Before I knew exactly what Tailscale would become, I knew how I wanted to build it: keep the product simple, sell to developers, win small markets before expanding, and avoid inventing management structures for fun.

I talked with Amit Kumar about those early decisions, what worked, what didn’t, and how Tailscale grew to 10,000 paid customers.

If you'd rather read than watch, the full transcript is below.

Transcript

0:00 the internet is no longer living up to the expectations that we had of it in the 1990s welcome to Spotlight on a podcast about how companies are built from the people doing the building one messy exhilarating decision at a time welcome to Spotlight on I'm your host Amed Kumar and I'm here with Avery penon the founder and CEO of tailes scale thanks Avery for joining us hey nice to be here before we get into tailes scale

0:23 and the founding story and what led you to this maybe you could walk us through a little bit about your background you know who are you and you know you you have a pretty pretty remarkable background and lots of different things that you worked on you came from Google maybe you could walk me through that a little bit uh in high school I worked at the first internet provider in my hometown of Thunder Bay uh running running the systems there there was first there was the uh nonprofit version the freet and then we uh I moved from

0:46 there to the first commercial internet company where we set I set up their servers uh I went from there off to University of waterl where we did uh co-op programs so I worked at six different companies uh one of those companies was one that I I started because I'm like well I we should learn what it's like to start a startup uh that one got a little out of control and ended up getting acquired by IBM in 2008 um after that I went and worked for a brief period in the banking industry

1:08 which was very educational but turned out not to be my thing really then I went off to Google I worked on Google Google Fiber primarily uh and some other side projects while I was there and I came out of Google and wasn't sure exactly what I wanted to do but I decided I wanted to be back in the startup world like big companies were not exactly my thing and what did you do at Google I started off in the Google Wallet team uh so if you ever noticed the little like attachment button at the

1:29 the bottom of an email that lets you attach money uh that was the team that I was your fault yeah well I mean yeah uh and you know I wouldn't say that feature was like spectacularly successful but it actually it launched and people use it it was pretty interesting it required you know it used my banking industry experience which is the reason they put me on that team in the first place and it was exciting because people have been trying to launch that feature for I think five

1:51 years uh and just like failing over and over again and you know one way or another like I showed up and either got lucky uh or pushed it over the finish line which was was pretty fun after that I went and worked in Google Fiber which of course is a internet service uh going back to my high school days uh but but maybe a thousand times faster in terms of uh uh bandwidth uh and there we were bu building Wi-Fi rers so that was my team uh building the home Wi-Fi rers

2:15 that go like come with your internet service and then once you were out of Google and you were sort of exploring ideas uh you had a friend at Versa Bank who kind of pulled you in to to solve a problem for them so this wasn't even you ideating this was just you trying to help out a buddy yeah he uh he was stalking me on LinkedIn and found out that I was no longer employed and like the day after uh which is also what he did uh my previous two jobs uh the day after he found out I was an employee

2:37 like hey Avery I've got a problem you want to help me fix this problem uh and I'm like well I'm thinking of starting a startup but we don't have any ideas yet so like sure why don't we go and try that uh and so uh yeah we we went and visited him uh and looked into his problem it's like oh this is interesting I bet we can solve I bet we can solve this in a in a weekend uh and and we built the you know project in a weekend and that that project that we built turned into tail scale what was the

2:59 problem that they had had that you needed to solve so the problem they had was they have banking software uh and you know banking software is sort of like famously not Leading Edge technology most of the time uh but this banking software didn't have two-factor authentication and they had had a security company come in do an audit and say like hey you know someone who can get the password from someone on your team uh could log into this banking

3:22 software and if you do a fishing test uh which I don't really recommend there's no point doing a fishing test because somebody at your company always fails the fishing test uh but if you do a fishing test you know you'll get maybe 20% of your uh team will accidentally give up their password which meant it was like definitely possible to break into the core banking system and start transferring money around and they're like look we have to fix this problem how do we get two Factor authentication into this Legacy banking software uh and so we brainstorm for a while until

3:46 eventually I said like hey what if instead of putting two-factor authentication in the software why don't we move the server onto a network and then VPN to the network and put two Factor authentication in the VPN and they said don't know what you're talking about but seems like a good idea and we're like all right all I need to do is find a VPN that's going to be good if you leave it on all the time and you put it in the office and it uses two Factor authentication and it integrates with

