Well, let's start this show where we should start it.
Sure. Yeah. Where should we start it?
Oh god. What a great... Is it over? I thought it was over.
No, no, no, no. That's not... He's asking for in the analog of Silicon Valley that Oxide is living.
Where do you... season are we currently portraying?
Oh, Oxide and Friends. What season are you guys? Okay, better question. I thought you meant like what are you currently watching? I thought you were saying what are you watching? I'm like no,
no, that is a great question. Uh, you know, it always merits a rewatch. You cannot rewatch that many times. I mean, it is so prophetic, too. It's amazing. They just like I feel in particular that the AI episodes are almost chilling. I mean, they seemed a little outlandish. Now they're just like, 'Oh my god, the AI did.'
Season 6 is coming to fruition.
Season 6 is coming to fruition 100%. Yeah.
If Anthropic just disappears, we know why.
Yeah. Exactly. Right. Um, you know, I feel that we are because I also view it obviously as a cautionary tale, right? And I think that there's so many times when I was watching it with my now 18-year-old where I would kind of pause it and explain that like, okay, this is a real concept. Like they're presenting this in a very humorous way, but um, you know, I still think that season 2, episode one, Sand Hill Shuffle, um, is one of the most important single episodes for an entrepreneur to watch. Yeah. Not just the nagging is obviously wildly entertaining, but when the guy... the pursuit of... he raised too much money, right? And he didn't realize that he could have raised... Richard asks, 'Could you have raised less money?' And he's like, 'Oh, right. I could.' And they do such a masterful job of the guy kind of replays the history of his own startup in his head of like, okay, like we would have raised less and then we would have been at this other milestone. Like yeah, it would have been difficult, but we could have pulled it off. And then he's like, you know, he realizes that his company was lost because he raised too much money and uh we're very mindful of that. That's a very real phenomenon and you know we obviously just raised 100 million bucks and we were very mindful about that and making sure that we... I mean the flip side at least for Oxide is that we have always believed that if this company can cross the chasm it is a generational company. It is a huge company waiting to be built and the number one risk for the company actually is running out of money, is actually capital. I mean VCs hate to hear this, right? They're like, 'Oh, that's your number one risk.' It's like, 'Yeah, that's why we're here.' I mean, it's like we've got money.
That's why we need money.
It's like, 'Oh, all right. Well, is there any other way we can be helpful?' It's like, 'No, you can be helpful by writing a check.' It's like...
like, 'Wow, God. Okay, that's kind of boring. We'd love to introduce you to... can we introduce you to potential customers?' Like, no. No, that never works. No, you don't even go.
Yeah, we're good to go. We actually need... So that is, you know, I think that I would skirt the question by saying, you know, we're mindful of all seasons of Silicon Valley and all stages of a company that represents. And how do we be the company we want to be without reliving some of the seasons of Silicon Valley? Um, without instituting Piper Pulse, um, which I still think is one of the... and actually did you know that the system at Facebook was actually called Pulse? I did not realize this.
Got some ex-metaphors, you're like, you realize that that is like actually... and that's real. And also the chairs ad, do you know the tables? That's based on a chairs ad.
Which is a spoof ad and you're like this is such good satire and so biting and it's like oh that's... Because actually Facebook paved the way. They have a chairs ad that has to be seen to be believed. It's just amazing.
So it's like how do we... how do we be the company we want to be? And obviously venture-backed. I mean we're very grateful for venture capital. It's very important for what we... this can only be a VC-based company. I mean I think it's like it's easy to be very cynical about venture capital but it does allow you to do something extraordinary. You get this huge amount of cash to go build the thing before you have customers, before you have a business and you know that's a magical thing and then you've got to hit you know the clutch and the gas just right so um we're very mindful of it all and I hope we are not... I hope we're reliving the good bits and not the bad bits. I love to believe um but mindful of it all for sure.
So why is 100 million for a Series B too much? Like why is that the right number?
Why is that the right number? Yeah. And I think that you know when we... and we were not necessarily raising... right, so when we had raised Series A and you know when you are a venture-backed company you always have to be willing to take the right meetings with venture capitalists because you always need that next round and especially a Series B I think is the most difficult series to raise um because you're kind of a teenager as a company. Um, you know, teenagers can be tough because they've got adult needs, but they don't have adult strengths, you know? They're not actually like contributing yet. They're on the cusp of it. They're close, but you are, you know, I got two kids in college, so I'm definitely, you know, I'm feeling this right now. You're just like, okay, why don't I give you my bank account and you just give me whatever is left over. Let's do it that way. Um, but you know you're kind of a teenager at a Series B and you need to have... so you're constantly like trying to find the right partner for that and we had a bunch of firms that... and there are a bunch of firms that are just like not very good, you know, so you're not taking every meeting by a long shot. Um, but this firm that really wanted to get to know us and you know the first meeting was fine but um then they came by for a second meeting and that second meeting was really good and they've done a lot of homework and this is USIT and you know the third meeting was really... you know, it's a courtship that happens over a long period of time and you know they got to know us really well and they felt like, you know, when you're thinking about your next kind of financing, we think you guys need to go big. And it was bigger than we... it was like, 'Wow, okay.' But really the way they structured it was great um from our perspective and kind of de-risked some of the risks that we saw of taking that much capital and it gave us... it was really important because again like the way... it still to me the greatest risk to Oxide is that we just don't make it. We run out of capital before we're able to build. It's really hard to build a business. It's especially hard to build a business where it's like we're selling big machines, you know, and this is not a home labber, right? Even though the home labs would love us to do something for them, it's like I'm so sorry, but they...
they're not your customer.
