Andrew Peterson is the Co-Founder and CEO of Signal Sciences, the fastest growing web application security company in the world. On today’s episode, Jon Sakoda speaks with Andrew Peterson about why he calls Anthony Bourdain his career role model and how he ended up in Tanzania working without running water or power near the beginning of his career.
Andrew Peterson is the Co-Founder and CEO of Signal Sciences, the fastest growing web application security company in the world. On today’s episode, Jon Sakoda speaks with Andrew Peterson about why he calls Anthony Bourdain his career role model and how he ended up in Tanzania working without running water or power near the beginning of his career.
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ANDREW PETERSON: And I quit. And the day I quit, Zane, who was, again, the CISO at Etsy at the time, we had dinner the night before I quit. And I said, “Hey, man, like, it’s been amazing. I’m sure we’ll work together.” And he’s like, “You know, about that. Let’s talk tomorrow.”
JON SAKODA: Welcome to the Decibel Podcast. I’m excited to welcome my friend Andrew Peterson, founder of Signal Sciences. Andrew started his company back in 2013 to make websites and applications faster and more secure. His company was acquired successfully by Fastly back in 2020. He is a good friend and advisor to many startups, and I’m excited to welcome him to our show.
Andrew, welcome to the Decibel Podcast.
ANDREW PETERSON: Very excited to be here, Jon. And before we get started, I just—I need to say this. I feel like your voice was made for hosting radio and podcasts, so. I’ve almost known this from the first time that I met you. You have a very soothing, very great made for podcast voice, so I’m excited to be on the show.
JON SAKODA: Thank you. I do remember you saying that years ago. And I gotta say, you also have a great voice for podcasts. So if this show goes well, maybe we can turn you into a co-host, or at the very least, a regular guest on our show.
ANDREW PETERSON: Hey, we could make it a regular thing.
JON SAKODA: So let’s start at the very beginning with your personal journey. I think many people know that Signal Sciences was an incredible success. But I don’t think everybody knows your founding story. So if you don’t mind, can we start from the very beginning? Where did you grow up? What was it like growing up in your house? What did your parents do? And eventually, when did you know that someday, you would start a company?
ANDREW PETERSON: I grew up in Seattle, Washington. And my mom was from here, so she grew up here. My mom was a physical therapist. My dad was a psychologist. So I used to joke that I had mind and body therapy at home, so. If any kid was gonna be healthy, it was gonna be me. I had one older brother. So I was the youngest. And actually, the youngest of kind of the crew that was up here. So my mom’s sister was up here as well, and she had two daughters. And so, I think that was kind of one of my defining things was, I always wanted to be treated like the oldest, even though I was the youngest. And so, my parents would be having adult conversations, and I’d be the youngest in the room with some of the older kids. And I don’t know, I was always kind of punching above my weight, I feel like, and always wanted to be treated the same as all the older kids.
And I think that’s kind of followed me in my character development and just kind of who I’ve become. One of the things that’s kind of a bit of a chip on my shoulder always.
JON SAKODA: I was gonna say, so from the very beginning, you had a chip on your shoulder.
ANDREW PETERSON: Yeah, a little bit, right? I mean, because I was the baby in the family, right? And that’s kind of how I was treated sometimes. And I never wanted to be. I didn’t want to be the baby. I didn’t want to be kind of signaled out as the one that was behind everyone. And so, I was always trying to get ahead. And that went into schooling and stuff. I wanted to do as well as my older brother in school. And he was a really, really brilliant kid. And I wanted to be as good in athletics and sports. I
played a bunch of sports and stuff growing up, and ended up kind of focusing on swimming in high school, and ended up swimming in college at Stanford when I went there. So that was sort of one side of, I think, I don’t know, the making of Andrew’s story.
I think the other side of just this question of when did you know you wanted to be an entrepreneur? I think it was pretty early. The first company I started was actually in high school. And so, I got my CCNA when I was in high school, which is Cisco Certified Network Associate, which is very official. But the job I had was setting up home networks and troubleshooting printers for people at home. So, that was kind of my first foray into just starting a business. And then I was lucky enough to get into Stanford. And it’s almost like a foregone conclusion when you go there that, “Oh, you’re gonna start a company.” And that just becomes kind of the story of folks that go there.
