The Pomp Podcast - #547 Mike Gonzalez on Building A New Category In Finance

Episode Date: May 5, 2021

Mike Gonzalez is the CEO and co-founder at Trace, the first service desk for finance teams. Before Trace, Mike developed a deep empathy for the problems finance teams face as the VP of Finance & Strategy at Zenefits, where he led FP&A. Before that, Mike built and managed financial systems at Facebook. In this conversation, we discuss working at Facebook and Zenefits, building finance teams, real-time data, financial planning, asset allocation, startups, and entrepreneurship.  ======================= Public Rec is the first to bring tailored sizing to leisurewear so that you don’t have to choose between comfort and style. They make leisurewear in waist and inseam sizes because they believe comfort starts with a better fit. And when things fit better, they look better. No tailors. No settling. No stress. Comfort and style, all in one. Check out publicrec.com/pomp and use POMP10 at checkout for 10% off your order. Step into a better fit today with Public Rec. ======================= As one of the largest and oldest Bitcoin exchanges in the world, Kraken is consistently named one of the best places to buy and sell crypto online, thanks to our excellent service, low fees, versatile funding options and rigorous security standards -- but this is only part of the story. We’ve been on the forefront of the blockchain revolution since 2011: http://www.kraken.com ======================= Unstoppable Domains makes crypto easier by replacing your address with [AnyName].crypto. They allow you to send and receive over 70 cryptocurrencies, including BTC, ETH, and LINK with a single blockchain domain. Go to unstoppabledomains.com and get [YourName].crypto to make your crypto life easier. =======================

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Mike Gonzalez is the CEO and co-founder at Trace, the first service desk for finance teams. Before Trace, Mike developed a deep empathy for the problems finance teams face as the vice president of finance and strategy at Zenefits, where he led FP&A. Before that, Mike Built and Managed Financial Systems at Facebook. In this conversation, we discuss working at Facebook and Zenefits, building finance teams, real-time data, financial planning, asset allocation, startups, and entrepreneurship. I really enjoyed this conversation with Mike,

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I really hope you enjoy this one. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys, what's up? Bang, bang. We're in a studio. We'll have more on that later. Today, I've got a special guest for you my friend mike probably one of my best friends we've got all kinds of crazy stories that we are

not going to talk about on the podcast today uh but we used to live together in san francisco along with a bunch of other people uh who we will not bring on the podcast because they're too outrageous uh what's up man how you doing i'm doing great you were the first person in this room it's nice you got a good setup here yeah mike sat down and he looked around and it was one of those looks of like uh oh shit this is real this is big time all right uh let's start I actually have notes. I'm going to be really serious for like two episodes, and then I'll go back to being myself. Let's just talk about your background first.

We met at Facebook, but before you were at Facebook, what did you do? Before Facebook, I was a consultant. So spent time building financial systems for big Fortune 100 businesses, GE, Chai, Kreft, some in property group. So right at the start of my career, just thrown into the deep end, building financial systems. First day on the job, they dropped a 300-page user manual on my desk. They said, Oracle Hyperion Strategic Finance, you got two weeks, go figure it out. So it was pretty intense.

But I think for me, I felt really fortunate. I was just working with finance executives, learning the ropes and building the financial systems. You get a chance to build their financial models. So you understand every single driver, all the different levers, how the business model works. And so being able to work across a bunch of different industries, seeing a bunch of different processes helped me early on in my career, build these mental maps of like, okay, this is how

corporate finance is done. This is how when you watch CNBC and you get the earnings and it's like, okay, here's our earnings projections. Here's our guidance. Here's how all this is done. Here's all this is made. That accuracy becomes so important. So yeah, really fortunate to start off my career building those types of systems. I did a project with Facebook a couple of few weeks into it. project was going really well. The VP of Enterprise Engineering took me on the long walk in the middle of Facebook and started recruiting me. And you know, I was, you know, at the time living in Chicago, had a condo, like life was kind of set, like was really kind of, you know, had good friends and like my family was there, gave me an offer to join Facebook. And, you know, he was like

exploding offer. You got two weeks. This was like right around Christmas. Ended up accepting the offer new year's eve moved out of my place new year's day i was in san francisco and i think we stumbled into each other like a couple weeks once you go on the walk they got you like like for those that don't know at facebook if you go on the walk they have you because there's a long walk to like look how great this place is and then they're like oh by the way here's an offer uh you should take this and then and then you take it that's how they get you there yeah uh all right before we get into facebook uh because i feel like that's like a very specific uh situation yeah these financial systems i think most people don't understand like how intricate and complex

they are so you mentioned um like projecting earnings yeah literally down to the cent right or to the dollar um and is it fair to say that like all this is it's just people are taking all the inputs they're then saying all right we're going to run it through our historicals plus whatever we think are the new inputs and then literally gives us an output for this system and that's how we're going to like literally manage the business so on a day-to-day basis we can tell, are we ahead or below the projections, where we believe we're going to be? And like, really, that's like kind of what is the heartbeat of the business to some degree, right? Absolutely. I mean, at the end of the day, it's all about, you know, a business is about,

you know, taking in cash to generate more cash and driving those returns. And what's interesting, you mentioned kind of like the day-to-day, you know, and I think the problem with current state financial systems is you don't have that day-to-day visibility. And I think people spend a lot of times building these financial plans. And the way that typically works is the finance team will work with board of directors, executive management team, and they'd say, OK, here's roughly what we think the business should look like. Very top down exercise, planning very strategically around, OK, here's the initiatives that we want to do. Here's the market share that we want to take. Here's the growth profile that we think we need to have. And then that always kind of cascades down to the different department leads and the business leaders.

And so then there's this really big exercise to say, OK, here's rough shape of what the business should look like guidance. then every single functional head in a business, VP of product, VP of engineering, sales, marketing, every single group kind of has their guidance and their targets. Then they go operationalize that and they say, okay, what projects do we want to do? Who do we need to hire? What pieces of software do we need to buy? And they substantiate those targets with what people describe as a bottoms up build. And so this is like bottoms up everybody in the business. What are they actually going to do to execute on those plans? Make sure that they can hit their goals, hit those targets. And so there's a lot of kind of just information that cascades down and then it needs to cascade up.

And that's a long process. Like, it takes a really long time to do those plans. I mean, people typically, you know, start that process maybe Q3 where they start thinking about this stuff for the following year. And then almost all of Q4 sometimes for some of these businesses is consumed with this planning exercise. eyes. And then what my biggest insight was, is being a part of that at so many different businesses, being part of it, Facebook, leading the finance team at Zenefits, building these financial plans is you spend all this time creating those plans. And immediately as you say, okay, this plan is done, it's set, it just collects dust, you know, and it just sits there,

then people actually go off and execute, you know, like, okay, we've set our annual plan, literally two or three weeks later, you know, your marketers like, actually, I'm going to double down on this project punt on this project, instead of a full time hire, I'm going to hire a contractor, you know, and they make all these different changes. And that is really tough to capture from a finance team who spent all this time building this model. It's just a it's just a model. And so that's kind of what brings us to Trace, where I've like, I've learned these insights, saw this problem. And I think finance, it needs to be more real time. It needs to have that day to day visibility. What are the actual decisions that people are making? And how does

that impact our financial results? And that's exactly what you know. So we founded Trace a few years ago to solve that problem where we help people make those day-to-day decisions. They can purchase, they can hire, they manage their projects. And then we help give them real-time visibility into, okay, how does that actually impact our plan? And the way that takes effect on our product is you get a top-down target and then people can execute. And then you can make sure that you set that guidance. You told Wall Street what you're going to do. Let's make sure that as we're executing, we have that day-to-day visibility into how we're going to do it, what we're going to do. The other way to do it, the old way is like, set our financial plan,

everything happens. We add everything up in the accounting system and then we hope that it matches. And then we try to do like an analysis and understand that variance. It almost feels like there's a complete disjointment between the finance team and then like the rest of the teams, right? And the rest of the teams, they're getting told by the finance team, hey, your budget is to hire three people and we need $10 million of revenue from you this year. And then the team's like, okay, cool. And then they go and they kind of do whatever they want. And they hope that they come back with the numbers. And I'm overgeneralizing, but to some degree, the finance team doesn't really know until they come back, whether it's on a weekly,