No, they're not. And it's like... and the sales cycles are long and you know... but the flip side of that has been like if we get there... and when we were talking to customers uh and you know God bless our early adopters and early customers, love them all. They've been terrific and a couple of them have gone on the record, even better. So grateful for them. Um, or tweeting it out, that's also great. It's like we had a customer... like are we going to be able to talk about the fact that they're a customer? That they're going to be like, 'Oh my god, Tobi at Shopify just tweeted it out.' It's like, 'Oh my god, okay, I guess that cat's out of the bag. I guess the CEO just tweeted it.' Uh, which is great. Um, but you know, those early... we are so so so grateful for those early customers. But we've talked to so many who are just like, 'Oh man, I love everything about this. I love everything about this. This is absolutely the right thing we should go do. I just... no, totally. I was just... we were talking like, God, I just need another... I need a Fortune 200 retailer to have adopted this.'
And we're like, you're a Fortune 200 retailer. Like, you're the one to adopt it. And they're, 'No, no, I know, no, I know. I know. I am, and I would love to, but I just need someone else to adopt it.' You're like, okay, all right. It's like, 'But I love this. If you do that, like, I'm all in.' And you're like, okay. So, you...
It is. And the risk is... and you get it, right? The risk is like you guys go away. The risk is you're acquired. I do love people like, 'I'm really worried you're going to be acquired by Dell.' And I'm like, now I don't want to neg myself.
Do they know about your path with exactly... the part on the podcast? You're like, no, never again.
I think Dell would not want us. We are a bit of a kind of a skunk there from Dell's perspective. I don't think Dell's interested in us. And you know, tell HP we are so disruptive... it's like that has never been the strategy. But people are understandably worried about it because people can rattle off companies that have disappeared, favorite startups that have disappeared into Dell or HPE and I've been acquired and we... you know, I get it and we obviously that's not what we aspire for ourselves. But you also... there's only so much arguing you can do something because like they've got a really good point, right? So the only way... it's just like earning... how do you earn someone's trust? It's like one day at a time, you know, you can't gas it on earning someone's trust. And that's what it really boils down to. People trusting... and not just trusting us personally. It's more that like I need to trust that you're going to exist. I need to trust that you're going to be there. I need to trust that this is going to make it. And you know, I think that this is a big part of... and we've already seen that where people are like, 'Oh, wait a minute. $100 million.' People are like, 'I think you guys are going to make it.' Like, 'Oh, thanks. We think we're going to make it, too.' But it's great to hear it out of someone else's mouth like, 'Oh my god, like you guys are actually going to make that.' Like, I actually... okay. And I... wow, that's... this is great. You know, and so I think that the capitalization is not just the capital that we need to go expand manufacturing and to go... because the other really significant aspect of this is that we... and we knew this was going to happen, but it's been fun to see it happen where a customer buys one rack or maybe two and they're like, 'Hey, um, what would 10 look like? What would 50 look like? What would a hundred look like?' And you know, for a long time that was just kind of pillow talk, you know, we were kind of dismissing it. You know, it's like it's great. We obviously always took it seriously. But as time has gone on, like those questions and conversations become like, 'No, no, I'm serious. Like I've got budget. I've actually used this thing. I know what this thing actually is and isn't. And like I've got this new project coming up and this will be perfect for it. And these are the kind of numbers I need.' And you're like, those numbers get significant really quickly. And you do actually need a head of capital to be able to secure the financing that you need to be able... I mean, so there is a flywheel that you need... this is not... on the one hand hardware is not as capital intensive as people think because it's not like we're building our own plant, right? We're not... Benchmark Electronics is our contract manufacturer and like they've got their own ITAR facility. We're not building a manufacturing line. We're not... there's a lot of things we're not doing that people kind of associate with hardware.
But on the other hand, it is also capital intensive because like yeah, you got to go procure a bunch of DRAM and a bunch of CPUs and a bunch of boards and like you can't invoice someone on that until it's actually been shipped. And so there is like... especially as the numbers get large, um, the financing angle becomes really important. So yeah, that's...
Is that a point where you do go build that stuff or is it just so far away that you're not even thinking about it?