4:09 your ad surely I can just go buy that off the shelf and we'll be done and I'll go back to what I was doing and I could not find a product that was going to be good enough to solve that problem uh so I'm like all right fine this new thing called wire guard just came out it's a really good VPN it's super reliable we can leave it on all the time it's not going to break I just need to make it work with two Factor authentication how hard can to be so we slap something to together plugged it into aure ad which I

4:32 think was was it still called aure ad at the time maybe it was I can't remember whatever Azure ad used to be called uh we plugged it into that um and and it was basically a key generator for wire guard that we built in a weekend and it and it worked and he was really excited and one thing that was interesting about it this was preo this was back in 2019 shortly afterward covid hit and because of the way the system worked it was

4:55 always vpnn into the network that uh ran the banking server as he could send all of his employees home on their laptops and nothing changed they didn't have to reconfigure anything and still their banking software worked which is like weird side benefit that we hadn't even been planning for and when that happened we sort of realized we actually had something on our hands it's like wait a minute what this is this is way more powerful than we intended that was that

5:18 was the moment when you thought that lots of companies need to be using this yeah because we originally thought we were going to do like a bootstrap software company why don't we just like slap some stuff together we can pay three or four people no problem with a relatively small product who cares and just like dis realize this thing and like Whoa We can like we can fix so much stuff this this deserves to be a bigger project that we can't just sell fund

5:41 maybe walking back a little bit you know how did you how did you form the early team to go after this and then what was this what was the process about going after and kind of scaling out from One customer to kind of an early set and you know one one thing I think all our listeners know is that tail scale has done an incredible job of building the most special community of folks and developers that love tail scale I mean there's this unique product love in the

6:04 community like how did you go from zero to one when it comes to that well this is where like and I know people don't always believe me when I say this because I'm Canadian and people accuse me of doing being too modest but like I'm telling the truth here we didn't know what we were doing and we're like well look our costs are really low let's try some stuff and see what happens so the first thing we did is we took this package we had made for this Bank we're like well I don't actually want to be an

6:26 Enterprise software company uh and it's a long story but a previous startup that I did accidentally turned into an Enterprise software company I did not enjoy it very much right what I want to do is build software for like people that I can talk to that are more like me so engineers and like you know nowadays and maybe even at the time but I was a little out of the loop nowadays this is like considered a normal thing I build you know build a startup for engineers because Engineers are going to buy stuff

6:47 bottom up but I never heard of any of this I've been in Google for like seven years and before that I built software like in the preas days uh so it turned out the path that we took is very standard but I didn't know that I'm just like I don't want to to build Enterprise software we built this cool thing why don't we see if we can make something that like people can just install on their own and then play with at small companies like like what our company is and so we like fine-tuned it a little

7:10 bit and slapped it on our website and it was really not very good uh but we wrote a blog post about it uh and for whatever reason uh when I write blog posts they frequently end up on Hacker News front page uh this one ended up on The Hacker News front page and we got zillions of people coming to our website saying hey this looks neat and the problem is uh we didn't have a signup system or a registration system or a user active acation system we actually had all of the users in the system hardcoded in the

7:33 source code of the of the server and so I got you know and the way you connected was you like put you know fill in your name and push this button and it puts you in the so-called waiting list and the waiting list is a CSV file which I would I read every few minutes and then go through the emails and send them an email saying how to activate after I inserted their uh email address into our source code and activated their account uh and I did that like several hundred times in one night so it was up for like

7:55 24 hours straight just like activating people because we had to build the signup system now I forgot what the question was oh yeah and so that was the clue that maybe something cool was happening because the feedback we started getting the nice thing about this method uh I expected like five people on the waiting list and then I could have a conversation with five people instead I was having a conversation with hundreds of people that I had to email personally to tell

8:18 them they'd been activated and this is an amazing way to like get feedback on your product because they know the CEO of this company he's talking to them right now right right and so we got tons of feedback on what the product could do uh and ideas for what the product should do but also a lot of positive like oh my God this thing is amazing I can't believe how great this is you're already so much better than anything else I've seen in this category well you you sort of joked and I know it's not entirely a