monthly, or quarterly basis, what those financial performance numbers look like. And so it's almost like this infrequent, non-real-time understanding of the business, right? And that's where you get some of the quarterly projections and numbers and stuff like that so it sounds like the solution here is just make it as dynamic as possible shorten the feedback loops and make it more real time right that's essentially what you guys are ultimately trying to do absolutely absolutely all right so let's talk about facebook uh i'm gonna tell a quick story to tell you how good of friends mike and i are some of our old colleagues may listen to this and just laugh uh i used to ping mike on uh facebook and uh and messenger which the

company uses and i'd be like hey man uh are you busy and it'd be like noon he'd be like nah i got like some free time this afternoon i'm like all right and then we would put a meeting invite on our calendars and for like you know 30 45 maybe an hour and then we go to the gym for the same time yeah and we go to the gym and we'd work out and it would just be like meeting with mike and literally we'd go to the gym we would just talk about we usually would actually talking about like business related stuff but that was our like escape is if we had a slow day we'd go do it so we're we're pretty good friends and we've been doing uh stuff together for a long time yeah we used to also wake up 4 30 a.m take that first shuttle in no traffic

get the first ones in the office people uh i'd laugh the whole miami thing is like man in san francisco uh back in probably 2010 12 13 14 like nobody cared about the tech industry and then all of a sudden they had like facebook and google and linkedin and all these buses going through their city and they were like hey who are these people like not cool and so i think that like that's the big thing that miami's got to be careful of is that like right now nobody cares about the tech people but if you go when you do crazy stuff then they're probably gonna care a lot yeah yeah i actually always give you credit for that because when i was living in chicago i was a consultant big fortune 100 businesses you know and i used to watch cnbc i really cared about the markets and

like you know and then i moved to san francisco and you know facebook was a publicly traded company at the time, but started getting immersed in the world of startups, you know, and I think being friends with you opened my eyes. You were already a successful entrepreneur. You sold a company in the past. And I think our relationship and our friendship is really what opened my eyes to like actually digging deep. And you can probably remember back in the days I was like working on all sorts of side projects. I was like, you introduced me to like the first engineer I've ever worked with. You know, I was tinkering on all sorts of things. And it's amazing. You can, you know fast forward like you know five years later it's actually took the plunge you know

left the job went all in on starting something i used to enjoy on friday nights mike and i before we'd go out we would get drunk and then we would argue over all kinds of dumb stuff like hey man we think about this company like it's trash to be like i think it's going to be great and you win some you lose some until we always laugh about it uh what was your biggest takeaway from working at facebook like what do you think was the thing that uh from working in and maybe you describe a little bit about like the role that you had inside the finance team and like what was the biggest learning? That's a good question. I often think if I can go back to Facebook, what I would do differently sometimes. That's a question I always ask myself. And I

would have like networked aggressively. And I think when you're inside of those businesses and you have a chance to work with so many smart people, so many dynamic people, knowing that I would have been an entrepreneur, I wish I would have just met as many people as possible instead of just going to the gym with you every single day it's like it's an amazing place to go spend time and just learn the ropes and really network you know because i think you realize as you're building your companies like being able to recruit great designers and great engineers like all that matters so much but uh to your question like what did i learn the most you know i think what i learned was i wasn't a good fit for a big company to be completely honest uh i think when i was at

Facebook, you know, I was responsible for building financial systems, FP&A systems, kind of the top down, more strategic models. We were building five and 10 year models to do, you know, data center planning and like really long term strategic planning. And I think what I felt I needed was like, I saw what those before me at Facebook had built. And I was like, I want to go build, you know, and I think that was probably the biggest learning for me. I always tell people, yeah, I was at Facebook for five quarters and people laughed. They're like you're such a finance guy you think about things in terms of quarters you know uh and it was enough cycles for me to learn that like actually i want to go build you know and so

that's where i started looking earlier stage not founding but you know going to like series c series d or it's kind of like at that stage where you need to build a lot of that early infrastructure um so that was yeah that was definitely my biggest my biggest learning all right and then at zenefits uh i always joke that you are my one friend who went from i got a new job to i'm running the place basically on the finance side at Zenefits. It happened in like a year, I think, or maybe a year and a half or whatever. What did you start at? And then how did you get to, well, you're the VP of finance, I think, right? You're the VP of finance. And kind of talk through just like the building process and like what systems you guys had to

build and like what you learned there. Yeah. I came in at IC level. I think at the time, there was really not a team being built yet. IC for those that are listening is individual contributor individual contributor yeah and i think the the there was really no foundation i think you know our kind of uh directive was go build up the finance go find it build the finance infrastructure you know and get this place ready to go public at some point uh we need kind of to grow i think at that point we were about 500 employees when i joined uh by the end of that that first year we were 1800 employees so it was like insane growth i joined just before we closed the big 500 million Series C financing. And so that was fun to be a part of. I didn't lead the

financing, but I was able to participate, help build the models, help prepare the presentations. And I think, you know, early on, I brought just discipline to how we built our models, how we presented, how things were organized. I think, you know, David Sachs, who was the CEO at the time, joked that like my formatting on the models probably increased our valuation by like a billion dollars, just the cleanliness aspect of it. And that discipline extended into as we started to build. So like I said, I was so fortunate in my early days, the first few years of my career to work with those big Fortune 100 businesses, understand organizationally how were they set up? What are their processes? What technologies do they use? And so I learned

the playbook. And I think when I joined Zenefits, I quickly implemented that playbook to say, here's what the modeling environment should look like here's what our team structure should look like here's the portfolio of services that we need to provide to our business partner here's kind of how all this should should orchestrate and i think once you kind of lay down that foundation uh it really establishes yourself as a leader on the team um and so i think that got me a promotion to director there was a lot of change happening at zenefits zenefits grew way too fast uh we ran into some compliance issues and then we had some tough decisions to make. And I think one thing that you know about me is, you know, I think always okay to speak my

mind, you know. And I think when times get tough, I think, you know, having somebody who, you know, is willing to make tough decisions that are the right decisions for the business becomes really important. And I think that kind of what earned me my seat to kind of take over more of the finance function and to participate in board meetings and to help drive some of those decisions around restructuring uh which are really tough things to do um but at that point i mean it's it saved the business for sure yeah it feels like that's one of the stories of silicon valley of like you get all of the experiences wrapped up in 12 to 18 months right like hey it's a rocket ship hey things are now kind of unsteady uh we've got the compliance or kind of regulatory issues we've got

a change of leadership like all these different things we've got to restructure the business like you really get a lot of experience very very quickly uh which if you're going there to learn is like actually the ideal kind of uh you know path that the company goes through yeah um what was the biggest thing you took away like when it's all said and done you walk away right you go start a business but like when you think back what's the thing you learned uh i think it's business fundamentals matter you know and and it's yeah shocking shocking alert alert 2021 breaking news And it's crazy, right? Because you look at some business where the unit economics are upside down and investors are still piling cash into these businesses. And the playbook has worked in some instances where it's like, even though the unit economics are upside down and unit economics being looking at for what's the unit of value that delivers future value for this business. And so a lot of software businesses, it's like a license or a seat or a user, you know, or for Uber, it might be a writer or something along those lines.

