Startups tend to be based on somewhat of a delusion. You need people to believe in the impossible. You're trying to achieve something that wasn't achieved before. Otherwise, what's the point? For decades in the history of AI, agents were theoretical things. We locked ourselves in a room, launched in September 2024, first agent on the market. Wow. And the business went from making almost no money to 250x in one year.
Welcome back to CEO Tech Live brought to you by Hexaware. I'm your host Ben Fatting and wow, we've got a fun one coming your way today with Amjad Masad who's the founder and CEO of Replit. Amjad, thank you for being here my friend.
Been looking forward to this one.
So when's the time you had an unexpected twist or failure in your career and how did it lead to your success or growth on down the road?
You know, I had predicted that we're headed into an age where anyone can make software, where the most important thing is the quality of your ideas, not the quality of your code. And that the whole premise of the business is that. And in 2023, I had predicted that the business would start taking off and the AI would reach a point where, you know, all of this would be possible. All of what's possible today would be possible. I was a little too early and we had grown the company a little too much. We were like I think 130 people back then who weren't making a lot of money and we got to a point we had a board meeting where we realized that, you know, with the amount of money we're burning we're just not going to survive. And I knew it in my bones that, you know, I might be off by a year perhaps tops, but it is coming and like we're going to be able to build that world. And so, you know, made the very painful decision to cut down the team. And what happens when you do a layoff is you burst the dream, right? Startups tend to be based on somewhat of a delusion, right? You need people to believe in the impossible, right? You're trying to achieve something that wasn't achieved before. Otherwise, what's the point? And the moment you do a layoff, people like snap back to reality in a way, and they're like, 'Okay, maybe the thing I joined is not really working.' And so we cut 30% of the team but we ended up hemorrhaging like another 20%. We were like 60 people in like mid 2024 and at that point a new generation of models have come out. AI have progressed to the point that I felt we can build the first agents, the first software creation agent on the market. There was no agents at the time. There was some attempts at it but nothing was working. And so we pivoted the entire company and we said okay for this company to survive, and this is kind of a dark time, you know, becoming the success for this company to survive we need to really bet on this. And so we locked ourselves in a room literally, we had a war room and we built Replit Agent, launched in September 2024, first agent on the market before Claude, before any of those were agentic. And it took the world by surprise. People were surprised that this thing was possible. Even the AI labs called us and told us we didn't know you could do that with our models.
And that led to the world we're living in where like agents are becoming a real thing. Whereas for decades in the history of AI, agents were theoretical things. And the business went from making almost no money. We were at like 2.5 million ARR which for our size was not very good to 250x, two orders of magnitude of growth in one year in revenue. And the company went from 1 billion in valuation to 9 billion in a year as well.
What did you need to believe during that time period of the bursting of the vision or the, I don't know, the delusion you described it, to keep going? Because it seems like when you're cutting staff, when you're getting concerned about cash flow, there are a lot of other ways you could have gone about it but you stayed the course.
Yeah, I'm a big fan of the burning the boats strategy, like the military strategy of like not giving yourself an out because I think anytime you hedge you end up not believing enough to lead the team well and people can see through that. But I try whatever I believe in I try to really embody it and really go all in and not hedge. And this is where I believe the future's headed. This is what we need to do. Even if it means taking massive risk, even if it means, you know, users might not understand it in the short term. When we launched Replit Agent and we transformed our platform from coding primarily to natural language, a lot of users were upset because they were still like in this old mindset. We're very adamant that this is the future and now everyone is coding in natural language. Literally everyone. But our users were the first to do that because we kind of dragged them along with us. And so I think believing and acting on that belief is very important. And it is stressful and like managing stress. I mean you talk a lot about leadership and entrepreneurship and so managing stress is a big part of it actually at that time.
It'll eat you alive if you don't have a way to manage it. How did you do it?
It's funny, but I used to be a big gamer growing up. When I moved to the US, you know, America is all about work, work, work. I didn't have time to play any video games. So, I didn't play video games for 10 years. That moment of a lot of stress, a lot of work. I actually bought a Steam Deck. And at night like when I couldn't sleep I would play video games and that was like an amazing escape.
What's interesting about it too is it also infected our product design because the platform became a lot more fun because when you're no longer kind of stressing on the semicolons and the dot and like the syntax of it, programming becomes a lot more joyful. So we took a more gamified approach to building.
Oh wow. What a cool twist. Yes.
I think about one of my ways that I de-stress is I like to play tennis and when I'm on the tennis court, all I'm thinking about is my opponent and playing. It shifts me immediately. So, it's not like I'm under less stress, right, on the tennis court. In fact, physically, I'm under more, but I've shifted my mindset to something completely different and fully engaged.
And then when I come back, yeah, ultimately maybe it's not about stress. It's about getting into a different mode of being. It's about getting into flow and stopping that rumination that's happening.
Yeah. If you think about your company's cash flow, you're not going to do very well on the video game. Vice versa.
