Logan: Welcome to the Logan Bartlett Show. What you're gonna hear on this episode is a conversation I had with TUI Core Launch.
Logan: Now TUI is the Co-founder and CEO of Procore, a construction software company worth over $10 billion in doing almost a billion dollars in revenue Today, TUI and I talk about a bunch of different things, including the early days of Procore, which involved bootstrapping for 12 to 13 years before ultimately getting to $10 million in annual recurring revenue.
Logan: All of the biggest inflection points in Procore came at our darkest hours. All of a sudden, you come up the other side and you realize you're running faster than you were before, everyone is way more engaged, and then you have that ah ha moment that that was not actually a dark time, that was actually a very, very important time for this project.
We then discussed the hockey stick growth that happened after that, growing to 4, 000 people today. We talk about the need to manage people out of the organization when they're not scaling as quickly as the business, as well as what he's learned from mentors like Toby Lukey from Shopify, as well as Satya Nadella from Microsoft.
Steve Zahm looked at me and he's like, look, if we don't get 30, 000 right now, we are going to go out of business. The person said, how much does Procore cost? Mark goes, uh, 30, 000 a year. And then we all sat back and the guy's like, all right, send me an invoice. A really fun conversation with 2A, one of my favorite ones to date that you'll hear now.
Logan: We were just talking before we started here, uh, that the valuation point, and it's, it's something that people get precious about, right? And, but on both sides, like it's not just VCs that are, uh, trying to, I mean, it's sort of talking my own book being like, Oh, well, valuations don't matter. Pick the partner you want to work with.
The journey of who you have on the ride with you is so important from an investor standpoint. And so it's funny to hear you don't even remember the traction or the ARR multiple or any of that
Tooey: No, you know, you remember the, by the way, I want to double tap on that. It is so important that you choose your, uh, that you choose your investors, right?
Logan: I assume that was from the mistake you made picking Brian Feinstein.
Tooey: No. Well, I'm more of an optimist. I'm the fact that Brian and Will are both still, uh, investors in Procore and still on the board after 10 years or whatever, uh, is a testament to how much, you know, it's, it's working out. So yeah, choose wisely, but you're right. Like, you know, I don't necessarily remember.
The, the details of like the negotiation particularly, but I, you know, I just remember the, um, you know, those milestones, like the billion dollar valuation, which is, um, you know, just something as a founder, a billion dollars is like, you never imagined that that was ever going to be something that you would ever be able to do.
And when we came to terms with that, with a deal that was at a billion dollars, I was like, It was just, um, it was one of those moments where fortunately I was with my leadership team that we were, and we kind of had it on speakerphone, but didn't, you know, didn't really announce that it was a speakerphone.
When we put it on mute and then we all started like cheering and high fiving that we had gotten here. Uh, it's just, those are the moments you remember,
Logan: and the journey, if you get too caught up on, uh, the, the end state, you'll lose sight of the, the journey along the way. And I remember one of the best investments in my career, uh, I was hung up on a 90 million valuation and they wanted a hundred and we went back and forth. And now I. Share Nick season tickets with these guys.
They came to my bachelor party and I was just wrapped around the axle of like, no, no, no. It's 90 million. Like that's the, that's the price I'm willing to pay a hundred. I'm out. Right. And, and I, I think about that at times when you're making the decision, it's sort of like, do you want to work with these people for the next 10 years or not?
And sure. The valuations matter at the margin, but especially in the last. 10 years, we've seen all the oscillations of like error multiples and valuations and all that stuff. And so you need the through line of like what, you know, the journey is going to look like, right?
Tooey: And fortunately for me, I think I was luckier than smart on this one, because though I'm, I'm pretty good with being a judge of people, I always say like, Working with a venture capitalist is much more about the partner that you're going to work with than the brand. A funny story, one of the largest brands out there, it was like in 2009, 2010, long before we actually raised real institutional money, uh, Steve Zahn, my co founder and I went up to Sand Hill Road and we walked into a firm and we pitched them and, uh, they of course put us in like the far back room with the, you know, the 22 year old analyst or whatever that
Logan: The lights are like swinging back and forth. It looks like a prison interrogation room or
Tooey: I'm like, is this a mop closet?
