little bit more of a competitive dynamic in the fundraising process. Because instead of a hopeful founder going to the office of a single venture capitalist who holds all the cards, now the investors have to come to the founders. And there's a bit of a competition as to who will invest in each founder's vision, which means a different power dynamic. But Yoris didn't actually land his first investor check on Demo Day, as is customary. He landed it before Demo Day in a kind of unconventional way. In fact, Y Combinator rules were different when Yoris went through the program in 2011 in allowing for fundraising before the big day that I don't even think that's allowed these

days. But just before Demo Day, while Yoris was going through the Y Combinator program, he was getting ready to go out and pitch the company to a venture capitalist. And this particular investor was great. And Yoris had been getting fantastic coaching on how to pitch from Paul Graham himself. So he was feeling pretty good going into the meeting. And once the pitch was made... This venture capitalist said, yeah, we're interested in investing. He was super excited. We come back. And then they said, hey, what are the terms?

And so we were like, okay, Paul, what should the terms be? And so Paul helped Yoris sort out the numbers and advised what kind of money and terms would be best for this investor. So we picked a price and we went back with that price. And this was like, no way, that's a crazy price. No deal. So Yoris went back to Paul Graham. And I was like, Paul, like, come on. This is like, you told me this is going to be a good price. And this is sort of the right fair price for the company. And they said, this is crazy. Like, this is way too high. You got to remember, like, this is back in the day when valuations were in the, like,

single digit millions of dollars, right? And so today, those prices have changed radically. But, and I was like, Paul, like, look, if this is the right price for the company, like, would you write a check? And I think most people probably wouldn't on the spot ask Paul that question, but I did. And he was like, sure.

And so he wrote the check and a small check. So he just pulled out his checkbook, wrote the check. Like a man of his word, Paul was willing to put his money where his mouth was. I would say he invested, if anything, more out of a combination of wanting us to be successful and feeling really bad for us having such a hard time fundraising. And it clearly wasn't to make a big return on the investment or something like that. But why that check is so special, and like any other founder would certainly remember that first check of investment, is because it's really the first time somebody is putting

skin in the game and really willing to believe in you. With first check in hand, yours and Adam were stoked. Yeah, I think we went somewhere to celebrate, maybe got a double espresso. You gotta remember, we're just totally broke. But the future was looking bright. To this day, that was the probably most meaningful investment that Reskill has received because, you know, it helps provide the confidence and the support and the trajectory that the company is able to go on. But again, if anything, I think Paul invested more out of pity than out of trying to make a financial return. And as time in the program went by, yours and Adam worked to secure their first customers in order to show on demo day that they were building something that people wanted. And they found those first customers in private space companies that I'm told are well known today,

but were not as famous back in 2011. They were looking for new ways to build rockets, you know, 10 times faster than the traditional sort of aerospace industrial complex was building rockets or satellites. And that enabled us to sort of come in and say, hey, you guys are a startup. We're a startup. Let's work together. Let's figure this thing out for you and ultimately try to help solve the engineering problem of how do you design a rocket, you know, 10 times faster effectively. The names of those companies are still on the down low, so they must not be named. I don't know. We can call them Voldemort space companies, but I guess that makes them sound evil. So maybe that's not the best name for them. Yeah.

We could also use the Kerbal Space Program. What is that? You don't know what that's from? No. It's a video game. I've never even seen these images. Really? What?

They've been around a while. Is it like a roller coaster tycoon for a space program? It's exactly that. It's a simulator. Interesting. Okay, yes, we can call it Kerbal then. The Kerbal Space Program. A lot of great advice.

I think Paul Bukai was actually somebody who told us, is like, fly out there, go sit down with them, and just don't leave until you come home with a contract. I don't want to see you guys back here at the White Comedy or like dinners until you come back with that contract. And we thought that was crazy, right? And it sounds crazy, but you're so right

because what we did is we went out there, we sat down with them and we did everything we possibly could to sort of get them as, I would say, sort of partners in the development and, you know, paying something for what we were building. And that was really material because that's kind of what got us to be able to show, hey, you know, this idea is more than just an idea. Here are some pretty serious companies building rockets that would use this technology. And when Demo Day came, Yoris could confidently show how his technology was helping engineers to build some incredible space technology. And as a result, Rescale picked up more than 20 seed investors for a few million dollars. And that led to more investment opportunities. We have folks like Jeff Bezos, Richard Branson, Peter Thiel, many others that were quite involved in building this sort of private-based industry at the time.