And I was certainly very entrepreneurial in spirit. I was always focused on technology, and especially the internet. I was just kind of obsessed with that. So, I really wanted to work for Google when I came out at the time. It was 2006. And this is basically right after Google had gone public. And so, I went in, and honestly, I took a customer service job. It was kind of the lowest level job there. I started as a contractor. Had to re-interview to become a full-time hire there when I got there. And the journey of going there, I think within my first year, I realized, I know so little about business and technology that I was—well, I’m not starting a company any time soon. It was very formative, I guess, in its own right, in the sense that I just said, “Look, I’m just gonna try to work with the very best people that I possibly can to try to learn as much as I possibly can, and just try to keep up.”
And I was lucky there to work—I worked alongside Ben Silverman, who’s now the CEO at Pinterest. He was in my 50-person group. I shared an office a bit with Tomasz Tunguz, who now is at Redpoint and has been a really, really prolific and successful investor. And I worked for Kim Malone Scott, who she wrote Radical Candor. And we all worked for Sheryl Sandberg at the time. So, in many ways, that was sort of my business school, I guess, by way of getting a network that has now become very, very successful across a lot of different types of companies.
And I just learned the business of the internet, really. So I worked on AdSense, which was the ads platform that they had. And yeah, what, 70% of the internet was basically powered by ad spend at the time. And so, I got to learn pretty deeply that business and learn from great people. But I think the big learning there was—and Kim Malone said this, and Sheryl said this all the time, was like, “Hire people that are better than you, and hire people that are smarter than you. And if you can keep up and be in the room for as long as you possibly can, you’re always gonna be a better employee for it. You’ll be a better manager. You’ll be a better leader for it.” And boy, was that true at Google. There was really, really incredible talent. And that really set me up for, I think, really kind of the sort of next part of my career.
And so, I left Google, and I went to—my inspiration at that point was like, hey, let me go on work and something that was as far away from what I knew as I could, and just put me in a position where I was like, crapping my pants because I just didn’t know what I was getting myself into. And so, I worked for the Clinton Foundation. And I lived in East Africa in Tanzania, two hours outside of the main city, in a place where I didn’t have running water or power for half the time that I was there. And we were working on medical health information systems trying to figure out what was wrong with the data that was being collected for the national health system that they had there. And talk about taking a massive risk and a massive leap, and going somewhere where you really were totally unprepared.
And God bless young naivete, because I was really, really not prepared for that. But I was at a point in my life when I said, look, I don’t have a wife and kids. I don’t have a house. I didn’t have debt at the time. And so, I was able to kind of take that leap and do this fellowship. I was there for 13 months. And a lot of people asked me, “Hey, was that fun?” Do you think I did that because I thought it was fun? I wanted a challenge, right? This kind of gets back to the chip on the shoulder thing. I wanted something that was just gonna completely stretch me, that I was totally unprepared for, and jump into the deep end, right, and see if I could swim.
JON SAKODA: Can I ask, because there’s a couple of interesting chapters in this book here, and I do want to figure out how you came back and found Etsy. But before that, so you mentioned that you always have a chip on your shoulder and are always trying to prove that you can punch above your weight. I’m curious. Google is an amazing company, and many people would dream of working there forever. And some people do. But yet, you felt the need to send yourself to Africa. Looking back, did you maybe think Google was getting too comfortable? I hear that sometimes from my founder friends. Are you the type of person who gets uncomfortable when things start to get comfortable?
ANDREW PETERSON: Yeah. I mean, I wouldn’t say I was super conscious, honestly, Jon. I think a lot of that stuff, it came out in just the day-to-day life. But I would say 100% that—I was at Google for about four years. And by the time I was done there, a lot of people, they wanted me to stay. And they were selling me on like, “Hey, move into this role and move into this role.” And they were all just kind of, I don’t know, lateral movements into something that I knew, and I could just apply it to a different part of the business that they were growing there. And I just wanted a slap in the face, go way back and start to learn again.