That's a great question. I man, I would kind of think never. I mean, you know, on all of that stuff, we always try to keep an open mind. And I think that, you know, we've got a really great partner in Benchmark because Benchmark allowed us to do some things that are... I mean, like look, we're an idiosyncratic company, right? As you guys know, and we are idiosyncratic to a T. And you know, one of the things that was really important to us is that we actually own all of our own manufacturing software. So, we wrote all of the software that runs on the line. And this is really unusual. Most companies don't do this. Most companies don't really consider this aspect of it. Um, and I mean what's funny is like the companies that do consider it are the ones that are like... it's kind of the SpaceX's and the Apples and the... I mean the companies that take manufacturing really seriously do consider it, but companies at our scale generally don't. Uh, in part because maybe they don't have the luxury of doing it, but it was very important to us to own all of the software involved in the manufacturing line. But because we do that, like we've got a... it is a truly great partnership where they're doing the things that they're good at that I don't necessarily know that we want to be good at and we are able to do the things that are very important to us like software. Manufacturing companies are not great at software. This is, you know, I don't feel that this is a news flash. Uh, and we are in our DNA, we are a software company, obviously do software and hardware together, but we've got software engineers with a strong hardware sympathy, hardware engineers with a strong software sympathy, but we have got great software expertise at this company and because we can, we control all that. Um, I don't think so. I think that this is something we would really look to partner for continuously.
It's a wild ride. $100 million.
It is. I don't even know what kind of class do you go to to manage that kind of purse. Like who says, 'Bryan, here's 100 mil. Spend it wisely.'
Right. Well, this is... I mean I think this...
Yeah. Well, I know this is... so this is something that people don't realize about because it's kind of easy to complain about aspects of VC, but the... and the process can be, you know, any entrepreneur will tell you it's an arduous process. It's like... I mean it is like coupling. It's like dating. It's like actually... although you know my son plays college baseball and uh it is... I will say that playing NCAA varsity sports does look a lot like raising a round if you've got an NCAA varsity athlete. They are definitely... because it's like it's...
A lot of options and you're kind of like everyone is trying to find the right pairing, you know, and you are trying to really find the right partnership. But you know with VC, like they're going to give you a bunch of cash and they actually don't have a whole lot of control over what happens, you know. I mean it's like yes you've got kind of... you've got some aspects of... you've got a board seat or what have you, but like you're really trusting the company to build itself in a way that is wise and proper and uh that's part of the reason why they take a long time to do their diligence. It's part of the reason why you take meetings with a VC firm when you're not raising because they want to get to know you and they want to get to know you so they trust what you're going to go do with it. So they know that it's... and um you know I think that uh you know I think if anything for us, I think you know we're very much children of the dot-com bust. So we are uh if anything like the comfort zone we have to get out of is uh getting a little more aggressive on things that we would do. Um and because my overwhelming bias is towards uh a bit of caution because I think that you know we... um as one of our advisors of the company who I've known for a long time, one of the first people I pitched on Oxide laughed hysterically when I pitched him on Oxide, like really hard laugh, in 2019. Um and then uh he kind of came back and saw, you know, came by 2022, 2023 about what we built, you'd be like, 'Wow, this is amazing.'
It'd be a real shame to mess this up now.
And I'm like, it would... And I just remember Steve and I both...
Yeah. Because it's like we both like... this is...
Like I'm not a serial entrepreneur. This is not like... I'm not going to take, you know, five more trips to the well. Like this is it. And like this one here.
This is it. And we got to make this one work.
And so it is... it's a lot of, you know, that pressure is a privilege of course. But so I know and in some ways, like almost the comfort zone we need to get out of is being willing to... knowing when to push harder in. And fortunately I'm, you know, blessed with a terrific co-founder in Steve and um you know and he and I both have the same disposition yet the same need and desire to go push ourselves as well. So...
So I'm kind of fascinated about the mechanics of this kind of thing. Do you actually take custody of $100 million or do you have access to $100 million? Like how does...
No, they like... it will like wire into your account like you raise a round.
Oh yeah. Oh, well actually I will... I mean kind of a funny story in this regard in our Series A. So, uh, not only does it wire into your account, but it is actually not yours until the round is closed, but it's like literally sitting in your account.
It doesn't go to an escrow account. It's not like buying a house.
Not even like you don't own it.
But people be like, 'It's in escrow,' but like you're like, 'It's okay. You keep saying it's in escrow, but it's just kind of like a real thing that you can do, but escrow is a real thing. You can do it, but like no one's going to do that.' So... but there is... this is where things get super... like when you're raising... so you're raising a round and you're raising a price round and you know people are going to invest at... and you know people are investing conditional on other investors. So you need to wait until you've kind of hit the number that you've got on the paper before like the round is closed. Like you're not... so you can be like waiting on a wire and you're not closed or you can... and you know one of the things that we did in our Series A, when we're extremely grateful to our investors for accommodating an early close. So, we were going to raise, you know, we ultimately ended up raising what, $44 million in our Series A and our investors did an early close at 30, which was great because we... this was 2022, it was really brutal to... I mean, the environment had turned very, very brutal and uh we were, you know... so then, you know, like, okay, once I cross this like this $30 million threshold, then like I every... and not surprisingly, one of the larger investors, uh institutional investor, is like, 'Look, we wire last. Like that's the way we operate. So we are going to operate... we are going to wire last.' And I'm like... I'm kind of sympathetic to that. Like they want to make sure that everyone else has already wired before they wire.