8:41 joke that you know you didn't know what you were doing but your intuitions have always been right and I think one of the things the community has really appreciated about you and tail scale and you know all the folks who work there is you guys sort of try to do things the right way you guys are very transparent very honest with with customers in the community I think people have responded to that I also think you benefit from selling to developers and building for developers right a your intuition is

9:03 probably better for that than for Enterprise SAS but it's just easier and better to communicate with those people directly even that I don't want to give it too much credit my intuition is listen to people like actually and then give them what they want right and I know a lot of people believe it's like I think there's the the uh what is the Ford saying if you just listen to customers we would have built a faster horse or whatever it is it's like look people really like Faster Horses um but

9:27 the trick is like sometimes you can listen the important thing is to understand the problem they're trying to solve right right and if you understand the problem you're trying to solve then maybe you can come up with a more clever way to solve the problem you don't have to implemented just like they said but you have to give them the thing that they said they want right if they said they wanted to be able to connect to their banking software using two Factor authentication you have to find a way to let them connect to their banking

9:48 software using two-factor authentication you can't just tell them like no two-factor authentication is not solution right and so when these people tried out tail scale they said like wow this is really amazing but I wish it could do this and this and this then you can listen to them and actually give them what they want and so my I guess my addition to that maybe the part that makes tail scale unusual is is it comes from the name tail scale which was sort

10:11 of the founding principle we didn't know what we were going to build but we knew how we were going to build it which is like everybody in the world makes everything too complicated now right it's all based on this like Google advanced super scaling stuff from the early 2000s back when computers were like literally a thousand times slower than they are today right and like I want to make a giant distributed system because it's cool to make giant distributed systems but to do that

10:32 everything has to be hard and so you get to the point where people are like to launch my website I created a kubernetes cluster uh and then put made it auto scaling and blah blah blah blah blah and like you know what my website runs on the minimum cost linode node right using a little python script that I start by hand from the command line right and whenever I want to change the python script I like edit the one file that's the python script and then I kill it and restart it right right and like that's

10:55 Avery's website which can handle as much load as anyone will ever throw at Avery's website because it's not that good but every now and then it gets a popular blog post right and almost every project in the world is like that scale of difficulty or maybe 10 times or 100 times as hard as that which is still not very hard like Google levels of difficulty is millions of requests per second that have to be served in like 100 milliseconds and they're searching

11:18 the entire internet like to do that you need a monster size system but virtually guaranteed your problem is not that hard and so tail scale is like look if you have a problem that hard we're not going to try to fix it for you right if you have a problem that's easier than that we can do it a totally different way and we'll just go straight to solving your problem and not just get lost in all of the complexity I think it's an incredible insight and it's also just gives me PTSD because I started a series

11:41 of very unsuccessful companies but of course you build these companies thinking that millions of people are going to come and billions of requests are going to happen at the same time and you sort of prematurely scale all these systems and to the point you're making you know there are a few very special and lucky companies that have to hit those scale metrics and numbers but you know most every everybody else is is solving for something much smaller or different yeah I mean the biggest risk when you're small is that you're not

12:04 going to build something useful right and so you need to build something useful as POS as fast as you possibly can once it turns out to be useful then first of all it's easier to get funding but secondly you've got revenue coming in you can pick the revenue you can invest it in engineering you can fix the stuff you didn't fix later there's this principle uh that I learned a long time ago comes from the like so-called extreme programming people that evolved into agile it's called yagy Uh you

12:27 aren't going to need it right and this is the principle is like if you're not sure you need it right now just assume you're not going to need it because most of the time building that stuff is not going to be any harder later than it is right now which means like you should always push off that investment as long as you possibly can in case you don't need to spend it right and this is an amazingly useful principle you can apply to almost everything and even if it's a

12:51 little more expensive later than it is right now you're going to have a lot more money later than you have right now so you should always do the things you do need to do right now because there's an unlimited list of anyway right so don't like imagine things that you might need to do and then do them right now you can wait I know we talked about this at the last company offsite but I've just I'm I'm still amazed you know a how great it's been to work together but we we come from such different backgrounds