Because, I don’t know, I have an odd career guide that became a career guide for me. I read this book called Kitchen Confidential, which is Anthony Bourdain’s book, his first book that became really popular. And the short version of this story is, he talks about his own career, that the first, let’s call it 10 chapters in an 11-chapter book, was about him trying to become the boss as fast as possible, and trying to be the person in charge as fast as possible, and the blunders that he went through as a result of that, right? And basically said, “Look, I became a head chef within two years after coming out of culinary school, and I just completely screwed it up because I had no idea what I was doing.” And then the last chapter of the book, he juxtaposes it with the then head chef at Eleven Madison Park, which has sort of become well-known as one of the best restaurants in all of New York. And he said, “Look, what did this chef do that was different than me?” He went and he worked for the very best people around the world in any job that they would allow him to take. He would be the dishwasher in the kitchen. He would be the pastry chef in a kitchen. His goal was just to work with and learn from the very best people around the world.
And he talks about that. It’s like, then when he went into his kitchen, he was like, “It was the most organized. The people really worked well together. He had benefits packages. He had teamwork that was going on. There were team values with the people in the kitchen.” He’s like, all this stuff that was so advanced compared to what he was doing in his kitchen, even though he became the boss quickly, that he was like, “I had no shot to ever become that type of chef because I was too obsessed with trying to become the boss too quickly.”
And so, this is certainly something that I followed in my career, where it was like, I want to try to work for the very best organizations in the world, regardless of where they are and learn from what I can, so
that when I actually go and try to start my thing, if I ever do, that I’ll be able to lean on the experience from all these amazing people and build something that’s different and unique and special.
JON SAKODA: But deep down inside, you also know that you’re going to eventually step out and put that chip back on your shoulder, and...
ANDREW PETERSON: Well, the chip always stayed, Jon. Even now.
JON SAKODA: But let’s go back to this, because I think that there’s a yin and yang here, which is why I want to maybe try to get you to provide some perspective on it for people that are out there. So, you have the opportunity to continue always to learn from and grow with the best. When you’re at a place like Stanford, or you’re at a place like Google, the sky is the limit. You can stay there for a long time. And people do stay there for a long time. Yet in 2009, you somehow feel like it’s time to move on. And you want to go put yourself in a really challenging situation where you don’t have resources and you’re not really learning from the best. So, what was that moment like?
ANDREW PETERSON: The moment was—I was bored, honestly. I was so ready to learn something. And part of this was like, I wanted there to be a little bit more meaning in my life than helping make money for ads for a big company.
JON SAKODA: Ah, okay. So it’s the purpose. It lacked purpose.
ANDREW PETERSON: There was a purpose piece there for sure. It’s funny, because if you look at any sort of financial risk analysis, everybody says, “If you want to make lots of money, the thing to do is stay at the big company and just continue to amass wealth. It’s the lowest risk, highest likelihood that you can do that.” And when I was leaving, I think Google was named Inc.’s number one company in the world or whatever to work at. And my parents were like, “What are you doing?”
JON SAKODA: What was that conversation like with your parents?
ANDREW PETERSON: I mean, the thing that I told both of my parents, and I’ve told them this actually every time I’ve left a job now is, if you build the right relationships and you work really well within these organization, I was like, I can always go back. And I told my parents this at the time. They’ll always hire me to come back and take some type of job. So if I completely fail at this other thing, I can always come back to that, right? Don’t leave on bad terms. Leave on great terms, and you always leave that door open. And then you give yourself the opportunity to open more future doors in front of you.
JON SAKODA: I think that this point that you’re making is, I think, one of the most important ones for aspiring founders. They all feel like they’re leaving money on the table. They all feel like maybe they’re never gonna be able to go back, that there’s no safety net. In some cases, that is true. But in a lot of cases, it’s just fear.
ANDREW PETERSON: Yup. I think leaving Google was one of the things that really set me up for being able to leave any future job in the future and go on to the next one. But I think the more success that I had leaving and feeling like I really leveled up and learned from that next experience and going into the next thing, right? So, from the Clinton Foundation, I left and I moved back to New York City. So I went from the rural of the rural to the urban of the urban, and then started working for Etsy. And—
JON SAKODA: How’d you find Etsy? And then walk me through the story about how you decided to found Signal Sciences.
ANDREW PETERSON: So, I found Etsy actually via an amazing man named Michael Dearing. So, Michael actually runs an investment firm now called Harrison Metal. But at the time, he was a teacher at the Stanford D school. I had met him when I was working at Google, and we had just stayed in touch. And so when I went to Africa, I had a blog, and he read it. He sort of became a mentor. We talked a lot about career stuff. And so, I pinged him. I said, “Hey, look, I’m looking for interesting companies, early stage in New York City. Is there anything that you love?” And he was like, “You should absolutely go look up Etsy.” And so, he didn’t make the introduction for me. I went and I just applied online to the open product manager role that they had there. And I interviewed from Tanzania.