Well, they go to wire and you're like, hey, you guys are $23 short.
And we're like, oh my god, we're $23 short. And like how do you end up $23? And of course everybody is like, 'Oh, I'll pony up $23.' Like, are we short $23? Yeah. It's like a bunch of grad students out for dinner or something. It always comes up short. You're like, 'Okay, who did... there are only like four of us here, who didn't throw in?' And everyone kind of swears that they paid enough. And I'm like, of course, you know, it speaks highly. Everyone's like, 'I'm in for $23.' Like, no, no. Unfortunately, it doesn't work that way. We can't just like put, you know, put a couple of bills on the table. The reason we're short is because of share math and shares get... shares will get rounded down and you end up... and you have probably... I'm presumably you have many rounds that ended up being short by a share or some very small number of multiples of shares. So it is kind of like... and most people don't care, but in this case like that investor is like, 'No, I'm not wiring until you have like the $23.' And we're like, 'Okay, so now we need to go back to another investor and basically get them to buy an additional share of Oxide so we can get to the threshold that we need.' And uh and you know, to be fair, like that investor is kind of frustrated with their own treasury department on that kind of process. They're like, 'I'm really...' and like, 'You know what? I get it. I think it's understandable to be pedantic because when that wires... like I mean talk about like wiring information you want to have correct... it wires. Gone.'
Yeah, you double triple check that one.
We had a... we were talking to an institutional investor or that corporate venture capitalist, uh CBC. Uh it was late to a call. I hate it when venture capitalists are late. Hate it. Hate it. Hate it. Hate it. Hate it. Do not be late because I'm going to be here on time. Like I'm going to be here on time as an entrepreneur. You need to be here on time. Like you as a VC kind of have one job. It's called show up on time. Hate it when VCs are late. So VC is like 6 minutes late but comes in very apologetic. 'I'm like I'm so sorry I'm late. It's very out of character for me. Uh we just had an 8-figure wire that went to the wrong account.'
And we're like, do you need more time? Like we can reschedule. 'I am so sorry.'
We need to deal with that right now.
Yeah. You go deal with that. But it's like... I mean and this kind of like when you get to the actual like mechanics of the money moving you're like oh wow this is just like... and it's a super manual process and it is like, you know, people making phone calls and it's like on the one hand you're like oh god this is so manual on the other hand like maybe this should be manual. Maybe this is not a bad idea for this to be pretty manual because you don't do it very frequently and it is super, super, super high consequence. We... when you're... and when you're on like that kind of... it is really tough and part of the reason why... when you know this is the reason that like people, you know, opening up to a large number of investors for example, it makes these issues become more complicated. You know, you've got to have... now you've got more people that need to wire, more people that need to get chased down for paperwork. So um we... there is a big mechanical aspect to it and it just doesn't feel like... you're not done until you're done. Um but fortunately...
What you need is like a cap table salami attack, you know, like someone just sitting there. Go ahead, shave those off onto my account.
Round down on my account. I'll take the 23 bucks worth.
Exactly. Right. Um yeah. When it was...
It'd be a lot simpler if you could just have that on there like... Yeah.
Well, and so by the way, so there actually... there have been things that have been invented to make this simpler. So this is why like the SAFE is a great construct. So a SAFE is a Simple Agreement for Future Equity. Um it pains me to agree with Paul Graham, I think. Although Paul Graham, I'm like super complicated about Paul Graham right now because he says things that I really strongly agree with and things that I really strongly disagree with like often at the same moment. I kind of like... my brain just kind of buzzes.
The... but one of the things that Y Combinator got really right is this idea of a SAFE and a Simple Agreement for Future Equity. What that says is like, look, let's not have to deal with all this. We have no idea how much you're worth. We got no idea how much you're worth and let's also like not wait until everyone's ready to wire and this kind of like waiting for the... like tell you what, I'm just going to invest this amount of money. I'm going to invest you 500k and then at some point you're going to have a priced round or you're going to have an event that happens, an acquisition, what have you. We will price it then and when we price it, because I'm doing this in advance, I get a discount on that or I get... you know, there are different ways that people kind of structure those things to incentivize them. But a SAFE is... or there's a cap. I mean, that's another thing that people do. We'll say, 'All right, the... one of the things.' So you get this. So like I'm going to invest, but I'm really worried that I'm going to invest 500k and then you're not going to raise for like years, and then you're going to raise at this multi-billion dollar valuation, and I'm only going to own a little sliver of this. So to prevent that from happening, I'm going to put a cap in place. So if you raise at above this valuation cap, I get it as if it's at that valuation cap. Um and so the... and it's also a way for them to kind of be able to model it. So but SAFEs are great for that because you can just like go right now. They can also be too great. They're kind of like candy and entrepreneurs can raise too many SAFEs. They don't understand how their SAFEs are stacking and they go to raise a priced round. It's like whoops, you got washed out because you didn't keep track of the SAFEs. Um so this is actually something... this is where we need like the Silicon Valley outtakes for because HBO Silicon Valley I don't think really hit on this. It's one of the rare things they did.
