Grant Miller of Replicated

Welcome to The Puck, Venture Capital and Beyond, a show that explores the evolving landscape in the venture capital world. We'll have candid conversations with today's VCs and entrepreneurs who are shaping those changes. I'm Jim Veer, the managing partner of Veer, Negron, and Troff, and the president of CMEG Advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately to how they got to where they are today. The software world didn't need a hand up.

We were doing pretty darn well without something like COVID, but then people would talk about software eating the world. When COVID hit, software was the world. Today, I have the pleasure of sitting down with Grant Miller, the CEO and the founder of Replicated, a company built around the idea of enabling software vendors to operationalize and scale the delivery of their applications into complex enterprise multi prem environments. We discussed the rapidly developing world of enterprise software, As the CEO and founder of Replicated, why don't you take a second and tell us a little bit about your background and what led you to starting the company? Yeah.

Sure. Thank you so much for having me, Jim. Really appreciate it. So we started Replicated about seven years ago, and my cofounder and I had started a separate company together about three years before that. So we can go all the way back to that first company, which was called look.io.

That was pretty quickly acquired by LivePerson, which is a publicly traded SaaS company based in New York. We basically joined to run and bring our product in and became the mobile team for LivePerson. So while we were there, we were doing a bunch of interesting things around updating sort of the way that infrastructure is deployed there. My cofounder, Mark, is sort of always in the leading edge of technology. And one of the things that was really, you know, emerging at that point was containerization and Docker.

Think about this as like a new way to package software that was really transformational for the software industry. So there's only a handful of real platform shifts that happen in the enterprise software or, like, software development world. You know, I'd say, like, some of those transitions are things like from bare metal to VMs, right, so virtual machines. That was a really big transition. It spawned VMware.

Basically allowed the cloud to happen because that's what, you know, AWS based their entire sort of service on this idea that you could partition off different parts of servers and offer them as virtual machines. So So that was a huge transition. Since then, there's another big transition, which is around containerization. And so it basically makes it a lot easier for applications to be developed and packaged in a way that they are a bit more portable, they can more easily be developed as, like, what we call microservices. So, like, every sort of service has its own packaging.

And ultimately, Mark, my cofounder, I was like, well, what's the big deal about this thing? He's like, well, ultimately, it's gonna change the way that enterprise software is deployed and delivered. And so I was like, oh, very interesting. And we explored the idea at LivePerson and tried to understand, like, if it was something that maybe we would use there to deliver our product into customer environments. And ultimately, we decided that it was probably not the right solution for LivePerson, but we could build a company around it.

And so what we did is we started Replicated. And so Replicated, it's has been around for about seven years. And the whole mission of Replicated is to enable software vendors, right? So think about these, it could be SaaS companies, it could be open core software companies, or they could be traditional software vendors that have been deploying software to enterprises for, you know, twenty years. And our tooling makes it easier for them to deliver their products into secure customer environments.

And so if you think about the way that enterprises, you know, are using more and more software all the time, right? So they have more applications they have to use. And every time they use a new hosted application, they're exposing some amount of maybe sensitive corporate data to those SaaS applications. And so increasingly are creating more and more surface area for all this data. Ultimately, what Replicated says is like, it can't go on forever.

You can't have 10,000 different software vendors who are all, you know, manipulating and managing and processing different versions of your data. Our vision for the future is one where instead of companies sending out their data to thousands of different software vendors, instead, we just bring those applications into an environment that the enterprise controls and allow them to not send data out. Right? They're just bringing the applications in. It's much more easy for them to control the security sort of posture of that environment versus trusting thousands of different software vendors.

And so, you know, we launched the company, built it all around, you know, Docker and containerization. Since then, you know, another sort of on top of that technology, Google released this really, you know, important piece of software, open source called Kubernetes, which has become the de facto way that modern applications are developed and deployed. And so it's added more momentum to this idea, and a huge ecosystem is formed around these technologies. You know, we're one of the players that sort of enabling that technology to have a real core use case that benefits both the software vendor and the corporate IT admin at these enterprises. And that makes total sense to me, Grant.

I've looked into this. I understand how this can really facilitate people's ability to kinda keep their data safe and so forth. Is there either a real life example or kind of a hypothetical example where you you literally take the example of a couple of companies in the real world and how they would practically use your platform? Yeah. I mean, hypothetically, imagine some big bank is concerned about the security of their code that they write themselves.