13:14 and and yet I think we actually did make the right choice and ended up working together it's been it's been awesome yeah so I have to say one of the things I liked about Excel uh was they were an investor in uunet a long long time ago uunet was the link that my first job in Thunder Bay when we had this first internet service that's how they got to the internet and so I'm like oh these people have good taste in uh internet providers or at least they did like 30

13:36 years ago um and probably you didn't have much to do with that um but you know thank God for Arthur yeah but you know you're you're you're the sort of successor in a long line of people with good judgment is is sort of what I was thinking well you know well let's let's hope that that lineage has continued with tail scale um so we made the investment in July or August of 2020 and everything has been Rosy ever since

14:01 right like things have gone extremely well and nothing has ever gone wrong correct at the company yes it's actually it's actually very unusual nothing ever goes wrong yeah no that's not true what um it it's obviously been a journey and there have been challenges there's been obstacles the company's had to do a lot of growing up what you know what were one or two Crucible moments for you as

14:24 you think about you know critical junctures things that you got right hard decisions they you to make that you know you look back on and you're like you know what like in the fog of war that felt like a really critical moment but now on the other side of it we made a really great decision maybe we made a really hard decision my My Philosophy generally around doing a startup is make your mistakes as cheap as possible so that you can just recover quickly and

14:47 don't don't go into denial about the truth about things so most things that we've done wrong and there's been like you know uncountable numbers of them have just like not turned into some big spiral that anybody would point at and say oh my God biggest mistake in my life cuz we was like oo that didn't work and then we turn it around in like a month or a few weeks and it's gone right yeah um we've we've gone in directions with the tail scale product for example we've

15:09 put out features that have not really taken off right or even if they did take off we realized they pulled in like the kind of users who are not the most profitable users and it's like this is a great feature but it's not the one that is going to like move the business forward right now yeah uh an example is tail drop which everybody loves tail drop once they hear about it right it's sort of like airdrop on your Apple devices but it doesn't require an Apple device and it doesn't require them to be

15:31 side by side but it lets you send a file between any device and any other device pointto Point encrypted without sending it up through our server and for free it's like well that sounds great that could be a whole product it's like it could but it's kind of consumer and we didn't need to go right now in the consumer Direction because we have all these engineers and the way tail scale works is all these Engineers most of them have jobs some of them

15:54 bring it to work uh some of the people who bring it to work end up using it at work and paying us yeah right and that's great and we're going to eventually invest more in the consumer Direction but there's so much opportunity in this Direction with just Engineers that we should we I'll say we should have instead put the energy into more engineering stuff but it's not like we wasted a lot of energy tail drop was like a three-month project for our 10 person team right and it created a whole

16:18 bunch of Buzz and that whole bunch of Buzz caused the word of mouth to go up so was it a mistake it's like there's probably something we could have done that would have been better might have been a more efficient but it was not a very expensive mistake our most expensive mistake have been in the direction of like we didn't really figure out marketing for a really long time uh and you know it's funny to say that because when I say that to investors and when I said it to investors in our series a and our series B they're like what are you talking

16:40 about you're so good at marketing I'm like I'm not you have no idea yeah uh tail scale Market he not kidding we we're not good at marketing we might be now though we're we're we are suddenly getting much better at marketing um but and that that completely relates to our new VP marketing Sydney uh who who really gets it right but before that like of our success was through Word of Mouth like literally our website didn't

17:02 matter we did an AB test at one point and and we just replaced the front page with a giant button that said download tail scale and that actually increased our signup rate because the only people who went to our website were the ones whose friends had been clubbing over the head saying you need to go download tail scale right right so they would Google for the word tail scale which was like still the number one reason anyone shows up on our website right somebody told them to Google for the word tail scale

17:24 then they click on tail scale right and then they dig around trying to find the download button right and that's like that's great that means your word of mouth multiplier is really high but that means we weren't doing marketing properly and the reason we weren't doing marketing properly had to do with like you know how do you hire people how do you find the right person who's really good at the stuff that you're not good at right because I'm pretty good at hiring people to do the