What they need is a new season. I mean there's so much new... I mean aren't we living the new season right now? Are we convinced that we didn't just like pass into fiction and we are just like... maybe we're just living... we're living the new season right now.
We're there for sure. I was thinking about some of the money that's thrown around right now because I was reading this Ben's piece all about, you know, and to individuals, you know, like hundreds of millions to steal an AI researcher from this... from, you know, from Apple to Meta or whatever. And you know, with that stuff...
On that stuff though, you got to know like what did you turn down exactly? Like this is where you're like, can you show me the paper actually that you got? Because I mean this is not $100 million cash up front. There's just like... and on those things I'm like I always kind of wonder what they actually look like. But there's no doubt there's a lot of money being...
Still the numbers that we talk about now. You know you just said 500k and that was like because you're trying to think of a small number to say.
Yeah, like an individual might do or something like that. That's pretty much free money at this point.
Um... it's just... it kind of boggles the mind how quickly... it can't all be inflation that we've ramped up our numbers.
Yeah. I mean, I think that we've got... well, and it's going to be interesting to watch what happens because I think the other problem is that we've got these companies that aren't going public and you know, we might start to see some of that where... but like ultimately like these have... I mean certainly the aspiration for Oxide is to be a public company. That is what we... that's what we want to go do. That is...
I assume that when you said generational, I assumed well that's going all the way right there.
That's going all the way. Yeah. Yeah. We want to be a public company.
How close are you? So you're... we're actually going to cross the chasm.
I'm in a board meeting. I can just raise our Series B, you know?
No, no, no. I don't mean like in raises or whatever. I'm just thinking like in your mind somewhere there has to be like maybe not a roadmap, but like you're talking about crossing the chasm to a generational company and like what is still in your way?
I think yeah, I do think we're going to... I think we're... I mean you always want to knock on wood and everything else, but um yeah, I think we're going to... I think we're going to do it.
Are there hard problems unsolved? Are there things where you're like, 'We have to figure this out first.'
Um the problems we need to figure out are now... um there are for sure plenty of interesting technical problems that remain. No question. But the questions are not around can we build it at all? Which by the way was a huge question. I mean we don't want to...
That's why your friend laughed at you.
Yeah. Absolutely. Absolutely. And you know the other line he had is like, you realize that if you pull this off it's going to be illegal to buy Dell. And...
And that's it. You know, that's it.
And so we... but it's a big if and so there's so much we need to go pull off.
Explain that. Why is it illegal?
Because like you just... you would never architect what Dell offers. Like that's not the way you would build it if you're trying to solve rack-scale compute at scale. So to say like I don't want to buy just one rack. I want to buy 100 racks. I want to have elastic compute in my own data center. I would not be like, okay, let me start with a 1U or 2U server and AC power supplies in each one of these things and like running... like let me go invent UFI. Like what... you just wouldn't do any of that stuff. You're like, let me... what you would actually do is what the hyperscalers have done, which is like, how do I engineer this thing as a whole and how do I think of it holistically? And like nobody likes the pain that they're in in Dell, HP, Supermicro. And it is just an enormous amount of pain um because it's not fit for purpose. It's just not what it's designed to do. And people that are trying to build... because we did this, we did this at Joyent. People that are trying to build elastic infrastructure on HP or Supermicro or Dell are trying to do their own Oxide on the cheap effectively and it doesn't work out well, you know. And this is where you discover that like, you know, you discover drives that you've not qualified. As I discovered at Joyent, I didn't even know Toshiba made hard drives until I went... I had such a vexing I/O latency problem. I'm like, you know, maybe... and I finally over a course of like weeks and weeks whittled it down to like coming from like the absolute lowest layer of the stack, the I/O layer. And I'm like, you know, I wonder, do I have a different version of HGST firmware on this drive? And I like pulled the drive info. I'm like, Toshiba makes hard drives. I mean, it was literally like this moment of like this is not even like a company. I like... what? It's like having like a Chevrolet hard drive. You're like...
Yeah. Yeah. Exactly. You're like, what? What? There's like... there's a raccoon in here. Like that doesn't even make... and then you just realize that like, oh, I'm just being thrust this thing because of some sweetheart deal. As it turns out all the cheaper hard drives are basically bought by Dell and then just thrust into that. You don't control your own destiny with Dell and that stuff is so deeply frustrating and that is a deep frustration that people are all feeling. This is not like theoretical and I think one of the things that's... it has been like... it is definitely vindicating. I think it's like a little bit surprising to even our proponents where they're like, you know, I was talking to someone today and they said that like these firmware problems...
