Segment: Peter Reinhardt & His College Roommate And Cofounder

We were just kind of like in our hidey hole in our apartment working for a long time, which is bad. And it was like, you know, it was starting to feel kind of dire.

How low did you get?

I think we got down to four weeks, maybe three weeks. Wow.

Welcome to Leap Forward, a show about founders and the people who believed in them before anyone else. I'm David Rusenko, and on the show today, Peter Reinhardt. I'm Peter Reinhardt. I'm co-founder and CEO here at Charm Industrial. So when Peter and Calvin French Owen first met in college, they decided they wanted to build a company. But actually figuring out what to build was kind of brutal. For years, they churned through one idea after another. They even got into Y Combinator, raised $600,000, and then flopped.

And I remember that being like a pretty dark time.

Eventually, they got so humbled that they stopped believing that they knew what people wanted and let their users guide them instead. That's how they ended up building Segment, an analytics company that was acquired in 2020 for $3.2 billion. After Segment, he founded Charm Industrial, which permanently stores carbon underground. And he's also the CEO of Revoy, a company that turns semi-trucks into electric vehicles. Today on the show, the uncertain journey to finding an idea that actually works and the process they discovered to do that. And now, Peter Reinhardt. You know, maybe it's best to just start from the top. So, you know, love as you just take me back to the beginning. You know, where'd you grow up? What was home like?

Oh, all right, the very beginning. Uh I was born in Seattle, but my parents went back to school in Pullman, Washington, at Washington State University. So on the east side of the mountains, small town. So yeah, I kind of grew up in the middle of the wheat fields in eastern Washington. Yeah, the wheat fields started maybe, I don't know, a couple hundred feet away, and then continue off in every direction. I just remember like beautiful rolling gold in sort of the late summer and fall. Pretty idyllic place to grow up, actually. Like not a lot of cars, just go run around in the fields, catch worms and grasshoppers and whatever else.

You know, I know it's kind of hard to bring yourself back, but like just in general, what kind of kid were you say you were? I was a very, very introverted, very quiet math nerd.

So, you know, math team, chess team, very into all the nerdary activities there. Like in high school, I took calculus freshman year and then was off to the University of Washington, took honors calculus, and then sort of applied math on up to complex analysis and stuff like that. So I was like, I was the scrawny little kid in the back of the university classroom trying not to be noticed. And so at some point in, I think at some point in middle school, I decided that I wanted to go to MIT. And I literally wore an MIT shirt almost every day of middle school and high school.

Was there any, like, were you exposed to startups at all as a kid? Was there any stories of entrepreneurs or anything like that?

No, I didn't really get startup exposure until maybe freshman year of college with Calvin and Ilya and as roommates. And Calvin introduced us to Hacker News and started reading all Paul Graham's essays. And that was really my first exposure.

And at what point did you meet Calvin and Ia, the guys who would end up becoming your co-founders?

They were my roommates, uh, freshman year. So Calvin and I had met each other in math competitions in Washington.

I'm Calvin. I was one of the co-founders and CTO at Segment, and I've known Peter for a long time at this point. So Peter and I met actually way back in the day, back in junior high, I want to say. We kind of always known each other through the like elementary junior high math circuit, kind of always at a distance. Like you'd see the other person's name in the top, I don't know, 10 or 20 people.

So was it a little bit of like kind of like friendly competition from a distance in the early days?

Yeah, I'd say so. Uh I frankly, I don't think Peter and I were particularly close back then. But where we really got a lot closer was when both of us ended up getting into MIT.

So we kind of met up at pre-frosh weekend. Calvin and I were wandering around campus, just like exploring it, checking out dorms that we thought might be interesting. So we walked to a dorm that we liked. We went to a random floor and we heard some voices, and we walked into a random room. And Ilya was there hanging out with someone else from his school. And so that was how we met Ilya. And we hit it off. And we spent the rest of that weekend together, and then we decided that we wanted to be roommates in the fall. So it was a super, super kind of lucky happenstance. So he was like the most normal person that we'd met. He was like a very Bebley friendly nerd. Everyone else was so weird. Like the freshman, like MIT is a great normalizing function, actually. Like people come in very weird and they leave like only somewhat weird. And you know, everyone else was like LARPing or like, I don't know, like obsessed with some obscure thing, which is very cool, but uh was hard to like, hard to make friends. And he struck us as by far the most normal person that we met that day, which if you know it'll he is maybe saying something.

What would you say college Peter was like? Kind of different from maybe growing up or high school Peter, was it, you know, mostly focused on classes? Do you manage to have some fun on the side?

Yeah, I'd say it was somewhat focused on classes, but I was on a floor that was pretty rowdy. I was definitely like the studious kid on the floor was Burton Third Bombers, known for partying pretty hard, which wasn't really my vibe, but I was sort of on the edge of that. You know, at the end of freshman year, they give out these awards to each freshman. Every freshman gets an award, which is like a funny name. And I had my appendix out and said the award was to Peter for um, you know, they successfully removed your appendix, but the stick up your ass was inoperable. So that was the tension. I was on the party floor and enjoying it to some extent, but I was still pretty uptight, I guess, as far as that floor was concerned.