And just have that break. That's right. And I think that's incredible that it infused or you said infected our product and in a way, I mean do you get that kind of feedback that using Replit is joyful for people?
Yes, people describe it as addictive, as joyful. It's like the most productive addiction that I have. That's what people say.
Okay. Which is good, there's worse things to be addicted to. Yes, yeah, well congratulations on that.
When what was your first job and how did it influence your leadership today?
My first job was an entrepreneurial job as well where I used to, again, gaming is a big part of my life. I used to go to these LAN gaming cafes. I don't know if you had them in the US but we didn't have good internet. So if you want to play with other people, you would go to a cafe and you would play in a LAN network. And I noticed that they weren't using software to manage their store. They were just hiring a lot of people and they would write your name and how many hours you bought and they would watch the clock and they will tap you in the shoulder till you ran out of time. They just used people for it. And it was also very insecure because anyone can come in with a virus or worm or some kind of key logger and steal their data and wreck your computers. And so I went to the owner of the store and I said like what if I built you software that can secure the store, that can manage, reduce your headcount, create loyalty programs. I kind of pitched it to him and I didn't have any code written at the time. I just knew that I could do it because I've been coding for many years and he's like, 'Yeah, I think that's amazing. We would buy it.' I was like, 'Okay, give me a couple months.' Those couple months turned into a year. I went away for more than a year. I remember my friend used to, you know, like sports and things like that. I used to play a lot, go out in our neighborhood and play soccer and all of that. My friends were like, 'You just disappeared for a while.' And so I was so engrossed in what I was doing. And then a year, perhaps a year and a half later I went out to them. I'm like okay I have the software and they were like who are you? They totally forgot about me. But luckily the world hadn't moved on at the time. And so I started showing them the software and they immediately liked it and they started paying me a lot of money at the time, hundreds of dollars. And McDonald's had just opened up in Amman, Jordan where I grew up and I took my entire class to McDonald's. I was balling.
Well, yes, we're getting Big Macs. Yes. What an incredible moment is this? It sounds like that was an entrepreneurial mindset that emerged in that moment. Had that been role modeled for you? Had you picked it up on the way or just sort of inherent to who you were?
You know, my father is a government engineer. There wasn't a lot of entrepreneurs around, but my brother and I were always entrepreneurial. My older brother, he still is, is now building actually software with Replit. And so we used to, we lived in a kind of low-income neighborhood and things were cheaper there than our friends in the same school that lived in higher income neighborhoods. So we used to like buy certain toys and sell them more expensive and so we were always scheming. I think just the fact that disparity, the fact my father stretched in order to put us in better schools and by putting us in better schools, there was an income disparity and so we saw our friends having PlayStations and we didn't.
And so you developed that desire, that need, and you're like, okay, what am I missing? You're missing money. Okay, how do you make money? And that's the entrepreneurial, it seems like, okay, you're just looking for the problem to solve, right?
Exactly. The problem is I need the gaming console that my buddies have.
Yeah. And here you are solving bigger problems. You know, what's the advice you give your younger self or something you tell your younger self to try?
You know, every success I've had has been driven by trusting my instincts. And the thing that I find most fascinating and interesting tend to yield eventually into some kind of business venture. But they start out, even when I started out on Replit I was interested in compilers and browsers and how do you put compilers in browsers. It was like a very technical academic sort of interest. Even with AI I was just like fascinated with it. I didn't exactly know how you could monetize it, how it could create business value. But there are times when there are like investors or other people that are trying to influence my decision-making where I actually went against my instinct and went in a direction that was more top-down reasoned. You can easily reason and there are people who are good at that. I have friends that will be like, 'Oh, this is what the world needs in terms of business. I'm going to go build that and sell it' and they're successful. I'm more like bottoms up. It's like innovation first and then go find a way to monetize that. But that's just how I am. And I think periods where I didn't trust that instinct is when we didn't do well.
That goes counter to a lot of people who say they don't build the dreams, they build it. If we build it, they will come. They say find it then build it. But your mind seeks. It's almost like it sounds like you have a creative part that's expressed and then you're able to sort of think through the business.
Yeah, there's a creative, there's also a predictive aspect. Like I like to predict where technology is headed. I like to kind of like see something in its infancy of like okay well you project that out and that's going to be huge, right? And so I'm able to project out progress in technology just because I've been coding since I was 7 years old. And like I've seen PCs evolve so much and then the smartphone evolve so much and then you sort of understand how technology works where everything starts out kind of crappy and the rational thing to do is to like GPT-2 when it came out in 2020. It would basically spit out a coherent sentence and then would go completely off the rails and start speaking Chinese to you. That was literally it in 2020. And so most people were just like what is this crap? Like, you know, we're working on a real thing.
Couldn't see the possibilities.
Couldn't see the possibilities. So I'm able to kind of see the possibilities. And finally I think where it gets problematic for people who think 'build it and they will come' is they don't do the sales and marketing. I actually do the sales and marketing. I enjoy that part. Like so I build the thing and I want to go sell it, I want to go tell people about it. So it's important to combine these two things.
