0:01 - Todd Gagne 
Well, welcome Michael to the podcast. I appreciate you taking a little time and talking a little bit about Prismatic and your journey.

0:06 - Multiple Speakers 
Yeah.

0:07 - Michael Zuercher
Thanks for having me on.

0:08 - Multiple Speakers 
Go good.

0:09 - Todd Gagne 
Well, why don't we jump into it and maybe talk a little bit about just your background. Um, you know, where are you from Kind of like, uh, did you go to college for, you know, computer science? I know you've done a bunch of startups that we're going to talk about here in a little bit, but maybe just get a background and kind of, uh, how you got to your point here that you're at today.

0:27 - Michael Zuercher
Yeah, so I went to school for electrical engineering and never did any electrical engineering at all for real, but did a four-year degree in electrical engineering at Iowa State. I was always pretty interested in software. I guess I went to college in 2001, that was kind of the beginning of the height of the, you know, the beginning of the Linux movement in a way, or kind of that early open source movement around GNU and things. And so, you know, I was pretty involved in some of that open source world and learned software that way.

0:58 - Michael Zuercher
There's probably more overlap between electrical engineering and software than, you know, a lot of people realize. And so, you know, I kind of ended up being an open source software nerd, I suppose, and learning software a bit that way.

1:11 - Todd Gagne 
Yeah. And so basically you had a summer job that kind of led to your first kind of opportunity.

1:18 - Michael Zuercher
Yeah, just one of those things that would never happen twice. I went back to my hometown, which is pure South Dakota. It's the capital of South Dakota. Went back to my hometown after my freshman year of college and had an internship at the, of all things, the South Dakota Department of Corrections that ran the prison system. And at the time, they ran the records management, essentially, of the prison system on Microsoft Access. And so I was one of two members of the team that maintained and built those systems.

1:49 - Michael Zuercher
The other was a full-time employee. Great guy. And I was the intern. And so we maintained this, like, Web of Microsoft access to databases and through that like kind of a happenstance way through all of that. I met sheriff's deputy It was a tiny little sheriff's office in our County the entire County had like 2,600 people and they they didn't have any software and surprisingly and so one thing kind of led to another and and I started a company to build software to do records management for for sheriff's offices essentially and Okay.

2:22 - Todd Gagne 
And so like, like you did that for 10, 10 years or so. Like what was the run on that?

2:30 - Michael Zuercher
All in was 15 years, 16, I think years I was there. It was one of those things where I was, I was still in college for the first three or so years of that. And so it wasn't like a year wasn't really a year in a lot of ways, but just kind of kept at it. And then when, you know, really full time and took on a co-founder as I, as I graduated from school.

2:49 - Todd Gagne 
Okay. And then how big did that come? I mean, how many employees did you have and, and, uh, you know, how many customers did you end up having? Like, I'm kind of curious on that story.

2:58 - Michael Zuercher
Yeah, so over that 16 years, there was kind of a complicated tale, but essentially in the end, we were about 250 or so employees, about 50 million or so in revenue. Customers, I think, was 2,000 or so, although I don't actually remember that number exactly anymore. And we were, toward the end, we were part of a larger organization, but essentially a separate entity with those numbers that I just described.

3:27 - Todd Gagne 
That's pretty cool and then you sold out to a private equity company at the end of that one?

3:31 - Michael Zuercher
Yep. At the end of that in sold 2018, the overall organization including my piece of it to Bain Capital and they did what private equity does and they merged it with some other stuff and it's now a thing called Central Square. At least when I left in 2018, I think it was a couple thousand employees and well north of 100 million in revenue.

3:52 - Multiple Speakers 
Wow.

3:52 - Todd Gagne 
That's impressive. Just a little bit on that. I mean, it's kind of interesting. What was your experience being a CEO going from an electrical engineering degree to managing 250 people? I know what my first experiences were managing people. And I had a technical background and it wasn't easy. I made a lot of mistakes. But I'm curious. I mean, that scale over that period of time, there's a lot of change involved in doing that successfully.

4:17 - Michael Zuercher
Yeah, I mean, I think there's, there's very little that is similar from being an electrical engineering student to, you know, midsize company CEO. I think. I think the biggest changes, the biggest inflection points are just the kind of classic things. If you judge your satisfaction or if you judge your success based on what you yourself are producing, you're going to have a bad time because you yourself are producing basically nothing. I think you have to find your satisfaction in empowering others and empowering the larger organization to achieve things.

4:55 - Michael Zuercher
And I think that's a, I'm sure I went through lots of phases of that change, but like, I think more than almost anything, that's the thing that was just completely different from, from the very early days when I was the only employee and therefore the engineer and everything else. And then in the, in the, you know, those later days, you're, you know, you're at a pretty, pretty distant level in some ways from a strategy perspective and, uh, you know, not really producing much work of your own, so to speak.

5:22 - Todd Gagne 
Yeah, tangibly, you're not. I mean, but you're trying to set up people for success and you're looking for issues and troubleshooting and stuff. And so I do think you're right. The work changes dramatically. And so maybe what you're saying is the output of writing code versus a quarterly result that your deliverables personally are super different than that. And there's an evolution of skill sets that is dramatically different over that period of time.

5:45 - Multiple Speakers 
Yeah, I think that's right.

5:46 - Michael Zuercher
I think your deliverables become completely amorphous, and you need to judge your success or failure simply based on, is the team accomplishing what we want to accomplish? It doesn't matter if your name is on any particular document, piece of code, anything else. It's kind of like stepping back with empowering the overall organization to succeed.

6:10 - Todd Gagne 
Maybe I'll draw a parallel and I'll ask you this question. From Concur's standpoint, we went from $7 million our first year to $1.7 billion the last year I was there, and it was 19 years. The amount of change that I personally had to go through just to continue to be relevant and then successful was dramatic. I always use this joke a little bit that you had to learn You had to throw away 50% of what you learned last year and learn 50% more. You just didn't know what the percentage, you didn't know what it was you had to get rid of And so, I mean, do you have any sort of insights or themes about like what you really had to do to continue to be relevant and be a successful CEO through that kind of run?