And so for every dollar that we earn from, you know, that unit, are we able to get three dollars in the future? And a lot of times these businesses are like, actually, we're going to pay a dollar right now to get 80 cents in the future because we're going to go win market share and expect that that dollar will be worth three dollars. We'll build future products or whatever. Exactly. And that 80 cents will then grow to 120, 153 dollars. Yeah. And you have to be really, really careful about where you apply those principles. And I think, you know, Zenefits at one point had really strong unit economics in certain areas in terms of its ability to... So Zenefits provided free HR software and then monetized as an insurance

broker. Really disruptive model. You know, I think people, everybody needs HR software. As soon as you start a business, you need HR software. And to get that software for free and then also have just you know somebody be your insurance broker and that you know and you can provide that free software in exchange and that you know broker commission that you're able to get it's really valuable you know i gotta i gotta admit something real quick uh i wanted to test it out one time so i went in and i put like uh you know name whatever i don't know i got like three clicks in the funnel and i was like i don't got time for this like i'll come back and check it out alex from zenefits is still emailing me like i don't know who alex from zenefits is i don't even

knows a real person but still emailing me i've unsubscribed i've blocked etc but i'm still getting emails so zenefits definitely knew what they were doing they were they were relentless when you decided to leave did you know you wanted to go start a company uh i did i did yeah and so i yeah when i decided to leave it was on the on the on the on the plan to go start a company up all right why trace and what the hell do you guys do i think people see it. And they're like, wow, these guys have like great investors. And like, they're smart. But like, what is finance systems? Yeah, yeah. Well, trace is the first service desk for finance teams. All right. What does that mean? We help people in a business purchase, hire and manage their

projects. Those are really the fundamental building blocks of any operating plan. It's what people do to, you know, deploy and invest their resources and their and their capital. And most software businesses, I mean, 60 to 70% of their spend is on is on hiring and headcount. And then they purchase things like software. You have professional services and contractors. Trace facilitates all of that work. And so it gives people a mechanism to go, you know, get those things done. And then it gives the finance team visibility into what these people are doing. And so the old world of this process is like, you know, you collect a request and you like stamp it for approved and like those people go get those things done. What we do is we collect this great information. We automatically give finance teams forecasts. So going back to that example that we said, we need to give people real time visibility into how their business is going to perform into the future.

We give that to people automatically. And so this is kind of like a paradigm shift. I think people always think about these old traditional financial models. We're kind of flipping on his head and saying, you know, you need to collaborate with your business to collect these requests. Let's maximize the use of these requests and understand what's committed. You know, what is my committed spend? What's my committed forecast?

What's pending approval? What's been approved? And how does that impact my business? And that's powerful information set like a finance teams to accurately, you know, manage the business. One of my friends, he's a head of finance at like, you know, one of the top SaaS companies. He says it best and he's a big fan of basketball. He's like the current finance tool set is like a coach, you know, coaching a game and

not being able to make any adjustments until the game is over. You know, he's like coaches have to be able to make adjustments in real time. And the way to do that is to collaborate with the business, understand the decisions that they're making, understanding how those decisions will impact the broader financial system, financial plan, and then make adjustments and tweak. And that's what Trace allows people to do. All right, before we keep going, how do people go buy the software? Because if you run a business of what size, what's the ideal customer size? I think once you have around 100 or 150 employees, you typically start to have just enough distribution of people across the business

where it starts to make sense. You have a finance team in place. We're still trying to figure out what the upper bound is we just closed our first enterprise deal nice nice sales yeah it was a 1500 person uh business they're gonna be 2000 employees by the end of the year uh and so our you know our goal approach is like let's focus on growth stage businesses now before they have all this infrastructure so like 100 to 1500 100 to 1500 is a good kind all right tracehq.com tracehq.com by the way for those that don't know if you talk to the sales team mike's brother matt He runs a sales team, right? He runs a sales team, yeah.

All right. He's an absolute animal. He will explain to you why you're an idiot if you haven't been using the software. Absolutely. What's it like starting a company with your brother? I mean, it's amazing. It's amazing and it's hard at the same time. I mean, I can't lie and say it's been like, you know, perfect at every single step of the road.

I think the CEO, VP of sales is always an interesting relationship as is. And then, you know, me and Matt. I mean, we are. I've got I've got four brothers. You've got one. And we're all very similar. Very similar. Yeah. Him and I are like so competitive. But at the same time, we have the same goal. We want the same things. It's honestly been one of the most rewarding things in my life. Me and Matt. I mean, we have a really special relationship, as you know. He's my brother. He's my best friend. But I I love him like like a father, you know, and I want him to do well. I always want him to succeed. And so it's, yeah, I think him and I being able to work towards the same thing, it's

incredible. When I'm working weekends, working nights, I jump into Slack. It's like, you know, whose little bubble do I see there? It's like, it's Matt's, you know, it's like the guy is just, he's just getting after it, you know, there's been tensions, there's been hard times, you know, and I think, I think there's like little brother, big brother things that happen, you know, and we always manage through those things. But isn't it fair to say that actually you would have tension with, like, any executive team, right, just naturally as you build a business and it's easier to resolve with your brother because you can just be honest?

We can be honest, yeah. But I think when there's other executives, there's a level of professionalism for sure, you know. And, like, him and I, we keep it professional, like, all the time. But I think we also, like, let, you know, things come out as well, like, and have a little bit more heated and heartfelt debates, you know. And I think it's a superpower, you know. because when you when you have that trust with somebody and you know that at the end of the day they at the end of the day nothing else matters you can make zero dollars like they just want you to be successful and that's the root of the relationship and it's like that family bond

you can get through anything you know um but but you can like and the reason i know this is because i do with my brothers like yeah you're professional whatever and then there's one moment you're just like dude i will whoop your ass right and the younger brother say the older brother older brother say to the younger brother whatever like that eventually comes out and then everyone's like all right chill me like you want to go get some food right and like and it's perfectly fine you pretend like it never happened and it's weird to other people right but i think to like people who have brothers specifically right it's just like that's like a natural thing yeah and so it's uh it's unique uh and as i've worked more with my brothers like you realize like you're like exactly

what you're saying like yeah i want them to be successful but like hey man don't forget like you know you're the little brother it's all my little brothers and matt you know yeah yeah and matt's like yeah i'm the little brother but i'm the bigger brother yeah don't my youngest brother's taller than me and he reminds me all the time um all right so with trace the whole idea here i mean it's like a no-brainer high level uh idea of just like hey we should make this more real time we should have more like almost like streaming information right if we have people who are making decisions and forecasts and they don't have information then they can't be effective with it If we can then build software to get them the information faster and in more real-time, they should be more effective, more efficient, all that kind of stuff.

Okay, great. Makes sense. How do you build the product? Because part of this, I think, is like most people are, especially those that haven't built SaaS software or I guess software as a service, they're just not used to building for these big enterprises, right? They're used to thinking about like, oh, let's build a mobile app. Let's build a website. Something that is more consumer-facing. what changes in the product development cycle for you as you guys look to service you know really

big customers that could pay you a lot of money but also there could be five different types of customers within one single you know customer base right right right right uh yeah it is tough it's a balance i think you need to start with like your insights or the problem that you that you want to solve and i think we were very clear around kind of like yeah the insights and the trends that we wanted to tackle with initially thinking through the scope of what we wanted to build. You know, I knew that it was I wanted to do something in the finance space and solve these specific problems around just collaborating with the business and collecting this information and just automating all these routine FP&A tasks. So I've been there, I've done it, I've been in the

seat. And so I think we, we kind of know, you know, where we can provide value and really where we can differentiate from other players in the market. And then it's, it's just like, tactically, okay let's you know now we have like a big vision you know and we think there's a huge category to be defined here and to be captured here how do we tactically go do that with like you know a few million bucks of a seed round and like you know a you know handful of engineers and that's where it gets a little bit more difficult to say okay where do we start what's our entry point with customers um and you know how do we how do we navigate from there to then continue to unlock and build towards a vision.

And so that is a process of just talking with customers, understanding their needs, defining requirements. And when you're building for the enterprise, there's not a lot of shortcuts that you can take, especially when you're dealing with financial software. The security of that information, the security of that data, working with the legacy accounting systems that you have to integrate with to get data,

all of those are kind of just table stakes. You have to do that. You have to do that really well. And increasingly with things like security, you know, you have to be like SOC 2 compliant and you need to make sure that you're protecting people's data. And so that's core infrastructure that we built in from the early days. So compared to like building a consumer company where you're just like, you're just throwing ideas out there and you're just trying to find a lightning strike. You know, when you're building an enterprise company, you have to be really thoughtful about how you architect the system and, you know, how you sequence things to deliver value to customers. I'm really fortunate to be working with an incredible co-founder and CTO.

His name is Martin Destaniel. He sold his last company to Box, led product and engineering teams there for four years. Serial entrepreneur. So I think he just understands how to build. But coming from Box, he understands the importance of synchronization. And Box makes sure all your files are synchronized. There's somebody coughing in the room. This is not allowed.