Right? So they use a version control system. Think about GitHub or GitLab. Instead of using a hosted version of those products, both of these businesses have a massive portion of their customers that actually run private instances of the GitHub product or of the GitLab product in their own environment. So they call it, like, GitHub enterprise or GitLab enterprise, and they would run these on servers they control.

So they're running GitLab or they're running GitHub, but they're never actually sending data off to those external services. They have their own private instance of that application. A huge amount of the software in the world is actually consumed this way. Your audience might be more familiar with the likes of Notion or Salesforce or Trello or all these different SaaS apps that have become popular, but that's still not the majority of software. The majority of software is still actually run-in private data centers or in private clouds, and there's just a proliferation of SaaS, but it's still not even the most popular way to run software.

And in the world you're competing in, is this, like, where there'll be a lot of people doing similar types of products like this, and then there'll be certain ones that emerge? Can there be a lot of people in your space from a competitive perspective? How many people are doing what you're doing, and how do you see the market taking shape over time? Yeah. I mean, our product is actually still pretty unique in the market.

We've had a few competitors here and there that were kind of moved in and out of the market. Ultimately, you know, our solution is very purpose built. Right? This is a very specific problem that we solve. Now, it's a core problem to most software vendors and to many enterprises.

So it's an important problem, but it's still fairly niche. And so not a ton of competitors for us. In the enterprise software world, the big cloud players are kind of the behemoths, Right? So AWS, Google with GCP, and Microsoft with Azure. And each of these infrastructure as a service providers, right?

So IaaS, right? They offer different tools. One, they might offer databases or other services that help you sort of build applications, but they also all have a marketplace of third party applications that an end customer, that a user of AWS or or Azure can actually install into their own AWS or Azure account. And so those cloud marketplaces are probably the most close thing to what we do. It's not really like a direct competitor, but it could be a substitute.

You know, and those marketplaces are where if you're a an IT admin and you're looking for a way to consume GitLab or another product, you might look for a listing there and install it into your account. We've sort of taken a different approach. We've always likened ourselves to more like Shopify, where we provide tools for the best direct to enterprise vendors so they can create an experience that is far superior to that marketplace experience. Right? So just like Shopify, if you're a Shopify vendor, you could just put all your stuff on Amazon and you could be another Amazon vendor.

Or you can be direct to consumer and really own that experience that the customer has, and those are the folks that partner with someone like Shopify. So we're sort of doing that but for enterprise software. So, Grant, as we're talking about this, how do you see the product market fit tying into what you're doing? Yeah. I mean, so the product market fit for enterprise start ups, I think, is maybe a little bit easier to define than product market fit for consumer companies.

What you're looking for is this idea of a proof of concept, so a POC, and then what your close rate is. Ultimately, you know, when you get these different customers kind of trying out your software, if you're not closing at least 50% of them, I think you're probably not yet at product market fit. And so product market fit, it's this key thing that every startup is thinking about. This is like, when can they really scale? That's what venture capitalists are looking for.

That's what every company wants to achieve is true product market fit. It used to be, oh, when you're at a million dollars of annual recurring revenue, you have product market fit. That's not really true anymore. And I don't know if it was really ever true. I think it's really about, can you scale your business?

And do you know what your customers, your ideal customers look like? Because if you're bringing on tons of proof of concepts, and only, you know, 30% of them are closing, you either might not be targeting the right user, and, you know, you're you're targeting too broadly, or your product isn't exactly what the market needs yet. To me, it's always a sign that you need to further refine your product and your go to market. Because ultimately, I think folks that are going to join an enterprise software company expect they're going to join something that has product market fit. If you're not one of the first 10 employees, maybe first 20 employees, you expect the thing that you're doing to be working and to be scalable.

You know, I would just suggest for software founders and folks that are trying to do this, really hone in on that POC to close rate, track it religiously, understand, you know, when we put in this amount of effort, this number of customers will close, and some number always won't close. Like, that's just the reality of the world, but I think it's super important to track that. When you were looking at starting the company and you're also looking at where the world is today, I know with new industries, when we had VCRs or when we had streaming, every time there's a change technologically going towards self driving cars, there's gonna be low hanging satellites, and there's all sorts of technology that grows up out of that. When you're looking at the world today and what appears to be this explosion in software and the importance of data and otherwise. What do you look at in terms of why your business is so scalable in this current environment?