You know? But, uh, but, uh, and then at the end of the meeting that they're like, you know, that's really interesting. But, um, If you could just pivot your business model to be more like Facebook. And I was thinking to myself, like, these people don't get it and they're not going to get it. But man, when I met Brian and when I met Will, uh, uh, they got it.
And that's the other thing is, I like people who are in love with the vision, right? And, um, some other people were just in love with, uh, the business model, and that's to me not enough.
Logan: it's hard.
Logan: So, so maybe describe for people we sort of dove right in. What does Procore do?
Tooey: So we are a construction, uh, software company, we're a platform, uh, and anybody who's ever done any construction themselves, like if they built something, uh, remodeled a bathroom or whatever, realize that it's a highly complex and fraught with lots of challenges, mostly because.
It's a prototype. Your bathroom is never going to get rebuilt again. That nuclear power plant in Europe is never going to get built again. Uh, and so the complexity is just enormous. And now you have teams that are coming together that have never worked together. So what Procore does is we provide this common layer, this common platform for data and managing these workflows that jump the different entities across these projects, um, that just drive smooth, um, uh, project, uh, you know, budgets and schedules.
Safety, a lot of other things and we've, we've now become, uh, many more things than just that because we're a platform and we have tons of partners that help extend what we
Logan: Yeah, I want to talk about the different products and modules and all that stuff, but originally, I guess, uh, it was kind of project management and collaboration for, for building what was custom homes way back when, and then became construction. And so I want to talk about
Tooey: There's a journey
Logan: that, that pivot there, but, um, the slope of your line and the growth was, um, unusual.
Logan: Uh, so it took you 12 to 15 years or so to reach 10 million in ARR. But
Tooey: Just, just south of it. Yeah. Yeah.
Logan: or four to reach a hundred, then another, I don't know, four or five to reach five hundred. So definitely an acceleration there. Um, I guess my question in that is there's. You can't ever start your company on the exact right day.
Maybe you can. Maybe you're super lucky. But, uh, you're either too early or you're too late. And if you're too early, your job's to survive. And if you're too late, your job's to catch up. I think
Tooey: Which one do you think I have?
Logan: you
Tooey: There's two. Yeah. Yeah.
Logan: So, so maybe, maybe take us through that, that journey of like, uh, 2000, early 2000, starting the company and then.
hunkering down and trying to survive until the market caught up.
Tooey: Um, the idea was, the idea was not too early. Uh, the concept, so I'd been working in the, in Silicon Valley doing some other technology work. Um, and what I saw was, is the digitization of different industries. And so I saw the opportunity in construction to digitize. And look, I, I knew the internet wasn't at the job site.
And I knew that the. Average, uh, construction management person graduating from a university is not going to be well versed in technology. But I also knew that the industry and the processes that drove construction were so broken that this needed to happen. Uh, so I just started on the journey and I knew it was early, but I, and I was looking at the slope and I didn't know when we were going to hit that kind of tipping point.
Uh, I thought it was going to happen fast, faster. But, um, Uh, I've just been this person that's, I just saw something that I just knew had to happen. And to me, it was much more about solving the problem than it was about growing a big business. Uh, so there wasn't really a lot of like lamenting the, wow, we haven't hit a tipping point yet moments along the way.
Now there were times when we couldn't make payroll. You know, times were tough, but like, I still just believed in it. So I, I just kept doing it and thank goodness I had a wife who didn't divorce
Logan: Yeah. Yeah. Well, so, so there's the, there's the picking the inevitability of something. And it's an interesting thing that I do as an exercise oftentimes is like, do I think this will happen? And you can get bogged down in the, the timing of like why now and all that stuff. But if you think it's an inevitability, then it probably makes sense to get on the, the ride on that journey.
So it sounds like you guys were early there, but you, you referenced, um, Not being able to make payroll. Were there times that you didn't think Procore would survive or what was the
Tooey: No, I, I just needed to get out and raise some more money. Frankly, I, I would never believe that we weren't going to survive. Well, I should say there was an existential crisis, uh, in 2008, 2009, where, uh, even our most, um, uh, loving investors were like, we're not putting any money into construction technology.