6:51 - Michael Zuercher
Yeah, I felt like, you know, especially, you know, through the kind of high growth phase of that company in that 16 years, we were probably growing pretty darn fast for about. About 8 of it, I guess I would say maybe 9 and in that period. You know, I think it's as you said, every some amount of time, and for whatever reason, I kind of feel like it's about 18 months or it was for me, but like every 12 or 18 months or something, everything about the way you're doing things just completely fails or just completely breaks.

7:22 - Michael Zuercher
And you almost have to just step back and say, okay, like operating from first principles again, what should I be doing? What should I be optimizing for? What should I be thinking about? You know, I think you kind of are on this spectrum of like, in the very early days, especially when there's, you know, just you, you're focused only on the product. Then you start shifting, focusing a bit on customers as there are some customers. Then you start focusing a bit on processes and building systems and building team as that becomes a thing.

7:48 - Michael Zuercher
And I think as you get farther along, you start basically thinking about, or at least I have always thought almost as the, of the company as a product or the company as a machine that is, that is like, a product for its employees or a product for the team almost. And you start thinking at kind of a very different level of abstraction, I think, in the like, well, how do we build an organization such that all these people can do all the great work that then supports all this other stuff? And I mean, it's just such a continuum, but by the end, you're thinking about, how can we build a culture that over some long period of time is going to cause this thing to exist?

8:25 - Michael Zuercher
And that's very, very different than how do I make our first customer stay with us, which is a much narrower and very different problem.

8:35 - Todd Gagne 
No easier or harder. Yeah, it's finite. I think it's a good progression that you've outlined. You mentioned culture. What role do you think that plays in scaling an organization? I think it concur. One of the things that we did in 2099, somewhere in there, we basically laid out some of our cultural goals. And I think really from a recruiting perspective, as well as a culture perspective, good behavior got rewarded, bad behavior got stamped out. And I think anybody in the leadership from the executive staff down really tried to carry that.

9:08 - Todd Gagne 
And I do think that that was a big part of part of the reason why we could continue to grow and execute the way we did. Culture played a huge role in it. And what I see in a lot of founders is this ability to like understand what it is for you individually, but transferring that to the large organization. So it's easy to go from you to the first five or but then once you start to abstract that to like the next set, it's almost like you have to like articulate what you're looking for and get everybody bought in on the same page.

9:34 - Todd Gagne 
I don't know if that's your experience or if you feel like it was a little bit different for you.

9:38 - Michael Zuercher
Yeah, no, I think that's, I think that's exactly right. And I think, you know, I view culture as the, culture is the, you know, the center of so many things. It's the thing that, if done right, it's the thing that can constantly be the, like, bedrock on which other things are built. I always think about, I always think about good culture a little bit as like, and this is the engineer in me, but the, like, kinetic energy versus potential energy, I think. I think in a way, culture is potential energy that grows and grows and grows, and over time can be converted into kinetic energy when you need it.

10:12 - Michael Zuercher
So I think culture, if I look back on my first company, we had bad times, like every first company. We had things go wrong. We had mistakes and missteps. And I think a strong culture is a big part of how you get through that and how the team carries itself through that, because you've built all that potential energy over time. As far as how you kind of lay out culture, I always think of culture as like, you can guide culture a little bit, but a lot of what you're doing is bring the people into the team that are gonna have the right innate behaviors, I guess, to build a culture that's going to be good for the organization.

10:50 - Michael Zuercher
And then just do a really good job of defining that, documenting it, and exactly as you said, build processes that reward good behavior, stamp out bad behavior, and you're really reinforcing a culture, I think, more than designing one. I think to some extent, cultures kind of just happen, you know, for better or for worse. And all you can do is just guide it a little bit, find the things that are good, and then build all the things around it that reinforce. I think that becomes more important and harder as you get bigger.

11:22 - Michael Zuercher
I think, as you said, with 10 people, it's pretty easy. You get everybody in a room and you say how you're all going to behave. By the time you're a few hundred or a few thousand, it's a little different story.

11:32 - Todd Gagne 
Yeah. And I think the governance part of it is like, I think that gets harder, like you said, as you get bigger. I think that if the executive staff or your group, I mean, and you're talking thousands and thousands of people, I noticed that we had a cultural decline after we got purchased by SAP. There was just a different set of things that were valued, right? And then our executive staff was dealing with some other things too. And so it eroded relatively quickly. And then I think it can be very fragile.

12:01 - Todd Gagne 
And so it's kind of interesting from that perspective. Maybe the last part on this piece of it would be, I think I read somewhere that you kind of regretted a little bit about undercapitalizing this opportunity. And maybe that was maybe the number one thing that you would kind of think about going forward. So maybe talk to me a little bit about that. And part of this, what I would say is, especially for first-time founders, raising money sometimes isn't that big of a problem. Being capital efficient with that money as a first-time founder, super hard.

12:29 - Todd Gagne 
And so I'm curious with your comments about that and knowing what you went through, would you have been capital efficient? And then how would you have thought about using that? And what were some of the outcomes to the negative because you didn't have it?

12:42 - Michael Zuercher
Yeah, it's a complex issue in the particular business that we're talking about. So we did software for law enforcement and 911 centers and that kind of thing. And so that is a very long sales cycle. It's government sales. It has almost zero churn, and so that's an advantage. But it isn't traditionally the kind of business or the kind of segment that is well-suited to venture capital. And so I think in a lot of ways, the success of that business and the fact that we got it where it got was partially because we had the grit, I guess, to essentially bootstrap it.

13:21 - Michael Zuercher
We ground and ground and ground and ground in that business. You know, it wasn't a SaaS business. It was kind of pre the SaaS business model. And so, you know, what we did is we cash flowed it by selling big contract. It's going to take 12 months to implement. We spend all that money almost immediately and hope that we continue to get deals in. So we're basically cash flowing or basically our customers were cash flowing the business. Like ahead of time, basically, always a year ahead.

13:52 - Michael Zuercher
And so like it worked, that worked really well in that business. Now, there was a point, and it was probably in about 2013 or 14. So this would have been, you know, 10 ish years into the business, when we clearly had what in hindsight, I would call product market fit. We didn't use those words at the time, or at least I didn't, there was a million things I didn't know. But like, that would have been the time to say, and Michael today would say, This is like, you are in nine states and you're growing like crazy.

