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If you're not using AI, like you're not going to be here in a year. The internet is changing fundamentally. What does the internet need to look like when you no longer have one website for every company? Well, Rashad, thank you for joining me. I want to do a quick background just on you. Uh, we didn't do this the first time we did this podcast. We didn't do that. And I want to make sure people understand kind of your history because I think it it plays into the story and the narrative that I think you have to

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really share. Um so Rash is the CEO of Vermont previously at Live Ramp. Vermont is creating AI powered customer journeys for commerce businesses but it sounds like the vision is to go much more broad and I want to talk about that today. Um the business has been on a tear particularly in the e-commerce ecosystem. Um raising from Greylock Bane most recently VMG partners in a 455 million series B. Congratulations. And so you know obviously I think you've done an exceptional job fundraising building the company developing

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momentum. And then previously you were at Live Ramp working in the privacy space. Um, and I think that, you know, has had an influence on the solution that you guys bring to the table with Vermont. Um, can you maybe expand on on on what Vermont does? Yeah, that's a better summary than I usually give. So, thank you for that. And yeah, it's exciting. I get to talk about what we do off the heels of the fundraising announcement, which are always like high momentum moments. So um definitely want to make sure that that

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capital gets put to good use which we will talk more about later but I at live ramp for the first half of my time there I land ran all of the technical facing customer teams and then the second half of my time there I built new businesses inside of live ramp so I built their podcasting identity business I built their privacy business like you mentioned I built their healthcare business and when Apple said that you're no longer going to be ble to track people from app to website. So when Apple made those big privacy changes and

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well announced first in 2020 and then took impact in 2022 that was when we decided to say hey we need a new system where you can generate a unique website for every piece of content so that way the trackability becomes easier. It turns out that system was like hard to operate because you have to manually build all of these different websites which is what the our system was initially designed to do. So we we like built a bunch of Lego blocks underneath it to make it easier for people to like build these websites per

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unique uh piece of content. So ad email, SMS, whatever it may be. And then when AI happened, we were able to automate all of that. So now we can with an agent just actually automatically assemble for you the best site experience for every piece of content, whether that's an ad, an email, an SMS, whatever it may be. And so the whole idea is that AI has become this massive tailwind to generate on the creative side, we're seeing it more and more. So you can generate creatives, but you can also generate

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full websites with the backend tie-in that you need for it to be transactable in a useful way, right? So like of course lovable and other things you can like build an arbitrary website from but it's hard to do that in the e-commerce context because you actually want to tie in to your product feed to your order management system to your inventory management system all these other things and so you need the right Lego blocks to then tell the agent to actually assemble those Lego blocks for the website

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experience that you have. So that's basically where the company is headed now. Can you dig a little bit deeper into the solve for privacy? Because I actually want to understand why that's a solve for what happened with ATT and IT like why your solution having a unique uh website for a particular ad actually like gives you better signal. Yeah. Yeah. Yeah. Yeah. Yeah. So when you say you cannot track people in particular, the way that you the way the privacy policy is implemented is Lucas

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came from an ad and then he purchased on the website and then you tell the system that you place the ad in. So Facebook in this example that Lucas bought, right? Right? And so you send that signal back to the ad system and then it finds other people like Lucas because it has a bunch of signal on all of the people who have bought. Instead, you can say, "Hey, everybody who comes from ad one then goes to website one shows this behavior." So you don't actually care that it's Lucas anymore. It can be like

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Lucas, Richish, Orin, Sam, whatever. Like all of these people ex across all of these people, here's the behavior that's exhibited. and then a different ad will have a different set of behaviors that are tracked on a different website and so on and so forth. And so you effectively create a closed loop system for every ad website combination. And so that's how you get around the privacy issue is you just say the person doesn't matter. What matters is the situation that all of the people who go through that experience

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are in and how they behave in those different contexts. So yeah, um that's that's the idea. That's how it it doesn't trigger privacy issues is because you actually don't care that it's Lucas at all. And so I'm curious how like does CLV play a portion into the behavioral data at all? Do you like tap into that um into like customer lifetime? Yeah, we do it on the cohort of the people who purchase through that. So here's a good example. One of the there's two ways of

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viewing CLB. One is like Lucas has high repurchase intent and the other one is people who come through this funnel or people who buy this product have high lifetime value intent. The first one is a statement about the specific human. The second one is a statement about the behavior behavioral data in aggregate. And that's usually like RFM data, right? It's just like pure behavioral. It's pure behavioral or it's product based. So it's a lot of companies have this. They they literally know, hey, if

