The Founder Formula

Armon Dadgar - Co-founder of HashiCorp

• Trace3 • Episode 33

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Big tech companies have their pros and cons; but compared to the freedom found in startups, the choice was a no-brainer for Armon.

In this episode, we interview Armon Dadgar, Co-founder and CTO at HashiCorp, about how his company gained success through a balanced relationship with the co-founder, seed money from trusted investors, and changing hats as the CTO to best fit the specific concerns of the quarter.

Listen to this and all of The Founder Formula episodes through your favorite podcast platform or Trace3.com.

Armon Dadgar:

It's never a question of the other person's motive or the question of the other person's honesty or whatever. It's like, hey, what data points do you have that I'm not considering?

Outro:

Founder Formula brings you in behind the curtains and inside the minds of today's brave executives at the most future-leaning startups. Each interview will feature a transformative leader who's behind the wheel at a fast-paced and innovative tech firm. They'll give you an insider's look at how companies are envisioned, created, and scaled. We hope you're ready. Let's get into the show.

Todd Gallina:

Hey everybody, welcome back for another episode of the Founder Formula. My name is Todd Galena, and with me is the Chief Marketing Officer here at Trace3, Sandy Salty.

Sandy Salty:

Hey, Todd.

Todd Gallina:

How's it going?

Sandy Salty:

It's good. I'm happy to be here again.

Todd Gallina:

We are super excited. Today's a big interview. We got a whopper.

Sandy Salty:

We do. HashiCorp.

Todd Gallina:

Yep. They are super exciting. And can't wait to talk to their founder.

Sandy Salty:

Yeah. They've got an amazing brand in the emerging tech space. But before we get to that, I'd like to take over for just one minute. Are you okay with that, Todd?

Todd Gallina:

You are the co-host.

Sandy Salty:

Sweet. Okay, so I want to talk about one of my favorite topics.

Todd Gallina:

Which is your dog.

Sandy Salty:

Not my dog. It actually happens to be you. Let's talk about you for a minute. I know this is going to be excruciatingly painful for you, but I get the sense that our listeners hear your amazing voice day in and day out. And maybe you want to get to know a little bit more about Todd Galena.

Todd Gallina:

I don't think that is happening at all. I want to hear from founders.

Sandy Salty:

Okay. So I'm just going to keep going. So Todd, you know, you and I get to work together almost every day and it's pretty cool. Like this is, this is sort of like what you do by day. Most people don't realize that there is another site to Todd Galena, which is a, an entrepreneur site. yourself and really an amazing world-class animator oh

Todd Gallina:

yeah um

Sandy Salty:

ladies and gentlemen he is already very uncomfortable

Todd Gallina:

so okay so what you're talking about is um some of the background in in animation work that i do outside of my awesome awesome uh job here at trace three but you know yeah so i um Yeah, I have a background in flash animation, which soon became Animate, which is an Adobe product. But recently, yeah, I've been launching and pitching an animated series, which has been super duper fun. It's been a big, big lifelong dream of mine. I tell people I've only had three good ideas my entire life. One of them was a super great idea I had for a movie. And so I had written it all down. And then one day I'm in the movie theater. And I take my son to go watch this movie called Chronicle. So for those of you who've never heard of it, go check it out. But I watched that whole movie and I was like, oh my gosh, that was literally my idea. And someone else did it. I'm taking too long to get my great ideas out there. And all my ideas are around TV shows or movies or series or animated series. So in a panic, I really started working in earnest on my second idea, which is this show that's called Force 5. And we've been super excited. I partnered with a good friend of mine who's an animation producer for Cartoon Network. He and I got together and he really, we complimented each other. In this interview we're going to be having with HashiCorp, there's a conversation about complimentary relationships. And I think that's key when you do anything. So he and I worked really well together and we were able to put together a test reel and we've been able to pitch to all sorts of folks. including DreamWorks and Nickelodeon and CBS. So it's been fun. It's been a big journey. We don't know where it's going to end up, but it's certainly been a blast.

Sandy Salty:

Yeah, that's amazing. And I've seen some of the design and I'm familiar with the concept and it is super uber fun. The amazing thing is I don't think most people realize that behind animation is a real business. It's a competitive business and a super rigorous business with a lot of money behind it.