That you've solved are really significant and important to them. I'm like, you know, you don't have to sound surprised. Like obviously we know it's important because we saw that, but like these pain points are really deep and really important and the people running at scale are the ones who suffer from it. And a lot of why people have moved to the public cloud is because they were sick of dealing with all that. And it's like I didn't have to deal with any of that. I never had to deal with a BIOS upgrade when I'm running on AWS. Thank God. And now, but now I'm dealing with this bill that is just like out of sight and growing all the time. And it's like, oh man, it's like, can't I own this infrastructure and still have all this delightful stuff that I get from the public cloud? And that's the market that VCs didn't believe existed. Um, believe it or not, they just didn't think it was there.
They're starting to believe though. They're starting to believe.
They are starting to believe. And it's funny when you know you'll have like a VC that you know passed on us or whatever and they will send us a report like oh I just read this report about like you know cloud repatriation and like they send it to me. I'm like why are you sending it to me like you should be sending this to your past self like I know this like this is not news to me. I mean, are you And we also I had another investor that passed on us that was like, um, hey, I you know, um, this Rust thing seems like I, you know, do you guys use Rust at all? I'm like, do we use Rust at all?
Like, yeah, we Yeah, we use Rust a lot. I mean, we and and he's like, "Oh, wow. I didn't realize that." I'm like, "Yeah, the company's name is Oxide." He's like, it's kind of like, "Oh, god."
Well, like you said, they're always late, you know, a little bit late.
Well, and I think that they are I mean to to kind of be sympathetic about it, like they are the the the concern that VCs always have is product market fit is that you like the failure mode that they I mean there are two failure modes they're worried about. Uh failure mode number one is this is going to be an outsized return and I'm not going to be a part of it. Um that is actually a and that's a real fear. That's the that's FOMO. That's the fear of missing out
And that is a very real fear and they fear that more than a zero because it happens less frequently.
It is very frequent that VCs fund a company that is a zero. That happens all the time. What happens less frequently and really gets under their fingernails is when they pass on a company that they could have invested in that then has returns a fund for somebody else.
That's the stuff that really drives them crazy.
So that so they they've got like that's kind of fear number one. Fear number two in terms of like they are I mean they they're not in the business to have zeros, right? So they actually don't want to have zeros. The the way you have a zero is that you have a company that builds something that no one wants to buy. Like that's the concern that they have and that you build and especially like if you've got someone and I get it like you got someone who's like no no like people have built this all wrong and I'm gonna build this much better thing. You're just like okay now I'm like I got you know antibodies are coming up and you can see why people pass on Oxide but because they didn't see the market was there um the and then also it actually strangely the uh there is no other startup doing what Oxide is doing which makes them more nervous you would think that you're just like and this is what holds them in like quantum superposition between fear and greed and and we have had VCs who are literally like overwhelmed with fear and greed with Oxide and they're just like, "God, there's no one else. Oh god, there's no one else." It's like, you know what I mean? Like there's like, "God, the moat is so deep." Like, "Oh my god, there's no one else because you guys are like wrong." Um, and so it, you know, as that has been um, it has been kind of amusing as people realize like, "Oh my god, there actually is. There is a market there." It's like,
Yes, there's a market there. Yeah,
There's so much. I don't know if like I'm still just not sure who your you know product market fit is specifically. I think it's on prem because it's kind of clear own the cloud. That makes sense. But there is so much on prem out there required.
Yeah. That they're just like, "Thank you, Jesus, that Oxide exists." And they care about the things you cared about from the Toshiba drive you never knew was there, the the mismatch of firmware, how a SAN could change I/O and your care for that level of detail.
