EP 102: Armon Dadgar (Co-Founder, HashiCorp) Reflects 48-Hours After Selling to IBM
After last week’s announcement that IBM is acquiring HashiCorp for $6.4B, HashiCorp co-founder Armon Dadgar discussed a few behind-the-scenes elements of the acquisition and HashiCorp’s full journey from the early days. Armon shares some of his biggest lessons from the journey, from fundraising to community building and more.
(00:00) Intro
(01:17) Explaining HashiCorp: Simplifying Cloud Infrastructure for Enterprises
(03:24) Navigating the Acquisition: Emotions, Expectations, and the Future with IBM
(09:01) The Founding Story: Choosing the Path of a Venture-Backed Business
(10:59) Challenging Silicon Valley Wisdom: HashiCorp's Multi-Product Strategy
(17:54) The Importance of Being Pragmatic: Adapting Products to Market Needs
(32:27) Customer Trust and Commitment: The Foundation of HashiCorp's Success
(36:27) Organizational Evolution: Adapting Structure to Strategy at HashiCorp
(38:36) Exploring Product Verticals and Team Structures
(39:16) The Evolution of Product Portfolio
(40:46) Strategic Product Development and Market Fit
(41:51) Transitioning from Product Expansion to Monetization
(43:27) The Impact of Docker on Fundraising and Strategy
(50:31) Navigating the Challenges of Multi-Product Strategy
(55:33) The Significance of Branding and Product Naming
(01:00:46) Understanding User vs. Buyer Dynamics in Open Source Monetization
(01:09:17) The Founders' Journey: From University to HashiCorp
(01:16:39) Navigating Leadership and Hiring Challenges
(01:17:14) The Search for the Right Leadership: A Journey of Discovery
(01:17:57) Realizing the Need for Specialized Roles
(01:18:24) The Turning Point: Hiring Key Executives
(01:19:57) Overcoming the Ego: Embracing Change for Company Success
(01:21:18) The Final Decision: Bringing in New Leadership
(01:22:45) Reflecting on the Hiring Process and Its Impact
(01:28:27) Building a Culture of Execution and Communication
(01:50:51) The Importance of Airline Loyalty for Busy Executives
Executive Producer: Rashad Assir
Producer: Leah Clapper
Mixing and editing: Justin Hrabovsky
Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA
🎙 Listen to the show
Apple Podcasts: https://podcasts.apple.com/us/podcast/the-logan-bartlett-show/id1606770839
Spotify: https://open.spotify.com/show/5WqBqDb4br3LlyVrdqOYYb?si=3076e6c1b5c94d63&nd=1
Google Podcasts: https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5zaW1wbGVjYXN0LmNvbS9zb0hJZkhWbg
🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1
Follow on Socials
📸 Instagram - https://www.instagram.com/theloganbartlettshow
🐦 Twitter - https://twitter.com/loganbartshow
🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow
About the Show
Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode, Logan goes behind the scenes with world-class entrepreneurs and investors. If you're interested in the real inside baseball of tech, entrepreneurship, and start-up investing, tune in every Friday for new episodes.
Executive Producer: Rashad Assir
Producer: Leah Clapper
Mixing and editing: Justin Hrabovsky
Check out Unsupervised Learning, Redpoint's AI Podcast: https://www.youtube.com/@UCUl-s_Vp-Kkk_XVyDylNwLA
🎥 Subscribe on YouTube: https://www.youtube.com/channel/UCugS0jD5IAdoqzjaNYzns7w?sub_confirmation=1
Follow on Socials
📸 Instagram - https://www.instagram.com/theloganbartlettshow
📱 X - https://twitter.com/loganbartshow
🎬 Clips on TikTok - https://www.tiktok.com/@theloganbartlettshow
About the Show
Logan Bartlett is a Software Investor at Redpoint Ventures - a Silicon Valley-based VC with $6B AUM and investments in Snowflake, DraftKings, Twilio, and Netflix. In each episode of The Logan Bartlett Show, we sit down with the people behind today’s most important startups and extract the tactics, lessons, and frameworks they’ve learned the hard way. Conversations span hiring to GTM, product, growth, fundraising and everything in between - collectively forming the ultimate playbook to make you a better CEO, investor or board member.
Tap follow and enable notifications to stay ahead of the game.
Armon Dadgar on HashiCorp's Practitioner Approach
Armon Dadgar and Mitchell Hashimoto are long-time open source practitioners. It's that practitioner focus they established as core to their approach when they started HashiCorp about ten years ago. Today, HashiCorp is a publicly traded company.
Before they started HashiCorp, Dadgar and Hashimoto were students at the University of Washington. Through college and afterward, they cut their teeth on open source and learning how to build software in open source.
HashiCorp's business is an outgrowth of the two as practitioners in open source communities, said Dadgar, co-founder and CTO of HashiCorp, in an interview at the HashiConf conference in Los Angeles earlier this month.
Both of them wanted to recreate the asynchronous collaboration that they loved so much about the open source projects they worked on as practitioners, Dadgar said. They knew that they did not want bureaucracy or a hard-to-follow roadmap.
Dadgar cited Terraform as an example of their approach. Terraform is Hashicorp's open-source, infrastructure-as-code, software tool and reflects the company's model to control its core while providing a good user experience. That experience goes beyond community development and into the application architecture itself.
"If you're a weekend warrior, and you want to contribute something, you're not gonna go read this massively complicated codebase to understand how it works, just to do an integration," Dadgar said." So instead, we built a very specific integration surface area for Terraform."