When we're in person, there's no coughing allowed. All right. Keep going. Sorry. Leave that in. Don't edit that out. Yeah. So Box, you know, he makes sure that everything was synchronized, you know, and it's the same thing when you're dealing with financial data across systems. You need to make sure everything is synced. And then you also need to make sure that those documents are secure, you know, and Box handles, you know, government documents for government agencies. And so that security aspect really came into play as well. And so we were really able to think about, you know, things like, you know, users and permissions, what users have access to what piece of the different product, what can they see, what can they not see into the foundation early.

And that's really going to be helpful as we continue to scale and service these bigger customers because we built the infrastructure anticipating, okay, we want to go serve big enterprises, you know, down the road. And so that's good that we have that infrastructure. When you think about what this will empower, right? So the software, we're just going to say it works. We know that the customers are using it. How does it change a business, right?

Like what is the outcome once they use it in terms of somebody buys into the vision? They say, yes, I want the real-time information. Does it lead to more revenue? Does it lead to just better forecasting? Does it cut costs? Like how do you think about the impact on an actual business? That's a great question. Mike, all I do is ask great questions.

Yeah, that's fair. I'm excited for the questions at the end. Talk about aliens and stuff. Yeah, so I think I'm going to start with like a few different areas of where we're going to create change. So first is just from like a cultural perspective. And I think like Trace, it empowers people. It empowers people across the business to hire who they need to hire, purchase what they need to hire, to manage their projects. And I think I think finance is kind of shifting away from this old guard of like gatekeepers and, you know, people who just say no.

And they're realizing the real way to lead and the real way to get results is by empowering people and holding them accountable and allowing them just to execute and move with speed. And I think that's kind of the first shift that, you know, finance will create in a business. It allows finance to be a collaborative partner to the rest of the business and an enabler of the rest of the business to allow people to move with speed. The downstream impacts of that is now we're giving all of our business partners a way to collaborate with us, to give us information, to get us in their minds of like, what are you thinking about doing? And all that information can then go be used to just supercharge existing financial systems and finance teams. And so it starts with, you know, giving that real-time forecast to finance, which is like an insight that finance teams really haven't had before. You know, they're really in the dark without getting this information. Or if they want to go try to create this in the old world, it, you know, takes weeks, you know.

And at that point, it's already too late. I mean, this sounds ridiculous, and I can say this. You can't. But, like, it's basically dinosaur-type approach to doing this, right, where it's, like, very static. It's a kind of top-down, centrally planned type environment to what you're talking about is basically where the world's going, right?

It's just real-time information that now I say, okay, we thought X was going to happen, X didn't happen, Y happened. If we take that input and we change it, rather than wait till the end of the quarter to make any change, we should probably change it

on day three of the quarter so that the rest of the quarter isn't screwed up because one of the inputs we made into the model is wrong. Absolutely. Absolutely. That's like a no-brainer. Like actually coming from somebody

not from the finance department, of these big organizations you're like well you guys haven't been doing that right like it like it's kind of crazy to think about just how um how hard it must be to do this job without real-time information right right right absolutely um one of the pieces of the software that's really fascinating to me and i actually i should have said this in the beginning i'm an investor uh mike was nice he he's he's gonna try to make us all rich so he'll be much more richer than i am but that's fine. Uh, is collaboration in terms of, uh, you guys start out collaboration pre pandemic. So everyone's in the same office for the most part. Right. And we're using software

to help everyone kind of work together better. Yep. Pandemic happens. People literally scatter all over the world. It's like collaboration and collaboration software is more important than ever. Talk a little bit about just like what this does to the internal communications of teams as they start to, uh, to use the software. Yeah, I think, well, the first thing is, you know, kind of when the pandemic hit every single finance team was put on tilt you know and then they were saying okay like what if we have to cut expenses by 20 25 what do we need to do you know and so using a tool like trace to have the visibility into what's committed what's not committed when are renewals when can we get out of this contract you know when is this contract in those are some

of the questions that we allow people to answer so they can just sleep easy you know at night you know knowing that they have all this information and they don't have to go dig through google drive or box folders, analyzing specific contracts, trying to enter information out. So we could have helped people really get started. And then from there, executing on new financial plans at that time, as people were kind of just trying to figure out the new world, they were just like, okay, iterating, you know, scenario one, scenario two, scenario three. And then when you pick a scenario, you need to go, you know, execute that scenario. You need to, okay, socialize that and then collaborate with people. And collaborating on financial decisions and information is really,

really difficult thing to do. I mean, I think there's just like a ton of, you know, information. There's a ton of documents that needs to be, you know, you need to have like both tools that allow you to collect this information, to collect these documents. But chatting then in Slack without the context of this information is really difficult, a really difficult thing to do, you know. And, you know, even if it's just like, for an example, if I want to talk about a number in my financial, I might say it's at the intersection of this department, this account, you know, this location and this and this date, you know, just so we can make sure that we're talking about that same piece of data or information. And so Trace allows people to, you know, have productivity tools to get their jobs done, but then also collaborate with that information right there. You know, so if I want to ping somebody and say, hey, we got this renewal coming up, like, should we renegotiate?

Should we go look for new vendors? Do we want to cancel this? All that can happen in the product. And having that collaboration in context is really, really helpful, especially when you can't just go knock on somebody's desk and be like, hey, I need your help. We want to make this change. Is it good to go? And so I think it's increasingly important to have good productivity tools with collaboration deeply ingrained into the experience while we're working remote. It almost feels like right now you guys are taking the data. You're saying, hey, we're going to help you do more with this data in terms of real time and streaming and all that. Then two, it's like, hey, we're going to help you communicate and collaborate around the data. And then eventually, if you can basically kind of almost like sink your hooks into an organization, right, to some degree of, okay, now we've got the data and we've got you collaborating here. you can build all kinds of products in a product suite that just continue to solve problems for these finance teams. And in some way, it feels like maybe there's been more software built for the consumer like finance, right? Whether it's taxes, or, you know, P&Ls and stuff like that, than it is for these like kind of growth stage, you know, technology companies. And if you can

really just essentially establish that entire category, and be the product leader there, that it's a no-brainer right yeah absolutely we think that's why i invested so yeah we think there is a new category here you know i think there's like categories of financial planning systems there's categories of accounting systems and i think that there's we think that there's this new category that's based around collaboration and workflows and analytics uh and does it have a name do you guys have a name for it we call the category finance service management and service is a very key part of that category name because we think about the portfolio of services that finance needs to offer the business. The problem with the incumbent systems like the planning

systems or the accounting systems is they're really built for finance. They're not built for the people in the business to collaborate with those tools and to use those and to use those tools. So the tool, the current tools are built specifically for finance teams to do finance activities, power user tools for finance. And what you guys are saying is no, we need to give tools to the finance teams that help them work better with the product team or with the customer a service team or whatever else. And so it's providing connectivity between the finance team and the rest of the organization. Absolutely. Absolutely. We say to myself, this is even better business than I thought. Damn, all right. We don't actually compare a category to existing

financial categories. We say it's most analogous to IT service management. So IT service management and finance service management. IT service management is companies like ServiceNow and Atlassian, and they built incredibly valuable businesses around a really simple concept of a ticket. You know, you need anything from IT, you go create that ticket. It was kind of like the core of, you know, what those systems started as. And that doesn't really exist in finance. And interestingly, a lot of people use Atlassian's Jira product for some of these workflows, you know, where it's like, I need a workflow ticketing system for purchase requests or hire requests. And so they end up using generic workflows, but they're not built for it. You're not built to

understand your financial data, you know, to do all of the connections with your financial systems and give you all the outputs that Trace is going to be doing. But so from an analogy perspective, we're most similar to those businesses. And I mean, ServiceNow is a $100 billion business, Atlassian, $50 billion business, two of the top 10 enterprise cloud software companies. So we think there's a huge category upside to finance service management. All right. So you've raised a good amount of money for an early stage technology company.