Yeah. And this is something, you know, that I think is foundational to every company that's starting. What we did and the way I think I mean, I always kind of joke that like, what entrepreneurs are trying to do is predict the future. Really good founders, you know, are predicting where the future is in twenty years. The ones that have a really good sort of eye for what future is, you know, a computer on every desktop.

Right? That was, like, the Microsoft and Apple vision. And so having a vision to what the future looks like and then being able to help the world get there. So, like, you blaze the path or you're you're gonna get a little trail out there for yourselves and maybe a couple customers, and you're gonna build up shop out there, and then the world is gonna find its way to you. And the way that you know where to build that is basically evaluating all of these different trends that you see.

And so for us, it was like, well, post Snowden, we knew that data privacy was going to become more and more important to companies and to people. And so, like, the zeitgeist was going to shift. That was one piece of information we used to think about, like, well, that's gonna change the way the world looks in ten years. And And then we thought about these technologies, right? So containerization, ultimately, Kubernetes, the way the pack the applications are actually built and deployed, that's gonna change the world.

Enterprises, we knew would continuously need more software, they would need more security. And so we looked at all of these different trends, and we said, okay, if those things are all true, what does the future look like? So you sort of then fast forward and you say, well, now the world is like this. And so now in my mind, I'm living that future. And I look around and I say, well, what's different?

And then you can sort of imagine what is different and what's possible. And so you're imagining a world that doesn't yet exist, but based on what you're hypothesizing in terms of what trends will come true will exist. And I always kinda say, like, when you're doing this, you're making a bet on multiple trends. And if you're making a bet on five trends, if all five of them are correct, you might build a $10,000,000,000 company. If four of the five are correct, it's a $1,000,000,000 company.

If three of the five are correct, maybe it's a $100,000,000 company. And if two of them are correct, maybe it's a $10,000,000 company. Right? So, like, it scales down in orders of magnitude with every single area where you're wrong. And so being able to look at that hypothesis and then maybe add in a different hypothesis, if you can invalidate something earlier, if you're testing these things, you say, oh, actually, that doesn't feel right.

Let's add in something else. You're kind of looking for things that are not necessarily obvious to everyone else, but like you believe to be true. And then when you combine those things together that you believe to be true, that's where it's gonna create this unique vision of the world. And then you either again have to like build and wait for everybody else to get there, or do as much evangelism as you can and help lead them there. Maybe you're kind of doing a little bit of both.

So you have to be fairly confident in yourself and in your vision for where you want things to go. If you're gonna spend five, six, seven years in the sort of trenches predicting the future that nobody else really sees in the beginning. We we started this company, I remember Salesforce exactly laughing in my face because they thought this idea was, like, antiquated. Right? Another pretty well known angel investor said he only invests in the future with the idea that, like, this was something from the past.

And in our perspective, there was, like, well, we just have a different vision of the future clearly. And our vision of the future involves a different outcome to all these different trends that we see. And eventually, I think we were proven fairly right. We're not a publicly traded multibillion dollar company yet. So, like, we're not totally right.

But the success of the company, the success of the ecosystem in the market, I think, has proven us a little bit more right. But we have a lot left to prove still. So, like, you know, let's see what happens over the next, call it, five to ten years. If you wanted to just have a simple tagline that describes exactly what it is that you're doing in a simple way, how would you describe it for the layperson? Yes.

It's funny because we don't spend a lot of time thinking about that. Right? Because the layperson doesn't buy my software. Right. There's value in sort of being able to describe it.

Like, when I talk to somebody who doesn't know much about software, I'm like, we build technology that makes software more secure. It's basically what we do. Now depending on how deep they wanna go, ultimately, it doesn't make any sense for me to put that in the homepage of my website because if you are my target audience who's coming to my website, you're like, great. 90% of the software out there is supposed to make other software more secure. So what do you actually do?

Like, how do you do that? There's a bunch of different approaches. So you have to target who your audience is. You know, when someone's like, oh, I don't understand what your website means. I'm like, yeah, because you're not gonna buy my software.

Right? If you were gonna buy my software or you were potentially gonna buy my software, you'd be like, I get that. And, like, I either love it, I hate it, or I don't need it, but I need to invoke that, not make other people who come to my website feel comfortable with with what it says because they know what the words mean. It's like, no. You might not know what it means, but that's okay because you're not part of my ideal customer profile.