14:21 - Michael Zuercher
If you were in 40 states instead, you would grow four times as fast. And we ended up doing that in 2015, but I probably should have done that a couple of years earlier. It all worked out, but I think I didn't really recognize what was probably an inflection point of, this is very repeatable and quote, easy end quote, to scale. Now, of course, there are problems with that, but like, putting capital behind the business at that point would have caused it to grow really fast. And just to kind of prove my point, I guess it would have been early 2016, we really put significant capital into expanding the business, thanks to some private equity investments.

15:01 - Michael Zuercher
In the following two and a half years, we went from $10 to $50 million in revenue. Wow. I mean, the demand was there. We had product market fit. I didn't know anything about growing sales teams and some of that. I guess I would say I regret, but I don't really know that I do because it all worked out fine.

15:19 - Multiple Speakers 
Yeah.

15:20 - Todd Gagne 
And I mean, I think the timing and I think the discipline that you had to get through the first 12 years was probably prerequisite to like paying that using that capital efficiently. And so you knew a lot about your business where I think a lot of people throw money at a problem and they don't really completely understand their business because money clouds a lot of the problems they have. And so, you know, like,

15:39 - Michael Zuercher
over a lot of structural problems in the short term with lots of capital. And in the end, we'll always come back to get you eventually. You'll pay for it. I think we were kind of forced to not get ourselves into a weird structural situation with whatever metrics, ratios, et cetera, because we had the governing factor of like, we can only spend the dollars that are in the bank that came from the customers. And so obviously, that's a forcing function in a good way in a lot of ways.

16:05 - Multiple Speakers 
Yeah.

16:05 - Todd Gagne 
Yeah. Some discipline. Well, good. Well, then you sold that and then you took some time off and then you jump back in with Prismatic. And so talk to me a little bit about maybe just even set out what Prismatic, the goal and the opportunity and how it tied back to kind of what you were doing before. Because this is a problem that you understood really heavily in your first startup. And then you basically kind of abstracted it saying, how do we solve this problem for a bunch of other folks?

16:30 - Michael Zuercher
Yeah, so I took some time off. I was going to take a year off and ended up taking, I think, about six months because one of my, I guess, our first employee at my first thing, who ended up running engineering the entire time I was there and after I left, he decided he didn't want to stick around. I actually thought he was going to be there for years and years after I left. Some period of time after I left, six months or something, he decided like, this isn't for me. This isn't what I want to do. I want to go try something else.

17:01 - Michael Zuercher
And so he just called me one day and said, hey, I put in my notice. And this is the way he put it. I'll always remember this. He said, I either need to go get a real job or we need to do something together. He and I had worked together. For both of us, it was our entire careers. I started that business when I was 19. I think he probably joined when he was 20, maybe. He's a year or two younger than me. And so it's the only thing we'd ever known was working together. And so I quit my sabbatical early to start a company with Justin, is his name, and my chief of staff at the previous company.

17:36 - Michael Zuercher
And she had done a bunch of things there, but ended as chief of staff. She had left the business at the same time I did. And so the three of us were all sitting around saying, I mean, we can't do nothing but figure out what to do. And we got together and spent a bit of time, and we kind of just kept coming back to this integration problem that software companies, SaaS companies have. And it's something that was, as you kind of alluded to, a really visceral problem for us in the public safety software space that I was in.

18:05 - Michael Zuercher
That market, for a lot of reasons, is very, very regional. And it's, in fact, kind of different in every state. You know, we're a federalist nation and every state has their own laws and law enforcement is more different state to state than most people realize. And that follows through to the software needing to be more different than most people realize. And one of the places that really, you know, comes to bear is on integrations. So by the time I left in 2018, across that couple thousand customers, we had built something like 600 integrations into our product.

18:37 - Multiple Speakers 
That is bizarrely painful. It is not for the faint of heart.

18:40 - Michael Zuercher
It's not something you want to do. Every strategy session you ever have, you're going to say on a whiteboard, if we could do less of this, it would be great. But it's also just the way that market is. And as we became a national player and a bigger and bigger player, we just built a bajillion integrations. And so we in, it would have been probably Probably two or three years before I left, we kind of came to a head and we said, we need to find a better way to do this. And we went out and we looked for platforms, and we essentially went and looked for what Prismatic now is.

19:12 - Michael Zuercher
And at the time, that didn't exist. And we looked at the traditional integration platforms. At the time, it was like Boomi and MuleSoft and probably some other, I don't remember. And like, they were really great at what they did. It's just that what they did was not what we needed. What they did was really help a business integrate their tools internally. What we needed instead was something that we could embed in our platform to serve native integrations to our customers. And that really just didn't exist at the time.

19:38 - Michael Zuercher
And so we just kept doing what we were doing, and we got better in certain ways. But like, I very much left that business. And if you'd asked me on the day I left, what are the three unsolved problems, that would have absolutely been one of the three. And so I think we just had this thing in the back of our mind that we can't be the only people with this problem. Clearly, this isn't the only industry where integrations are important. And as we spent time and did some research and spent time really working, we realized this is not just a problem that a lot of companies have.

20:09 - Michael Zuercher
It's a problem that has some tailwinds to it that are making it worse in almost a compounding way. And now's the time to solve it. And so we started Prismatic basically just to say, We're gonna build the thing we wished we could've bought at the old place. And that was basically the thesis for Prismatic early on.

20:28 - Todd Gagne 
From a positioning standpoint, and maybe like the Dell Boomi and some of these other ones, they're kind of geared towards enterprise. They're heavy consulting engagements. They're not cheap at all. And so you kind of invented or you started to play in a new space that basically was not that, but it had some characteristics that were similar. Talk to me a little bit about like creating a space that's like new and that you have to educate customers. You have to like educate the marketplace.

20:57 - Todd Gagne 
There were some competitors that came on into that. And so that's always kind of an interesting space because like you're trying to take some things that are problem and bring them down market. So in theory it makes sense, but like you need kind of a different category to really articulate what you're doing and why it's going to be different.

21:13 - Michael Zuercher
Yeah, I think, you know, the biggest difference to me between the kind of integration platform space as it has always been, so I'll call it traditional iPaaS, and what we now call embedded iPaaS, which is what Prismatic is, kind of the biggest difference is, are you a business that is going to acquire a tool to integrate the tool, the other software that you use together, or are you a software vendor that wants to provide that as a native thing out of the box? Where are you putting the responsibility is it is it on the IT group of the buyer to integrate things or is it on the vendor selling the things to just make the magically connect and to your point that dynamic is different at different parts of the size spectrum right in enterprise historically companies have been more willing to have.