This, the world is falling apart. Uh, except for one gentleman, Kevin O'Connor, who's the founder of DoubleClick. Uh, he, uh, he got it. And, uh, funny story about how I raised that money, but. I was within hours of not being able to make payroll and he was in the South China Sea on a cruise ship with his wife.
And by the way, if you've ever had a challenge of trying to reach an investor, try calling a cruise ship, right? It's almost impossible, but I figured it out. I got him. He wired us some money. We made payroll, but he was my last call. I didn't know who else to call after him. And thank goodness he answered.
And thank goodness he was, uh, in the casino and it was midnight, uh, when he got the phone call. Cause he, I think he was probably a little bored. Uh, um, Open to the investment.
Logan: amenable to, uh, the circumstances and, uh, uh, yeah, thank God for, I don't know, the blackjack hands that he got
Tooey: He may have just won a few. Yeah.
Logan: exactly. The roulette wheel was spinning his direction. Uh, um, so there were things you did to try to move the market along, including like installing Wi Fi on job sites.
And was that for? When you look back, was that just for your sanity at the end of the day? And there's really willing the market into existence was just to keep moving forward or do you think anything actually helped moving the market?
Tooey: I was having a hard time proving the business model because there was no internet at the job site. So my, my business idea wasn't about the internet at the job site. It was about providing data access to people at the job site. So in order for me to kind of prove my idea, like I just had to brute force getting the internet to the job site, but I will tell you when I, so when we flew into, it was, I think it was in, um, South Carolina, we flew in.
Uh, to, to South Carolina to go do that, that this is, this was the very first one we did. Um, we went to, you know, Home Depot and got a toolbox, which was going to be the waterproof housing. Then we went to CompUSA and bought a, bought a router and a modem. And I remember climbing up the ladder, I borrowed a ladder from the electrician on the job site.
And remember, this is a, um, this is, this is a dirt lot that has a temporary power pole in it. So I'm climbing up this ladder and I'm thinking to myself, this probably looks really stupid. Like, you know, why, you know, we're charging like 95 a month and we're doing this. But I just had to be able to prove, and fortunately for us, we installed it on the job site of a, of a gentleman who, uh, was really, really, um, uh, excited about the business model.
He ended up investing in Procore, uh, and he told the world about it. So it was worth it, but boy, I felt silly at the time and we did, we did. And by the way, I mean, But my, I really got the start on the south side of LA, uh, working with some kind of the Hollywood folks, um, in the, in the residences. And we installed every single one of those.
We installed the internet at the drop site, you know, crawling underneath trailers and
Logan: Well, and it was Ben Stiller and Barbara Streisand, right? Like it was that
Tooey: First one was, first one was Ben Stiller. Uh, second one was Eddie Murphy. Uh, and then it was a whole cascade. The Barbara Streisand one stood out because she was so cool. Like I, and you know, I don't. She's
Logan: cool on site.
Tooey: Yeah. Like, like I, she has kind of a. a reputation for maybe not being so easy, she was the coolest person I'd ever worked with.
And I was like, I just remember that one because she sat us by the pool and served us icy and cookies. Yeah.
Logan: so, so the business model evolution, so you were doing these custom homes for celebrities essentially, right? I'm sure not, that wasn't your TAM, but, uh, it was a lot of big houses, I
Tooey: Well, what it was, was there's a, there was, there still is today a handful of large custom home builders in Los Angeles that, that, that cater to the celebrities and the high net worth people down there. So I was working with those general contractors who would bring me to these celebrity sites,
Logan: And what year was this? 2001. Okay. So, so after the, uh, internet bubble popped and, uh, um, and so what, uh, what was the evolution in going from these custom homes in LA to construction,
Tooey: Well, I, the first. Well, that is construction, but commercial, yeah, yeah. So, uh, the first kind of aha moment I had was, I remember standing up on the roof of Eddie Murphy's house in Beverly Park. And uh, I looked, he had two structures and I looked down on one structure. And uh, I don't know if you've ever been, well you have, you're in New York.