And then when I was flying back home after my fellowship was over, I flew through New York on my way back to Seattle to stay with my parents until I figured out what my next job was gonna be. I was able to get my interviews in, and God willing, they went well. And I went back to Seattle after that weekend. They had called me and said, “Hey, do you want the job?” And I said, “Let’s do this.” So then I moved to New York, started at Etsy. I was the third PM hired, I think, that they had on the team at the time. And they had an engineering team of like 50 or 60. So I got to work with tons of different engineers groups on launching products and kind of learning crash course style of how to become a product manager.
And in that time, we launched some fraud features and some security features. And so, I overlapped with my now Signal Sciences co-founders, Nick Galbreath and Zane Lackey, as they were running a bunch of infrastructure engineering, security engineering, a bunch of parts of the engineering group. And then Zane was essentially the first CISO that Etsy had ever had. So, we overlapped on some of those projects.
And so, I had an amazing run when I was at Etsy, and I was there for four years. And we did some really incredible work, both on the business side, but then certainly on the technology side. And I quit. And the day I quit, Zane, who was, again, the CISO at Etsy at the time, we had dinner the night before I quit. And we were drunkenly walking home in New York City. And then I said, “Hey, man, it’s been amazing. This is such a small world. I’m sure we’ll work together.” And he’s like, “You know, about that. Let’s talk tomorrow.” And I was like, “What?” I didn’t really understand what he was saying at the time. And then we got lunch the next day, and he said, “Hey, look, Nick and I have been having this idea. We’ve been working on this for a while. And we love working with you, and we really know what kind of skills you bring to the table. We’d love to see if something could work out.”
And these are the moments, Jon, where it’s like, if you—I think this comes back to that concept that I really believe in, which is like, look, if you work with really great people and focus on just trying to work with the very best people, I think opportunities like this can come up. And so, they sort of approached me. And I’d known them for a long time, but I’m not a security expert. I wasn’t at the time, right? I mean, we had a lot of these conversations sort of back and forth. And I took about three or four months to work with them on the initial ideas around how we would build this and start a company. And some of what we worked on was me understanding the market and me understanding the product space. And some of it was just really talking to a lot of other founders and investors who knew about starting companies and what it takes to do that.
I got amazing advice. I continue to do that to this day, which is talk to as many people that know about things that they’ve gone through that you haven’t, and really firmly believe in both paying it forward to pass those learnings on to others, but also—this is one of the amazing things about technology and the technology culture, is that people are very, very willing to give away their knowledge and experience to others to help them do the exact same things that they did themselves. And you don’t see this in every industry. This is something that’s so special, I think, about technology and about where we are in technology right now. Because in essence, we’re all kind of learning these things together.
JON SAKODA: Yeah. Do you remember what some of that advice was? I mean, if I go back to 2013, you left Etsy. You maybe did not even know you wanted to be a founder until you were approached by your co-founders. So, tons of uncertainty about whether this is the right thing for you. Yet four months later, you decide to start this company. So, what were some of those conversations, and how’d you get over that anxiety?
ANDREW PETERSON: Yeah. The way these conversations would go, Jon, would be like, “Hey, I got put in touch with X founder of X company. And let’s say, here’s the situation. We’re thinking about starting a company. And I don’t know what the hell I’m doing. And so, I want to get some advice.” And they’d say, “Well, what’s the company? Tell me about what you’re thinking about doing, and tell me about your team, and tell me about what the background is, and what led to it.” And telling that story to them, it’s almost immediate that it was 100% for 100% of people that would come back and say, “You need to do this. You have a team of people who you really trust, you have experience working with already. And you have a specific idea in an area that you now is painful that you have experience solving from your previous company. Duh. Absolutely go do this. And even if it fails, you’re gonna learn so much in the process.”
And so, one of the things that I was doing at the time was trying to think of—look, I had just turned 30. And to your point, I didn’t leave Etsy to go start this company. I left Etsy because I was ready to move out of New York City. I was ready to move back to the West Coast and just do something else. I was essentially bored, right? I was bored.
JON SAKODA: I love that your boredom drives you to be so wildly successful. ANDREW PETERSON: Or foolish. Maybe just lucky, I guess.