17:47 things that I am good at like many Engineers can spot another good engineer right so we hired a bunch of great Engineers but like anything I'm not good at how do I know like and even if they're good at it maybe they're not the right person for your company right like marketing has like a hundred different variations of how you should do it somebody who's really good at one of the variations that variation might not be the right one for your company and So

18:10 eventually we've tried many different itations but to get to our current VP marketing for example I had to interview dozens and dozens and dozens of people and find out how they did it and ask for people's advice and ask for their advice and like what do you think about this until I finally found somebody who like explained it to explained to me how my company should work Avery what's what's been surprising you know when you build a really powerful tool I mean of course

18:32 there are like obvious ways to use it what have been some surprising use cases that have emerged you know as tail scales become more and more popular people use tail scale for really unexpected use cases uh one of the most recent ones as we we as we were like grinding through our data about like who's using tail scale we found that like you know five of the five top or AI companies were using tail scale and then we found that like hundreds of not the

18:55 top five AI companies were also using tail scale and we're like oh why I don't know any of these people they all just signed up through self- serve and never contacted us right so we had to dig around and find out like okay what about tailes scale makes us popular with AI companies um and the answer is basically they're all stuck with multicloud uh they all have to deal with some gpus they're probably all using kubernetes and they all have like all of

19:18 these like you know they have connectivity problems but they don't want to invest in a networking team there are a bunch of really smart Engineers who are AI engineers and networking is just getting in their way and they just want to spend some money to make networking problems go away and they had all heard of us because they're early adopters and they were all mostly living in San Francisco and like everybody in San Francisco now knows about tail scale um and so they just AI companies just like across the board

19:42 started adopting tail scale for everything and this is again it's great it was a surprise but if we' been on top of our game we would have seen that coming and maybe put some work into it like at the time you could search for AI tail scale and not find anything on our website there was no not a single mention of the word AI anywhere or machine learning or or llm or GPU right like there was nothing our website was not serving it at all other people were

20:05 telling other people oh you you work at in AI you should do this like they go to an AI conference and people would like ah how do I connect to my GPU it sucks and like oh I have tail skill you should try it it's free trial right and just like took off uh more recently uh we found out retroactively that tail skill is a service mesh and I'm like I don't even know what a service mesh is uh but I'm talking to customers and we have

20:27 customers who are like well we threw out our old service mesh and now we're using tail scale as a service mesh tail scale as a service mesh and I'm like we did I'm gonna have to go Google some stuff let me come back and so now I know what a service mesh is a service mesh is a combination of connectivity identity uh and service Discovery right and tail scale obviously does productivity and identity which is the thing that it does

20:50 uh I never thought of it as a service Discovery system but it turns out the architecture of tail scale is that it keeps a list of all the devices in your network because it had to generated encryption keys and track them and distribute them and then it tells each node about each other node and then each node has a list of nodes and you can query it and say like who's the list of nodes that match this criteria and that turns out to be a service Discovery mechanism and some of our customers realized that we did these three things

21:12 and are like out with the old service mesh thing and put in tail scale and again it's like there's no not a single mention of the word surface mesh anywhere on the tail scale website actually that might still be true today people are actively working on it they're going to be launching web pages that say service mesh sometime soon right but it's like these kinds of things where it's like you just have to at this point we have to keep our eyes out for what people are already doing and then listen to them and then tell

21:35 the story back and improve the experience that they're having it wouldn't it wouldn't be a tail scale podcast if I didn't at least give you the layup of telling me about crossing the chasm and I I think I think this AI sort of pervasiveness you know allowed you to keep like resurrecting crossing the chasm and board meetings for at least another like two years so um could you maybe just talk about that because I

21:57 know it's like one of your guys principles as you think about the company and in particular for the motion that you have of getting ubiquity within developers how is that you just tell us the audience about that and then how that's guided some of your decision- making I guess the the history of this uh I was introduced to the book Crossing the CM by one of my investors at my very first startup toward the end of the cycle of that startup when we were like

22:19 we were struggling uh we had like growing revenues but it was really hard to grow the revenues and in retrospect what happened was we were stuck uh in with basically early adopter customers and there were lots of early adopter customers and we were pushing really hard we had a sales team like searching as hard as they could to find early adopter customers but like every single thing was like just push push push push and they're like well Avery