If you look down on the building below you, you'll see that there's a whole bunch of air conditioning unit on the roof of all those high rises, right? I looked down at Eddie Murphy's house and what I was looking at was what I thought would look like, you know, enough air conditioning unit for a casino.
And I'm like, wow, this is, this is not a residential project by any stretch. This is definitely a, and it was all commercial grade equipment. I'm like, we're actually doing commercial construction and I didn't really think we were. And that's when the kind of the bit flipped. And I'm like, Wait a minute, we don't have to be limited to high end residential.
Uh, and there was a few missteps along the way, but we finally were able to
Logan: It's funny, Eddie Murphy's house was equipped like a commercial,
Tooey: Building. Yeah. Yeah. I think he had 23 air handlers on his roof. Yeah. I mean, most people have one.
Logan: Yes. Yes. Yeah. Uh, so, so, so you saw that and then it was the global financial crisis that you, you're actually kind of forced to, to find your way into that market in a more, uh, meaningful way?
Tooey: We had a customer that was building a, uh, what's called mixed use, but it was residential upstairs and commercial downstairs and we were really focused on the residential part of it. And, uh, then we realized, well, wait a minute, they're doing all this commercial work. And I'll never forget Steve Zahn, my co founder and I were in a, we were talking about like, what are we going to do?
All of our custom home builders are going out of business. Like, and it was, I don't know how much you remember of all this, but it was, um, nothing happened slowly in that time. Like people were, you know, every day, five customers would call and be like, you know, sorry, but I'm out of business. And so we're like, kind of like, what are we going to do?
And we're like, let's just start calling, uh, commercial contractors. Uh, and we, we did, and we, um, fortunately found a lot of early adopters that want to do, to go with us. That was another one of those where we're just skimming the wave tops, but, uh, I'll never forget too. So our pricing model was, uh, 95 a month per project.
And of course that doesn't, that doesn't make payroll very well. So, uh, Steve Zahm looked at me and he's like, look, if we don't get 30, 000 right now, we are going to go out of business. So we're in this little tiny rental, uh, office rental, and we're probably like 12 employees. And, uh, Mark Lyons, our sales rep, our one and only sales rep called a lead that was in Salesforce.
And at the end of the demo, we're all standing around this computer. This is before you did Webex or whatever. It was just a phone call. Um, he, he was, um, uh, talking about the benefits of Procore. The person said, how much does Procore cost? And Mark, and Steve goes, Mark goes, uh, 30, 000 a year. And then we all sat back and the guy's like, all right, send me an invoice.
We're going to be in payroll, uh, so that's actually how we, uh, kind of, we actually changed our pricing model at that moment
Logan: On the
Tooey: on the fly.
Logan: So, so the global financial crisis proved to be, uh, I'm sure at the time it, it felt like a major headwind, uh, to your business and you were kind of iterating, but it twofold, I guess it helped you, uh, find your way to commercial construction in a more meaningful way. Like what is it? Um, opportunity is the mother of invention or
Tooey: It is. Yeah.
Logan: Uh, on the other hand, it also, a lot of competitors didn't survive there. Was there a recognition at that moment that this was actually an opportunity or was it just a,
Tooey: No, cause we were trying to survive, but what was interesting was the, before we went into the, um, the global financial crisis, we were, um, we were in a sea of a lot of people had the same idea, uh, and there was a lot of them and there were, there were companies that were bigger than us, more established, they have bigger customer brands associated with them.
Right. Right. Um, and it was really interesting because when you really are focused on what you're doing, trying to save the business, trying to survive, you don't really take a lot of time to poke your head up and look around. And on the backside when we came up, literally the landscape was empty. I don't, do you surf at all?
Logan: I don't,
Tooey: So there's a thing called duck diving, which is you, you, you know, you dive your board under a wave that's broken and you come up the backside of the other side. I always just have this mental image is like, you know, the sea is full of surfers. We all duck dive. I come up the other side, I look around and no one else is there.
Right. And that's kind of how the landscape looked at the time. It was barren.