Todd Gallina:

Totally true. I mean, most of these people get into the animation business now because they want to sell toys. And there's a huge following for folks that go to Comic-Con, all collectibles. And a lot of times these people will make a series. The first 12 or 24 episodes of a season is a money loser from a production perspective. But then when you start to get past that and get into the second season and third season, there's an opportunity for reruns. And that's when the merchandising starts to kick in. I 100% only kind of care about this idea and this story. And I do believe that the rest of it will kind of figure itself out. But like you said, that's a big part. That's what these folks who want to green light and give you a production deal, they want. They want to see that larger opportunity from a business perspective.

Sandy Salty:

You're such a founder in so many ways, Todd. And you actually also, just to bring it back, to this podcast. You are the founder of The Founder Formula. Can you tell our audience about how that came to be and why you decided to launch a podcast for Trace3?

Todd Gallina:

Oh, sure. So basically, we have this really cool thing that you created called the Client Advisory Board. And this is where we get all of Trace3's top tier customers. And we just basically ask some questions. We ask them like how we're doing, what new products they'd like to see. We asked them to guide us in on new offerings, where we should be making investments in the business. And one of the things that came out of it was just how they consume information. And many said that they just consume information by a podcast. They want to multitask. They want to run, ride their bike, lift weights, even drive, and still learn. Trace3 gives us an opportunity to be introduced to so many founders. I mean, founders, one of the most romantic things on the planet, at least in the world that we live in, is someone just saying like, I've got an idea. Now I need someone to help me fund it. I need to build a team. And it's so romanticized. When you meet these folks, what you realize is there's a ton of blood, sweat, and tears. There's a lot of losses in addition to the gains. For many of them, we found that we're interviewing them and they're leading a company, but it's their second or third company. They might've possibly failed once. And my hope is that when people listen to the show and they get a chance to hear directly from these founders, they get the whole picture, right? The good, bad, and the ugly. And you know what would be awesome?

Sandy Salty:

Huh?

Todd Gallina:

Is if it turns out that someone who is listening to this show actually launches something big and they come back to us and they're like, hey, I was missing a few pieces. There are a few things that I didn't know. And your show helped me put together the complete puzzle. And now I'm going for it.

Sandy Salty:

That would be amazing.

Todd Gallina:

Yeah.

Sandy Salty:

Well, thank you so much for sharing that with us. You're

Todd Gallina:

welcome. Nobody's listening anymore.

Sandy Salty:

That's not true. I think they're going to want to learn more. All right. With that, should we roll?

Todd Gallina:

Yes. Let's get to our guest. Our guest is an entrepreneur and engineer. He's the co-founder and chief technical officer for HashiCorp. a San Francisco-based company he helped launch in 2012 with the goal of revolutionizing data center management, application development, delivery, and maintenance. Before that, he spent the early part of his career as an academic researcher for the University of Washington, which is also his alma mater. Please help me in welcoming Armin Dadgar. Armin, welcome to the show. Thanks so

Armon Dadgar:

much, Todd. Pleasure to be here. Appreciate you hosting.

Sandy Salty:

Tell us about HashiCorp. and why you started the company?

Armon Dadgar:

Yeah, it's a great question. You know, in many ways, it's me and Mitchell joke about it all the time. Mitchell Hashimoto is my co-founder, but it's the world's longest sort of detour to sort of the startup we actually wanted to launch. So if I kind of go way back, you know, me and Mitchell actually met each other at the University of Washington. We were both studying computer science and we became close friends. And, you know, early on, we both had the startup itch. And so, you know, we went through and created a bunch of different ideas and we had like a little working group at the university where we we started kind of highlighting different things everything from uh you know we sort of an iphone app similar to maybe like a group me sort of a group text app to sort of a point of commerce solution on the iphone to you know a few other you know textbook resale and things like that and i think one of the persistent challenges we always had was why is infrastructure so hard You know, flash forward a few years and we end up working at the same mobile advertising startup in San Francisco together. I'm more on the application side of the house. He's more on the operation side of the house. And we have the kind of the same friction between our teams where my team's like, hey, I want to push a new version and scale up and down and change a configuration. Why do we have to file a ticket and wait for your team to do it? And at the time, we felt like we were fighting a lack of good tooling, right? There wasn't good tooling for how do you do cloud infrastructure? How do you do DevOps? How do you do kind of automation at scale. And so in some sense, the kind of genesis of HashiCorp was us saying like, you know what, there's got to be a better way. Like, why are we home growing this stuff? Or why are we dealing with all this, you know, outdated legacy software that we're trying to make work in cloud? What if we sort of rebuilt it all with a blank slate? You know, what are the tools we wish we had? You know, let's build those things and then we can get on with, you know, actually running the mobile ad company or actually building our, you know, point of sale tool. And so in some sense, it was really scratching that itch that ultimately led us to HashiCorp was like, hey, as practitioners solving this problem, we just felt like there wasn't good tooling.