That checks out, that checks out. Uh yeah. The floor itself was definitely quite rowdy, and Peter was probably the one who was like most diligent when it came to studies. It's funny, I feel like Peter is one of those people who's very much an old soul. He's kind of always known what he wants to get out of life, and in general, he's a very ambitious and I'd say structured and analytical thinker. I remember one of the funny stories while all three of us were roommates together freshman year, I had ordered this little like charcoal grill off the internet because I was really excited about putting a little grill out the window and like making hot dogs. I remember both Ilya and I got into this argument related to the grill, where Ilya was worried that the grill would be somehow overnight like off-gassing a certain amount of uh CO2. And so I remember Peter actually did the math on the diffusion rates of inert carbon from this charcoal to say that it would probably kill us in something like 700 years or something like that, of sleeping in the same room with the charcoal grill. So I I think that's sort of the like flavor of Peterism. Like he goes deep from first principles to understand what kind of the real ground truth is. And I think that's something that he's just like always done and continues to do, even to this day, with his various businesses.

That's hilarious. Um, do you remember when Peter first got interested in tech versus what he was studying?

Yeah. So Peter that first year, like both of us were kind of tinkering around with a lot of like slight software projects. But I think he first grew a lot more serious about kind of like building a startup when he and Ilya took this class called uh the founder's journey.

Yeah, beginning of junior year, we started to talk about like, oh, it would be fun to start something together because we were reading these Paul Graham essays. Calvin in particular had put us on that. And then Ilya and I took a class, Founder's Journey. And the concept of the class was just a founder comes in, talks about what they built and what their story was. And the very first week was Adam Smith, who had founded Zobni in box backwards. Yeah, he just told us his story how he raised like almost 50 million dollars and like built this really cool company. And I was like just totally in shock of like, wow, this person is so impressive, and which he was. And afterwards, Ilya was like, you know, let's just go talk to him, let's ask him if he wants to come back to the dorm for beers. And I was like, Don't do that, that's embarrassing. Why would he do that? He's so like there's never no chance in hell that he's gonna come and want to hang out with us. And Ilya's like, screw it, I'm doing it. And I was like, Oh my god, like nervous in the corner, feeling feeling shameful. And Ilya goes in the ass, Adam, and Adam's like, yeah, sure.

And I remember just all three of us like hanging out with this guy who, in all respects, seemed like a very normal guy. Like he could have been just like a older upperclassman or something. But I think that was kind of the first moment where it's like, oh, maybe we like can do this, you know.

It was just like such a humanizing, normal guy kind of experience. I was like, maybe I could do this too. You know, it like took this thing that we had put on the pillar of like founding company and just like brought it to like a very digestible human level. And so I think that's probably around the time that we were like, okay, we can do this. I think then it like really started percolating and our like confidence that we could do it was pretty transformed. And then MIT has this thing, January is like an independent activities period where you can just do something of your own kind of design. And so we converted my dorm room into a little hacker space and set up a bunch of desks in there. I think we had like six desks in there, yeah. In a tiny, tiny dorm room.

He basically converted his dorm room, which already is not very big. It's like, I don't know, 170 square feet, something like that. He converts it into a hackerspace where there are just now instead of like his one desk, there's kind of like a desk with like two chairs there and like maybe a separate desk under his bed, which he like lofts a bit. At any given time, there were probably like three or four people hanging out in Peter's room working on various ideas where it's like, okay, we're just gonna like hack on ideas.

And through that whole month, we're just like building stuff. You know, by then the wheels were in motion, I think that would cause us to leave school, go to Y Combinator, all those things.

So, yeah, I mean, let's start talking about some of the ideas. I mean, the first idea I don't think is the one that you ended up on, but what was the first idea and how'd you come up with it?

First idea was bookstore, uh, book XOR. The idea was to give professors a place to host their like class materials, and then they could kind of get analytics back on like, you know, which parts of the doc students were reading.

And the whole pitch for it was that students or professors could upload PDFs, typically like problem sets or class materials, and then anyone could comment on them. So uh it'd be the kind of thing where it's like, oh, we're both studying something, like I'll comment on it, you comment on it, we can like highlight it. Maybe we can start collaborating in terms of our studying.

This has a product market fit problem, and the professors don't give a shit. And so, you know, we realized that, and then we pivoted to well, maybe they care about their lectures, right? Because like lectures are a lot of work, and maybe we could give students a way to ask questions because they feel kind of nervous and they could ask things anonymously, et cetera. So we we thought that would be interesting.

We had been reading all of Paul Graham's essays, and kind of his chief advice was to build a problem that you understand. And so we said, okay, we're students, let's go try and like solve a student problem. And so one of the problems that we uh or the problem that we eventually landed on uh was this idea where the professor says something in the middle of a big lecture hall and it kind of goes over your head and you like look around and everyone else is confused, but the professor keeps on going. And we were like, okay, this like seems like a problem, like maybe there's a software fix for it. And so we went around and we interviewed a bunch of professors to see like whether this problem resonated. And one of the professors who we talked to uh was actually Robert Morris, an MIT professor who's involved in Y Combinator.