Logan: probably an interesting, uh, internalization for people that are, um, burrowing down right now as founders and trying to get through what. Uh, this is an interesting market to say the least right now. It's uh, definitely been manic over the last couple of years, but um, the incremental venture backed startup that has been funded in the last couple of years.
that you're competing with going away could actually, uh, really present the opportunity if you can survive this period of
Tooey: Well, by the way, I think that's probably a great thing for thing founders to think about, which is. All of the, all of the biggest inflection points in Procore came at our darkest hours. And you don't really think of it that way as a founder. You think it's a dark hour. But the reality is things are changing so rapidly that if you can actually adjust to the new world very quickly, you will, uh, accelerate your, um, all of your vision that much
Logan: Are there any other ones other than the global financial crisis that stand out? I assume COVID maybe is another
Tooey: COVID was definitely one.
Tooey: Um, you know, there was also one around, it's kind of, Somewhat adjacent to this, but it's around culture, right? We, we got to a certain point, uh, when we moved to this campus in I think 2013 or 14, we were like 60 or 80 employees. Enough that it was like too much for me to know everybody really, really well.
And you know, a certain point, you know, early on, you know, not only the, the person that's working for you, but you know, their spouse and their dog's name and everything else. At that point, I was starting to kind of, uh, not being able to know everybody as well as I could. And so we were deciding that we were going to, um, that we were going to, um, establish our mission, vision, and values so we can actually scale the business.
And, um, it was during that time that we, you know, uh, we made some hiring mistakes because we hadn't really established all of that yet. As a founder, You really have to develop very early on the skills of hiring great talent, but also being able to get rid of talent that's not effective. And I remember we were kind of in a crisis mode.
We'd hired some wrong people and I needed to make some, some drastic changes. And when I did, lots of great things happened, right? So you, you, you, you struggle with making these decisions and having these conversations. All of a sudden you come up the other side and you realize you're running faster than you were before.
Everyone is way more engaged because these people are actually slowing you down. And then you have the aha moment that that was not actually a dark time. That was actually a very, very important time for this business.
Logan: Because any bad, I mean, this is obvious to any founder, but I'm sure you live this, any single bad employee, it spreads, it's like cancer. They then hire the next person and the culture starts to drift away. You guys went as far as to Steve became, or his title now is chief cultural officer,
Tooey: Yeah. He's chief culture officer, but he also, he does so much more for Procore, but He's kind of my head sales guy these days, but he's a, yeah, but yes, that is, he's primarily, I, I, yeah, but I want to make sure that everyone's clear. He is not the owner of culture, uh, but what he does is he's the ambassador for culture to ensure that everyone has the tools that they need to carry our culture forward.
But yes,
Logan: did you go through and at that point in time codify like what the values were and what had drifted from it or what did you do other than managing those people out? Like what, what, what was the, uh, post mortem changes you made?
Tooey: So we, uh, we shut the business down for two whole days, which by the way, um, when you were 60 people and you're barely making payroll, that's a big, but I'm like, I want to get this right. I used to work in Silicon Valley for. Uh, in HR software, which had nothing to do with this industry. And, uh, I would just see these businesses that had horrible cultures.
And I'm like, I don't want to, I don't want to ever grow that. I want to make sure we get this right. So we went off site and we, we facilitated a, uh, a meeting with our, I think our leaders at the time was like 10 people and we went through our mission, our vision and our values. And, um, Uh, and it basically codified who we were, uh, and it's a process, but it's really important.
In fact, we do a thing called Culture Academy here where we bring our people that build on our platform, our partners, um, we bring in the, the, the ones that are most engaged and, uh, adopted by our customers onto campus, like I think twice a year, and we help them build their mission, vision and values, uh, because it's so critical at the early stage to get that right.
Logan: Hiring against it, do you end up breaking people into different teams that assess certain elements of the culture or is there a single person that's responsible for holistically will they fit into the culture or how do you actually actualize it?
Tooey: At different stages, uh, we did different things. Early on, it, you know, Steve and I were doing all of it. And as we grew, we would find, uh, folks that were, uh, really good at certain aspects of it. But you also, you know, early on, you have to still test for aptitude. So you really, you know, at our scale today, if you're, You know, if a resume makes it to our desk, you pretty much have the skill set to do the job.