The integration is about 200 lines of code, Dadgar said. They call the integration their core plus plugin model, with a prescriptive scaffold, examples of how to integrate, and the SDK. Their "golden path" to integration is how the company has developed a program that today has about 2,500 providers.
The HashiCorp open source model relies on its core and plugin model. On Twitter, one person asked why doesn't HashiCorp be a proprietary company. Dadgar referred to HashiCorp's open source approach when asked that question in our interview.
"Oh, that's an interesting question," Dadgar said. "You know, I think it'd be a much harder, company to scale. And what I mean by that is, if you take a look at like a Terraform community or Vault – there's thousands of contributors. And that's what solves the integration problem. Right? And so if you said, we were proprietary, hey, how many engineers would it take to build 2000 TerraForm integrations? It'd be a whole lot more people that we have today. And so I think fundamentally, what open source helps you solve is the fact that, you know, modern infrastructure has this really wide surface area of integration. And I don't think you can solve that as a proprietary business."
"I don't think we'd be able to have nearly the breadth of integration. We could maybe cover the core cloud providers. But you'd have 50 Terraform providers, not 2500 Terraform providers."
Free Software and Open Source Business
Today, despite the critical importance of open source to software, it’s still seen by some as blasphemous to make money as an open source business. In this podcast, Armon Dadgar, Cofounder and CTO of HashiCorp; Ali Ghodsi, CEO of Databricks; and a16z General Partner Peter Levine explain why it's necessary to turn some open source projects into businesses.
They also cover the most important questions for open source leaders to answer: How do you keep community engaged while building a business? What new opportunities does SaaS (software-as-a-service) present? And if you are a SaaS business, how should you approach cloud service companies, like Amazon Web Services (AWS)?
Stay Updated:
Find a16z on YouTube: YouTube
Find a16z on X
Find a16z on LinkedIn
Listen to the a16z Show on Spotify
Listen to the a16z Show on Apple Podcasts
Follow our host: https://twitter.com/eriktorenberg
Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.
20VC: Why Founding Your First Company Is Like Learning Through A Thousand Paper Cuts, The 3 Core Phases to Product Adoption and Why Valuation Obsession Must Change In The Valley with Armon Dadgar, Founder & CTO @ Hashicorp
Armon Dadgar is the Founder & CTO @ Hashicorp, the open-source software company that provides consistent workflows to provision, secure, connect and run any infrastructure for any application. To date, Hashicorp has raised over $74m in VC funding from many friends of the show including Scott Raney @ Redpoint, Glenn Solomon @ GGV, Semil Shah, True Ventures and Mayfield. As for Armon, today he leads the Hashicorp research group and focused on industrial research in the security and large-scale system management space. Prior to founding Hashicorp, Armon was a software engineer @ Kiip and Amazon.
In Today's Episode You Will Learn:
1.) How Armon made his way from intern at Amazon to founding Hashicorp and creating the game-changing suite of tools in the world of DevOps?
2.) Hashicorp has enjoyed success after success with new products, so what does Armon believe is the secret to continuous product innovation? What does Armon mean when he says "there are really 3 phases to product adoption"? How does Armon determine between vision for a product and the realism when it is not working, when launching products?
3.) Hashicorp only recently started generating revenue, why was now the right time? At what point does one go from building products for the community to building products people will pay for? How does Armon assess professional services today? What does Armon believe are the 2 foundational problems with "professional services"?
4.) Many VCs suggest it's impossible to build big infrastructure businesses today given the commoditizing forces to open source and cloud computing. How have Hashicorp navigated that and bucked that conventional wisdom? How has Armon also bucked the conventional wisdom on the importance of focus? What core tenets must remain if one wants to go against this emphasis on focus?
5.) Armon and his co-founder brought on a CEO early, what was the realisation moment for the need to bring in an external CEO? How did Armon look to get comfortable with this transition? What advice would Armon give to founders contemplating bringing in an external CEO? With the benefit of hindsight, what would Armon do differently if he had the time again?
Items Mentioned In Today's Show:
Armon's Fave Book: To The Lighthouse by Virginia Woolf
As always you can follow Harry, The Twenty Minute VC and Armon on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
Are you told your standards are too high, well The League is the app that tells you to keep them that way, they know your time is valuable so simply tell them your preferences and they will handle the scouting and vetting for you. Plus even better, your profile will only ever be seen by people who match your preferences, matches expire after 21 days and so there are no drawn-out games and they even require LinkedIn to protect your privacy and block you from matching with co-workers and business connections. You can apply now by downloading The League on the app store or heading to The League.com
Zoom is the fastest-growing video and web conferencing service, providing one consistent enterprise experience that allows you to engage in an a variety of activities including video meetings and webinars, collaboration-enabled conference rooms, and persistent chat all in one platform. Plus, it is the easiest solution to manage, scale, and use, and has the most straightforward, affordable pricing. And you can see for yourself! Sign up for a free account (not a trial!). Just visit Zoom.us.
Culture Amp is the platform that makes it easy to collect, understand and act on employee feedback. From onboarding surveys to company-wide engagement, individual effectiveness and more, the platform manages multiple sources of feedback and connects the dots for you and that is why companies like Slack, Nike, Oracle and Lyft all trust Culture Amp. It enables leaders to make better decisions, demonstrate impact and turn your company culture into a competitive edge. Find out more on cultureamp.com.
.jpg?width=400){kind=small}
%20(cropped).jpg?width=400){kind=small}