22:42 you you should read this book it kind of explains what's happening I'm like ah how could a book explain what's happening we have a unique situation nobody's ever done this before blah blah blah like I read the book and the format of the book every chapter is like here's what people usually think you should do here's what happens when you do that and here's what you should do instead and so I like opened up chapter one it's like oh that's what I did oh that is what happened oh that's what I should have

23:05 done instead and then you go to the next chapter and the same and the same and it's like the story of our entire uh startup from beginning to where we were and a recipe for what to do to fix it right and so I I decided to follow the recipe and then within like six months the business turned around right but by then it was too late we' been doing it for like eight years we were running out

23:27 of money in didn't want to put in more money the ex the First Investors were like getting impatient and so we exited IBM but if I had that same exact advice for or five years sooner it could have been a completely completely different company because we had the product that we needed we didn't know how to cross this casm and the secret of crossing the chasm is just to figure out how to become um the default product that everybody uses for some use case and the

23:53 the thing that nobody realizes the super counterintuitive part is that that use case that group of people has to be tiny because you're not going to win you're not going to be the default Solution that's more than 50% is like how you be the winning default solution you're not going to be the bigger than 50% of anything big when you're tiny right so everybody wants to go after this thing with a giant total addressable Market they want to find some Market that's

24:14 like humongous and tell their investors like don't worry there's like 10 billion dollars of possibility here a trillion dollars right it's like that's not how you succeed when you're tiny right the way you succeed is you find something really small and you win that really small thing by telling everybody like look no maybe you don't have to say this out loud to the customer but like this is too tiny for anybody to care about but I care because I'm also tiny so we're going to give you the best possible

24:38 service and go out of our way to make the best possible thing and then when you win that then you can win something adjacent and something adjacent to that and something adjacent to that and it just gets bigger and bigger and bigger so like the secret strategy of tail scale and again it feeds into the name like we're we accept the idea of doing Small Things yeah right and so tail scale is always going after like what is the small thing that we can do next that

25:00 we're going to win easily right and AI was one of the things where like okay we actually were kind of late we already won it before we noticed that we had won it right uh AI networking I should say um and then you know the service mesh thing again is like oh we're not winning but it's actually like I I looked it up the other day the service mesh Market is not that big in terms of dollars right now it's actually achievable to make it

25:23 a splash in the service mesh market right right and so we'll keep doing things like that uh and growing and growing like incrementally but it's such a good book because it just it explains why this works in a you know I'm a systems design kind of person but it explains it in a systems design sort of way like this is why systems like this always happen and when you do the obvious thing this is why it always doesn't work Avery how do you think

25:46 about monetizing or charging for what you've built at tail scale you started off with this amazing Community it's very Bottoms Up you have individual developers you talked about this motion of developers at home using it bringing it to work how do you think about charging and you know kind of growing up into a business over time sure so I I said earlier that like I didn't want to build an Enterprise software company

26:09 which is true but I want to maybe I should qualify that because like obviously our first customer was a bank uh sales scale is suitable for Enterprises what but I want to like make the internet a better place right and if you're going to fix the internet if you're going to fix this like lowlevel protocol of tcpip and get it out to everybody then it has to be literally everybody everybody includes Enterprises But it includes everybody else and so

26:30 tail scale my other favorite Business book is called The innovator's Dilemma and if I was to summarize it in like one line it's like nobody ever goes down Market they only ever go up market and so if you start up Market you're never going to go back down right so tail scale our policy is like we are going to make sure that the zero Doll part of the market is ours and we're going to do that by a giving away the product to people who want to use it for free and B

26:55 making sure that it's cost effective to give away the product at people for free free because I what I can't have is just I'm going to raise a bunch of money from investors and then spend all that money uh giving away like AWS credits or something like that so that people can have the product for free so I have this blog post called how tail scale remains free um and it explains the architecture of tail scale and why it doesn't cost us anything for you to have your free account and if it doesn't cost us

27:17 anything for you to have your free account we can keep giving it out to lots of people and in fact in the early days of tail scale because you know I I talked about how uh in the very early days we didn't even have a signup system that was not aver sending you an email uh but later we're like okay well we have lots of work to do why should we Implement restrictions on what customers can do so there was no actual limits like if you bought a 10 user account or if you didn't buy anything there was