That makes sense. In terms of building the company, in terms of what I might describe as not post COVID, but as we're coming out of COVID, in terms of hiring people, managing the business, what have you learned through this process and how's it affected your business and where do you see it going? Yeah. I mean, when COVID hit, we were still a pretty small company. We were actually had just really achieved product market fit.

And so it was tough. We planned to raise the next round and go into the high growth period. And instead, we had to actually do a small riff, let a couple folks go and really buckle down and think about, like, how do we make sure this thing is profitable in case we can't ever raise another dollar? That was a very tough time. But you know, the market recovered pretty quickly.

And we looked at it and we said, Okay, this is an opportunity for us to build a company that we really want to be a part of. So a couple of things that we did then, we were already somewhat distributed, I think just over half of our team was in LA, but folks were getting pretty comfortable working from home in sort of a forced experiment around COVID. And so we decided to go fully remote. And we made that decision pretty early. I think it was May 2020.

We said, Look, let's just not renew the office lease. Let's just take this completely remote, and folks don't have to worry about ever coming back to the office again. They can move wherever they want. They can do whatever they want. And we did that, and we implemented a bunch of best practices from folks like GitLab.

GitLab is very well known for having a great remote culture and remote only. And so we hired a couple folks from their team, you know, our Chief Product Officer, our VP of Engineering, and we've implemented several of their best practices. They experimented for a couple years around what to do. We implemented those things like twice a week, we do all hands, we share what's going on with ourselves personally, share what's going on with the business, we make sure everyone has a really great internet connection, we make sure everyone has good headphones for these kinds of meetings, good camera, so you have high def experience when you're talking to folks, we do cameras on as much as we can. We're just trying to do whatever we can to really make the remote experience really comfortable.

It's allowed us to hire folks who don't want to show up at the office, right? Because the office has its drawbacks. It has a lot of inefficiencies, and you're seeing your kids and your partner less. And so now folks get to spend time. I get to see my 10 old baby every day at lunch and, you know, in between meetings.

And, you know, I can hold her, and we can play for five, ten minutes here and there. Whereas if I was in the office for ten hours a day, that wouldn't happen. It's been a massive improvement for my life and I think for most of our employees. Like, the data shows that most executives think that everybody wants to get back in the office because and they wanna get back in the office, but that's partially because that's where their power is, And that's where they're, like, kind of more important. But then most employees, right, most individual contributors don't want to get back.

Their lives are better not being in an office. And so I think, like, really saying, hey, look, we're gonna build a great fully remote company. We're gonna do things that sort of enable folks to have a great remote work experience. So we do, like, a $10,000 a year budget for everybody's home office. Not only do we actually pay for you to get set up where you have a desk and a great monitor and the camera and the laptop and all the things, but we also actually did something where we pay part of our employees' rent or we pay part of their mortgage.

And so every month, they're getting reimbursed from us for the square footage that they're using, and we pay, you know, whatever percentage of their mortgage or of their rent that that is. And so we use, like, the IRS forms that people used to use to write off home office expenses, but the Trump tax cuts actually removed the ability to write off home office expenses. And so instead, we said, Look, let's just reimburse our folks for it. So that's what we've been doing, trying to think about innovative ways to actually create amazing culture that's still remote first. You know, I think one of the more important things we've done is around shared experiences.

We've used Cameo a couple times to bring on a B list celebrity, like we brought on one of the season 27 survivor contestant, Rick Devins, into an all hands and just, like, asked a bunch of questions about what it's like to be on survivor. We brought on Brian Scalabrini, who's, like, a Boston Celtics NBA finalist player. They won a championship when he was on the team, asked him questions about being on a championship team. We had Kenny G join our holiday party, played us a bunch of great tunes, and talked about, you know, writing great music. For me, it's about how do you create great shared experiences, and you have to think through it.

Is it whiskey tastings? Is it a magic show? Is it other things that you can do virtually, but you're still actually creating a shared experience with your team? And so we just try to be thoughtful about that and do unique things, and it's worked out really well. We're super happy.

Your team's happy. There's always some downsides, but I think the benefits greatly outweigh the costs. Great. How many employees do you have? And when you do these full company meetings, how many people are we talking about?

A 104 today. We're about 30 a year ago, so we've really scaled up. This, I think, is fascinating and important for people to listen to because we're hearing about in the real world how you're actually making this work. Your plan is to stay a complete virtual company for the next five years, so to speak. Yeah.