Walk through what that experience has been like and kind of what are some of the tips and tricks that you picked up as you went through the fundraising process so if there's a founder out there who's like hey i'm about to go raise capital like what are the things that you found that worked for you um i think that's that's great it's a great question i told you only great questions uh i think people say that's a great question when they're trying to like buy themselves some time i know i'm not gonna call anybody on it i've called on people i've called people out on it before but go ahead yeah yeah uh we were fortunate to have a great early investor jeff Claviot on core capital. Um, he calls it, he's, you know, the OG of seed investing. He's been

doing it for a really, a really long time. Um, it wasn't early, it wasn't easy for us, you know, to get started on the kind of the fundraising trail. Uh, and so first piece of advice is I think people get this advice all the time is test your pitch with friends and like, you know, you know, people who you can really trust and dial that pitch in before you go kind of talk to your ideal, you know, investors. Um, so it's basically start with the people who not necessarily you don't want, but start with people who either aren't actually investors, but can give you feedback. They may be people in the industry or people that you trust and know, and then almost move in and go pitch the people who like they're nice to have first, and then work your way up to

the people that actually you want. I think that's a good idea. I think you'll have a good feeling when that pitch is kind of dialed in and your story is really dialed in. And it takes some time to kind of iterate on that. I think we met Jeff at a good time. I think he was a believer in the category, believer in the potential, and really a believer in the team. And so we initially raised a $3 million kind of seed financing. And that allowed us to go build our early team, develop these kind of proof points. We brought in some institutional investors into that round. And so we brought in Redpoint, Greylock, and NICA, all in about equal amounts. And they're typically a little bit later stage investors. And so I think there's always a question that an entrepreneur

needs to ask themselves. It's, you know, if you're going to bring in a later stage investor, That brings signaling risk at the early stages. So if they invest early on, they decide not to do subsequent financing. That can be a bad signal to other investors in the market. At the same time, you get their brand, you get their power behind you early on. And so we made the decision that instead of bringing in like two big institutional seeds, Uncork Capital is just primarily a seed investor. You know, and Jeff will say his job is to go, you know, help us get that Series A done.

He's not going to lead the Series A. We made the decision to bring on those bigger investors. And for us, it worked out to be a great decision. We are fortunate to be working with Sarah Guao at Greylock. She's been an incredible partner from the very beginning. Why? She deeply understands our market and what we aspire to do. I think she's a true believer in the category and the potential.

And she's done the work to speak with CFOs in our network. They introduce us to customers that we can go chat with. even early on before we were at the stage of our product being ready to sell, you know, she would sit in on the demos and actually do the work, you know, and, you know, it's rare to have a partner that's going to like, you know, of course, open up the Rolodex, introduce you to folks, but then actually go and sit in the meeting and see how it goes and get that feedback, you know. So even in the early days when we're still developing our product, you know, you can

see how, you know, finance people respond to it, like kind of like you respond. It's like, yes, we need this. It's like, why has this not been done before? you know, and you can you can develop that conviction over time. And so then when we see opportunities to raise more money, move faster, you know, we want to increase and accelerate on the product roadmap. We've had supportive investors and Greylock has continued to invest in us, which is which has been fantastic. It's been allowed us to, you know, hire our first founding lead designer. We're currently hiring for engineers. So if you're an engineer looking

for a job come talk to trace or go to go to pomp's crypto jobs depending on depending on what what type of you know sector industry you want to work in wait wait hold on before all right so if you're an engineer you should go talk to trace i'm super impressed by sarah going to the actual meetings yes she's that's incredible yeah she's uh she's a she's a great partner she's when her and i meet i i say i enjoy the meetings because i always learn something uh and that's of course you know you love to chat with people that you always get to learn learn stuff from and you can actually have a good sparring partner when they understand and they've done the homework. So I think it's pretty rare to have found that.

Any other investors or advisors that have stuck out in terms of either over-delivering or you're like, hey, look, they're super valuable, doing something that people normally wouldn't do? Yeah, a couple of people come to mind. I mean, you're the one of the first. No, no, you can't come to mind. You're the first person that come to mind. Because I mean, I think, yeah, I think we were fortunate to have you.

And I think you came in. It's not like, you know, you write big checks for big companies. you do big deals and big rounds yeah big deals man i'm gonna cut that that's gonna go somewhere i don't know where we're gonna put that but that was a great fucking clip but the beauty of it is is like you know you have a small check in trays but every single time and obviously we're friends so it's a little bit different but every single time i call you it's like you know i have somebody that i can get feedback from good good feedback so i always appreciated that um somebody else who comes to mind, a couple of people come to mind. Charlie Kevers, he's the CFO at Carta. He's an

investor in us. And, you know, it was in our early deal. We didn't have a lot of allocation to share. So it's not like a big check, but always supportive. I mean, whenever we want to meet, he gives us his time. Whenever we have resources like he shares resources, he's always willing to make introductions. And there's a handful of people like like that that are just like the true believers uh and yeah so so fortunate for for all of them i can i can go on and on what's fascinating to me is just uh the common thread through a lot of that i think it's like time right and and if you think about it from uh um all these kind of solo capitalists or people who are rating angel checks etc uh we've got a couple of companies that i've put you know pretty

big checks into and then there's like 20 checks that are literally like a thousand bucks 2500 hundred bucks five thousand bucks whatever um and now founders are starting to use like angels has a new product where basically you can kind of pool a bunch of really small checks it's one line item on your cap table so maybe you want people with big audience or people who are an expert in a specific space or whatever and uh what's fascinating to me is if you go talk to the founders like oh those people are way more helpful right like you know maybe i've got like one big investor who's really helpful or has opened up the rolodex kind of like what sarah it sounds like has done has done for you and and jeff as well uh but then there's like oh this person who's like actually

really really valuable to me doesn't even have that big of an economic stake but like they're always there i know i can call them whatever and to me i think that's the argument for like why people should do more angel investing right is because you forget that uh that person's actually getting value out of it as well yeah right like there's probably very few people who wrote a small check who are like oh it's gonna be life-changing it's more so they're either learning they enjoy it they want to help people like like there's some other non-economic benefit to them for doing it And so it's fascinating to hear that, like, the time investment, the access is almost more important than the money. Yeah, absolutely.

I think there's a rise of the operator investor right now. And I think increasingly we're seeing a lot of great operators who are, you know, C-level, VP level starting to write checks. And I think entrepreneurs are learning that those are some of the best people to have on your cap table. In our most recent financing, we brought in a syndicate from Fog Ventures. It's it's Operators Guild is the network and it's like 500, you know, operators who are VP, COO, CFO type folks. And we were able to bring together a great syndicate of I think we have like 40 different, you know, VP, CFO level folks. And, you know, I think it's early in terms of like our relationship with them. But we're already getting so much from them and so much from that network.

i think increasingly entrepreneurs are going to want those types of folks on their cap tables who can really really help for sure all right before i let you go i want to talk about investing in general uh have you done anything in crypto i have i own yeah i own crypto i own bitcoin all right well i mean okay let's go back let's go back to yeah times at facebook i think it was like what 2014 we were i know this you weren't like huge into crypto at the time um but you we were talking about it we were on the shuttle you know there's probably a giants game so we're like sit and wait 45 minutes just sit on the shuttle trying to pass time uh and we were talking about buying crypto and buying bitcoin and i'm i started doing my homework you know and then one day i'm like okay

i'm just gonna i'm gonna you know buy some just tiny allocation uh so we're on the shuttle i got my wi-fi going i'm gonna go to coinbase and i'm like filling it out and then they they asked me for my license and i'm just like all right that that's where things stop you know now you don't need that you don't need my license on this website yeah and so looking back that was a little bit little bit of a bummer i wish i would have done that but i think i've gotten it honestly i think your conviction in it and your conviction along the way is like i've done my research and like i've come to believe that like you know this should be an allocation uh in anybody's portfolio and i'm not i'm not you know i'm more of uh you're not a 95 percent guy i stick to my finance

principles but at the same time it's like let your winners ride you know yeah you know when you were debating with jason uh calcanis about this it's like well jason calcan's got a fiat haircut i love jason to death but he's got a fiat haircut just so we're all clear for anyone who's been watching this podcast or watching andrew schultz podcast jason is the one who started the fiat haircut whole situation i love you jason you didn't see me in miami so you're gonna get that right there on the chin but i still love you uh that's the whole thing go ahead yeah i mean it let your winners ride, you know? And I think that's something that he believes. And so if, if, you know, Uber ends up becoming 95% of your portfolio, I mean, like you, you gotta,