21:56 - Michael Zuercher
IT groups or even like full-on development shops internally that will build these integrations. And they don't mind owning that because scale lets them do that. In the mid-market, it was more that way and it shifted a lot. And in SMB, you obviously don't have usually sophisticated IT groups. And so it's kind of got to be an out-of-the-box thing. I think what's happening, and I think almost no one would argue with this, is that there's an expectation that has gone up market to where basically nobody wants to take on the responsibility to build integrations inside of a business anymore.

22:29 - Michael Zuercher
That's maybe true at the very high end of the enterprise where you're doing such bespoke things, but even big businesses buying ERPs or something, expect those ERPs to have connectors and have a marketplace for apps and things out of the box. And that is the part of the problem that was very unsolved. If you're a software vendor, if you're a SaaS company, how do you provide that without reinventing the entire integration platform stack? Which you can do. You're a software company.

22:59 - Michael Zuercher
If that's what you want to do, you could build that.

23:02 - Todd Gagne 
Time and money.

23:03 - Multiple Speakers 
Yeah, time and money.

23:04 - Michael Zuercher
I always say just, you know, it's interesting selling to software companies because just about any of our customers could build Prismatic if they really wanted to.

23:11 - Multiple Speakers 
It's just probably not what they want to spend the next 10 years doing.

23:14 - Todd Gagne 
It's the opportunity cost.

23:15 - Multiple Speakers 
Yeah, it's the opportunity cost.

23:17 - Michael Zuercher
It turns out they're pretty focused on what, you know, the other things they're good at.

23:20 - Todd Gagne 
The domain expertise that they're making money with.

23:23 - Multiple Speakers 
Yeah, exactly.

23:23 - Michael Zuercher
So, you know, I think you have this shift there that Prismatic is a big part of

23:28 - Multiple Speakers 
Okay. That's good.

23:28 - Todd Gagne 
So maybe take this down to, uh, you found a space that was good. You kind of, you kind of defined it. Now talk to me a little bit about how do you get an MVP out and some early adopter customers? Like, you know, this is, you know, what you just experienced, you know, kind of the space you want to go do you. You know that you're not going to build all these features and launch to start with. You're going to have to build a small subset of that. You got to find a beachhead or a niche that you want to go after.

23:53 - Todd Gagne 
Talk to me a little bit about how your thought process in getting to that something where it's enough value and quick enough to get some feedback so that you can start to kind of scale it up.

24:03 - Michael Zuercher
Yeah, I think we kind of thought about it in in a continuum with a couple of mileposts. So to me, the first thing with an MVP, and everybody has different words for these things, but like the first milepost is basically, do you have something that you can use as a believable prop to help people understand your vision? And I think this was especially true for us in a new category because in the early days of Prismatic, we were terrible at describing what we were building. We didn't have the vocabulary to do it.

24:33 - Michael Zuercher
We hadn't had enough at-bats with people to understand what resonates and doesn't resonate. And some of those early conversations, you'd just watch people's eyes immediately glaze over and like, clearly I'm explaining this poorly because I know you have some of these problems. But I'm terrible at describing it. And so, you know, our first focus was really like, how do we build enough of an MVP that I don't even care if it's something that anybody would put into production. I just need somebody, something that I can show, show to people to like paint the picture of what I'm describing.

25:03 - Michael Zuercher
And I think in some markets, you can do that with mockups. With Prismatic, we built a functioning MVP. I don't know what's best where, but we built a functioning MVP. But in hindsight, of course, it was just the tiniest little thing compared to what our vision was and what Prismatic's now become. So to me, that's milepost one. And then milepost two is, how do you build the minimum thing that somebody could actually pay for, feel good about, and take to production? And for us, there was a fair amount of work that had to be done before getting to that second milepost.

25:38 - Michael Zuercher
Because one thing about the category we're in is, if a company is going to use Prismatic, they're going to put us in their product. And they're going to bet their reputation that Prismatik is going to do what it needs to do for their customers. Because remember, their customers probably don't know Prismatik's even involved. And so it's pretty hard to take a flaky little MVP and say, give it a try. There is no give it a try. It has to actually work. And so that to me was the second mile post.

26:07 - Michael Zuercher
And for Prismatic, we were probably 18 months in before we really got to that point. And that's longer than most of the conventional wisdom around MVPs and iteration things go. But the truth is, I don't know how else to do it in a market like this where It's almost mission critical. It's not the kind of thing you can just kind of wing.

26:31 - Todd Gagne 
Did you end up kind of building it for them, like your first customer? I'm curious about how much was out of the box, letting them go do it versus facilitating to make sure that it was a white girl of experience, just to ensure that that mission criticality, you didn't blow that trust.

26:48 - Michael Zuercher
Yeah, I mean, like, like any early company, we absolutely hovered over our first few customers and really our first probably quite a few customers. Um, you know, just to to Make sure that we were getting the feedback from the market, which we were just like super thirsty for desperately needed But also as you said just like we're going to make this a good experience come hell or high water And some of that is we're gonna we're gonna build features Quickly to kind of like stay ahead of where apparently the product is going some of that is you know Babysit things and make sure that they go well in a way that you probably don't once you get to like a bit later Stage and things are fully fully productized to the point that like, you know, it's gonna go well But yeah, we

27:32 - Todd Gagne 
put a huge amount of time into those early customers and and just being collaborative with them Did you actually have a thesis on who this would be good for as far as a niche or beachhead? Or was it kind of opportunistic on, we're gonna pitch this to a bunch of people and see if there's a theme to the prospects that engage?

27:51 - Michael Zuercher
We absolutely had a thesis, which was essentially, we were looking for customers that were big enough to have these problems for real and need to solve them, but small enough that they could choose somebody like Prismatic without it being just an insane decision. And, you know, we saw this kind of like narrow part of the, call it the lower mid-market of SaaS companies or something like that, where that was the case. And to kind of just illustrate that, certainly today, there are some really early stage SaaS companies that use Prismatic, and that's great.