You know, we we got his feedback on it and he thought it was a good idea, or at least he told us he thought it was a good idea. So that became class metric, and that's what we got into Y Combinator with.

Do you remember, by the way, your your YC interview? Do you remember the details behind that? Was it like easy breezy, or did you get grilled? Like, how did that go?

Uh, we got grilled, but there was a funny dynamic where Paul Graham was like, you know, I always wanted something like this. And so I think that's what carried the day. But then after he said that, he turned to the YC partner, who's also an IT professor, and was like, Hey, what do you think?

He looks to his left over at Robert Boris and he says, Oh, Robert, you're a teacher. Like, would you use this? And Robert Morris is just like, nah, probably not.

We're like, bro, like we like we asked you when. So that was a real gut punch in the middle of the interview. It didn't matter in the end, I guess. And that's what we tried to build for like the first four months, like through all of my combinator. We raised like 600k. And then as we deployed it in the fall, as the classes started, it was just a total disaster. Like all the students opened the thing, they spent two seconds on our class metric application, and then they immediately switched over to browsing the web, buying stuff on eBay, checking their email, whatever. So it was it was disastrous. And it was pretty clear within like a week that having students have laptops in classrooms was not a good idea. And so that was the end of that.

So, I mean, so so talk about that decision for a second. So you said that that's the end of that. I mean, you could have you could have just as easily gone back and said, we just had to work harder at it, we have to figure something else out. Like, walk us through the decision to just say, hey, this isn't working and let's move on.

I don't know. It was pretty obvious. Like, I don't know that there was that much. It was just like it was so bad. Like, literally, we were apologizing to the professors afterwards. So it wasn't like, oh, the product just needs to be improved. It was like the premise of like laptops in the classroom is like not a good one. And like I think we've just emailed all the professors and we're like, you should ban devices from your classrooms. Um, that's our takeaway.

Don't don't just stop using our product, but but get rid of all devices.

If we'd been better founders, we probably would have tried to find something that worked with the current idea. Because frankly, class metric wasn't like a total disaster. But at the time, we were just so burnt out on this, and we're like, oh man, we like kind of suck at this. We're not good founders, we don't understand the market. We want to switch off education entirely. And this was actually like kind of a contentious thing. I think it was definitely a little rough before we kind of landed on our next idea. Ilya, Ian, uh, the fourth co-founder who we had brought on for design, and I were all like a little bit burnt out on this idea of trying to sell to college professors, and Peter was still kind of in on it. And eventually we we kind of just voted and we were like, okay, we're gonna like try new ideas.

We moved on to analytics, which is like a bit of a honeypot or a tar pit idea, I think, for founders who are lost. And you know, one one investor asked for their money back, so we wired that back, or two, two, actually. The rest were like, yeah, we invested for the team, like have fun, pivot.

Have you talked to the two investors that asked for their money back?

No, I haven't. Yeah. Big bummer for them though.

I kind of wonder what they're thinking.

Yeah, yeah. One of them had 200k in, which I think would have been yeah, somewhere in the like 40 to 80 million returned in the end. So whoops. Whoops.

We'll be right back. And now, back to the interview. So analytics, it's not working great. Like, what wasn't working about it?

It turns out that the existing analytics tools are like pretty good. So we just like never really achieved product market fit. We always thought we were like one feature, what iteration away. I guess unlike the classroom tool, the signals weren't quite so obvious. And so we actually did spin our wheels for a long time, like over a year. Wow. Um, like trying to grind through that.

So you're working on it, you're grinding away. I like like what do those conversations look like? It's I mean, you just you basically you're obviously talking to investors, they know it's not really working. Inside, you know it's not working. Like, what are the conversations like?

We weren't really talking to our investors. We were scared to go talk to our investors because like we didn't really have anything impressive to show. Users like weren't you know, it's like very rare for someone to come to the website because we weren't launching anything, we weren't writing blog posts. We were just kind of like grinding, trying to get to a product that we thought was impressive before we would take it out. So we were like afraid to launch, which is a terrible idea. We were just kind of like in our hidey hole in our apartment working for a long time, which is bad. And you know, it was starting to feel kind of dire.

So I think for most startups, you can kind of like go along for a while and like pretend that you're doing well. And that was the case for us. Like, we were like, oh yeah, we're like one feature away from hitting product market fit. And I think at the end of the day, well, obviously we didn't know anything about like finding product market fit if we've been honest with ourselves about it. Uh, I think by the time that we got to December of 2012, frankly, it was this kind of like elephant in the room that we couldn't ignore anymore. And we finally like looked at it and said, like, wow, we are just not very good at this. Uh, we basically burned all this capital. We have almost nothing to show for it. We have no active users, no one who actually cares.

And I think there's like a the Airbnb story, I think, is like poison for founders in this situation because they did grind for like two years or something, and eventually they took off. And that is just like, I don't know anyone else who's ever had a founding story like that. Like, it's just it's not how it works. Airbnb is the like exception that proves the rule. And like I got I got married that fall, and we went off on our honeymoon. And I was like, through this period, I was like going through panic attacks, like in the in the hospital. It was bad. Um, it's like, I think this thing is like not gonna work.