you gotta let your winners ride. What else are you invested in? Like not dollar amounts, but just like from a percentage basis, just ballpark. Uh, is it mostly equities? Is it like others? Like, how do you think about in today's world, uh, creating a portfolio? Like, like, how do you think through that? I think you need, it depends on your time horizon. Uh, it depends on your risk profile. I'm, you know, a big believer in the enterprise software asset class. And I think, you know, of course, I'm building Trace. And so a lot of my eggs are in the Trace basket. But I really believe in just the opportunity in just cloud software. And I think what we've seen is like in that asset class, I mean, we can talk about, you know, Bitcoin now

being a trillion dollars the enterprise enterprise cloud or cloud you know asset class is a two trillion dollar asset class and the top five companies in that top five are a trillion dollars so you can compare those top five to you know to bitcoin uh and see like how do those two things stack up i would say that it makes sense for people to have good exposure to the cloud the cloud category and when you when you look at the cloud it was you know roughly 600 billion a couple of years ago, you know, and now it's $2 trillion. It's coming back a little bit as interest rates are going up and multiples contract a bit. But I think there's still just so much upside. And I think you're seeing that in the markets, you know, and I think you're seeing

some of these public guys come downstream and get deeper and deeper, you know, and go more and more upstream. And that capital is kind of continuing to flood up into startups. And I think there's just a huge opportunity and those numbers i just gave were for publicly traded companies when you think when you look at private unicorns companies valued over a billion dollars that represents there's like over five five hundred unicorn yeah unicorns and that represents only two trillion in uh in value as well so just four trillion total really big numbers yeah and those are for unicorns so there's even more at the earlier stages uh and you we talk about asymmetric bets and how Bitcoin was, you know, one of the, one of, if not the greatest asymmetric

bet, you know, of all time. I think you're still seeing that in early stage businesses and the cloud software, cloud software category. I mean, I talk about all the time, right? Like, from a professional standpoint, a little bit different personally, but professionally, when I think about allocating capital, if you invested in Coinbase's seed round or series A or bought Bitcoin on the same day, Coinbase's equity actually outperformed Bitcoin, right? Now maybe at some point in the future that doesn't end up being true forever or whatever,

but like up until now, that's true. There's a lot of businesses that are very similar to that, right? BlockFi, Gemini, Kraken, like all these different companies. And so I think that it's less about like equity versus like crypto assets, right? Or these liquid tokens. And it's more so about like sector bets, right? And if you think about it,

probably the two best sectors in the world to have bet on over the last five years it's like cloud software and crypto yeah right and maybe there's one or two others you could throw in there but like those are basically the future right in terms of the way that people are going to get software delivered they're going to pay for it etc and all the cloud stuff yeah and then two is like this whole reworking of a financial system yeah like outside of those two things you'd be hard-pressed to find two other sectors that you'd want to go bet so heavily on so i think it's more it's less about like they're competitive and it's more so just like i don't

know there'd be like five sectors that you know in hindsight people look at big oh if you were along those sectors you could have been an idiot and make money absolutely right and like cloud software is definitely one of the five absolutely yeah just go long technology yeah i mean uh we could talk about warren buffett and charlie munger's uh recent comments because i think both you and i uh respect them very deeply like from uh uh just this historic run but like they don't understand technology at all right right and like it's pretty crazy to uh hear the like flippant conversations and uh um and the responses to like all these questions and to me it's like very weird because uh i think we know that like athletes are a great example right athletes like

go through this process of they get better they improve they get better at some point they peak yeah if they're a professional athlete hopefully it's when they're a professional and then there's kind of this like decline and if you're really really good like maybe a tom brady who you know he's owing to in the super bowl against eli manning uh he's been able to stay around for a really long time he plays into his 40s right and like that peaking where did he peak did he already peak is he got the future to peak like nobody knows but eventually like he'll decline he'll have to retire uh in business you obviously have a lot more longevity right but like at some point like yeah there is a decline and so is it 60s 70s 80s like by 90 you've probably you know

on the way down which again doesn't take away like if you were so much better than everybody else like you could have declined 50 in your skills and evaluations uh abilities etc and still be better than everybody right right but it just feels like there's an entire generation of people who like completely miss cloud they completely miss crypto and i still think through is it an age and like a demographic thing is it a just experience thing like if you don't grow up with a super phone in your hand do you actually end up just not understanding the importance of cloud computing i don't know but it feels like even when you listen to earnings calls and stuff like there's a lot of people who still are like i don't know and you're like dude what like you don't

believe in cloud computing or like that's not like a material thing for you moving forward and so i mean you know this stuff better than i but it just seems kind of crazy that there's still people who uh maybe they don't not believe but they just are uh less convinced that that should be like a big part of their portfolio yeah it is interesting and i think there's like some strategy aspects to this as well where it's like all i want to do is compound my money at like eight percent you know and if i mean eight percent damn all right we're gonna have to talk about this crypto stuff when we get done eight percent bitcoin goes up and down eight percent in a day yeah well i'm talking about some of these old school you know money managers where it's like oh okay yeah if i'm at

eight percent i'm doing my job you know and i only want to take on enough risk i don't want to take on you know any risk i just want to compound at eight percent and i will do that for the next century, you know? And I think, and that it's a smart way to play it, right? Because if you just look at compounding and being in the market, you know, I think this is the stuff that we need to start teaching our kids. It's like the basics of, you know, compounding and financial literacy, but those mental models around how you can get that 8% and what that looks like is changing, you know? And Amazon is the prime example is how many people missed Amazon because Amazon wasn't generating cash and and you know amazon was just piling cash into new new it just driving it

investing it right back into the business and that's the same thing with a lot of these cloud cloud software businesses that are you know running on subscriptions and ar ar models where they're not getting every single piece of cash up front and i think these businesses have to they're investing a dollar because they're going to get three dollars you know over some over some time horizon. And so early on, these businesses are like, oh, they're not generating cash or they're not generating earnings. But if you understand how the model works from a subscription and this lifetime value of every single customer that you get has a lifetime value assigned to it. And so I will invest a dollar if my lifetime value is going to give me $3 over time. And it takes time

for that to play out. And I think now that people are starting to see that these businesses actually can print cash. It was hard to see that early on. And so I think, you know, Berkshire has invested, you know, in, you know, some of the high flying companies now, I think Snowflake, they were they were in and I think Snowflake trades at the highest multiple like in enterprise software right now. So I think that one's probably like Warren's probably sweating. He's like, I know he didn't make that decision. Somebody on his team did. But it's cool to see them finally starting to understand like how these business models work and how they can print cash over time. The top five enterprise or top five cloud software businesses are going to do 100 billion in revenue next year.

They're going to print 20 billion in cash. And so these businesses can just, you know, once the machine is working and at scale, deliver incredible returns for investors. And I think that's why investors assign, you know, I think the category trades at 20x, you know, revenue. And I think it's because people can anticipate what those revenue streams and that growth will look like into the future with a relative high degree of accuracy. So, yeah, investors love those businesses. And it feels like they're really sticky too, right? Like once somebody starts using the software, I mean you've really got to screw up to get somebody to leave. And so when you start looking at the retention, it's like, whoa, this is not only a great business to begin with.

it's also then you got the customer for, you know, years. What better business than that, right? Absolutely. Absolutely. And it's like a lot of these businesses, it's not just retention where it's like, we kept every single customer, we got 100% retention, a lot of times those contracts will increase, you know, and so then you can say my dollar retention, if this was a, this is a $10 contract, this year, it's $130 contract. Now my retention rate is 130%. And when you start modeling that out, where my customer base as a whole is going to be, you know, say it's dollar retention, 120%, 130%. Now you're getting a compounding rate on just your existing revenue base, not to mention what you're bringing in net new. And so that, you know, is a compounding factor. And you, of course,

you can discount it. But, you know, once you start getting into modeling what these businesses will look like with that high retention rate, you know, you're not even looking at maybe an annuity stream that it looks like with some, you know, end in sight. Now it's looking like a perpetuity of the way you model it and you discount it. And so there's just so much value to extract from when those business models are working and the software to your point is incredibly sticky you know a system like trace integrates with your accounting system all your all the people in the business are using it they're not getting rid of you it once you're in they're not getting rid of you but it's not because you like came up with some trick it's because it actually works it provides value we