Todd Gallina:

By the way, that's a great story. We've heard a lot of stories where a couple of people meet at a previous gig, they find a problem that needs to be solved, and then they go ahead and solve that problem as a startup. But you mentioned that you and Mitchell both had that startup itch. Is that something that you got when you were at Washington? Is it something that we go way back into your childhood and look at and say, okay, so this is where it started for Armand?

Armon Dadgar:

So it's a bit of a blend, to be entirely honest. I think going in, I always thought, hey, the big tech companies, they're always so glamorous. They're the ones you read about, all these great perks, and they're always launching these new cool projects. So I think kind of going in wide-eyed, bushy-tailed, I thought that it would be really glamorous to work at these big tech companies. And so early on, I did do a number of summer internships at Amazon. And in fact, I got to work at AWS super, super early. So it's sort of a fun claim to fame was I worked at Amazon Web Services when I was only 250 people. The whole thing fit on one floor. So I got to see a little bit of how the sausage was made early on. At the same time, I think getting to see how the sausage was made and working at a big tech company, a lot of it lost the luster for me a little bit. I think from the outside, people think it's a lot different than it actually is on the inside. I think every big company has its pros and cons, but I think there's a large element of bureaucracy that comes with being a very large tech company. And I found it sort of off-putting, to be entirely honest. I'm super candid. I actually decided to do a 180 and go into academia. And so at some point, I actually applied them. The reason I moved to San Francisco was to go for a PhD program. So it was such a jarring experience for me that I kind of went the other way. What ended up happening was a few different things. My parents got laid off during the recession and downturn, and both of them ended up starting their own small businesses. So I got to see them building that up and the autonomy they had and the freedom to build something that was their own and see that firsthand. So that was, to me, both inspiring to get to see them do it and see them succeed at it. It was like, okay, actually, that is a thing you can do. You can go start a business as opposed to just going and working for one. And then I think a combination of moving to San Francisco and getting introduced to a bunch of people in that startup ecosystem and and realizing, okay, it's not all big tech. There is this thriving ecosystem of startups and it's a very different vibe. And I think those, you know, all these different threads kind of came together ultimately where I joined a startup. That's where me and Mitchell started working together in San Francisco. And then ultimately sort of felt like it, it sort of normalized it for us to go start a business ourself.

Sandy Salty:

Yeah, Armand, there's so many good themes in what you just said. Like there are many, including myself, that believe that struggle and strife is what creates future entrepreneurs. I'm a firm believer in that. And it sounds like to a degree, you know, you witnessed a little bit of struggle and strife at some point in your life and decided that the entrepreneur life was right for you. And clearly it was right for your parents. And then the other theme is, you know, we hear this all the time, like working for a big company obviously offers certain luxuries, but it's a huge trade-off. And oftentimes you're creating obviously speed and agility and for that stability. And there are some that are okay with that, but we find that most entrepreneurs are not okay with that. They tend to move pretty fast and they're pretty ambitious. And it's in many cases the cause of their innovation. I

Armon Dadgar:

couldn't agree with you more. And I swore to myself, I would never be subject to another database design review committee ever again.

Todd Gallina:

Were you there when you were at AWS? Were you there reporting to the now named CEO of Amazon, Andy Jassy?

Armon Dadgar:

You know, I was just an intern at the time, so I didn't get to directly report to Andy Jassy, but he was very accessible. We definitely met him as part of it. You know, he welcomed the interns. You know, he has had sort of an open door policy. You could see him walking down the hall. So you definitely got exposure to him, but I didn't get to report to him. That's pretty cool.

Todd Gallina:

You still have his phone number, which is important. Todd wants to

Sandy Salty:

give him his phone number. So we like to play a little game of fact or fiction. And we'll sprinkle these throughout the session. But let me start with the first one. So fact or fiction. At the age of 10, you asked for a coding book.