And I remember that being like a pretty dark time. Like all four of us, like normally our mode would be like, oh, you wake up in the morning, you start coding, and you like start figuring out what to do. That week, like we basically didn't code at all. We just kind of like sat on the couch and argued with each other about what we should do next. Because I don't know, it's funny how hard a startup is, like for someone who is used to flying very high. And I think all of us came from a background where it's like, oh, you do very well in school, you like study the material, you understand how to pass the tests, you pass them, like you're kind of always just set up for success in that way. Whereas startups are like totally different. It's like if you don't do something that users care about, you're done. And I think it was it was a very humbling experience for us where it's like, oh, it doesn't matter that we're like these hot shot kids from MIT or whatever. Like we were just bad at making things people wanted.

And eventually Ian and Calvin, mostly Ian, I think, were like, you know, I think that there's a big idea behind this little open source library, analytics.js, that we built like a year and a half prior for ourselves to distribute data between different analytics tools from class metric. And so they, you know, they had like an analytics.js manifesto that they wrote as like a GitHub markdown. And we debated that. I thought it was a terrible idea. I tried to kill it. Uh, and then, you know, tried to kill by convincing everybody to just like launch it on Hacker News and see what people think. And I thought that'll kind of kill it and make it go away. We had maybe like five or six months of runway left. Uh, and so we we put it on Hacker News and it just like blew up. So that was the that was the product market fit moment, and then we were off to the races trying to build that out as fast as we could.

Do you remember the comments on Hacker News? Like, was it all positive or was it, you know, there's typically uh, you know, also a bunch of haters. Yeah, that's a good question.

I remember being like mostly positive, which was kind of surprising. Uh like I just pulled it up 326 points on December 12th, 2012, 12, 12, 12. This is a cool idea for a project. It was like shockingly positive for a hacker news thread. And we got like thousands of stars on GitHub and thousands of email signups. Like it was pretty shocking.

So our story actually is maybe somewhere in the middle, which is kind of funny, but like totally different. We um we were working on Weebly. It just kind of wasn't working out. Um, you know, it's the same thing, like one more feature. And then we came to the conclusion that it was a dead idea. So we tried something else. Um, we tried a MySpace profile creator. Then we tried an ad customizer, like an ad optimizer. But in the meantime, we're like, hey, let's just not shut this thing down. I actually don't think I've ever told this story. We're like, let's just leave it online. And somehow, about 12 to 18 months later, the thing just starts taking off on its own, completely out of nowhere. And we're like, hey, you know, maybe this isn't such a bad idea after all.

Wow, that's cool.

Um, but um, I mean, did you have a plan? Like, if that didn't work, what what what were you guys gonna do?

Uh we were discussing all kinds of different ideas. We'd had uh like office hours with PG. We'd given him a bunch of different ideas. He was like, So he was just like, that's a terrible idea. So yeah, we were we were kind of at wit's end. Like it was kind of the end of the road.

Do you remember that conversation? Like like where you were, like were you guys all sitting together? Was it pretty heated? Like how did how did that go?

Yeah, it was in our apartment slash office on Russian Hill at Thousand Chestnut. That was the argument about Analytics.js. And then that was also where we were sitting all day when it was blowing up. And so we kept we kept building out of that apartment for another six months.

Yeah. How how did that? I mean, so you so you post on Hacker News and then it just blows up. Was that the moment you're like, wait, this is where this is gonna be it?

I mean, it was clear that we just needed to go work on that. So we just like pretty much immediately started working on that. But we we we almost took like a holiday from vision setting. Like we were just like, we were so exhausted of just like, oh, here's a vision, let's go build the vision that we were just like, I don't know, man. Like, let's just build whatever what are people asking for? People want more integrations, people want a hosted version. Cool, let's just do that. Just like an absolute state of exhaustion and like emotional, like end of the road. And so that's kind of what we did for like six months is we like we tried not to have a vision. We just tried to build exactly whatever people were asking for. And then over time, the vision you know solidified.

I think the moment that we got even like a glimmer of traction, it felt like enough of a rope that we should start pulling on it. And so that's effectively what we did. I think for me, I came out shell-shocked enough that I didn't even think this would be a real business until like eight months in when we signed our first enterprise contract. But I think for all of us, it was like, okay, there's at least something working here, which is more success than we've ever had today. Date. So we might as well keep seeing where it goes and figure out if there's a way to get to a bigger, bigger business.

But it was a it was a very different motion and it was kind of a cool feeling, actually. Like product market fit for us almost felt like we'd been pushing this boulder uphill for a really long time, and but we were in control of it. And then it was sort of felt like the market like took control of the boulder and it started rolling downhill. And on the one hand, it was very exciting. And on the other hand, it was like, oh my God, like I don't, I don't really control this thing anymore. Like it's not where I want to go, it's like where the market wants to go, which was also like a feeling of loss. So it took like months for us to like kind of emotionally get realigned and to like, okay, this is actually exciting and this is cool and promising.