So we really now focus mostly on the, the kind of the values hiring. Uh, but as we grew, uh, it became more and more, um, uh, kind of, it was really more like, Hey, Gabe, who is running our, our, uh, customer success group. He is really, really good with openness and ownership. Like he's really good at, and so we would put him on it and it was a gang tackle, but we would even do things like.
Um, when we had a candidate come in to LAX to come up to Santa Barbara to interview for a job, um, the, the car service that would pick them up. Um, is actually a friend of mine and so he would drive them up and he would overhear their conversations and he would hear how, he would, he would tell me how they treated him as the driver.
Um, and so long before that candidate actually got here, I knew all about how, like what they were really like and if they were really living our values or if they weren't. So we tried every tactic in the book to make sure we didn't get it wrong.
Logan: What specifically broke, like what was the red blinking light at that point in time?
Tooey: I don't think, well, like I said, we had made some, some challenging hires. Um, but it was less what broke. It was more about, I had so much faith in where this business was going that I knew if we didn't get the foundation right, we were going to have a real hard time. Those businesses I was working for in the Bay Area when I was doing HR software were, were fortune 50 companies.
Most of them had fundamentally broken cultures and they couldn't put Humpty Dumpty back together again. And I'm like, I don't want to get to the point where I'm fixing my culture. So if we just start with people, cause people are the root of all your culture and get that right, then we won't have to fix the problem later.
Logan: If you're a founder and maybe you feel, uh, that there's some element of this or you're asking yourself, Hey, there's five or eight people that I don't know if they totally fit in, but they're, you know, they're doing a good job and they're high performant or whatever. Is there any question you would ask yourself, uh, like, Hey, if you're asking the question, the answer is probably yes.
Or something along those lines that you would recommend.
Tooey: I mentor some founders, uh, and across the board, everyone is, uh, especially the younger ones have not developed the skills of how to assess and jettison, uh, people that aren't working. Uh, and they will make all of these mental gymnastics around why they should keep the person. Uh, that is a fundamental flaw because across the board, they will eventually fail.
And so really what you're doing is you're just extending the amount of damage that this person is going to do to your business. Because ultimately what you want is you want, you want a force multiplier in that seat. That's not going to just. Obviously, you don't want them to slow you down, you want them to actually accelerate you and make you better.
Uh, so yeah, I, I, I tell founders all the time, like, do not make excuses. You, by the way, we all know, and they all know, what the right answer is. It's just hard to do the work. Um, you know, it's funny, and I've had to say goodbye to lots and lots of people over the years as this company grew. Um, but I've always told myself that, you Ultimately, Procore is bigger than me and it's bigger than them.
Uh, and if we are going to deliver on the promise, we have to make difficult choices. And, you know, Um, I'm not excluded from that if I'm not doing my job or there's somebody that's better to do this job than I am, I, I trust and I know the board will, will make that change and it's not personal.
Logan: I, I've heard you say specifically that you hire for a certain set of traits which are hungry, humble, and, and smart. Um, how, how do you think about this and are there interview questions that, that you've, you've
Tooey: well, well, so as I mentioned, the, uh, the driver, by the way, I'm giving all my tactics away. So now the people that hire me have to go to
Logan: trick you at this
Tooey: The driver, uh, is, uh, definitely on the humble side. Like, is this person actually who they kind of come across to
Logan: the driver's assessing that.
Tooey: The driver's giving me all of that on the way up.
Um, well, generally the smart's not a problem. Because again, if you're, if you're coming into Procore, you've demonstrated that you've made, you've had success somewhere. Um, but the hunger too is really, uh, important and what I've found is you can find hungry and smart, but you tend to get, you're going to probably get an asshole, right?
Uh, you need the humble in there, uh, and you can get the, you know, hungry and humble, but if they're not smart enough to do so, in other words, that triumvirate, you have to have all three of them and you can't compromise on them ever, but it really works. And I love, I just love simple paradigms like that, that you can kind of live by.
And by the way, I actually, that's how I choose my friends too, frankly. Uh, there's something about it that, um, uh, just works.