Armon Dadgar:

A fact.

Sandy Salty:

I love that one because I'm like, I think at the age of 10, we were asking for like bicycles and transformers. And here you are asking

Armon Dadgar:

for a

Sandy Salty:

coding book.

Armon Dadgar:

I will be the first to admit I was not the cool kid growing up. But

Sandy Salty:

you're the cool kid

Todd Gallina:

now. What code language are you trying to learn at 10?

Armon Dadgar:

It was the visualbasic.net book. And I remember it came in the giant box set. It had like five CDs you had to put in to install the whole thing. And it had, I don't know, it was like a 600-page book that came with it that sort of walked you through the basics. And you built like a tic-tac-toe app and the whole nine yards. But it sort of assumed a no programming experience and kind of built it up from there.

Todd Gallina:

That's funny. That's a Microsoft product and you were in the home of Microsoft right there. So did that have any influence on that choice?

Armon Dadgar:

Oh, for sure. You know, a lot of my family members actually worked at Microsoft. So I had a great affinity for it. And, you know, it was just a very accessible language. And at the time, we had a Windows desktop at home. And, you know, I knew it was sort of a from doing a little bit of research, it seemed like it was kind of a beginner friendly language. So it seemed like the right place to start. Plus, you have access to all the Visual Studio, sort of IDE and things like that, which, you know, as a newbie was certainly helpful.

Todd Gallina:

That's nice. You should sign that and put that on eBay. I would bid on it. I'm just telling you. Okay. I got another fact or fiction for you. Fact or fiction. I read a story that implied that you guys had VCs coming and asking to invest in you and asking you to build HashiCorp out. Is this true?

Armon Dadgar:

Sort of. It's sort of in the middle. Fact-ish and fiction-ish. I'd say it was a grab bag. I mean, I think So Mitchell had created Vagrant, which predated HashiCorp by a few years. So he built that when we were at the University of Washington, and it gained quite a bit of traction and momentum when we worked together at that startup in SF. And so he was approached by VCs to be like, hey, you should build the Vagrant company and sort of really commercialize Vagrant and focus on that. I think HashiCorp as a company is actually a totally different ballgame. You know, I think most investors thought we were crazy because I think most startups, you know, they fail with one idea. And I think our pitch was like, hey, we're going to build eight products spanning four different categories and we're going to try and win them all. And people looked at us like, are you guys insane or what?

Sandy Salty:

Yeah, that's definitely a different, a very untraditional business model.

Todd Gallina:

Yeah, they normally ask you to focus, right?

Armon Dadgar:

Totally. And I think in a lot of the early pitches, people are like, yeah, we're super excited about what you're doing with maybe one or two of these tools. If we invested, we'd need you guys to basically kill off everything else and just focus in on these. And that was very common, I think, for us. I think it was rare the early investor who we could explain the breadth of the vision and they didn't just sort of laugh us out of the room.

Sandy Salty:

Well, I mean, we can continue talking about funding because it's such a big part of the founder's journey. You talked a little bit, obviously, about the early rounds of funding. Let's talk about the earliest one. Was it hard to get your seed round?

Armon Dadgar:

So the seed round was actually probably our easiest round. And the reason for that was when we worked at the mobile ad company, we became acquainted and friendly with the investors there. And I think they had a good respect for sort of the work me and Mitchell had done there. And so when we left and said, we're going to go off and do our own thing, they basically were like, hey, we know you guys are smart and you're probably onto something. We don't exactly know what it is, but can we write the seed check? And so I think that one was actually sort of the easiest because they kind of were like, hey, we're taking a bet on you two as people, not necessarily on the idea of the company because it's so early stage that you two are still going to kind of develop to that and figure it out. So the seed money was actually, I'd say, the easiest money because there was no idea that we had to, or I should say the idea wasn't well-formed enough for us to have to explain it.

Sandy Salty:

Yeah, you talk about them betting on people, you and your co-founder. Let's talk a little bit more about that. So when there are two co-founders, or I should say two founders, there's a little bit of complexity there. How do you guys collaborate on hiring your executive team, for example, or making decisions in general? What's that dynamic like?