28:26 - Michael Zuercher
But like, We didn't want to build a product just for those early SaaS companies because we very much believed that the vision of the company was to serve mature SaaS companies with kind of all of the problems that you run into in the later stage that we had dealt with at our last place. And so we didn't want to build a product around really early stage companies. So we didn't want to just have really early stage customers early on. Same thing on the late stage. We certainly that was the vision was like, let's go serve scaled software businesses.

28:56 - Michael Zuercher
But what, you know, what, what million revenue company is going to choose prismatic when we when we have zero customers. And so that was kind of the way we thought about the sweet spot. It was already narrowed down to SaaS companies. So like, it was already pretty narrow. And then we said, Okay, this is probably the segment where we're going to succeed. Now, that's all great. And it looks fine on a whiteboard. The customers you talk to are the people that are willing to talk to you. So, you know, I took countless calls, some of which, you know, were absolutely not in that band.

29:25 - Michael Zuercher
But, you know, you learn everything you can from anybody who will talk to you basically early on.

29:30 - Todd Gagne 
So I'm going to finish this section out by asking a little bit about the thought leadership of the origin story. Do you feel like that was really critical? I always think about startups that basically have a compelling origin or thought leadership. And I think yours is great from the standpoint of, I know this problem exists. Lots of people have it. And you're trying to change behavior on, do you want to put your time and energy and your best resources on this problem? Or do you want a toolkit where you can take a junior developer that can do it with the same success rate?

29:59 - Todd Gagne 
If you can get that message across, does that hook them enough to like ask the next series of questions and engage? And so I'm curious, like, was that a part of your sales strategy engagement? I mean, I know this is all super gorilla at that stage, right? But you're trying to find things that actually just get them to say, this is interesting and worth taking another call.

30:18 - Michael Zuercher
Yeah, absolutely. I used as much as I possibly could, though. Look, I've been in your shoes. I'm not theorizing this problem. This isn't academic to me. I was in quarterly QBRs every quarter where we said this is one of the biggest things that we need to improve efficiency-wise, etc., etc., in the business. And especially if you're talking to you know, a head of product or a GM or a CEO or something like that, like it resonates pretty quickly with them that like, okay, this person isn't coming from some just like bonkers abstract perspective.

30:49 - Michael Zuercher
They get my world. And I think that's absolutely a big part of how we got our first, you know, 10, 20, 30 customers.

30:58 - Multiple Speakers 
Yeah.

30:58 - Todd Gagne 
Okay. Well, let's pivot to sales and stuff a little bit. I think you and I have had a couple of conversations over the years. One of the things I was always impressed with your approach, especially on sales, is you're a technical founder in electrical engineering. And I think you gave me some stat that said you participated and were involved in maybe the first hundred demos and sales activities. And what struck me about that was A, maybe that wasn't exactly where your comfort zone was, but you knew how critical it was.

31:26 - Todd Gagne 
B, the amount of information you get from prospects, even when you get shot down, is super important. C is you understand the lineage of messaging and what's working and what isn't and how to move them from somebody that picks up the phone to somebody who closes. And so maybe talk about that. I mean, as an engineer, that probably, there's elements of that that actually work because sales can be very analytical. But I'm curious, I give you a lot of props. I don't think a lot of technical founders gravitate and then leverage some of the skills that they have and apply it to this.

31:57 - Todd Gagne 
They look at it as way more black magic. I know this is a technical sale in general, but I do think that your approach and your dedication to that probably helped you understand what your organization needed, what you wanted to hire for a sales leader. And so maybe just, you can riff on any of that, but I think that's an important distinction.

32:16 - Michael Zuercher
Yeah, I mean, I'm certainly more technical than some, but I think after 20 years of being a CEO, I don't know that I'd really call myself a technical co-founder anymore. You know, Justin, who I mentioned before, Justin is a technical co-founder, right? And so I think part of it is that I'm surrounded by people who are so darn technical that even though maybe objectively I'm somewhat technical, I probably don't play that role quite as much as I used to for sure. And I think that's all good.

32:51 - Michael Zuercher
The other piece of it is that I think regardless of that, I flat don't know how you find product market fit if some really key person in the early team, probably a founder, isn't the one out there having all those conversations. You know, I think there are two pieces of it. You mentioned one of them, which is absolutely true, which is like, there is no better feedback than a whole bunch of ad bats with sales. And as I said, I would get on those calls and I would explain it poorly and I would not have the vocabulary and I would not have the easy way to connect the dots for people.

33:25 - Michael Zuercher
I don't think we ever would have found those ways if I hadn't just beat my head against the wall over and over and over and over with that. And so I think that feedback is. It's really crucial and I think it almost has to come to a, I think, ideally a founding CEO and and I think there are other models that work. The 2nd thing is the other thing you alluded to, which is. Obviously all of this has to be done across the company, but it's true in sales as well. With the eye on, like, we can be as guerrilla and as unsustainable as we want in the early days, but we have to have an eye on a sustainable model, something you can processize, something where you can believe that, like, this can turn into, like, instead of Michael having a couple of calls a day, this can turn into 20 reps having, you know, however many opportunities at any given time and can turn into something at real scale.

34:15 - Michael Zuercher
And I think one way to make sure you keep your eye on that is to like, to the extent that you're doing super unsustainable things, be really plugged into it so that you always know this is unsustainable, but I believe it's short term unsustainable. This is where I believe this can be like two years from now or whatever, as it has to become a repeatable process. And I think being the guy to do that really early, let me just keep my eye on, yep, this is dumb. We can't do it this way forever.

34:42 - Michael Zuercher
It's the right thing right now. But when we get product market fit, here's probably what the sales motion looks like, And then as you said, that informs who to go hire for sales leader. It informs what roles you need. In our case, sales engineering is a really important part of our sales process because it's such a technical cell. That became really clear through the process of doing all these demos and proofs of concept and things. I would never do that differently. I would absolutely be the guy doing it.

35:11 - Michael Zuercher
I did it again.

35:12 - Todd Gagne 
So let me dig into this a little bit because I don't disagree with you, but I'm kind of curious about just abstracting even further. So I think about product market fit, and I think that's right. But I think a lot of what I guess I think about is, let's talk about the sales motion and what messaging resonates and how, as soon as you start to get to a point where 70 or 80% of this kind of goes in the same direction, you give the message and you get the same sort of outcome. Then you're like, okay, I could build a marketing collateral around that.