JON SAKODA: Can I ask, I think it’d be fun to look back now. You’ve been wildly successful, and you also now coach a lot of founders. Perhaps you realize that a lot of times when founders are going out to start a company, they do get a lot of positive signaling, partially because I think there’s a naivete from everybody involved, and I think also partially because don’t like to disappoint founders. They don’t like to say, “Hey, man, this is gonna be risky. Don’t do it.” So, what would you say to founders now who are in your position back in 2013, knowing that statistically speaking, a lot of people don’t make it on this journey, and they’re destined to maybe fail?”
ANDREW PETERSON: Yeah. Especially if people come to me and they say, “Hey, I’m thinking about starting this company.” Most of the time, I say, “I wouldn’t recommend it.” And they say, “Really?” I basically say, “Look, number one, it’s a 10-year commitment. If things go well, it’s a 10-year commitment. And that’s things going well, right? And number two, you will put your mind, body, and spirit into this thing. So, maybe you work 60 hours a week, but you’re thinking about it 100 hours a week.” And so, a lot of the questions that I tend to ask folks is like, “Do you have kids? Are you
planning to have kids? Are you married? Are you planning to get married? Do you have ailing health for your family members or yourself?”
These are real sort of life questions that are basically—you can have all these things and you could be successful, and you could start a company. You can have all of those things. But if you are unconscious of, or you’re not aware of the type of commitment that I think is really needed to build a successful company, I just think it could be a very large burden for people then when they get into it. They basically start getting into it. They say, “Oh man, I wasn’t expecting”—
JON SAKODA: Well, it is perhaps one of the counterintuitive things about building a successful startup. It gets more intense, not less intense, as you succeed.
ANDREW PETERSON: Right. Yeah.
JON SAKODA: Let’s talk about the founding story and some of the things that went well on the way. So, take us back. It’s 2013. What was the hypothesis? What did you guys build? And then looking back, what were some of the things you really got right?
ANDREW PETERSON: Yeah. Without getting into the weeds, the gist is, when we were at Etsy, Etsy was kind of on the forefront of some changes that were happening to software development that are now called DevOps, or cloud, or basically modern application development, right? And so, building our security practice in the context of that, there were really big chances with how software was built and how it was maintained that we just saw were gonna have a pretty big impact on how you were going to secure that software. And so, we had a number of years at Etsy where we were trying to build this stuff in-house, because a lot of the technology we were trying to use, stuff that was off the shelf, it didn’t exist. And so, we built some solutions to these things in-house.
And more than anything, it gave us this sort of of aha, okay, great. We’re learning these things. Nick and Zane both went out, and they would give talks about these lessons that they were learning to try to allow others to kind of learn from them also and do these things in-house. And they just got an increasing number of people that would come to them and tell them, “Hey, we don’t have the type of capabilities that you’re talking about. We would really need them. And they sound very, very compelling. Where could we go and buy this stuff?” And I think with enough of those conversations, I think that really led us to being like, look, this is an opportunity not only to create a business around it, but it’s certainly a pain for our colleagues in the industry that I think we could really help them with, right?
And so, I think just from a pure business founding story, it’s a lot of right place, right time. We were at Etsy before the rest of the industry was really doing some of the practices that they were doing on the software development side that led us to some of these insights. And we took a shot, and the timing, I think, worked out for when we started the company. So, when we started the company, we built a bunch of technology. A lot of lessons learned in the process of doing that. And I kind of shake my head at how many mistakes we made along the way that I would advise myself out of at this point. But it’s part of the journey.
JON SAKODA: Is there anything you would’ve done differently, sort of words of wisdom or lessons to your younger self?
ANDREW PETERSON: Some of the things that I would tell other founders, and I tell this to them all the time, Jon, is kind of cliché now, is that first-time founders focus on technology. Second-time founders focus on go-to-market. And I think I really believe that the go-to-market motion for companies that are coming out now is even more important than it was when we came out because of how much—the building blocks for technology and building technology are so much easier now than it was, let’s call it eight years ago, that your differentiation on the technology side, I think, is just getting thinner and thinner in terms of how you’re gonna compete in the market.