27:40 nothing stopping you from signing up another hundred or few hundred users and that's what we actually got and so when we hired our first few salespeople the first few salespeople job was just like hey we've got some customers with like hundreds of seats they never actually emailed us we should probably tell them that they're actually supposed to pay for the product if you dug around if you actually went to the billing page it would tell you like whether you were

28:01 over your subscription but it was very Canadian it said like hey you know it's great that you're trying this thing uh probably you should pay us sometime I think I can't remember the exact wording but it was kind of like that I was uh I always told the people at Excel that you're uh the company is capital c Canadian and lower C capitalist it's it's stories like that that but but you know as a Canadian I want to point out that despite all of

28:24 that uh the amount of Revenue that we could capture by going out and collecting all the money from people who were underpaying us was only about 20% extra that means like 80% of the people in the world were paying us even though there was absolutely positively nothing making them do that right because most people in the world are honest uh and that that is you know a fundamental belief of Canadians of course but also like you know that extra 20% like I

28:46 could afford to have that 20% for the huge amount of Word of Mouth that It produced uh but anyway so as tailes scale has been getting bigger we have a more structured sales team now I actually got complaints from various people that I knew is like when they signed up for tail skill and started using it they're like Avery you're doing something wrong I'm not going to pay you until somebody reaches out to me and tells me to pay like my my own friends were telling me this it's like Avery fix

29:08 your company it doesn't make sense nobody's going to be mad because they've got 50 seats that they're really enjoying and somebody emails them saying like oh we should have a discussion about dollars now right and so we started doing that we have a real professional sales team uh we still don't actually enforce too many limits but the sales team will catch you sooner uh and invite a conversation right and so we've been getting bigger and bigger now and we're starting to actually do

29:30 our first like Million Dollar Plus deals and so when I said I don't want to do Enterprise sales it's like somebody now we have employees there are people who are going to do the Enterprise sales but I have to remember like where we came from and where we came from as individual Engineers who love the product they use it at home they bring it to work they use it in small teams and eventually it turns into a system where people buy it top down it roll it

29:52 out to the whole company and so that's where tail scale like the whole vision of the new internet like it can it can scale all the way down from zero to maximum and that's how you get the new tcbp rolled out to everybody you talked about transferring files between devices you talked about two-factor authentication you talked about vpns you talked about connecting

30:14 devices and now you're talking about service mesh and you're talking about hey AI networking how do you think about defining the vision for the company I mean you know when you stand up at an all hands in front of the whole company you know how do you describe to them what the future looks like and what does that mean to you um in terms of the mission of the business and what the implications are on the world that we're headed towards well I'm kind of workshopping this one uh the one the the

30:40 way we have been saying it we'll do it live let's go okay okay yeah yeah so what we say is like tail skill is the new internet and I like it because it's funny because there's a TV show Silicon Valley where like the main character has made this thing that was called the new internet it was just like a series of laughs but actually the internet needs to be fixed and I mean by that is like as an engineer tcpip is the problem right and we've known this since the

31:03 1990s ipv4 is not good enough they tried to launch IPv6 IPv6 should have solved a whole bunch of our networking problems have your networking problems been solved by IPv6 no right and why not large part of it is the thing has not fully rolled out and why didn't the thing fully roll out it didn't roll out because it didn't follow crossing the chasm right like they didn't have a roll out plan that

31:26 was going to win and it's still hasn't won right and it doesn't look like it's going to win if you look at the trend line it looks like maybe in the next 40 or 50 years maybe they will get to like 80 or 90% adoption it's like I might be dead by then right I've been like waiting for IPv6 my entire life right and it's not solving the problem like IPv6 was the chosen one it didn't work out the new internet didn't happen it was it was the new internet so what are

31:48 you going to do about it right tail scale is actually and again it was kind of by accident because I just wanted to fix some problems tail scale is this thing you insert at the IP layer that makes the internet work the way the internet was supposed to work right and when the internet works the way it was supposed to work any device can talk to any device you've got safety you've got security you've got encryption you've got identity you've got like e you know