35:38 - Todd Gagne 
Right. Or like my messaging gets refined. And so product market fit is part of this, but I think like this experimentation that says, you know, like, how do I help? Once I get them implemented, what's the customer journey? Well, you know, we're going to try a bunch of things. And then once we see some consistency, then we'll put the process and the methodology and we'll train. So I do think it's like a startup mentality that can be applied to almost any aspect of what you're doing. But I think that the iteration and looking for patterns is probably the important part of this because you know, that's not repeatable to do forever.

36:08 - Todd Gagne 
But until, if you're going to build any process and pieces of collateral, whatever it happens to be, and there's not consistency, you're going to get hosed.

36:15 - Michael Zuercher
Yeah, I completely agree. I think I kind of viewed it as like it was a year or whatever period of time it was when I was doing that where I was essentially like force loading myself with a whole bunch of data points and those data points can be used by me and the rest of the team. To pattern match and to try to find trends. And like you said, like places where if we say this, it all seems to go in this direction and that's a good thing. So let's figure out how to systematize that with collateral or the website or whatever.

36:43 - Michael Zuercher
And I think it just takes a lot of data and a lot of at bats to do that. And I think the faster you can get those, the better just about.

36:50 - Multiple Speakers 
Exactly.

36:50 - Todd Gagne 
I think that's really good. Yeah. So let's talk about a little bit about just communication style. So I'm curious on from your first startup to now and then scaling, how do you think in of being 20 a CEO, has your communication style changed? Have you refined that? I think it's super important as you add employees And I think you see a lot of junior founders maybe don't spend as much time on that. It's all about just getting work done. And you have to do that. So don't get me wrong. But I think as you add more and more employees, what is the role of communication and how do you think about it when you have different personalities, different introverts, extroverts, different skill sets?

37:30 - Todd Gagne 
I think it's one of these pieces of success for founders that if you're not a good communicator, it makes it way harder to communicate externally as well as internally to your company.

37:44 - Michael Zuercher
I think communication is one of the things that is most likely to cause people to find a ceiling in their career as a leader, whether it's as a CEO or some other leader. I think communication is one of the things that like people find ceilings there sometimes because like it's just, it's just not something, either something they want to focus on or something that they happen to have some skill in or, or whatever. And I think that happens to some people, you know, when you hit 10 people, I think it happens to some people when you hit 200 and some people when you hit 10,000 or whatever, and then some people can grow forever.

38:15 - Michael Zuercher
But, but I think I think there are definite transitions in the way that works that cause people to kind of top out. And I think I was, I mean, I was a 19-year-old software nerd who knew nothing about any of this. I'd never had a job. I was a lifeguard. Lifeguard is like my only actual job other than founding two software companies. And so I think I just, I had no idea what good looked like, I had no idea what what you were even supposed to do and undoubtedly learned that the hard way in my first business.

38:52 - Michael Zuercher
And I remember, you know, when we were about 30 people or so, was kind of the first time I had the realization that it's just conventional wisdom that I didn't know, which is the like, if you're not saying things so much that you're convinced everybody is sick of you saying them, then you aren't saying them enough as a leader. And I have just found that to be true over and over and over. And at this point I've helped develop a lot of, you know, leaders in, in organizations. And, and, and I think that's just like the universal thing that is not intuitive to basically anybody that like, what I actually have to do is say the same sentence every time I'm with the whole company over and over and over and over and over.

39:34 - Michael Zuercher
And still you'll get feedback on surveys and things saying, I just feel like I don't really understand why we're doing this. And you shake your head, but I just think such a big part of communication, especially at scale, is just finding a million ways to say the same thing, to speak to different people with different styles of hearing and different ways of understanding. How do you speak to the people who are analytical? How do you speak to the people who are emotional? How do you speak to the people who are intuitive?

40:04 - Michael Zuercher
I think you just have to do all of it to keep a team aligned. I'm sure I probably don't even remember all the cringy things that happened early, but I'm sure I screwed that up in every way you could. And I think I'm reasonable at it now, but you're constantly learning. For example, the shift from in-person, my last business was almost all in-person, in this beautiful building where we all ate breakfast and lunch together and shifting to a remote culture, which is what Prismatic is. I mean, that completely changes the way you communicate and the way you lead with communication.

40:38 - Michael Zuercher
And I'm still learning a lot, I think, as I continue to grow.

40:42 - Todd Gagne 
That's good. That was the next pivot was going from an in-person company to completely remote. I'm curious on just the pros and cons, maybe why you thought about doing this remote to start with. Obviously, you could have done in-person and tried to find an office and stuff. Maybe just talk a little bit about building that culture because that culture is definitely different. Um, and I think some people do extremely well in that and I think some people love the idea, but they don't execute very well in, in a remote culture too.

41:14 - Todd Gagne 
And so, um, how do you sift out and find those people so that you're getting the quality folks that can work in your environment?

41:20 - Michael Zuercher
Yeah, so the way we started Prismatic, the early team was me and my two co-founders. Obviously, we're both in Sioux Falls at the time. Justin has since moved to Phoenix, but at the time we were in Sioux Falls. And the early employees came from our network, which was mostly my last company, which was in person in Sioux Falls. Very early on, we were actually all in Sioux Falls. We had a little tiny office. And I think that was good for the first couple of years. I think we could have done it remote, but just the way it worked out, we did that in person.

41:50 - Michael Zuercher
But we always assumed that Prismatic would become a remote-first company. Or at least a company that was largely remote. I don't think we had an exact thesis at the time, but we knew remote was going to be a really big part of what we wanted to do because to accomplish the vision we wanted to accomplish, we were going to have to have a deep enough team and a big enough team. That we just weren't going to be able to hire them where I happen to live. And so we always knew that was going to be a big thing.

42:19 - Michael Zuercher
And obviously COVID accelerated that, which worked out just fine for us. We were kind of in exactly the time where I think that would have started to happen for us anyway. And so we had an office when COVID happened. People started working from home and we just kind of mostly never went back. And that actually worked out just fine. But I think, you know, For us, it was just a, it was a very, I think, rational decision that to build the size and quality of team we want, we want to hire the best people we can from wherever they are.