And I still don’t think there’s a blueprint for this. And I think there won’t be a blueprint because there’s so much competition to figure out how to actually make these sales right is, what’s your angle on how you get in front of customers and how you actually get your product out to customers? And so, that’s something that I think blunder is probably too strong of a word. But I would say that we really brute forced it. It was really just, we are going to just hustle our way into this many different meetings and hustle our way in front of customers. And we did that. And it just was a massive effort from us that I was like, look, if I did it again, I would focus a lot differently on how we actually built out that [crosstalk].
JON SAKODA: I think it’s quite common. I remember this even for myself. You begin to think that the hustle and the power of running through a wall is what makes you special, and you don’t ask yourself whether you should be running through walls, or whether there’s other ways to get from Point A to Point B.
ANDREW PETERSON: Yeah. I think that’s mainly it. It’s like, especially if you’re a tech-focused founder, you don’t know that there are other ways to do it. And I think the teams that I see now that are sort of the new generation of companies that are coming up that are doing really, really well take this stuff seriously. They think about how to apply technology and their expertise in technology, how do you apply that to growing, and filtering out, and identifying who are good target customers, and then filtering those back to your salespeople, and are building a lot of custom technology internally to their company that helps them identify these customers and helps them sort of rank order them in a way that has been very successful and I think will continue to be very successful for them.
JON SAKODA: So the company was doing incredibly well. Walk us through how you guys thought about exiting the company, and when is the right time to think about an exit?
ANDREW PETERSON: This is a common question that you’ll get when you start having—especially savvy employees start joining the team that may have been involved in startups in the past. And they’ll ask you, especially executives that you hire, they’ll ask you, “What’s the plan for the company? What do you want to do with it?” And I think I was smart enough to not be naive when we started the company to understand that when you raise capital, especially from institutional investors, you have kind of three outcomes. You’re going public, you’re selling the company, or you’re dying. It’s one of the three. And this whole concept of, “Oh, we’re gonna stay private and just sort of maintain”—now obviously, the longevity of staying private has gotten a lot longer than it was even 10 years ago. And so, that—
JON SAKODA: But you are right. Just because you’ve stayed private for 10 years doesn’t yet answer the question of, how do your shareholders and employees eventually make money?
ANDREW PETERSON: Yes, exactly. And so, I would tell people that. And what I would tell people is I would say, “Look, we don’t plan to have the company die. But we’re in this unique position where I think we actually—it’s possible to either sell the company or go public. I think it’s actually possible.” And one thing I will say is, especially in the cybersecurity industry, lots of companies get bought. And you sort of—your experience of seeing your peers or companies around you get bought is like, “Man, they just got lucky.” It’s not luck. These companies—and when we went and talked to these other founders, they were actively developing relationships with companies around them that could be potential acquirers. And they did lots of work to do that.
And there’s this adage that says “Companies don’t get sold, they get bought.” And I think that’s kind of BS, Jon. I really do believe companies are sold, maybe in a different way than what people think, that somebody just shows up on your doorstep and is like, “Here’s a check! I want to buy your company.” No, that doesn’t happen. And so, we really learned and invested a lot then in starting to build relationships with people that were potential for us to buy.
And another founder told me, “Look, the moment that you start doing that, then your company’s already sold.” And I really pushed back hard on that, because I think that the responsibility of the CEO is to have optionality for the company. And that optionality might come in when the company’s doing extremely well. That optionality might come in when the company’s not doing really well. But if you don’t have those relationships built up with potential buyers for the company, you are taking away the optionality for your company, and you’re creating and introducing a lot of risk for the company as a result.
So, most of the advice that I give to other founders is, “Yeah, it is wrapped up in our own experience. But it’s like, if we didn’t have those relationships, then we wouldn’t have had the opportunity to even sell the company at the time. And so, nobody’s gonna show up on your doorstep. You’re actually gonna have to sell your company. But it’s not like you’re gonna go door-to-door salesmen trying to sell and say, ‘Hey, here’s this amazing thing.’ It’s really about building relationships with people that you want to work with longer-term.”
JON SAKODA: I think this is such great advice, and I think it’s also coming back into fashion, perhaps as maybe some founders see that they can’t just raise money at higher and higher prices forever—that eventually, you do need to exit. So, I think this is very sound advice, and it’s very timely.
So when I look back, if you remember the 30-year-old version of you who was about to start Signal Sciences, do you have any lessons for your younger self?