Not just the hardware level, but the software that controls all that. I think that's the beauty of it. I would I mean I don't know how you phrase it but I would probably phrase it as if
You're the only people who could do it
And maybe now that you are doing it
You'll have someone enter that is also highly capable and because you've done it they would compete and maybe because you've done a lot lot of stuff at open source they can maybe leg up because of open source who knows but
You know that was always our assumption so my assumption was so when we raised in 2019 my assumption was one of the myths The first myth that we are going to dispel is that you cannot raise for this company. And I had many people tell me you cannot raise. You will not raise for this company. No venture firm will ever fund it. And it turns out it's more complicated than that because it's so contrarian that it's actually that FOMO. It does like kind of light VCs up cuz like oh this is like a big potential. And the problem we had actually was much more that VC
Totally. That's right. That that they would be attracted to it but then also terrified by it and they would be kind of locked in that kind of again that kind of superposition and we actually tried to actually this is funny Adam you'll appreciate this they like I did try and I can tell you that like this is where you know season 2 episode 1 definitely has some truth to it you do actually want to disqualify from these be like no this is like you should not be doing this like this is not something you should invest in like you're a bunch of software investors and they're like oh Now we want to invest much more. You're like, "No, god damn it." Like, "I'm not actually trying to neg you. I'm not I'm not trying to do what what Errol did to you. I'm actually literally trying to talk." And actually, there was a there was a VC firm in particular that was so adamant and I was like I'm like, "These guys are just like not kind of technically lightweights and they just did not appreciate the technical risk." And I'm like, "You're never going to get over the line." And I'm like, "You don't understand. We are going whaling. You should be fishing from the pier. Actually, you should be shopping in like the fish section in Safeway. Like, that's that is as close to it. Like, and they're like, "No, no, no. We want to go whaling. We want to go whaling." I'm like, "No, god damn it. Like, you don't actually No, you don't actually want to go whaling. Like, we are going like multi-year mission to far away oceans." So, but we assumed like we're going to dispel this. We're going to show that you actually can raise and there'll be a company that raises behind us. And so we were kind of geared for that from the beginning that there'll be another company that raises behind us. And so we did one after we were completely done with our seed like that was actually harder than I thought it was going to be. It's like actually maybe and in particular one of the things we definitely did do with our series A is like well I'm or our seed rather I'm like I'm definitely going to find the investors that want to invest in this because they believe in it outside of Oxide and we're going to get those folks on the cap table. We're gonna conflict them out of investing. So they So we will definitely have the best investors for this, which we didn't. Um
I see. So that's against competition or what?
Total hedge against competition. A little a little sneaky hedge.
Yeah, that's an interesting play.
The other sneaky hedge that we did is like I want to make sure that we structure a company such that anybody who's attracted to this who like I want to go do this looks at Oxide is like I'll just go join Oxide. I just like I could go like deal with the whole VCs thing or actually like this company is going to give me the freedom and the agency and the autonomy
To realize my own personal vision of how
This and you know one of the things I'm really proud about is like we have attracted those folks and we've got a bunch of people at different you know and and at any kind of slice of the stack I can introduce you to the technologist who's got a chip on their shoulder about that slice it's like no this slice whether it's the security of the system whether it's the efficiency of the system networking of the system the I the system software it's like no no I have got an opinion about this and I I want I'm coming to Oxide to kind of exert that and you know at this point it's like we're you know we're going to be six years old here in September it's like yeah you're welcome the race behind us but man there's a lot of work to go do
Continue. I mean, we got a lot in front of us still technically, but technically this has been now de-risked. I mean, you're asking like what are the obstacles like what what it stands between us.
Um, we've got a product. It works, you know, and we've got I I I no longer hold my breath on an install or or an update, right? Of course because I'm saying that there's going to be an install that go the next install is going to go wildly wrong and we're going to come back to this about you know the time that I um but we um and so we're able to kind of level up and level up and level up and get to those those next customers the bigger customers more ambitious customers so uh it's exciting um and the problems in front of us are are of that kind of scale variety
Scaling, scaling, scaling. Yeah, back on the working for Oxide thing. You guys are famous for having the egalitarian salaries, right? Like everything's I don't know if that's what you call it, but everybody gets paid.
Don't Yeah, I call it Yeah, I uniform compensation. Um uniform.
Yeah, I um because people like, "Oh, you think everyone's equal?" Like, I definitely don't think that.
Well, that's what I was trying to get at with just thinking about raising money and like, you know, people getting a slice of the pie. I'm sure there's equity involved in these people is it's not all cash compensation. And so, how does that play out with that?
Yeah, you do get people like, "Oh, you're not talking about the total compensation because you're not talking about equity." Well, first of all, everyone at Oxide has got equity. Very important. That's just like important principle for me that everybody has equity in the company. So that's just like bedrock principle. The equity also compensates for risk and risk in the company goes down over time. And there was way more risk in for employee number one than there is for employee number 100. And it's like those are not going to be and you know it is kind of funny that people are like oh like you know everybody in the company should have if you say they should have equal compensation which like again not the word we use they should also have equal ownership and you're like how does that work? Can you just like walk me through how that works? Like I I I don't know like you know you can do this. It's like you can have an employee-owned cooperative. I think you know
Go down to your local organic grocery store employee-owned cooperative and and
You know, it's like the I'm reminded of that old Onion headline. Uh local Applebee's hotbed of Machiavellian maneuvering. Um you know, I I I think that just like there are a lot of challenges. It's like we we sorry we are not an employee that's not our objective. Um, and I also think, by the way, this idea that equity is part of your compensation is misplaced. And this is a is a problem. And this is something that these large companies with product market fit that are public use the fact that they can kind of print these confederate dollars in terms of their equity and they use that as part of your compensation. Because if you view equity as part of your compensation, it means that you are selling your equity all the time. Like you're a net seller on your company, you know, you are you're not buy and hold on that. And I just don't think I and I get where people kind of come from with it, but I the people don't understand startup equity is not liquid. Your Google equity and startup equity shouldn't use the same word because they're not the same thing at all. Like they are literally
Sell one, you can't sell the other. You can sell one with infinite liquidity and the other one has got zero liquidity. I think people don't often understand what zero liquidity means. And you know, one of the
It's not real.