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you come in and buy this product first, you are more likely to buy other products versus if you buy the other 10, right? And what these things at least start to tell me is that it has less to do with the fact that it is Lucas and more to do with what experience you're giving the person in that first interaction. You know, I definitely want to dive into the fundraising life cycle of Vermont. Yeah. Sure. Yeah. And how the product changed and evolved. I'd love for you to describe like from

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inception to like product market fit with the product you just described. H how did how did that come to fruition and how did your fundraising strategy kind of coales around that? So the northstar of the company has never changed. It's just how we get there continuously changes. As we get new tools, the ecosystem changes, the environment around it changes. The northstar of the company is the internet is changing fundamentally. At the time it was because of privacy. Now, Genai is like another way that the internet is

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changing. And with the internet changing, my central question was, does it make sense that brands have one website? And that was starting to make less and less sense to me that brands have only one website. And so I said, hey, it probably makes more sense that brands have many websites and off of those many websites, they can actually deliver better experiences to people. It just turns out that that's becoming even more true with like chat agents. So like chat GBT when you and I each interact with chat

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GBT, we get different responses, right? And it's not because like it's tracking all of my previous behavior. It's because in the context of what I am asking it, it responds in particular to the things that I am trying to figure out in that moment. And so that central thesis has always been the same. the product surface changes as we get new technology. So the AI thing created agentic workflows for us and as the ecosystem changes or as technology changes that's what spurs the fundraising moments basically to say hey

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guys we have this new opportunity set in front of us that we should invest into very fast in order to win against this current market environment. And so that's that's like the the meta point of all of the fundraising that we've been doing. And so like basically the vision and the opportunity of the business can expand based on how the market's changing. Maybe not the vision expands, but like what you're able to accomplish. You kind of like understand the paths. Exactly. Yeah. And it changes as new

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technology emerges and the central guiding principle stays the same. That's Yeah. on a broader level, like I've seen a lot of founders fund raise. I think you've the way that you've been meticulous in your interactions, super intentional with handling investor conversations. I've seen it firsthand. Like I think it's very very well done. Um what's your advice for founders who want to effectively fund raise, they want to get to series B. Um how do you how do you advise them? Yeah, I think

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that there are two principles that are the most important and then there's like a whole bunch of tactics in the how to implement those principles. The two most important principles are what are you building and what are the proof points that suggest that this is growing fast and can become a big company. So knowing the answers to that for yourself then gives you the permission to use those data points to pitch an investor for why now is the right moment to invest, right? It's like any other

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sales process. You need a hook and so you should just know what the hook for your business is because you're trying to get someone to buy a piece of equity in your business. And so it's like I think the worst fundraising advice is like when people say like oh use this Sequoia deck format or whatever like hey you know you do you problem whatever incredibly stupid like I mean I can't think of a worse way to fundra because you are not giving the person something to buy into when you do that. All you're

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doing is formatting the data in a standard way which is I mean I can't think of a worse way to do it. And so the way to do it is what is the hook about your business? Why is it interesting? Why is it exciting? What are the two or three metrics that support that hook? And execute on those two or three metrics. And next to that, know who are the investors who would care about this type of business for the long term and who the five names of those people. and make sure that those relationships are the ones that you

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build in a way in which they want to sell you and do work for the company to prove that they would be a good investor for the company. Those are the underlying principles. And then like how do you do it? I have like you know like tons of tactics underneath that. But let's let's go into the tactics because I I've seen some of them and they work. They work. Yeah. I mean the 45 million series Yeah. Yeah. Yeah. I mean, first of all, there's like fundraisers that are much more that are much larger than our

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raise, right? But, um, yeah, I I think like on the on the metric side, which I think is the the core ingredients to actually doing the investor management side, knowing your north star and knowing what are the two or three things that will prove that you can win it is critical. So for firmat what that happens to be is I knew that I needed to show high growth on our main motion which is like our mid-market motion and I wanted to show that we could win the whole market. So we wanted to show that our enterprise

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motion was starting to work and our agency motion was starting to work. And so we invested very deeply in making sure those things were true to show early signal that there are opportunities to invest on the go to market side of the core mid-market go to market machinery. Hey like we're seeing early signals that the agency and enterprise thing is working. We should invest into it. Now you can like make those metrics um just for the fundraising process and that's fine. You can also make those