ANDREW PETERSON: I think one of the things that I’m really proud of that I think we got right was—look, I knew this was gonna be a 10-year commitment. And I knew that it was going to be a dominant space in my mind and my life for a very long time. And I had—again, luckily, these are some of the lessons that I learned when I went around and talked to other entrepreneurs, because they sort of prepped me for that. They said, “Hey, look, this is not a—it’s not for the faint of heart, and it’s gonna be a long commitment.” This is not like a couple years where, again, that could be my four-year stint somewhere, Jon, and then get bored and go do something else. I was like, that’s not what you’re signing up for as a CEO of a startup, right?
And so, I was very conscious about saying this and thinking about this with both me and my founders was, life has to go on also. You also have to proceed in your life, because if we do this and we spend
eight years, and the company does not succeed, and it folds, I don’t want to have that regret that sits on me that I stopped my life for eight years, and my co-founders stopped my life for eight years for something that ultimately didn’t necessarily have a great financial outcome for us, right? And I’m sure we would’ve learned a ton along the way, and we would’ve gone to something else. But it was gonna be exhausting. And so, look, I bet my wife—we got married. We just had our first kid. Nick met his wife. Not met his wife. They got married. They had been dating at the time. They got married. They have two kids now. Zane got married also. Lots of other people in our company got married and had kids. And this was something that I think was a success. That was a win for me in my mind in my life, that look, we did the company, but we also didn’t completely ditch the rest of our life and put everything else on hold. And I think that’s important.
JON SAKODA: Is there a way that you remember reminding yourself of that and reminding your founders of that? I know everyone says that. But then there’s the day-to-day grind of a startup, where life always seems to be the last thing on the list. So, easy to say, hard to do. Do you remember how you did it?
ANDREW PETERSON: So, I think the most talented founders that I’ve been sort of able to learn from along the way have been very fluid about how you just find a way to do more with less. And I remember—again, this is back all the way when I was swimming 25 hours a week in high school and then going to high school all day, and then waking up at 4:30 every morning and going to bed at 10:30 every night. You just do the work in less time when you have to do it. And if you have all weekend to do a paper, or if you have six weeks to do a paper, you’ll do about the same amount of output in that three days than you would in six weeks. And so, to me, it just comes down to being really good at prioritization. There’s no cheat code here. There’s no silver bullet. It’s like, what’s really important to you, and then focus on those things in your life. And so, if you want to make your personal life a priority, you do it.
JON SAKODA: That is such great advice. While we’re on this topic, do you have advice for how founders should manage or build the relationship with their spouse or significant other through this process? How do you manage that relationship?
ANDREW PETERSON: Well, I’ll do one simple life hack, or a very specific piece of advice is, you are gonna be doing lots of things during the week and on the weekends at night where you’re gonna be away. This job is not a 9:00 to 5:00. It’s not, right? And so, for those things where you’re away, either on the weekends or during the week and weekdays, or you’re traveling, put those on your combined calendars together. Make sure that at least it’s on the calendar. Because you’re never gonna be able to keep up with explaining, “Oh, I have this dinner. Oh, I forgot to tell you about the dinner on Tuesday night. Aw, shoot.” And then you’re always essentially in the doghouse if that’s happening. It happened for years for me.
And I talked with my wife and said, “Look, I’m not doing these things on purpose to try to—this is just life. My life is super busy, and it’s fluid and stuff right now.” And we agreed together, it’s like, well, okay, put these on a combined calendar, so at least I can look at our calendar during the week and see when you’re gonna be around and when you’re not. And that has been extremely helpful for us. So, that’s like a specific thing that I would recommend people do.
But the second thing is, and surprise, surprise, the kid of a psychologist is gonna give this advice, is talk to your spouse about what’s going on. It’s one of the things that I still have a hard time doing,
which is especially in the upsides and the downsides, a lot of what I see founders doing is when things are not going well, you keep it in. And you don’t want to explain that to your significant other. You don’t want to explain that to your partner, because—and I didn’t do that. And what I would tell my wife or my girlfriend at the time was, “I don’t want to burden you with the stress that I have, because if I have it and I tell it to you, you’ll probably have some of the stress too.”