What so you said it? I mean, when you launched it, you had six months of runway left. How low did you get? I think we got down to four weeks, maybe three weeks.

Yeah. And then called our investors and was like, hey, I think it's time for us to raise. And they're like, oh, cool. Like, how's it going? Like the update, we're like, how much cash do you have left? I'm like, oh, like three or four weeks. And they're like, holy shit, like, you got a fundraise now. Like, what is going on? And then, yeah, from there it was, yeah, truly off to the races.

We got, I think at one point in time we had like three weeks of cash left too outside of YC. You know, at that point you start making contingency plans about how you're going to pay rent next month because it's coming up. It's like next month, and you guys have those kind of conversations.

Uh I was very naive. We were just like running out of wall. Yeah.

Oh, that's awesome. So yeah. So that so then at that point, I mean, if you raise money, you got that pressure off your back, how quickly did it start taking off?

Not that fast. Like we basically grew linearly forever in terms of number of users, which is very strange. I still don't understand why. And what we figured out over time was a lot of our growth was driven by moving into larger accounts over time. Um, so like bigger companies instead of, you know, a small startup paying $20 a month, like in the end, Procter and Gamble paying like $7 million a year. And so, like, there was a lot of that kind of shift in account size over time, which was both bigger companies and larger contract value because we were grossly undercharging. We were terrified to ask for money. And in the early days, customers would even email and be like, hey guys, you got to charge more. I like don't trust that you're gonna be around that long. Can you please like you should raise the price?

Do you remember the first moment you're like, this is gonna be big? Like, this is really working.

I think probably the first time we hired a new sales advisor and I was like struggling to, you know, figure out how to do enterprise sales. And we went to meet with Nat at Zamarin, Nat Friedman, like real like Silicon Valley stalwart. And anyway, he was running his company Zamarin at the time, and they were using us, but not paying very much, $50 a month or something. And so we were going to a sales meeting, we were gonna upsell them onto an enterprise plan. And our sales advisor was like, Peter, in this conversation, you have to ask for $120,000 a year. And I was like, I don't know if I can do that. Like, that's crazy. We're chart, I think I think actually we're charging them $120 a year. And so it was like a thousand X increase in price. I was like, I don't think I can do that. And he's like, like, what is your sales advisor then? And he started walking away and I was like, whoa, like, okay, I'll ask, I'll ask. So we sat down and got to the end of the conversation. Now it's like this really compelling. Like, you know, how much does the service cost? And I was like, you know, 120,000 a year. And I turned just like completely beat red, just like bright, pulsating red. And he kind of looked at me and he's like, Well, how about $12,000 a year? And I was like, How about 18? And it's like, that's fine. And I walked out of that meeting and I was like very embarrassed. And then also was like, Oh my God, the value that we're creating is just way higher, you know? And so pretty quickly, then we got to a 36k deal and then a 45k deal and then a 150k deal, and then Angie's list at like 200k. And so I was like, where's the ceiling on this? Like, as we started to see those contract values creep up and we crossed like a million in revenue, that was like, okay, I now understand how this can actually be a big business because I'm I'm seeing the value per customer at like a level where that could be big.

So, you know, considering the last pivot, you know, it seems like the idea was so fragile at that point in time. I mean, what do you kind of take away from that experience? Going through the pivots and then ending up on something that really, really worked.

I mean, there were a lot of learnings from that. One learning for me was just like how important understanding the market as compared to like whatever your vision is, right? Like visions are worthless, truly worthless in that stage, right? They matter a lot when you're trying to like rally a company of people around like a direction to all pull the ores together. But when it's like four people in an apartment and you're trying to find product market fit, it's like the world could care less what you think about how the world should operate. People have problems. If you solve those problems for them, they're their problems, not your vision of it. Then it'll start rewarding you. And so, like just like 10x more humility at that stage, unless you've been steeped in the space for a long time. You've got no idea.

You know, I know you know a lot of founders, I mean, probably every single founder at some point has to decide, you know, whether they keep working on an idea that's in struggle mode, try something new. You know, different startups find success in different ways. Like, how do you help people navigate that question?

Boy. I guess for me, it's always come back to like the understanding of the customer and the market. And particularly in hard tech, people can get very carried away with the science or very carried away with the capability and not necessarily understand the like customer need that they're selling into. And so that's almost always where the where the failure mode is of sort of like grinding away in obscurity, right? Is like trying to solve some hard technical problem that might not even matter. So I guess that's that's where I always try to point people is like go understand the customer problem that you're gonna be able to like blow the competition out of the water through that understanding.

How big did Segment eventually get?

At the time of acquisition, we were about 600 people and doing like north of 100 million in revenue. And then we got acquired in 2020 for a little over 3 billion, and then continued to accelerate growth afterwards, which was exciting.

Just paint the picture for us. Like, what were you doing the night before you announced the acquisition of the team? And like, what did you do the night after you did?