Armon Dadgar:

You know, we often get asked things like, you know, how do we and Mitchell resolve conflict and, you know, how many big fights have we had and things like that. And the, you know, I think the sort of shocking answer for us is we've never really had a major fight. We've never really had a major conflict. The way I describe it is we're almost like left and right brain. And I think for us, it's like, you know, what it goes back to is I think there's a deeper friendship that comes first, you know, we were both in each other's wedding parties. We've been, you know, best friends for over a decade. So I think we just have such this bedrock of, I'll call it like trust that, you know, anytime we get into a conflict, it's always like, Hey, you know, it's never, I'm questioning. It's never a question of the other person's motive or the question of the other person's, you know, honesty or whatever. It's like, Hey, what data points do you have that I'm not considering? Right? Like, why is it that we are coming at this from two different angles? It's like, You know, are we making different assumptions? Do we have different data, right? Like, you know, why is it that we're sort of at ends? And I think we've always been able to kind of talk our way through it, if that makes sense. So it's never become this sort of fight where we're sitting on, you know, two opposite poles and we can't find a way to reconcile or whatever. So I feel very thankful for that. But to your point on like, how do you make that work? You know, I think early on it was harder when we were sort of figuring it out and who plays what role. I think as we've kind of grown up to scale, I think what we've done is like each of us has like a pretty clear swim lane, right? Like I think Mitchell tends to still be much more of, I'll call it the engineer's engineer, right? He is hands on keyboard most days of the week. He's still actively programs. He's deeply embedded in our engineering teams. I play a little bit more of sort of a, you know, traditional CTO role. So I spend more time with kind of outbound with customers and partners and more kind of strategic kind of management conversations. And then both of us partner super closely with our CEO on sort of running the company. And so I think each of us kind of brings a different set of skills and strengths to bear, but it's very much a true partnership between us all.

Sandy Salty:

Yeah, it sounds super balanced. Armand, that's a great segue to another question I have for you. What do you focus on and when as a founder? This is really like a changing hats questions. How do you know when to put your marketing cap on, say, versus your financial cap?

Armon Dadgar:

Oh, such a good question. Such a hard question. I joke internally that, you know, the first half of every quarter is me trying to rediscover what my job is. And the second half of the quarter is me trying to put myself out of that job because it changes so often. And with the scale of, you know, at every scale point of the business, you know, so I guess I'll answer it in two ways, right? Which is, I think, I think as a company, every company, I think goes through three phases, right? I think phase one for any startup is what I'll call kind of achieving relevance. How do you actually get your audience, your market to care about what you're doing? If you're in any meaningful market, there's a lot of different players in that space. And so how do you kind of rise above the noise? So I think that's kind of challenge one for a business. Then if you succeed at that and you're like, great, you are relevant to that market and people care about what you're doing, then you get to phase two, which is like product market fit. How do I actually then have a product that I have tight fit and resonance with my buyers and I have a repeatable sales motion and all of that kind of classic stuff where I'm building a product and taking it to market. Then if you succeed at that, you get to phase three, which I'll call the scale phase, which is like, great, you have product market fit, people care about what you're doing, Now your job is to make the company big, right? As big as the market will support, depending on whatever market you're in, right? So that's kind of how I think about it, is like the company itself goes through phases. And so I think as a founder, that kind of translates to what my role is in each of those three phases, right? So in phase one, that kind of, how do we get above the noise? I think it was a lot more deep involvement in the tactics and the day-to-day of the product strategy, right? the day-to-day of the product messaging, the marketing approach. How do we actually get in front of developers? How do we get people to care? And so it was kind of a hybrid, I'll call it product manager and developer relations hat that I was wearing in that phase. And then I think as you kind of figure that out and you go into phase two and you're worried more about product market fit, then you spend a lot more time as you are the number one salesperson and the number one solution engineer, right? So you'd spend a lot more time with your customers to understand what their problem is, what they're willing to pay, what's the price tolerance for the product you're building, how should you think about pricing and packaging. So you're thinking more about the mechanics of going to market and how to start building that out, as well as what's the product that's ultimately going to support that in that second phase. And then I think now, as you talk about the third phase, as we talk about scale, it's so much more about like, what are the systems we need to put in place and the kind of processes we need to implement that's going to allow us to scale from, you know, 500 people that we were, you know, two plus years ago to the 1500 ish people we are today to the, you know, 2000 and beyond that we will be. Right. Cause I think it's just such a different challenge of scale now, as opposed to it was before. So I think the role changes constantly. Right. And I think my, you know, I think with that, you're always figuring out like, where am I the bottleneck? And then how do I hire someone better than me? you know, to take that on. Cause that's the only way it's going to scale.