I mean, forever. To me, it's a really important part. If you are like, oh, we're gonna do a hybrid thing, I think hybrid's, like, the worst of both worlds. Right? It's like you don't get enough office interaction, and you don't get folks that can live wherever they want, and you're like, oh, we're gonna have you come back in.

Sometimes, I've been part of companies that have an office that people do hotelling, and you're only there a couple days a week, and it always feels empty. So we just said, look, let's just be opinionated and say remote is better. Let's make that happen. And folks that wanna really do remote the rest of their lives, come work with us. So when you're recruiting somebody and you're interviewing them, I assume you have a small group that interviews people.

Sometimes it's one on one, sometimes it's a group, but you do all that on Yeah. Do it all over Zoom. I mean, I've raised about $75,000,000 over Zoom. You can raise money over Zoom. You can hire folks over Zoom.

We do lots of meetings, make lots of important decisions all over Zoom. I will say the worst part is actually firing people over Zoom. That's not a nice thing to do. It feels a little bit impersonal, and you wanna let folks know, like, how important they are. And it's a very impersonal way, and then all of a sudden, all their accounts get shut down.

So that's one thing. The offboarding process isn't great when you need to let someone go, but the hiring process, everything else has been really good. And in terms of when you're teaching somebody sales or you're having strategy sessions or mentoring, do you have breakout groups and sessions where people work in small remote groups on Zoom? Yeah. Of course.

You know, we're doing all company training around productivity and around even inclusion and different things that we might be doing. So maybe it's hosted externally, maybe we have an internal training team that's doing it. Yeah, lots of collaboration. We still do try to get together occasionally in person, right? So it could be, you know, an all company, maybe every nine to 12 months, or small teams getting together every four to six months.

But I think you can accomplish a lot over Zoom, and you build really strong relationships with folks just by, like, being on Zoom together. And we get everyone a standing desk, right? So it helps to stand up and to talk. You're not just always sitting, staring at the camera. You can actually be a little bit more animated, move around, walk back and forth, and it's just about figuring out what works for you, and that's our goal, to make people successful.

Do you think when you're looking at where the world is going and you're talking to other entrepreneurs and customers and otherwise, do you think that you're gonna be unique, or do you think that there's a significant percentage of companies that are gonna go your way? Yeah. I mean, the data says it's gonna be, like, more than 50%. You know, I think there's some studies around startups particularly, like, even the big companies. It just makes so much more sense.

I also think it's gonna be much better for our country and also for the world because the entire, like, coastal elite and, you know, versus Middle America like, I'm from Cincinnati, Ohio originally. I was living in LA for twelve years and moved to Austin, Texas recently. And so you're gonna see more interaction. People are gonna be in communities and doing tech stuff, but not just in the Bay Area and LA and New York and the major cities. It's gonna be everywhere.

Folks are moving into rural cities. And when you see things like Starlink coming online, it's gonna activate really great broadband everywhere in the world. People don't need to be in cities to do this kind of work. And so there will be a diaspora that I think brings new thoughts, new information, but also brings folks who, like, maybe thought they were better than the Middle America. They'll bring them close together and realize these are really great people as well, and they just live their lives a little bit differently.

And so hopefully, it'll help heal some of the division that this country has seen. That's my hope at least. I'm a pretty optimistic person. And I think it does create that opportunity. So here's a question for you.

When you're looking at your business model and where your growth is, has this trend towards these virtual environments where we have all these, whether or not it's Zoom calls going to virtual reality, augmented reality, the meta universe, Is that gonna just create this incredible new demand for your product? Because people have all this data that they're recording and everything else that they now need to be thinking about. Oh my god. We have a trade secret we're talking about. We can't let this get out.

Is this, you know, like one of those unexpected benefits to your business? Yeah. I mean, sort of like I always comment that the software world didn't need a hand up. We were doing pretty darn well without something like COVID, but then people would talk about software eating the world. When COVID hit, software was the world.

And so, of course, it's like it's made every one of these businesses more valuable. And as enterprise software becomes more valuable, so does Replicated because the market opportunity gets bigger and bigger. So it's great for us. Again, I think, hopefully, if we can get well paid folks out into the rest of the world and, you know, hire folks even more remotely and not just in the tech hubs, but all throughout The US and then eventually the globe, it's better for everyone. So we'll see what happens.

Well, listen. Grant, it was wonderful to have you here. This is fantastic. I loved learning about Replicated. Jim, that was great.

Thanks for having me.