32:10 easy to set up you don't think about it anymore it just works properly right and when things work properly like one of the things that's hard to explain about the vision is like when people were inventing tcpip they didn't really think that big they were like you know what I want to be able to access the supercomputer at my University from another University he's like you know that sounds neat but it doesn't sound like the internet we

32:32 have today right the internet we have today is used for everything all the time right I have internet on my watch if I if I bought a watch and it didn't have internet I'd be like why am I paying for this it's it's broken right like nobody thought about that we used to call them smart watches now we just call them watches exactly or smartphones like when was the last time you phone somebody on your phone right like it's so what is the vision for tail scale the

32:55 vision for tail scale like fundamentally on an engine engering level is like look we just need to fix the thing that we call the internet and replace it with this new thing and the layers on top can be actually the same but a whole bunch of stuff is going to work better right and then how do you explain like what's the business value of that what are people going to do with it it's like it's a little hard to explain because most of the uses for tail scale haven't

33:17 been imagined yet right and I think the only way I can explain that is through that analogy and so even though it's a joke like the new internet analogy is actually the right analogy like the internet is no longer living up to the expectations that we had of it in the 1990s because IPv6 didn't work and even if IPv6 did roll out now you know it's been 25 years since it was designed it's missing some stuff that we would have

33:40 put into it if we designed it today but it's just been like stuck and if you unstuck something that's 25 years old in the tech world you're going to get a whole bunch of benefits okay so that was incredible by the way that was pretty good pretty good for a workshop if you could go back and give any feedback or advice or wisdom to Avery outside of Reed crossing the chasm four years

34:02 earlier what would you what would you tell them I think tail scale we did a really good job building the company through the first several phases I think what we didn't do a fantastic job of is as we're switching from what I would call a like early stage startup to a growth stage startup you really have to restructure the way the company Works to make it more scalable right and that

34:24 means building an executive team in the right structure so that you can can like help people like get their work done when not everybody is going to be able to know what everybody else is doing all the time and so I didn't do a super great job of creating the structure inside the company that I probably shouldn't like the organization of the executive team is really important uh you don't need to be super Innovative

34:47 there's like again you're not the first person to build a company right uh and so there's lots of advice you can find on like okay what's the good structure of an executive team how do you choose what rle should go here there's only a few structures that like reliably work and so you don't want to innovate on everything in your company it's great to be Innovative on the technology side but you don't need to invent everything you don't need to invent your own accounting systems Finance systems and so on uh the

35:10 most important thing for me when building an executive team that I learned is like actually executive search uh companies are amazing and they're worth the weight in gold uh much more than I realized because the main thing they do is they introduce you to lots and lots of great candidates some of whom you won't even be able to land some of you don't even want to land but you get such a wide array of information about what's possible in a particular

35:34 role that after you've talked to like 25 or 30 of these people then you can understand what perfect looks like for you right and when you're when you're a tiny little company and you're only hiring one executive it doesn't matter if if there's not a hundred different people who can fit that exact role that you've invented if there's just one person who can do that exact combination of things that you want you can just find that one person and that one person

35:57 is really going to want to work there because the job that's absolutely perfect for them right and we found like that kind of Executives but I didn't realize before that it was possible to do that because I didn't connect to the fact ironically given that tail scale is all about small things right I didn't really connect to the fact that you only need one perfect person for this job and that person is there somewhere and you can just go find them but it's going to be a lot of work and an executive Search firm will help do that it's awesome yeah

36:20 I think I think you've done a really good job like in those in those situations one thing I've grown to really appreciate about you is you definitely take time to get all the data but once you have the data I I really trust your decision making and it's worked out pretty well for us my comment on data is I love data but in fact like most of the most useful data in my life turns out to be like anic data or like building an intuition for something so

36:43 maybe I'll stare at the data for a long time it's like okay I think I understand what the pattern is now and then close down the dashboard and like with the idea about the pattern you talk to people you get advice what's the com what's the pattern of advice what's the standard way to do things are we really special enough to be breaking this pattern or should we just stand do the standard way to do things uh and then just like you know there's there's a little bit of like just following your intuition but to make your intuition

37:06 smart enough requires a lot of studying which is how I do it it's awesome Avery thanks for joining us you're great dude [Music]