Sandy Salty:

Such a thoughtful answer. I mean, that is like the best, comprehensive guide of the founder formula I think I've ever heard.

Todd Gallina:

That's the cliff notes of the entire

Armon Dadgar:

podcast. Saying it is the easy part. Doing it might be the harder part.

Todd Gallina:

People only listen because they want to hear the saying part. They don't want to do the doing part. I'm just kidding. You mentioned the last phase, which is scale. You also mentioned that you currently have 1,500 employees. So at some point, you guys start a company. You pretty much are walking around. You know everybody. And then now you're in phase three. There's 1,500 people. There's probably people that work for HashiCorp that you might not ever meet face-to-face. At what point did that dawn on you? Did it get weird? Because you left a really big company to start a really small company. So it had to have gotten weird for you.

Armon Dadgar:

Oh, totally. Well, it's exacerbated by the fact that HashiCorp was a remote first company, right? Even before COVID, we were pretty much entirely remote. We had a San Francisco office, but it was 10, 15% of our employees. So most people were remote. So you don't really get a sense for the size of the company because you go into the office, you see the same 50 people. There's the other 400 people or whatever that you don't see, right? Because they're not physically there. And so I think the first time that it really clicked for me is every year we do our big employee annual summit. We call it HEX. It's the HashiCorp Employee Exchange. And so we get everybody together once a year. I remember it was right before COVID hit. We had our last one in Atlanta and we get into the room and we get on the stage for sort of the opening keynote of the event. And it was like, holy cow, you know, there's like you know, 800 people here, right? It was like, it felt like a conference. It was, it was basically doing a keynote talk at a conference. And I think that's when it really clicked for me of like, okay, this is like some real, this is real scale. Once you see everybody in one room, all sitting there and you're like, oh wow, we're all, we're all kind of part of the same ship. It becomes real.

Sandy Salty:

It lands. Yeah. It totally hits you.

Todd Gallina:

Oh, I was going to ask a question about how, COVID has potentially changed somebody who would start a company today. Sandy and I were talking about this before the podcast, how important it is to connect culturally with people, to have a small group, to be in an office. And it sounds like HashiCorp was kind of ahead of the curve, where now I think people are very comfortable working remotely, hiring remotely, connecting digitally. Yes.

Sandy Salty:

Armand, the part that Todd is skipping is the part where I joke that only in our generation do we have to be together in the same room to connect. I think newer generations have a much easier time of maybe connecting remotely or maybe it just offers a certain compartmentalization that they like and they've gotten accustomed to.

Armon Dadgar:

Totally. I mean, I think there is definitely a generational shift in there for sure. But I think one of the actually... funny things we find is that it's harder for us to make remote work with like the really junior folks like so the folks that are like you know fresh coming out of college it's actually harder and which is kind of counterintuitive because you think you know great they're the more digitally you know savvy and they kind of grew up on this stuff but what's interesting is like if you think back to like you know who is your networks of you know friends and family and the people around you and your colleagues a lot of that like if you think about you know, graduate fresh from college, maybe you move to a new city, the way you ended up meeting that network of people was through work. And if you don't have that, then it's kind of weird, right? You have these people who they have kind of no social network to really fall back on. That's their sort of support network. And so it's actually very hard for, I think, junior employees to go straight into a pure remote workforce. It tends to be the average HashiCorp employee skews older and probably has, you know, a wife, a kid, you know, a family. So there's some social aspect that exists for them outside of work. And so it's not so isolating.

Todd Gallina:

That's super interesting because it goes back to what you were saying before. In this scenario, do you run into Mitchell? Do you have these kind of, do you butt heads in the same way and then still hang out and talk to the water cooler potentially about starting a new company?