Or it's real, but it's not real yet.
Yeah. And actually, you know, in many cases, like from a liquidity perspective,
The the worst thing that happens is success, right? Because you know, company kind of like stumbles and exits and there are plenty of companies that exit for greater than their preference stack. So they pay out to the common, you get your money back. And it was like, you know, you may be disappointed with that. It's not it's not the venture return that a venture capital is earning, but an angel be like, "Oh, this is great." Like, you know, I gave you 75K and I got back like, you know, 91K, right? Great. You know, and
Uh but like not if a company is successful like I gave you 75K like where's my 75K? It's like oh it's like sorry we're 6 years in, we're 10 years in, we're 12 years in. And you know that that liquidity event doesn't necessarily happen for a long long time. So it's like these are not in the same ballpark and it's like for a startup the like your startup equity it's very important that everyone has it every very important everyone has a share in in that kind of generational future. It's also important that like that's not what actually pays for the kids summer camp. What pays for the kids summer camp is cash compensation and so that cash compensation is really important to us.
So how do you do it then? Do you just offer opportunity for them to buy at?
Um, we we make sure I mean everyone when they uh when they join the company gets gets equity as part of their package and then you know we we reup people over time again to kind of um because again it's important that employees have a share in that and then um from a cash perspective you know we have it's been a little bit tough. We've been in an inflationary environment obviously. Um we did just give one give ourselves a raise. So uh we are we're now all making 235. Um which is funny because like this is you know the fourth or fifth raise we've had. And you know when when compensation is completely disconnected from you know performance review processes and all this other kind of bull. I like even I will like I know we've talked about it but I don't know like you know we kind of got final approval to be like oh yeah and the all hands like by the way everyone got a raise like oh it's like oh that's great and someone's like literally will have gotten up and go to the bathroom or we did actually have this happen a couple raises ago
Where people like there's a discrepancy in my paycheck like I got paid too much no no we actually gave one we gave ourselves a raise like when did that happen like oh it happened like two all hands ago it's like oh crap I was out and I didn't catch the recording it's like well that's the one sorry you got to got to pay close attention to when you get a raise around here. Um but the the um and that you know it's been funny because like that's not a point of principle necessarily although the transparency is a point of principle the um that is something that we have just always done and then when we were uh really struggling to hire struggling to hire bluntly double ease struggling to get outside of our kind of immediate uh network and um you know one of our engineers is like I think we should talk about compensation and we talked about it and this in March of 2021. And that is in many ways the most important single thing we did in the history of the company because it brought in so many new folks to the company. And not because they were drawn to the the the it's it wasn't the fact that it was uniform per se. It was the fact that it represented a different way of conducting ourselves. It's what it represents that's important that like and the reason that our engineer was advocating we talk about it is like when I talk about Oxide values to friends and family they think it's until I talk about the comp and when I talk about the comp it's like a record scratch people are like
You're serious. You're really serious.
Well, no one else does that. Is anybody else doing that?
No, not to my knowledge. Not at our even nope. And we've been told over and over again that like won't scale won't scale won't scale and I'm like I don't know maybe I I whatever I don't know I've been told I was told that when we were 10 20 30 40 50 we're now at 70 we'll be and and or 80 on our way to 90 um we and I would say that it is playing a more important role not a less important role because the thing that's been it's had so many like interesting side effects one of the super interesting side effects is everybody is hiring a peer and uh when you tell people that they're going to hire a subordinate their standard standards for that person are going to be a lot lower and they're maybe going to overlook a bunch of things that maybe they shouldn't overlook. You tell someone they're hiring a peer and they're like, "Okay, I want to make sure that this is like worthy of us,
And so it's like, yeah, it's it is not easy to get a job at Oxide. It is uh we are very oversubscribed and we've got people that take hiring extremely seriously. Um, and I think the other like, you know, we the other thing that's been very important is that it tells us in a very concrete way the importance of every role at Oxide and you know cuz when we first did this it's amazing this because we first did this obviously announced in March 2021 we don't have a product and people were like yeah but are you going to play support people that and it was always like support people like this is like a cast in in back. They're less than. And you're like, and you kind of take it apart. You're like, really? We're going to like, do you feel that? I want you to think of the very best support people you've ever worked with. Are they worth it? Oh, yeah. Of course they're worth it. Okay. Well, what if we only hired the very best? Like, oh yeah, yeah, I guess we'd make it work then. Like, all right, I guess that's what we're going to go do. We're going to go hire. And so it's like kind of and why do you always like why is it always support like so I'm so sorry like support is so hard and so important you are
It's the front lines with a customer.
Like what is more and like you have got a it's highly technical it is by the way like under fire you've got like