42:51 - Michael Zuercher
And we want to build a culture that makes that possible. Like we just saw it as a tool to building the team that we wanted to build. And of course the downstream from that is okay. Well, now you got to figure out how to build a culture that actually allows that to happen. You got to figure out how to recruit remotely. You got to figure out, I mean, there's a million things to figure out, but we knew we needed to do it. And so it all kind of stemmed from the just pretty analytical decision that it was the right answer for the business.

43:15 - Todd Gagne 
Do you think that you were in a different location where talent was more abundant? Your decision would have been different if you were in Silicon Valley, Austin, whatever. Would you have kind of taken a different approach? Is that a function of, I can't hire a number of great people that I want because I'm in Sioux Falls? Or would you have said, hey, look, I'm in Austin, there's plenty of talent, but I'm still probably going to do something along these lines?

43:36 - Michael Zuercher
You know, it's hard to answer, I guess, the hypothetical. I think we have had such a good experience with remote at this point that I think almost no matter where I was, it would be really hard to know that there's a really great sales engineer in Charlotte, North Carolina that can't work for us. I think I'm so spoiled now by the fact that we can just go get people who are driven the same way we're driven and are experts in what they do here. I think it would be really hard to go back to any geographic scoping there.

44:15 - Michael Zuercher
I've never lived in the Bay Area, I've never lived in New York, I've never lived in Austin, so maybe that's incorrect. But I think that's basically what my mind is at this point.

44:25 - Multiple Speakers 
Yeah, that's good.

44:26 - Todd Gagne 
So maybe talk a little bit about the culture standpoint. So 2004, went remote for Concur, and that was a massive shift. My boss was like, this is a death knell for you, to the point where he said, we're putting you on probation. We're going to do this for, I think he said, 45, 60 days, and we'll see how it works. And so that was scary for me to go from Seattle to Rapid City and go, I'm on probation. I don't know if this is going to work. And so it was definitely pre a culture of being remote. And I was managing a decent sized team, but I had to reinvent a lot of the way that I thought about managing.

45:05 - Todd Gagne 
And so a lot more was written communication. And then meetings were different. Um, I think, you know, they were way more discussion. If you could just read something, we're going to go do that. And so I think a lot of those trends worked out really well for me because then the company and the culture got to the point where we did some acquisitions. I had way more remote teams and I had some better skill sets because out of fear. So I'm curious from your standpoint, um, you know, and this goes all the way down to, you know, creating time for developers and other people to do really deep work versus being broken up into small little chunks where they're, you know, the, the change, you know, effort to like move from one meeting to another.

45:42 - Todd Gagne 
Uh, there's just a lot of inefficiencies built into that. And I think sometimes remote can just be I'm on meetings all fricking day and I'm not getting any work done. So it's a, it's a big question, but I'm just curious about how do you build a culture that's different or emulates a lot of the benefits of being together. Um, but allows the flexibility and benefits of amplifying the remote component of it.

46:03 - Multiple Speakers 
Yeah.

46:04 - Michael Zuercher
You know, I think there are kind of two pretty different kinds of remote. I think there's remote as in we all work from not an office and we see each other on video and we communicate largely over Slack or whatever. And then I think there's the, for one reason or another, we're not just remote, but we're mostly asynchronous. And I think what causes that is generally lots of time zones. You know, even in the U.S. With four time zones in the continental U.S., it's, you know, your West Coast people, your East Coast people only overlap four or five hours during the day.

46:34 - Michael Zuercher
And I think those are very different problems to solve for. I think if you're asynchronous, you have to solve all of the remote problems and we also don't synchronously communicate very often problems. Whereas if you're the former, you only have to solve that half. Prismatix started being the former. We started with We had, like I said, my co-founder Justin moved to Phoenix at some point, but he just kept working Central Time. And that meant he got up early. You know, we have a CRO who's in Seattle.

47:05 - Michael Zuercher
He's worked Central Time as long as I've known him. So, I mean, he still does that today because that's just what he does. But like that, you know, we basically just stayed on Central Time, even though we had a handful of people not in Central Time. At this point, Prismatics in all, you know, we're in 20 states or something like that from an employee perspective. And, you know, and we've had to move toward being more asynchronous and being more mindful of, you know, how do you deal with everybody working in their own time zone, everybody, you know, communicating more asynchronously.

47:33 - Michael Zuercher
And that for us at least has been when it's become much more written culture, much more, you know, and this is just good at our scale anyway, but like much more, augmentation first culture, much less just like, I'm gonna randomly hit a whole bunch of people up throughout the day to do what happens to cross my mind at any given time. I think that comes with scale. I think it also comes with trying to make multiple time zones in asynchronous work better. And so I think that's something that's actually a transition prismatics going through right now.

48:07 - Michael Zuercher
And it comes down to sometimes just really boring things like, We're overhauling the way that we use our wiki internally and best practices there and guidance there. And, you know, I mean, some of that just seems so boring, but like at the end of the day, it's those kinds of like traditions or systems or however you want to say it, that I think in the end caused really good, really good working environments remotely. And, um, you know, we're being pretty mindful about that, but some of it you'll learn as you go as well.

48:34 - Todd Gagne 
Yeah, and I think it goes back to culture and discipline too, right? I mean, if that's part of what you're trying to go do, you need to hold people accountable for it. And I think sometimes, you know, we get busy and we cut corners and we didn't send the stuff in advance. And, you know, it's like all those sort of things. It's like everything else. It's a discipline and you need to reward. Positive behavior and stamp out the stuff that doesn't go with what you're trying to go build long-term.

48:58 - Todd Gagne 
One of the things that I thought was kind of interesting about being remote too was I think we saw some sensitivity on just career development. And so, you know, like I think you have to make that a priority. And I think especially younger people that maybe already have an expectation of being remote. And so their opportunity to maybe mirror and understand how things actually get done. They lose some of that. And so then they complain, Hey, I'm not progressing as much. I'm not getting as much career development.

49:24 - Todd Gagne 
And so I'm curious from your perspective, if that's something, I mean, you're getting to a point in the company where it's like you're evolving and you want some of those people that were there with you two or three years ago to convolve in the next job, but like they need to be developed so that they're ready for the next opportunity to continue to grow.

49:40 - Michael Zuercher
I couldn't agree more with you. Um, I think that especially people very early in their career have a harder time succeeding remote, or at least it would make sense to me that it would be harder to succeed remotely than people who have kind of like, Seen what good looks like, you know, kind of know how behavior is supposed to be and some things like that from past experience. I will be just completely transparent that I don't think that's a problem we have solved at Prismatic yet. We have, I think, almost literally I think probably less than 5% of our headcount today are people who are in the first few years of their career.