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metrics true for yourself to like actually build your business and invest into those motions. We we happen to do that. And so now our agency motion and our enterprise motion are the fastest growing parts of the company. Um and they're growing extremely fast actually. So that's one part of it. The other part of it is how do you actually set up the investors to be hungry for a piece of the equity? Uh and there again making sure you know the names of the five people who are going to be the

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best fit for you is part one. Part two is find people who they are connected to and get them to drop information about how well the company is going so that way they inbound you. And then part three is make them do work for you in order to get a meeting. So, it's like make sure they come with customer intros ready to be made or already made for you. Make sure they come ready with being able to introduce you to excellent candidates that you may want to be like that you're in the process of hiring

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for. Make sure they come equipped with value to add to the company from the get-go. Because once you put an investor into a selling posture, now they are like that is the posture that they have for the fundraiser. Yeah. Yeah. And so and they are actually competing with a handful of other investors who also aren't in a selling posture. And then that word leaks because investors all talk to each other. It's like uh you know like I would say that the information gossip in the VC world is like worse than like

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Indian aunties. Like you know one company is out fundraising like every associate at every fund is talking to each other within like 30 seconds basically. And so you definitely want to deny a very large number of meetings because that gossip gets around gets around. And so then once they once people hear that the company is not taking meetings from people who have not shown value ahead of time, that's a very strong positive signal about the company. I like those tactics. I think those are so true, not just in fundraising, but

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just like in sales in general. I think some of the things you spoke about are like great tactics for like generating hype or demand, especially in a fundraising context. What happens like when you have nothing like when you don't have uh a strong product? You just you you just have a vision like preede like Yeah. Yeah. How did that work for Fermont and what what's advice you can give there? Well, you h I mean ultimately you have to have a product people want to buy like that. no matter what. That's like

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in every context, right? Um when you don't have customers or product, the only thing you have is team, right? Because like a company is only three things. Customers, product, team. And so without customers or without product, you have to sell the team. Which basically means as a founder, you have to know why are you the right person to build this company and can you recruit well? And so you have to be able to prove those two things that you are great at recruiting and you are the right person

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to build whatever company you're proposing. And you can raise a lot of money off of just those two things. How much time do you spend fundraising? How much time should a CEO that's launching a venture business spend fundraising? when you're not actually in the process, it should be 5% or less of your time should be going to investors. Yeah. Yeah. Because I mean ultimately again part one which is like having the metrics that are the leading indicators of a north star that can be hit is P 0. And so 95% of your time should

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be on that. And then 5% is like nurturing those five relationships that will get the fund raise done. Um that that should just be true. Like I think there's this like extremely bad advice that you should be always meeting investors. Like you should not do any of that. Like you should spend 95% of your time on the metrics that matter and then five on the five investors who are the best fit for your company. uh when you're in the fundraising process, then you spend 100% of your time on fundraising

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and delegate running the business to someone else. For me, that was Shreas, but you have to delegate that like someone else has to become CEO. And so I literally sent an email to the company saying Shreas is now the CEO for this amount of time because you want to make sure people think of that person as like their point of ultimate escalation in any situation because P 0 for the full-time CEO is fundraising and so they cannot get distracted by the ongoing operations of the business. That's interesting. So when you're in

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fundraising mode, it's like that's that's all you're doing every day. That's all I'm doing. I'm literally not I'm I mean there's like two or three things that maybe Shreas brought up to me saying like hey man I need your input on this but outside of that I intentionally don't get involved. And what does that look like? That's just you meeting with investors going through diligence like Yeah. Yeah. Yeah. Yeah. Because it's like the whole thing is like condensed

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and so like literally 100% of your time is spent fundraising. How long did that process take for let's just say series A series B or seed series A series B it's always been less than four weeks. So like our so our seed round we did in two parts. The first one was it took no time because I had a pre-existing relationship with the partner at Greylock. The second one took four weeks. Our series A took 3 weeks and then our series B took 10 days. Yeah. But each time it was like 100% occupating like 100% of my time was

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occupied with the process. So like these sound short but they were like extraordinarily intense. Yeah. And stressful a lot of pressure. Who preempts the decision to you know say hey we need to go out and raise another $45 million. So I had brought it up to our board at the end of our Q4, so like in Feb, saying, "Hey, in the next six months, we should go out and fundra." Um, and so that's when the prep starts. So it's like, "What's the story? How do we want to present the company?"