Oh man, that whole period is a blur. I don't think I was sleeping very well because you have to live like a double life as like a CEO of a company. Like you have to keep executing, and yet with your small team be in discussions with indiligence with the acquirer. And so, on the one hand, like guns blazing, we're gonna go do X, Y, and Z thing, but like your emotional state is completely consumed with like landing the plane on the acquisition side because it's life-changing for everybody and like a completely different thing with like incredibly high stakes in every conversation. So I don't remember exactly, but like not sleeping well, and then I think it's like squawk box at like you know 4:30 a.m. Pacific, you know, in my like weird janky room downstairs with like a crappy collar shirt put on that I like you know never wore. So just like emotionally spent.

Did you guys as founders ever, you know, I know, um at least in my experience, it's like busy, busy, busy. But did you ever have a moment of downtime where like just between founders, you kind of, you know, looking from, you know, math camp to roommates to like that kind of success, you're like, like we kind of did it?

Yeah, yeah. Uh we've been trying to organize these founder trips every year, uh, where the three of us just go and kind of like zoom out and think about those and kind of reflect on it. Um, both for myself and I think for a lot of folks there, like the acquisition itself was kind of this like nice end of a chapter. We basically spent 10 years building this business. And I think one of the things that I'm most grateful for is seeing everyone whose careers were launched by segment. I actually think the coolest part for me is one thing that we did post-acquisition is we went around to the earliest employees and actually just thanked them. All three of us got on a call, folks who were still at the company and folks who weren't. And I think seeing the difference that it made in their lives is like one of the things that I'll treasure most. And so I think for a lot of folks, it was like, okay, we've kind of like taken this business to like a meaningful outcome for everyone, and now it's time to continue on to the next phase. At least for me, I didn't go on to work at Twilio, and neither did my co-founder Ilya. So it was kind of only Peter who was there from the three of us founders until he left a year later.

More after the break. And we're back. And so, you know, obviously segments not your only founder story. You know, how did how did you move into the next company that you started?

Yeah, I started Charm Industrial in 2018, and it actually came out of a problem that I experienced as a customer at Segment. Uh at Segment we wanted to do the right thing from a climate perspective, and so we're buying offsets and you know, protecting forests, supposedly, in in uh Indonesia and uh the Amazon. And, you know, I was like feeling really good about that.

You said you wanted to buy carbon credits, you want to do the right thing. Why was that important to you?

I think my mom is a pretty big influence here. She was always clear with me that like it's great to do well and build wealth, but the impact that you're having on the world around you matters in how you do that. And this was part of that, right? Part of that was like trying to find ways that we could use the product to kind of help the world around us. I don't know that we ever really figured that out. It was a great business, but moving around data is like that, it's a business. And we we had like some nonprofit programs and so on where we kind of support folks that we thought had good missions, but minimizing the impact that we were having, at least on the climate, seemed like a good way to have impact. So that that I think is ultimately where the motivation came from. So we're buying offsets and we made the first purchase in 2016, I think, or 2015. And then in 2017, I like circled back and I was like, cool, like, you know, what happened? Like, did we have the effect that we wanted with that $20,000 that we spent on it? Like, you know, what happened here? And so we started digging into the nonprofits that we'd sent money to. And the deeper I got into it, the more I was like, oh boy, like, ugh, I don't think that this is having the impact that we wanted it to. Like 70% kind of went off into marketing fees that were lost at various levels. And so it wasn't until you got down to like, you know, the last 30% that actually there was any evidence that the money was actually going into rainforest protection. And then you were seeing these headlines like Amazon on fire, biggest for fire season ever in Indonesia, etc. And you're like, well, was the land that we put aside like, was it protected or did it blow up in flames? Cause like, I don't know, should we buy more? Like, what's the deal here? And the deeper I got into that, the more I was like, like, I don't, I have no evidence that anything could happen. And so I really wanted like a carbon removal product where I had trust that it actually had been removed and that it had been verified and that I could personally inspect some kind of ledger to show that it had been done correctly. So that was kind of the initial inspiration around charm was a high quality, verifiable carbon removal.

So we're kind of moving in the charm. You know, how would you either describe it to your kids or actually maybe more interesting, how how do your kids describe it?

Yeah, I have a seven, five, and two-year-old. The two-year-old prefers to talk about the zoo with his, you know, three words he can string together right now. Seven-year-old is starting to understand it though. We often, you know, there are many problems in the world of which climate is one. And it's challenging because it's a very long-term problem, right? There are lots of other problems that are extremely urgent. And climate is tough because it's one that's both very important but also very long term. And so we we try to describe to him, you know, as like there's a blanket around the earth from this gas, and it's just kind of getting thicker and thicker, and at some point it's going to become really problematic. And so I'm trying to thin that blanket by putting some of that blanket back underground in the form of bioil. And along the way, by the way, you know, you see the smoke, and sometimes the sky turns orange, and like we can prevent some of those wildfires because the stuff that we're putting underground is actually plant matter that would otherwise go up in wildfire uh smoke and so on. So that's kind of how I explain it to them. And, you know, carbon removal is important, it's a small part of the problem. First, we have to reduce all our emissions along the whole supply chain, and clean power is a big part of that with solar and wind and nuclear, geothermal, etc. But a big part of it is industrial, like cement, steel. Um, these are like really hard to decarbonize areas. And so we should figure out a way to re-engineer our industrial processes to remove carbon in their processing instead of emitting it. And so charm industrial is char farm industrial because the idea is you take the biomass off the field, you leave behind the char, and you take the bio oil as an industrial feedstock. In the future, we hope that the sort of liquid biomass that we make that we can, you know, use it as a feedstock in those. I think that's probably like a 2030s kind of proposition for us as we come down the cost curve. But yeah, today we just take the biowale and stick it underground.