And while that might be true, you are also just—I wouldn’t say that you’re hiding your experience. But by not sharing that experience with your partner, they just have no idea where you’re at. And so, I think sharing those things, and especially sharing the things that don’t go particularly well, I think that’s actually part of the way that you build trust with your partner, because they don’t feel like you’re gonna end up in some situation where, look, the company just died, and they’re completely blindsided, and they’re gonna have to get an extra job or something to be able to help support the family, or whatever. If you’re talking about both the good experiences and the bad experiences, I think that builds that trust over time that nobody’s gonna get blindsided. They know what’s going on.
JON SAKODA: I think I only learned this three years ago, so I think you’re now giving people not only life-changing advice; I think you’re giving them life-saving advice. I think when we were at lunch just a few days ago, you told me that you now are working on a piece to explain to founders all the things that you wish you knew in order to minimize dilution, or at least build a company that’s valuable for yourself and for your family and for your employees. Would you mind sharing some of the words of wisdom that you’re authoring right now?
ANDREW PETERSON: Dilution is an area that I think a lot of founders just don’t understand. There’s a lot of founders that are very smart and very savvy, and this stuff actually really does come down to math. But there’s so much other things wrapped up in it. Some of the examples are like, just raise less money. And this sounds really stupid basic. And it is. But when you’re raising money, I remember how many of my employees would say, “Well, we only raised a $10 million Series A. Our competitors all raised $20 to $30. Does this mean that we’re really suffering and we’re just not doing as well as them?” And I think for a lot of people, the amount you raise equals how successful you are. And so, I think that there’s certainly, A, there’s a lot of pressure to do that. B, if you are being successful, investors absolutely want to put more money in, because they get to own parts of your company.
But I found myself having this conversation with many, many of my own employees, which is like, look, when we raise money, we’re actually selling ownership of the company. And so, that means you and I both dilute our ownership, and we’re trading that away. And so, what we’re trying to do as an executive team, we’re not trying to raise less money. We’re trying to manage how much money we really need to continue to grow the company over specific periods of time, right?
JON SAKODA: And so, this is a very counterintuitive point, but it’s true. And that is, in some ways, the more confidence you have in your business as a founder, the less money you raise.
ANDREW PETERSON: Yeah. Because the way that I would think about this, Jon, and the way that I talk about it with our team and with my other co-founders, I’m betting on ourselves. We’re making a bet ourselves that we’re gonna be worth more in 18 months than we are today. And we took that bet the entire time. We never maxed out rounds at all. We left a lot of money on the table for a lot of investors that wanted to put more money in. And we were very sensitive about dilution, sometimes to our detriment, I would say, right? But I think long-term, it worked out well for the company and worked out well for our employees as well.
JON SAKODA: Okay, last question. I love asking this. I know that many founders, after they’ve had a successful acquisition, have a little PTSD, and aren’t ready to jump back into their next big thing. But do you think you’re going to start another company?
ANDREW PETERSON: Yes, absolutely. This makes me think immediately about the, how do you manage your partner relationship and stuff? My wife knows, and I think this comes back to just what are sort of motivating factors in my life, has been working on problems that other people don’t think I can solve, and solving them. Now, I think the thing that a lot of people ask me that is a little bit more surprising is, “Would you start another company in cybersecurity?” I don’t know. Maybe cybersecurity is where I’d start another company, and maybe not. But as you can imagine from my background that I’ve explained so far, working in Africa on the healthcare, working at Google on ads, working at Etsy on ecom then starting a cybersecurity company, that’s not really terribly linear in terms of how I’ve gone about my career. And I don’t plan to have my future career look linear either. And on purpose, even if that means that I’m going into another area where I’m gonna have to learn from the ground up, because that’s part of the fun.
JON SAKODA: Awesome, man. Well, I now remember back in 2019, I think, when you and I were sitting on a chairlift at a ski resort, you told me, actually, that you could recognize my voice because it sounded like a great radio voice. And I remember back then thinking to myself, “I’m never going on radio.” But I do really appreciate you saying that, because maybe deep down inside, that was actually the inspiration for kicking off this podcast when we all went inside and had to shelter in place last year. So, I really do appreciate you mentioning that. That might have been serendipitous for both of us.
ANDREW PETERSON: And now we’ve come full circle, Jon.
JON SAKODA: Well, you have been an incredible friend to me. You’ve been an incredible guest on this podcast. And I just can’t thank you enough.
ANDREW PETERSON: Thank you for having me, Jon. Any time.