Armon Dadgar:

Oh, I feel like we're so heads down in this one that we don't even have the time to think about the next

Sandy Salty:

one. That's a pretty good lead in to another topic. Do you have criteria for an exit or, or what, what does the future look like if you change it? Yeah,

Armon Dadgar:

that's a good question. You know, I think the way we've always thought about it is, you know, you know, part of the way we explained, like, you know, what was the motivation for Hashi or when we started was like, you know, imagine a world pre Oracle, right? Like, Every company was building their own database. Every company that managed any data had to build their own storage engine, their own query engine, their own everything. And so there's kind of this huge tax, if you will, on the entire industry. But once you had a set of vendors who said, great, here's a set of standard SQL solutions, whether it was Microsoft Oracle, Sybase, et cetera, then you could build the higher level application and just consume the database and it was sort of a detail solution. And to us, it felt like that was kind of where we were with ops tooling. When we started, it was like, everyone was building their own platform. Everyone was home rolling their approach to automation. Shouldn't there just be a set of vendors who sell that to you and you just, you know, you operate it rather than building it. And so I think that was kind of our view. And then, you know, I think what that leads to is like, you know, what would it mean for Hashiro to be a successful long-term? It's like, you know, I think it's that opportunity to go build a franchise business like that. Right. Where, um, you know, it is a large portfolio of products. It supports, you know, tens of thousands of customers and it becomes kind of a core building block of the whole ecosystem. And I think that's always been our aspiration of like, how do you build towards that? And I think, you know, it's certainly, I think, easiest, I think, to do that and achieve our goals if we're sort of an independent standalone business. I think that's what we've always sort of built towards.

Sandy Salty:

Yeah. I've learned that like a lot of entrepreneurs are actually they suffer from serial entrepreneurism. It sounds like you guys have created an awesome sort of platform for yourselves and that every time you get an itch, you can scratch it by augmenting your portfolio in a pretty cool way.

Armon Dadgar:

Yeah, that's the luxury, I guess. Luxury or downside or curse, I don't know, however you want to call it. When you have eight products, it's not that much harder to add a nine.

Todd Gallina:

Yeah. Okay, so this is generally one of the... favorite questions of the folks that we have on the podcast. And it's a must ask question. And this is where we ask you to share a gratifying moment. A lot of technology leaders listen to the show. And so there must have been a time when you had a big customer. I know you guys have got some huge customers where one came up to you and just really gave you a pat on the back for what HashiCorp has been able to do for them. Can you share one of those with us?

Armon Dadgar:

yeah i'll share one that always sticks in my head because it was both uh tremendously exciting and i've lost sleep ever since which is you know one of our big customers is a as a major stock exchange and you know it was a hard one deal we spent a bunch of time they had these crazy requirements of you know hey we need to be able to do hundreds of thousands of transactions a second we need you know real-time failover we need sub mil you know sub millisecond response times like It was a crazy hard set of technical requirements. And they were always a little cagey about what the exact use case was. We ended up winning the deal. They rolled it out. They were happy in production. We were meeting with them a few months later. And they were kind of sharing a little bit more with us. And they're like, yeah, every single trade that happens on the stock exchange, hundreds of thousands per second, is being authenticated by Vault. We're using Vault as the underpinning for the key management and the authentication and the... the root of trust for the whole trading system. And so this is why they had such crazy stringent requirements for what the deployment had to look like. And for me, it was just such this moment of like, wow, that's insane that it's in the transaction path of every single one of these trades, which is both tremendously cool to think about the importance of the role Vault is playing for their architecture, but also terrifying to think about the importance of the role Vault is playing for their architecture.

Todd Gallina:

Oh my

Armon Dadgar:

gosh. That's amazing.

Todd Gallina:

Well, congrats and a great lead into that answer. I can understand why you're up at night. Oh my gosh. So it's definitely a

Armon Dadgar:

responsibility we take seriously. Oh, I couldn't imagine.

Sandy Salty:

Okay, so Arman, so when I think about sort of appetite for innovation and maturity that's required to kind of deploy some of the concepts that HashiCorp offers around orchestration, automation, et cetera, is it fair to assume that, you know, the open source play was part of the strategy to kind of feed that commercial motion in the market?