Logan: Yeah. So, so smart is a certain level of competency and we could probably look at, you know, whatever different resume related things on, on that, or maybe it just comes out in the conversation. Uh, the humble side, you've got your, your, uh, driver that helps on that. What about, what about hungry,
Tooey: That's the hardest one. The, the, it's funny, I was having this conversation at dinner last night with one of our customers, but, uh, Yeah, how everyone claims to be hungry, uh, but, but are they, uh, and, um, it's very hard to assess that. What I normally do is I spend a lot of time on curiosity because the more, um, the more curious somebody is usually the more kind of energy they're going to bring to their job because they just are curious.
So I spend a lot of time in the interview process just talking about what people are passionate about and, and see if they, um, if they are, have a hunger around something outside of Procore. Uh, and, and usually that comes out pretty quickly
Logan: Yeah, I, I've sort of found that there's, um, there's football players and basketball players and football players, you tell them what to do and they execute on it. And that has a good role. Basketball players, you need to be able to move and create and all that. And within an organization, especially in the early days, if you, uh, if you can't create and juke and jive and go with the flow on stuff, it's going to be really hard for that person to be successful.
And so one of the questions I'll always ask is like, what is an entrepreneurial thing that you took from zero to one? And it doesn't matter if you're an investment banking first year analyst or you're whatever, you're an executive. If you've never taken something from zero to one organizationally in some way, you're probably not going to make it in a startup or a venture job as well.
Venture like, you know, our calendar is blank every day and you need to justify. Something to keep going. It could be a podcast. It could be, you know, meeting the incremental founder and all that. But if you don't have that, it's really hard to start.
Tooey: Yeah. It's funny. We, um, we were fortunate when we first started as we found a lot of, by the way, uh, motivate, there's, there's a lot of things that motivate people to kind of have that hunger in them, uh, and also wanting to kind of prove that they can do something. They have a little bit of a chip on their shoulder.
So we're sitting here in Santa Barbara, California, right? The ocean's right there. UCSB is where we hired most of our, um, early people from, um, and a lot of those folks come from towns like Fresno, California, Bakersfield, California, you know, places where these kids who have gone to school here for four years, learn how to surf, love the beach or whatever, they graduate and they have the fear of God comes over and they're like, Oh my God, I got to go back to Fresno or Bakersfield.
I don't want to go. Um, and so we would find these people that would do anything to stay in, in this town. And, uh, and so you find that by itself just separates people. Which is, these are the people that will fight and scrape to make something happen. Uh, in the absence of, of, of, uh, you know, any help on, from outside.
Logan: I heard you say something interesting about the risk inserting a company. And, uh, I think what you said and correct me if I'm wrong, but you need to have a unique insight into non consensus view of something that's going to happen. But that the number of things you need to believe will happen is exponentially correlated with the risk of the opportunity.
It's sort of a, uh, it's, it's intuitive when you think about it, but like the number of things you need to believe, there's this Andy Ratcliffe quote about like, uh, or, or view that, uh, there's an onion and each time you're trying to peel layers off the onion, uh, to de risk the opportunity. How do, how do you think about that and how does it relate to Procore?
Tooey: Well, uh, A lot of things had to go right, right? Um, by the way, I, I heard, I, I stole that from a, I don't know if you listen to the acquired podcast, I, I forget if it was Charlie Munger, maybe some, by the way, I I'm such a huge Charlie Munger fan and so sad that he, so sad that he passed away. But, um, uh, but taking that concept, it really kind of struck a chord with me because Uh, so many things would had to have happened in order to make ProCourse, you know, actually work.
The fact that there was no internet at the job site was a huge deal for, you know, you think about it. Um, But 3G was really what, what actually allowed the internet to get to the job site. That didn't happen for like, I don't know, eight years, uh, until after we started the company. So, so so many things had to happen.
You had to, you had to have that. You had to have, um, you know, kids that graduated from college that were kind of pressing and adopting for technology. You really had to have the iPhone. You had to in 2007, iPad in 2011. All these things had to happen. We had to survive. We had to make payroll. It's kind of, uh, a little scary when you kind of rewind the tape, the game tape, and you're like, wow, like we had to fly through so many, you know, small apertures in order to make this, this, this work.