They jump on board, investing in Rescale. And I should point out that by this time, enough people had communicated to Joris that the name Vludo probably wasn't going to work. And it was another founder going through Y Combinator who happened to own the domain name Rescale.com. So this founder was nice enough to essentially sell it to us at a very fair price because that domain name really fit the company so well what we were doing. So we were nice enough to say, hey, like as much as I would like to take it, I'll give it to you guys. So that allowed us to really launch the company as Rescale. Rescale graduated from Y Combinator at the beginning of 2012. And with their first investors, their new name and their first customers already locked in, they were off to the races.

They hired their first couple employees who, after more than a decade, are still with the company today. And so with the four of us, we started building the product. Over the years, they listened closely to their customers. They picked up more customers from many different verticals. They hired more people, added more features, picked up more investors, raised more money, and the company just grew. With Joris, all along the way, seeing his technology break down the engineering barriers he had originally been so frustrated by during his own days as an engineer. Now, rocket ships and airplanes and drug discovery was being done so much faster thanks to his own vision.

They ultimately really cared about the speed, right, and the speed and the performance and be able to accelerate this overall design cycle. And so, you know, we kept writing software to do that. But it wasn't all gumdrops and roses on the journey at first. So at that time, public cloud was nowhere near as performant as it is today, right? So it was known for being really buggy. The performance of a server would be pretty random. Like you would call up a server and sometimes it would just, the clock speed of the server, the performance of a server would be pretty random. Like you would like call up a server and sometimes it would just the clock speed of the server, the performance of a CPU, be like 30 percent of what it should be. Right. And it might be because it wasn't being properly cooled in some data center somewhere.

And so even though the concept of spinning up as many servers as you needed via the cloud to get a job done in a faster time frame was great. The actual server performance just wasn't as compelling against a traditional on-premises system, at least at the beginning. You know, technology just wasn't there yet. But at the same time, they were able to spin up thousands of servers simultaneously, which was something that wasn't typically done at all. Which was mind-blowing for engineers, because even if it runs a little slower, now it can run 1,000 at the same time. And since that part was resonating well with customers, Yoris and his team decided to concentrate on making the software especially awesome, while the hardware caught up.

We really hired the team that could go build the software, because it's pretty difficult to build. And so big kudos to all those early engineers and especially Adam, Ryan, Leonto, we're all sort of writing software to just make this thing happen. Their first 20 or so hires were all technical people focused on building out the software. And then when they wanted to introduce the product to companies outside the space industry, they had to go through a bit of a transitionary kind of period because suddenly the whole, you know, sit down next to a potential customer and don't leave

until you've solved their problem approach didn't really work with Fortune 500 companies. To just put it into the harsh reality, you can't even walk into Boeing, right? Like there's a gate and if somebody didn't invite you, you can't, you'll get arrested if you try to jump the gate. So they had to hire marketing and sales people. And that's something I had absolutely zero experience with. Right. And so it was a pretty interesting time. A lot of things learned along the way. But, you know, fast forward to today, you know, a big chunk of our company, maybe about a third, is focused on sales and marketing, right? It's a huge piece of any important enterprise software company. It's being able

to make sure that these products make it in front of the right companies as potential customers and make sure that the customers understand the value that they can get from adopting the technology, right, and the product. Because a technical founder's dream is just to build the best product. And because it's the best product, people will just buy it, right? And that's true to a certain extent. But in a day where there are so many competing voices, there really needs to be someone to help break through the noise and get the product in front of the right people. And it's simple with Kraft macaroni and cheese dinner. Only a nickel a serving, too. So Rescale continued to grow.

And as far as cloud servers went, before yours was even accepted into Y Combinator. I used a combination of Hadoop, a bunch of mappers in Hadoop, kind of run in a distributed form at large scale, many computations on Rackspace or SoftLayer because they gave me some free credits as a startup. Which is technical speak that means he did smart person things to connect to what he could afford. But eventually, Rescale partnered with a well-recognized cloud service provider. At that time, I don't think it was even like a serious choice in the sense of the only cloud provider that was really catering towards like startups and earlier stage developers was Amazon Web Services. And so they, since then have been an amazing partner for us.

And, you know, we started building upon that API. In addition to Amazon, Rescale started partnering with supercomputing centers. Who has the latest and greatest computing technology. It's all these like universities and national labs. And Rescale still partners with supercomputing centers. Just a few months ago, we announced a partnership with Fugaku,

which is a supercomputing center in Japan. Not just a supercomputing center, but the world's fastest supercomputer. But long before Fugaku, the Rescale platform ran on AWS, various supercomputing centers, or on a customer's own sort of distributed private data center. And soon after, as cloud really started to take off, Rescale added all the other major cloud providers like Microsoft Azure, Google, and Oracle. And today, it's safe to say that cloud hardware technology has, in fact, caught up. And the thought is, I mean, let engineers do

what they're hired to do, create awesome products and innovations. Don't make them have to sit there and figure out how a data center works or have to wait around in long queues or lines to get a job going. Instead, be able to run a simulation during a coffee break or something using software and hardware optimized for that specific workload in an easy-to-use collaborative environment. As a company, that was certainly our thesis that if you're an aerospace company or an automotive company or a life sciences company, you probably shouldn't be building up this expertise around running data centers. That probably should be somebody who's really good at running data centers. And they're probably going to be able to do it better, faster, cheaper than you'd be able to do yourself inside of like the company whose focus is on building certain products. And today, Rescale is used by countless companies around the world.