Armon Dadgar:

Yeah, it's a super good question. And I think it gets into sort of the nuances of like, how do you actually, you know, how do you build an open source business, right? As distinct from an open source project. And so I think if I'm super blunt, You know, when we started, I don't think we really knew how HashiCorp would commercialize, right? I think what we felt strongly was the kind of future of infrastructure software was going to be built in open source, right? Like, you know, as developers, as practitioners ourselves, that's kind of where we saw all the energy, all the momentum. That's where we saw kind of the groundswell of how these neutrals are being, you know, adopted and communities were forming around them. So we started off by saying, okay, we don't know what HashiCorp, the business will look like. But we know the HashiCorp projects need to be open source because that's how we're going to build our community. That's how we're going to build sort of our audience and get people to adopt this stuff. You know, flash forward then a few years where we're saying, okay, great. We now have, you know, a portfolio of open source products. We have this community of users. What's HashiCorp the company, right? Like, you know, how do you kind of make sure that, you know, you can commercialize this and that it's sustainable rather than, you know, it's just a well-funded research project. And so I think there is where there's this question of open source and how it intersects with a commercial go-to-market. And I think what we found was early on, we had some of these sophisticated, large enterprises who wanted to use this stuff and were willing to pay for us to add some premium set of capability. They wanted multi-data center replication. They wanted disaster recovery. They wanted certain HSMs and FIPS certification and things like that. And so we started off, I think, with a with a clear focus on the very top of the market, kind of the global 2000s, if you will, of like, great, let's build a set of capability around what they want in the commercial versions so that everyone can start with the open source. That tends to be how our stuff is trialed or discovered even. As people download it, they use it, but they might not even know who HashiCorp is. And so our stuff ends up kind of everywhere. And then over time, they want a support relationship or advanced capabilities or whatever, and they reach out to us. And I think what we've been doing steadily, like we started at the very top, kind of focused on this global 2000s, and we've added more capability that's focused on sort of more of the mid-market customers. And now with our cloud product, we're kind of going all the way down to SMB, which is like You might be two people in a garage and you want to use Vault or Terraform. Great, you can sign up for Terraform Cloud or our hosted HCP Vault and consume it as a service and not have to operate it. So at this point, we have kind of a range of offerings for two people in a garage all the way up to the Fortune 10. But I think that's kind of how it evolved over time.

Sandy Salty:

Great strategy. Thanks for sharing that.

Todd Gallina:

Yeah. Armand, this has been great. We really appreciate the time that you've been able to spend with Sandy and myself today. Before we wrap things up, I just wanted to give you the opportunity to share anything that you might have that you think our listeners might be interested in.

Armon Dadgar:

Yeah, Nolan, thanks again for hosting. It's been a great pleasure to chat. I think we just touched on it a little bit ago on sort of that intersection of kind of the open source strategy and sort of the commercial strategy. I think one of the One of the pieces that's been interesting for us is, you know, the irony is not lost on us that by and large, we help people adopt cloud, but we sell them as sort of desktop software they have to self-manage. And so I think that that disconnect is, you know, it's pretty obvious. And I think over time, people want to consume all of this stuff as a cloud service. And so I think for us, the big investment has been the HashiCorp cloud platform or HCP, as we call it, in terms of transitioning the stuff from, hey, it's self-managed, you download it, you run it into HCI. Actually, you consume it as a service that's fully managed by HashiCorp. And I think that sits at the heart of a bunch of these themes we talked about, which is one, is it changes a bit of the commercial strategy, which allows us to go down market and address and provide a service to SMBs where it can be a low-cost, monthly pay-as-you-go type thing. But at the same time, it also provides people thinking about building open-source businesses a different route to monetization. If you think about SaaS and building a set of services around a hosted open-source project, It's actually a different way to monetize, different way to build a business than kind of the traditional self-managed route that we might've gone on or the support route that Red Hat has gone on. So I think with all of these things, as you think about the advice is to realize that it was within a time and a place and that it just, it keeps evolving, right? These markets are so dynamic that what made sense five years ago doesn't necessarily make sense today.

Todd Gallina:

Cool. Well, thank you. Appreciate it. Great, great insight.

Sandy Salty:

Yeah, thanks, Armand. It's been great fun. And on behalf of Phase 3, thanks for the partnership as well with Hashi and Chase.

Armon Dadgar:

Well, thank you so much. This has actually been a lot of fun. Thank you for keeping it very dynamic and interactive as we went.

Outro:

Trace3 is hyper-focused on helping IT leaders deliver business outcomes by providing a wide variety of data center solutions and consulting services. If you're looking for emerging technology to solve tried and true business problems, Trace3 is here to help. We believe all possibilities live in technology. You can learn more at trace3.com slash podcast. That's trace3.com You've been listening to the founder formula, the podcast for all things startup from Silicon Valley to innovators across the country. If you want to know what it takes to lead tomorrow's tech companies, subscribe to the show wherever you get your podcasts until next time.