50:21 - Michael Zuercher
It's a very senior team in a lot of ways. And as a result, we just haven't had to solve that problem. I actually view that very much as a problem that we need to solve in the next year or two as we grow from where we are today to 2 3 times the size yet again. Because as you said, you get to a scale at some point where you need to have that diversity across the, you know, across the gamut. And, you know, up until now we've been able to kind of punt, but, but I think that's, I think that's absolutely something that's going to come into focus for us in the next couple of years.

50:49 - Michael Zuercher
It's also something that I don't have. Any real idea how to solve yet. We can opine about things you can do, but the reality is a lot of the way that we all learned how you operate in a company is that we were all in a place together and we had all of those cues from seeing each other all the time and from you know, water cooler conversation and talking to people on the walk to the parking lot. And, you know, I don't know a way to replicate that stuff. And that doesn't mean it's not possible. It doesn't mean it won't be solved some other way.

51:19 - Michael Zuercher
I mean, knowing no means do I want to be fatalistic about it. But I think we have to be really honest with ourselves that like, that is, at least for me, that is an unsolved problem today. And something that I think will, like I said, focus on in the next couple years.

51:33 - Todd Gagne 
Yeah, I mean, sometimes it's the alligator closest to the boat, right? You focus on the problems that you have to go solve because they're right there. And so this is not a today problem, but it's coming. So, okay, well, I got one more question for you and I'll wrap up. You know, if you had to go back and talk to that old 19 Michael that started the Zerker software and stuff, what advice would you give him? Like, what are the things you think you wish you had known kind of at that point in time?

51:58 - Todd Gagne 
Because I think it's always hard. And I think you've gone through this massive continuum from lifeguard to, you know, two software startups. And so, you know, like if you were to mentor or talk to somebody that's kind of in an early stage startup, like what advice would you give them?

52:14 - Michael Zuercher
You know, I think if I were to go back and give early at last thing, you know, early in my career, Michael advice, 19 year old Michael advice. I think the thing that took me a long time to really recognize was that, and again, this is that conventional wisdom and it's a cliche at this point, but man, did I make some mistakes here, is that like, you have to pick the very, very small number of things that you're actually going to put your energy into, and as a company or as an individual or anything else, be very, very good at.

52:47 - Michael Zuercher
And you have to let the rest of the things not be good. And I think that's really, really hard, maybe especially in some cases for people of my kind of background. I came from a technical background. I wanted to do everything really, really well. I didn't want to do anything if we weren't going to do it really, really well. And that's not that's not a thing you can't do that and I think I think as you mature as a as a leader and probably just mature as a person or in your career in general I think you identify that like it's okay to say these are the three things we're just gonna knock out of the park this quarter or this year or whatever and we're gonna let the rest of them just stay on fire And I think that's, that's really, really hard.

53:28 - Michael Zuercher
And I was really bad at that early on. And I think if you don't choose what to leave on fire, then what gets left on fire ends up being arbitrary. And I In a period toward the end of my, kind of the last three years that I was at my last startup, or two years or whatever, we were inside of a larger parent company. And the CEO of that parent company is somebody that I have an immense amount of respect for. His name is Tony Eels, and he was bizarrely good at that. He was running an org close to 1,000 people.

53:59 - Michael Zuercher
He had been a CEO for, I don't know, 25 or 30 years by that point in his career. And the thing that I noticed almost immediately from him was like, he knew what two things or three things he thought were important to the organization level. And he was willing to just let everything else stay on fire. And I was, I was really fortunate because he essentially ran, he ran kind of like that, that two thirds of the business. And I ran my one third of the business and we ran them kind of in parallel.

54:25 - Michael Zuercher
And, and I got to learn from this guy by watching him watching what he did in a thing that wasn't a thing I was involved in, if that makes any sense. And like, I will forever be grateful for that experience. And, and specifically, I guess what I probably learned from him more than anything else, million tactical things, but from a big picture was like, he was willing to just ignore certain things. And, uh, I've gotten a lot better at that. And that's been super, super important. And I think had I been better at that in the really early years, there are some things that certainly would have gone better.

54:53 - Michael Zuercher
Um, So kind of a maybe an abstract thing to say, but I think that's a really, really important skill.

55:00 - Todd Gagne 
Yeah, I don't disagree with you at all. Actually, I would say it's not abstract at all. I think that any founder is dealing with a ton of problems and your ability to triage and say, what's the most important thing to focus on? And then, you know, there's a line of stuff that like, okay, like the stuff below it, I'm just not going to get to it. And I think that that changes over and over and over again, depending on kind of how your business is going. And so I do think it's a really good skill.

55:26 - Michael Zuercher
And I think for me, some of it is like, not only are we not going to focus on it, we're not going to be embarrassed by the fact that we're not, or we're not going to be ashamed of the fact that we're not. You know, it's fine. Like it's just not the most important thing and it's okay. And I think, you know, back to the communication and leadership, I think getting the whole team on board with the fact that like, yep, yep, that's on fire. You're a hundred percent right. We're gonna let it burn for another couple of quarters and that's gonna be okay.

55:52 - Michael Zuercher
And here's why it's gonna be okay. And I think that's really hard for a lot of people. And I think part of what you have to do, especially in that like high growth phase, is just over communicate why that's okay. Because you're always gonna have the person that that fire is closest to. Who is convinced that you don't see it as an organizer. And heck, you might be wrong, but whether you're wrong or not, this is what we're going to do. And I think I've gotten a lot better at not just making those decisions and being okay with it myself, but communicating that and kind of getting the team on board.

56:21 - Michael Zuercher
And man, things are easier when you're willing to just focus on a handful of things.

56:27 - Todd Gagne 
Yeah, I agree. Well, Michael, this has been great. I really appreciate the honesty and just talking a little bit about your background and story. I mean, there's a lot of fascinating kind of nuggets here that I think people can take from it. So I really appreciate you making the time to do this and share your wisdom with us. So thank you.

56:43 - Michael Zuercher
Same. Great to have the conversation and wish you the best.

56:47 - Todd Gagne 
OK, thanks.