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That sort of stuff. And then I did like what was supposed to be like internal updates or practice pitches with insiders. Um, and we ended up getting like a preemptive offer basically from one of the insiders. And that triggered the process faster than I was expecting or hoping for candidly. And so then we just like spent two days to prep all the rest of the materials that we needed to and then like run a fast process over the next two weeks. Yeah, this is like new for me. I think just being a a bootstrap founder, it's like

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what are the c what's the calculus behind a the amount of money you're going to raise and b how you deploy it? Yeah. Yeah. Like I so I was saying that the agency and the enterprise motion sorry yeah agency and enterprise motion were the two that were growing very quickly. So there are different economics happening at the same time inside of the firm identity. So our core mid-market motion had a certain unit economic model that was starting to work at like high efficiency from a sales and marketing

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perspective. But of course the newer ones are low efficiency. So the enterprise and the agency ones are low efficiency by definition, right? Because those are like still getting figured out before they get into a good unit economics. And so there's a set of things you want to invest into from a go to market standpoint so that way you can like get through the J curve on the new motions. At the same time from a product investment standpoint for most product companies through the series B your net margin is like very negative

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because the amount you have to spend on building the product is so large compared to how much of it you can sell. So until your sales team becomes large enough that you're selling a lot of it and then it dwarfs the cost of the engineering that's gone into the product, you're basically in the J curve, right? Um and so that's basically how you come up with the math for how much you want to raise in the B. It's like, okay, with this amount of capital, I can get through the J curve on all of the things

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that I want to execute on and if I want to, I don't have to raise again. is like the way that most people think about it. Now, of course, you want to be in a position where you have other new ideas that again need to go through the J curve and so again you raise more money, right? Like that's the best outcome is that the incremental dollar being invested can be put to good use. And so like even though you can build a business that doesn't require more capital, the best outcome is you

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actually build more new stuff and you require even more investment. Yeah. Yeah. Yeah. So you need you need to deploy more. You honestly deplete your cash. What is what is the investment mix look like? So that's like in people. I mean for the most part I would imagine sales, product, right? Engineering. Wow. Um what's the time horizon of the of like how you will deploy? Well, okay. So when we raised it, the plan was to deploy it in like two and a half years and we went out with the plan to raise between 25 and 35 and then it

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ended up like massively overs subscribed. So then we ended up raising 45. But the the plan was to deploy it over two and a half years. And in deploying it over two and a half years, it was largely organic growth. So like sales marketing product given that we've raised 45 the way I think about it is like 8020. So 20% of that capital is meant for high-risk activities. So like roughly 10 million of that is meant for high-risisk activities. So probably five will be deployed in experiments along the way

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over those two years that are not in the initial plan but could lead to yet another J curve of growth and probably five is like inorganic experiments. So there might be a few things we might look to acquire along the way and things like that. So where does the product go from here? You have things you want to work on. Yeah. Yeah. I I mean I think that the the northstar vision for the product is the same which is what does the internet need to look like when you no longer have one website for every company. Um

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and that's a very big question. So part of it is for e-commerce brands like we do now. We generate a unique website for every piece of content. So now all of a sudden we have like tens of millions of consumers in the US who are interacting with and shopping inside of a firm experience instead of the one website right and so that's like a very different painted reality for people like what I think most people don't appreciate is by like probably by the end of this year the majority of the US will have

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interacted with a firm experience like it's already like close 20% of the US has interacted with an experience that is like a unique journey that's not the core site that we power directly and so from there saying okay how do I make it such that over the year the entire US population interacts with like a unique experience and then you flip it and then you say how do I make it so that way like 30% of the internet is powered by Vermont ultimately what does that mean though 30% of the internet is powered by Vermont It's like

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they can be touching Vermont experiences like just just like uh 40% of the internet is powered by WordPress. Yeah. WordPress. Yeah. Where does that put you with Shopify? I'm just super curious. Shopify serves the back end, right? So Shopify serves the order management, inventory management, payments, payments most importantly, right? Payments and checkout. We don't do any we don't do any of that. We are like we are entirely a front-end platform. So everyone's focused on the user

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experience of the of the site. You know my agency we do like a lot of UI UX for the main billboard of the website. And you know it's very clear that there are you know the website's just not as important as it used to be. People are going to shop where they want to shop. Amazon, Tik Tok shop, other marketplaces, Vermont landing experiences. What what ends up happening to the to the site? It's the place where you go to for the people who actually want to go directly to your site. Like whenever I buy Nikes,

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I go to nike.com. I just do. Um, but I there's like one other company, Marine Layer. I go to marine layer.com. There are stores that people want to go to the main website and buy the thing because they like go there all the time. But all of my other shopping, it is driven through a piece of content. It's an ad or an email or an SMS or something, right? It is not me going to whatever whatever.com. And it's like, yes, sure, every brand can say like we want people to go to our.com. That is super unrealistic.