Most of the largest companies in the Fortune 500 in these verticals are our customers. And so, yeah, that's a huge accomplishment. And I want to thank the entire Rescale team over the years for the many years and long nights of hard work that has gotten us here. And it's funny to think back on the beginnings, the little Dutch boy without a TV who learned to program in his childhood, plopped down in an English school and eventually developed a multidisciplinary process to optimize the wing of an airplane many of us have probably flown on, ultimately using his passion and his experience to create technology

that is now being used to build rockets, more airplanes, cars, consumer products, as well as design microchips, sustainable energy practices, drug discoveries, and, I mean, just about any innovation out there that involves engineering. And, I don't know, that's pretty cool to think about. Yeah, I agree. As a matter of fact, that's pretty cool to think about. Yeah, I agree. As a matter of fact, I've flown on a 787 several times. Keep in mind, the 787 is a massive airplane. It is huge, amazing aircraft. Is it cool to think about now what you know about how its wing was designed?

Yeah, because obviously back then I didn't know yours and Adam, but it's interesting to know now that they had worked on that wing. It is one of my favorite aircraft to fly on. But yeah, that was an amazing feat to get that airplane designed. And it's cool to think that companies like Boeing, Airbus could have the ability to do so much more, much cheaper and much more effectively on rescale than what they had traditionally done. It's almost uncanny to think of the amount they can gain and then just like the reduction in the time to market for a new aircraft if they use rescale as opposed to using their on-prem system. So yeah, it's pretty cool. Success is always the eye of the beholder. I think the measure of success and how you define success is always very important. So certainly relative to when we started the company, it's an enormous success. And there's actually one of our investors, Sam Altman,

he has a quote saying something around, you generally overestimate what you can do in one year, but you probably underestimate what you can do in 10 years. And I think that's very much true. And it's a testament to the team of all the grit and resilience and effort put in over the years to get us to this point. But I would say if you look back at the vision we laid out when we founded the company, a lot of it has come true. In many areas, it has far exceeded our expectations.

And so that's always really exciting. But we have a long ways to go, right? So if I look at sort of the overall market opportunity for just cloud in general and high-performance computing, it's today only maybe about 15% of the market. So, you know, we're still in that sort of early stage of adoption. It's certainly going mainstream. If you look at how customers are investing and talk to analysts, everyone's obviously looking at cloud. Majority of customers are for any net new investments, selecting cloud for that.

And our mission and our goal is to empower these engineers and scientists in every single one of these companies to be able to do their work faster, better and accelerate innovation across all these areas. And so we're just scratching the surface of what's really possible with Rescale. And so I'm really excited about the future ahead. And in case you were wondering, I asked yours what his parents thought of his decisions now, given where he's been as well as where he's arrived. And he says with a smile that he doesn't really ask anymore. He knows that they just want him to live a happy and balanced life. And I don't know, my guess is they're probably not complaining. And as for Flora, Yoris' kind girlfriend, who helped financially support Yoris when he first dove in

and took the risk of building a startup, the two of them tied the knot a couple years after Rescale was first founded, after the first few people had been hired, and they have two young children today, the multilingual and probably genius children we mentioned at the beginning of this story. He also noted that while having a few employees and an official business setup wasn't a requirement for marriage, he was sure it helped that Flora could tell her parents that her husband was more than just unemployed. Yay!

Well, that's going to do it for us in this two-part series about the Rescale startup story. To learn more about Rescale, you can visit rescale.com slash bcpodcast, where you can also sign up to demo the platform. You can also go to bigcompute.org where we'll put up some pictures and links of Joris and his journey. And if you'd like to support the Big Compute podcast, you can leave us a review on Apple Podcasts or Spotify. You can also visit bigcompute.org for videos, articles, and other podcast episodes all about amazing innovation in a world of virtually unlimited compute. Yes. And special thanks to Joris for talking to us today and to all of you for joining us.

Don't forget to use multi-factor authentication everywhere and practice 3-2-1 backup. Stay safe out there. Thank you.