Like walk me through. I mean, you come up with the idea, you know, you decide it's time for you to do something new. You know, what were the early signals that gave you the confidence that was the right direction?

Uh, this one was more like I was convinced that this had to happen and that demand would materialize over time. That was based more on instinct than you know, knowing these industries. And it took several years of like smashing my head against a wall to break out of the tech industry networks into software industry networks into like steel, concrete, ammonia, you know. Like I don't think this worked that well, but like, you know, at one point I was on a sales trip to Chicago for a segment and I like made a stop in my Uber at like the headquarters of like CK Industries or something. There's like the company that runs most of the ammonia plants for fertilizer production in the US. And I like literally, I had like printed out, you know, flyers basically with like a memo. And I like walked in cold to the building and like handed it to a secretary and was like, you know, this is for X. Um, so there's like I really smashed my head against the wall to like get into some of these places. Another one on the steel side that was very challenging was um uh we had an investor whose younger brother had been a roommate with someone in college whose brother had then inherited the family's rolled steel products business in Ohio. And so I got an intro through that chain to him. So we're like four steps deep already. And then he introduced me to like the Canadian Steel Association. The Canadian Steel Association thought this was interesting enough that they introduced me to their colleagues at Arcelor Middle to Fasco. And they thought it was interesting enough that after like three meetings, they finally introduced me to the direct reduced iron plant, which was my original target in Quebec. And then, you know, I was like, Oh, I'll be in the area. Like it's like northern Quebec, like you're not in the area. And so I just like flew out there and that became a productive kind of relationship. So I don't know, it was very hard to break into these industries.

I mean, in some ways, oddly enough, it seems like a bit of the opposite to the segment story, but also it sounds like it, you know, maybe it was the customer pull that was really giving you the confidence like this is direction we need to keep going.

Yeah, I wouldn't say that we had customer poll until 2020, but also that I was not internally focused. Like I had a feeling that this was like a strategic area to be in, but that it was gonna take a while to figure out what the product market fit was. And eventually we found this product market fit on carbon removal, and it's like it's honestly just grown faster than I expected. Like I'm always a little skeptical. I'm like, but how much voluntary carbon removal are people gonna buy? You know, like I mean, I was a customer of it, but like, are other people really gonna step up to the plane? And it was like, well, I don't know, like we'll probably get to 10 million in bookings, and then we got to 10, and I was like, well, no, like I kind of have visibility to 100 million in bookings, and then I'm like, well, we're at 100 million in bookings and like kind of have visibility to like a billion in bookings, and so you're just kind of like, I guess we'll just keep rolling with it. But importantly, I wasn't spending my time as founder on the grinding in obscurity on the technical process. I was trying to go knock down these customer conversations and things like showing up with a Chevron refinery. Like I was out in the field trying to understand what was compelling to them.

One of the stories that Peter talked about that really struck me, you know, he talks about going cold into companies after he's already been a pretty successful founder of his own right, walking into their lobby, like, you know, a company in northern Quebec and just basically saying, like, hey, like I want to meet with this person. I mean, how do you imagine that going? And like, what do you think it is about him? And how do you think those conversations went?

I think our early failure, where we came in with such expectation for like, oh, of course we're going to succeed. We succeeded at everything else before. Oh, of course we're going to make something that people want. Oh, of course, this idea that I have, like, that's the way the world should work. I think being hit over the head so many times with like, hey, the world doesn't necessarily work like that. The world works a certain way, and it's kind of up to you to figure out how to fit into it and to build a company that makes it work a little better. I think that lesson hit all of us pretty hard, and especially Peter on the product market fit side. And so I think since then, like frankly, Peter's biggest superpower is like figuring out the go-to-market path for a company. And I feel like there's lots of problems out there, and I think he's gonna go after them.

You know, from an outsider perspective, I think it's actually fascinating about how the three of you in some way post-segment explored, you know, climate tech and you know, kind of kind of various solutions. You know, Ilya with fire, you with heat pumps, you know, Peter was obviously doing charm. I mean, do you have any insight into like, was there something in the water? Like, what do you think it was that got all three of you interested broadly in this space?