solve problems we deliver value absolutely like they they need to use the software in order to run their business better which is like the crazy thing is uh how do you build a great business just solve people's problems absolutely yeah right yeah all right i could talk to you all day uh my notes i didn't use them one time so i'm going back to no notes fuck the notes um three questions one what's the most important book you've ever read most important book i ever read um i would say the the most important book um to me right now is called survival to thrival how to build an enterprise how to build an enterprise startup all right um and survival to what survival to thrival thrival yeah and it's a book that was that a word survival to thrival

yeah um and it was a book written by entrepreneurs uh who built you know cloud software enterprise software uh and it's been awesome for the journey and i we give it to every single employee who starts at trace because it starts talks about the early stages of founding finding product market fit finding go-to-market fit you know and i can say as we've been on this journey with trace I felt like I'd be like, okay, we're on page 38. We're going to page 39, you know? And it's really nice to, you know, that people have been like sharing this information. Um, and so for anybody who's out there that's like thinking about starting a business, uh, you know, you can do it, you know, have the courage, you know, there's so much information out there. Uh, there's no

limiting beliefs. It's like, you can go do whatever you want. Uh, facts, facts. It's probably the thing that you and I agree on the most out of anything in the world is like, there's an entire group of people who literally think the world's like i don't know conspiring against them yeah and then there's a group of people who are just like dude i'm gonna go do what i want to do because i can yeah right and it's like if i want to be uh you know successful entrepreneur i can go do that if i want to learn investing i can go do that if i literally want to go be a piano player like i can go figure out how to do that but it's this like a self-starter mentality right and this like uh um as i'm fond of tweeting like no one's coming to save you like like it is on you and i

think that that's kind of the way that you guys have built trace and and really just live your life right 100 and if there's one thing that i can that i aspire to do as i you know build trace and have more success is for like kids who grew up in you know rough areas or rough neighborhoods you know like like we did who they don't know these things right and they think that like their world is constrained to this box and it's only this box that they know there is literally no box there is you have the internet no constraints like you can literally go do what do what you want you know and just dream big aspire big and just work you know works relentlessly and don't stop sleep schedule eight sleep uh for those that don't know i've been asking this question

for eight sleep for a while now i'm an investor in the company because literally it changed my life nice uh my brother and i have a competition as to who can sell more eight sleeps uh he beat me last month for the first time ever, which is crazy. I think that he conspired with Mateo, the CEO. I know that you're really into health and fitness. Just look at him. He literally works out every day. I can still beat him at basketball though. So let's talk about sleep. I have a question. I have a question. This is going to be a great question. What's the worst you've been beat in a game of one-on-one basketball? I don't think I've ever lost. I can't think of a single time i've ever lost a game of basketball if it happened i don't remember it why go ahead tell

your story we were playing with so 4 30 a.m shuttle we get to facebook 5 36 something like that and i think we decided not to lift that day all right we go play basketball or playing one i think you beat me the first game and i think we ended well i should have stopped there that sounds like the lesson of this story but i think it was like okay so then i won like the next two i think it was like our fourth game that we're playing we're playing games to 11 ones and twos yep and i just got on like the hottest hot i do remember my life i'm not gonna admit i remember it but i remember it i was banking in threes from like from the not even from half court like i think he was on the other end of the court and he was literally like throwing it underhand it was

just going in i was like this is absurd i think i made six straight shots and it was just like 11 zero game over that did happen i i hate to admit it but that did happen that's actually the only time i ever remember losing the other two that you said i don't remember yeah it's funny because if like that happened with me and matt my brother he would just like it would just be completely out of his mind he would not not remember he's like mike mike isn't even good at basketball i literally beat mike every time i play him all right sleep schedule what uh what was it like and then how has that changed over the pandemic i used to be uh yeah i used to be uh you know sleep sleep when i die guy you know like let me sleep like five hours a night and especially when

i was like you know at zenefits and i was really dialed in into just career success and making an impact. And then I think I've always just been big into studying and research, especially like around my body, working out like what feels good. And I've really come around to the idea of just you need to get more sleep. And so I would love to get eight hours every night. I'm a big believer in Whoop. And I think the Whoop band, I've been using it for two years. Yeah. I wish I was an investor. What does it tell you that like you actively use? Because I think like Whoop, Apple watch like they all tell a kind of different metrics what's the thing like when you wake up and you look at the metrics like what's the thing you look at uh so i look at when i wake up i look

at sleep it's like literally the first thing i do okay like how many hours i got how many hours of sleep that i got it gives you a recovery score so it looks at your heart rate variability and i think eight sleep tracks heart rate variability uh as well i didn't know what this was until like a year ago and hrv is like the most important thing that all these people tell me they look at yeah yeah yeah and so yeah whoop gives that to you in a score so then it tells you like okay you worked at this hard yesterday here's what your sleep recovery was and so you know here's your recovery rate and you want to be like yellow green you don't want to be uh in in the red and so i look at that i look at my resting heart rate um and i think what are you putting up resting

heart rate i'm like in the high 30s um what i'm somewhere like around two what my resting heart rate is like recently it's been around 38 to 40 interesting bro are you alive 38 to 40 is your resting heart rate i thought mine was low i'm at 50 yeah matt matt my brother he's at he's at 35 which is like does his heart not work which is like lance armstrong type you know wait 38 to 40 is your resting heart rate yep dang man i was flexing on people with 50 because my brother's at 53 and i was like joe you're not even that healthy 38 to 40 you should get a whoop yeah Maybe it's the Apple Watch. It's bad data.

All right. That must be what it is. I got to get a whoop and then I'll have 38. Well, it's fun because – Actually, I'll have 37. Yeah. By that time, I'll be at 35. What I love about it is like you can have a team, you know?

And so it's like me, my brother, and my dad's in it, you know? And so like every single day – You can look at everybody's. We can see activity, like how hard you worked out. You know, you can see your recovery. You can see your hours of sleep. And so, yeah, it's great. I also look at like calories burned and so every single day it's like okay how many calories did I

burn how many calories can I assume and so then you can kind of play around with it you know in terms of like do I want to you know gain or do I want to lose a little bit of weight so it's awesome to have this level of insight you know one of the first times I remember going to the gym with you uh was in San Francisco I think went to a crunch gym shout out crunch uh and I think that we went there I'm pretty sure that we were trying to see who could bench more uh but towards like the middle the workout, I was like, yo, you want to go for a run? I remember you just looked at me and go, I don't run. I remember being like, okay. And like, damn, all right. And then you were like, the most cardio I do is like go on the stair stepper thing. Like the, you know,

the stairs that rotate. And I remember being like, damn man, he, he's in a different world. But you had, you, you always said that football player strength, you know, like I would be doing workouts and we put 225, you know, and like we would, we'd go for 12 or something like that, you know? And then you would, you know, you would probably like start dying down, you know, you do like eight and then we'd keep going up and then we'd be at like 315 or 335 and i'm like done i'm gassed and you're just like i'm like where did that come from just one or two like where did that come from yeah i mean you know it's you ain't got when you gotta do it 12 times like if your life if your life matters then you just gotta do it once you know just push somebody away

whatever just i'm not into doing it a bunch of times just you know just say yeah i could do that one time but my brothers give me a hard time because uh they're all weaker every single one of my brothers is weaker than me just put that on the record uh but um when we go to the gym they're like dude you were going to the gym you work out for 25 minutes i'm like yeah i don't got time to be like sitting around playing they've like got music they do this that i'm just like in and out and so uh literally now the joke is like when we go the second we walk in like you done already yeah whatever all right third question you could ask me one is uh aliens are you a believer i am uh oh my god don't tell me no i am i'm like i don't i'm not informed but i see enough where i

just don't know you know and i'm not gonna do the homework to like figure out if there if there's aliens or not you know um do you like that there's a higher probability or lower probability i think that there's probably something out there there's probably aliens out there and i think like yeah and it depends on your definition of alien yeah right it's like there's probably not little green men but to probably like life whatever yeah if aliens if aliens were real and they did come like we would probably be friends with them yeah i mean i tell plin all the time that like she's like what would you do if aliens showed up like go to the bar and get a beer what's up man you want to go back to my country sure i think it's on another planet though uh would you rather go