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Like humans just don't have the memory to be able to do that. You know, we talked a lot about like how you embed AI within your culture. At the time of recording this, obviously, we're going through this generative AI revolution. Um, that's changing how people buy and discover products, but it's also changing how workflows and companies get operated. And I think everyone's been talking about agents. And I I certainly on the agency side, like this is existential for us. How do you get people on board

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with AI? because we're at the cutting edge of like in the in the in the you know, like experiencing this thing. But when you have a How many people is Fremont at this point? 70. Yeah, we're we're 90 people. It's like how do you have that filter down into every individual? Um, do you follow Aaron Levy on Twitter by any chance? Okay. I think that he is the example that I give of what it takes to really get everybody in the company to want to stay at the bleeding edge of how to use the tools, how where

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to use them, how to be effective with them. At Fermont in particular, there are like multiple tactics that I have deployed, but the strategic level thing is the CEO must all the time say use AI, use AI, use AI, use AI and like mean it and invest behind it and be very serious. So like every time somebody comes to me with a problem, I'm like, have you asked AI? Literally for anything. it it like doesn't even matter what the problem is, right? And that re creating that reflex is the first most

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important thing, which is also what Erin is doing by being on Twitter so vocally. Um, and then you can do a bunch of other tactics. So it's like, you know, we created large budgets for everyone to like spend on AI tools. We created like these AI pods where like a set of the company stops doing their normal work for three days and has to just implement AI things for their personal or professional workflows. We hired someone who is like the most AI of AI people. This guy named Jacob Posell, you know, like I I I

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convinced him to move to San Francisco, which I think is going to work out very well for him. Um, and like he's building his own product, but he's like doing it in the context of Vermont. And so the, you know, it it just like creates all of this pressure that if you're not using AI, like you're not going to be here in a year. Um, we we hire based on it. So, like we ask everyone on the hiring interviews like how to use AI if you don't have a good answer. I I love that. Um, what what uh what tools are you

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mandating? So, like for that three-day sprint, like are you having them use NAN? Like, no, no, no. We don't mandate anything. We're just like go build Um, and what's the end goal? Like do you have a like a measurement or like something you're working towards? No. Especially because the rate of change of this thing is so high and how they will interact with each other is so unknown that creating a metric for what we want to shift right now is like an impossible thing to do. So instead I'm

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trying to understand if people can drive leverage for themselves or accomplish things that they didn't think were possible before. That's basically it. And outside of that, it's like impossible to have a northstar metric because there's no we don't know what's possible yet with these tools. Yeah. All right. The last thing I want to cover is, you know, I I think you u have done an incredible job bringing people into the Vermont ecosystem, hiring, like just bringing a players

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onto your team. Um, how do you go about hiring and like thinking about building your team? I would say there are two things that I try to do not always successfully but at least try. One is I ask who is the best person at this job period. So like Rabba for example who most people know I I use him as an example because most people know him. Like the way I thought about courting him was I just asked like who is the best marketer in ecom and I would get responses like oh this person is like a junior Rabba or this person is

00:31:41 - 00:32:38

like Rabba in these ways and people would not say Rabba directly because they didn't think he was hireable but everybody would refer to Rabba and so I was just like okay then why don't I just try to hire Rabba right and like yeah it's going to be expensive obviously But ultimately, you have to decide what kind of company you're trying to build. And so, you just like you need to get the best people and then you need to find a you need to find a way to find them and then you need to

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find a way to recruit them, however long it takes, whatever cost it is. Yeah. So, that's like ultimately how I think about it. So, like one is like sourcing and then figuring out who they are. And then convincing is you just have to align the role to that person's own professional objectives. Uh and if you can't do that, then they're not going to join you. And so those are the two ingredients and we don't always get it right. Um but that's how we try to recruit the best people.

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Rashad, thanks so much. Congrats on all your success, man. I can't wait to see where uh things go from here. But I'm excited and thank you. Yeah, dude. This is fun.