I mean, I think for Peter, he's always wanted to solve like one of the big problems of our time uh and have more of an impact. Uh, and I guess stepping back, even thinking about kind of like post-segment life, I think for all of us, we really want to try and solve some problem where we look at it, we're just like, oh man, like this feels like a worthy thing to swing for. And so I think for him, obviously, climate change is like one of the biggest problems of our time. And he feels like he has a way to solve that. I think it makes a lot of sense that he would like get deep into it and try and understand, like, hey, how can I build a bunch of infrastructure to solve this problem? I think he's definitely had an impact on me and Ilya as well, I would say, just from like talking about this so much. Like, I feel like I've learned so much from both him and his wife, Erica, about the climate space and like where there are problems and where people could use better solutions. Like right now, he's doing the carbon removal stuff with charm and also helping run Revoy, this electric freight startup. Like, but between all those things, it's crazy. So I would say that's definitely he's rubbed up on us in a good way.

And then you also joined Revoy, uh, which is a company that we've invested in. Can you describe what Revoy does and how you decide to get involved?

Yeah, Revoy was founded by uh my friend Ian, who was another floor mate of ours at MIT. Uh, he was actually our next door neighbor when Calvin, Ilya, and I were roommates. Really brilliant idea that he had for Revoy. So the idea is it's an electric dolly that sits in between your standard diesel tractor, a standard trailer. No special hookups, like just you would normally hook up a trailer to a tractor. And what's cool about it is that you just have like a load cell in the kingpin, and it basically tells you whether the truck is trying to accelerate or not. And purely on the basis of that, instead of burning gas, you can transfer 94% now of the mechanical power is coming from the electric dolly, not from the gas burning in the in the truck. It's pretty incredible. Like effectively, the truck is like barely idling at this point, right? If you're hooked up to a revoy, you're doing 120 miles per gallon in your semi-truck instead of seven. So it's really incredible piece of technology and very quickly in the right markets. And we think with like 25 to 50 revoys, we can get to a place where it's gross margin positive, like breaking even with diesel. And that it's a very cost-sensitive industry. And so I think if you can even start chipping off like a few cents per mile, you start to be actually pretty compelling for carriers to use. And from a safety perspective, in many ways, it's better. Your stopping distance is shorter, just because you have the regenerative brakes on the revoy, another axle in addition to the truck. And you also get faster acceleration, twice the power at your fingertips. So drivers love it from that perspective. They kind of get this better maneuverability of like accelerating onto the freeway without getting, you know, hit from behind or jamming someone in the on-ramp lane, as well as yeah, shorter stopping distances in the case of like an accident or coming downhill. You have a regenerative braking that's like taking a huge amount of energy into the battery instead of a long downhill where you're just burning brake pads and you know, could potentially have a brake failure. So there are safety and driver experience benefits as well.

Yeah, I've had a very small view of some of the work you've been able to do help out there. And, you know, I have to say it's been super impressive, just super methodical, very focused on execution. What are some of the main lessons from segment and charm that you think you've been able to bring to Revoy?

I think from the charm experience, the number one learning, which has been quite painful, is just like deleting the part, is really important. Like if you can eliminate a part, you lower the maintenance cost, you lower the failure mode, so you increase reliability almost always. You know, it's one less thing that has to be designed and kept track of. And I just can't overstate like if you can delete something, you must delete it. Um I'll give you one example for reware right now. We have a we have turning on the rear axle, which is really convenient when you're trying to hitch it up. But you get a lot of extra friction, you need a lot of extra weight. There's like all these components that then are managing the fact that that axle can turn. Anyway, so we're experimenting with that. I'm very excited about this because if you delete the ability to turn, you delete all these gears, you delete all this friction, all these like other pieces. So it's like anything that you can find a way to delete is like so transformative. So delete the part as a mantra now.

What do you think is special about Peter in terms of his strengths, in terms of what he like uniquely contributes as different than most other people?

Peter is able to go deep in such a broad range of subjects, like maybe more than almost anyone I know. It's ridiculously impressive. He's like quickly able to cross disciplines and dive into a bunch of different areas, like maybe more voraciously. Than anyone else I've ever seen. And so I think finding all of those in one person who has that range, but also has that ability to then go and just like execute in like a very deep, thoughtful, and inspection-driven way, I think is very rare. Because I guess I feel like I talk to a lot of investors. Like, I think investors have the range, but like not often that sort of like operational cadence. So I would not bet against Peter just in terms of his desire to go and get things done.

The joy in life, in some sense, is like the struggle and all the learning that comes along with it. I don't know. I feel like there are big problems that need to need to be solved. So fun to go tackle them.

Well, that's awesome. This was really great. Thanks for sharing your story. Yeah, thanks for having me. This podcast is brought to you by Leapforward Ventures, an investor in early stage startups. If you like the show, the number one thing you'll want to do is sign up to get notified when we release new episodes that includes transcripts and key takeaways from each story. Head to leapforward.fm to sign up. I'd also love to hear your feedback on the episode and who you want to hear from next. Just shoot us a text at 415-915-3050 to get in touch. This episode was produced by Theo Balcomb and Kim Nederveen Pieterse. Craig Eley is our engineer. Reese Laudano made our cover art. Music is by Jim Brunberg and Ben Landsverk of Wonderly. I'm David Rusenko, and this is the Leaf Forward Podcast. See you next episode.