spend a year on the international space station go underneath the water to the depths of the ocean for a year or go to mars and not be able to come back you gotta pick one of the three this is my this is my new thing to ask people i'm picking none of the above i would like to stay in my condo with my laptop uh but i'm more scared of the ocean than i am of space uh why do you say that i guess like if in either situation if anything happens like you're dead yeah but like there's just something about like being underwater at the depths of the ocean and being like yo i can't get out like i don't know it just freaks me out like space kind of feels like you know we're floating out here chilling yeah would you uh would you would you go to space if i could come back but

like i asked my youngest brother john the other day i said hey if would you go to mars if you couldn't come back and he actually had a great response he goes well what's there like am i going to hang out with people am i going alone yeah right so it's kind of like uh if you knew that it was like a better like what if i told you mars was better than earth then okay like maybe right let's go check it out yeah yeah well i'm not gonna go first uh i do appreciate though that everyone got mad at elon musk because he said he was going to create the laws on mars yeah and uh he was like they were asking him like what are the laws gonna be he's like we'll figure it out when we get there and they're like you can't do that and he was like okay well you go and figure

it out then and everyone gets real quiet right so it's like uh we just don't know yeah like i think that's what's so much fun to talk about right it's like how long would it take to get there you read they're like oh they created oxygen on mars like wait what like okay they're like oh we found this like ice well that sounds like we got oxygen and water so like that sounds like we might really pull this thing off and it's like in 50 years are there gonna be people on mars like probably probably they just flew a helicopter right like sure and it was a little you know robotic one but like dude imagine 20 years ago telling people we're gonna fly a helicopter on mars they'd be like you guys are crazy yeah i i still got some exploring in miami to do so i'm good

there's enough city here for me to go explore you could ask me one question what do you have um well i guess first i would say that like um i think this is awesome i think the platform that you built is awesome i think it's awesome to see you on cnbc as somebody who's known you for a while like seeing you on cnbc i'm like man that is awesome like that is super cool it's pretty ridiculous yeah as a friend i'm happy for you i'm proud of you uh i think what was interesting to see is like you've been such a believer in this for so long uh and to see like when bitcoin crashed like three four k and like held your conviction and held your belief uh and knowing some people who are like not maybe not friends but acquaintances like attack you on twitter call you a grifter like

all this stuff like i don't think people understand like how disciplined you are how hard you work and like you know that like this is not just some like overnight success it's actually years you know decades of like hard work and dedication uh and so what would you say to the haters other than buy bitcoin what what do you want to tell those folks now that we've like 15 to 20x from that from that low i mean to be honest like i just kind of feel bad like people always ask me like what's the most fun part about bitcoin and like look the memes are awesome uh the dancing on graves on the internet is hysterical right like i enjoy it just as much as anybody no no no the best the best meme is this is like the snoop dog where you get the hat and you get the little you

get the cigarette that's literally the thug life that's literally the thug life theme is literally best meme honestly i saw that i'm like all right pounce made it i don't remember who made the very first one but when i saw that i literally was like this i may put this on like a tv on my on my tombstone when i die just so you guys all know um no i i think that uh the part that i enjoy the most about all of this is uh i got a message uh the other day actually hold on i'm gonna read this out because i don't want to mess it up but i get these messages like this probably on a uh daily basis if not daily then i get them for sure weekly and this one specifically uh was interesting because hold on where is this yeah i mean there's just so many people out there who

probably just appreciate the dedication to it so this is a person who i don't want to show so i'll just show you but basically they've messaged me a lot yep and the last time they messaged me was back in march uh and they were like joking around all this stuff yesterday at 7 18 a.m they said today is my first day of my retirement thank you pom for helping me see the light best regards then they put their name yeah and i like get those messages and i have no clue who this person is uh literally it's a pseudonymous account and i have no clue what they did to get to this point So they could have been 55, 60, 70 years old, right? They put $10,000, it went up,

and then all of a sudden now they've got money and they can retire. Or they could be like literally like a 25-year-old kid and, you know, whatever. But I think like what people forget is there's like, and this day is a little old, there's probably at this point over 100,000 wallets that have more than a million dollars of Bitcoin in it. Wow. I'm pretty sure that's correct.

when you think about what that does to like an entire generation of people it's crazy yeah and that's just bitcoin and you look at all this other stuff and so uh recently barry silbert uh from digital currency group he tweeted out and he was like the amount of wealth creation is like staggering in this industry that's all great but who cares about like the money as much as like imagine being somebody who wanted to retire couldn't and then all of a sudden does something they can retire so like that's all the positive stuff that i enjoy when you flip it around you look at like the hater side yeah i just always go back to like i feel bad for them like man you have such a shitty life that you're literally on the internet talking shit to somebody who you

don't know right and then like the best part always is like i'll dm them sometimes and then they're super nice right like immediately they're like oh i'm so nice like whatever and so it's just like uh when you look at it almost like empathetically and you're just like man that's really you woke up this morning and that is what you decided to say on the internet yeah like are you okay right what you realize is like one it's easy because it's like super non-personal right so people can attack people like all this kind of stuff there's pseudonymity and whatever yeah but then the second thing is just like if you meet them in person they would never say that and by the way you would never like say anything back either and so like i think like

for all the benefits of the internet there's downsides yeah uh and so if you asked me this question two years ago i said all kinds of crazy stuff like really crazy stuff um now i just kind of look at it i'm just like man like you you can participate in this just as much and so i'll tell you uh one last story before we go i went to dinner recently uh pleno was there with me i don't want to say who was there but there was very successful people there and one of the people was a hedge fund slash private equity person they had no clue any of the bitcoin crypto any stuff and at one point during the dinner they started to go on and on and on all about uh the game stop longs were manipulating the market and screwing the hedge funds i just sat there listened for a

little bit and plinna was looking at me like i know this dude ain't gonna sit here and not say anything and so at some point i just very cordially was like yeah but like aren't the hedge funds manipulating the market as well with all of their research and you know their comments and going on television and like all this stuff and everything yeah and to his credit he was like oh that's a good point right like that's fair but i think that's like what the internet's done right is like the internet didn't necessarily like swing markets or do anything all it did was it created more accessibility and then it allowed for everyone else to do the same thing that the hedge funds are doing right or do or professional investors or whatever and so to me like the people

who are mad about this usually there's a guy literally today who told me uh i tweeted out and i was like if you're a young person don't go work at a traditional bank or traditional asset manager like all of the innovation and most of the returns we need for is going to be in crypto like go get a job in crypto of course this guy runs like a four billion dollar hedge fund which by the way if you're on a four billion dollar hedge fund you're talking shit on the internet like you should be doing way better things or your investors should take their money back uh and so he basically was like look uh this is stupid advice if you get a job offer from like Goldman Sachs or Susquehanna or any of these places like you should go take it and I was like

hey man like you're confusing like take Susquehanna for example they're not a traditional asset manager like they're one of the biggest players in crypto so like sure go work but go work on the crypto desk and he was like oh uh trading equities at Susquehanna is better than any job you guys have and like the response I want to say frankly which I didn't I actually typed it out and deleted it because it wasn't worth my time was like dude we can compare your hedge fund returns to like literally strangers on the internet who just held bitcoin for the last five years so they destroyed you and you're charging two and twenty and they literally are better at your job than you are right and so like sure returns end up like being the scoreboard yeah but at the end of the

day like all you're seeing is like it's fear they're literally scared so if you're trading public equities you're doing all this stuff you have a decision either you can adapt or you will die like you your business will be disrupted because everything is going to move to the open public blockchains and so when i just think through that i'm like all right so if somebody's being aggressive or like negative either literally something's probably wrong and like be empathetic or two like they're fearful and like when they're fearful like hey man you see the same thing i do it's just either you operate out of fear you operate out of optimism and like optimism always wins optimism always wins yeah so like you know whatever fuck off i mean you know at some point

you just throw your hands up and you're just like whatever i'm gonna do my own thing like yeah knock yourselves out whatever so uh by the way if you're a young person you go work at uh trading equity somewhere then you probably should uh have an intelligence test because that's probably not the best thing to do so all right man tracehq.com tracehq.com all right where can people find you on twitter uh mike uh underscore underscore gonz two underscores all right it's tough to get it tough to get a handle yeah mike gonzalez is a common name do you want to tell a story real quick uh no we'll save it for next time all right thank you so much for doing this thank you for having me it was fun