Um, and so I, I guess I think of it that way. I'm kind of glad I didn't think of it that way back then. Cause I might, it might have been too daunting for me, you know?
TLBS 95 Tooey Courtemanche Procore (final edit): Yeah. A lot of different things had to go right along the way. Hey guys, this is Rashad. I work with Logan on the show and I wanted to take a quick break to tell you about Redpoint's other podcast, Unsupervised Learning.
Unsupervised Learning is our AI podcast where we interview guests from companies like Perplexity, OpenAI, Adobe, and more. And many others about the topical things that are happening in the very, very rapidly developing landscape of a I. So if you're interested in going deeper, Uh, check out the link in this description for our YouTube channel, but also wherever you get your podcasts.
So back to the show, we talked a little bit about the number of competitors you guys had in the early days. Um, some did survive, I assume, and some new ones entered the market. From an execution standpoint, how did you beat the other people in the market?
Tooey: Well, uh, a couple of things, one was. We got really lucky to be, to be a platform in 2002. If you think about it, like, um, SAS wasn't even a, there wasn't even a word called SAS, right? Um, but we, we kind of ended up being a platform by accident. When I started Procore, uh, I, I was used to in Silicon Valley and these fortune 500, fortune 50 companies, we would show up on site and we would install an Oracle database, right?
Well, this is, these are fortune 50 companies. They can afford Oracle databases. Uh, but when I started Procore, the thought of, well, I, I, I couldn't afford to spin up an Oracle database for every one of our new customers that was paying us 95 a month. So what I had to do was create a single instance of a, of a code base in a, uh, in a single, on a single server.
Um, and I did that by just building a database. Putting a company ID in front of every database table that I had created in the database. Um, and so we got kind of, kind of lucky that, um, that that actually happened, uh, very early on in our journey. Um, and so, so being a platform allowed us to scale. So the
Logan: And what, sorry to interrupt you, but what does a platform actually mean in this regard? Right? It's a single back end database or a bunch of constituents in it or ability to build applications.
Tooey: a single code base, uh, multi tenant architecture, uh, that really allowed me to run the entire business off, off of a single server at the time. So if, uh, my next incremental customer, all I had to do was add an incremental count to the company ID in the database and, you know, I could spin them up. So the, so the incremental costs to bringing them online was pretty high.
Next to zero.
Logan: And there's probably something about like the core operating system as well that, that allows you to then build modules on the extension as
Tooey: Yes. Yeah. And, and, you know, I certainly am not the best engineer in the world, uh, and, uh, but I got it right. I got it right enough, I guess is the right way to put, put it. Uh, so that allows, so being, you know, being able to spin up a customer quickly, very inexpensively was a competitive advantage that are most of the people that were doing what we're doing.
We're not doing that. They were. You know, they were doing a hosted solution where each customer would get their own instance of the, of the code base. And I think that was a big boat anchor on, on our competitors.
Logan: And by the way, not to, uh, sometimes people are dismissive of, of competitors and that, but that probably made sense from their vantage point because they were servicing, I assume maybe a higher end of the market.
Logan: And so they could build the custom
Tooey: No, actually. Um, by the way, I actually think that was just what you did, right? There was no other motion. Nobody. At that time, I shouldn't say nobody. I think there was a couple of companies in the Bay Area that were doing this. I mean, obviously Salesforce had, had done this, but it, it, the, the, the pattern, um, for this particular business model had not really been established yet.
So, and again, I, I, I did it only because that was the only thing I could afford to do. Uh, if I had more money and I had more momentum with the business early on, I probably would have chosen the other architecture because it was the. It was the predominant architecture of the time.
Logan: so you raised, uh, you raised from Angels and, uh, Kevin O'Connor and a few other folks along the way, but your first institutional round came from Bessemer in what year
Tooey: 2015, I think.
Logan: 2015 and you were about 9. 6 million in about, I say, I think you were, uh, I had down here very precisely 9. million in revenue at that point in time.
What led you to pursuing outside investment from an institutional
Tooey: I'll never forget. We were, uh, Steve Zahm and I were, we were talking about the fact that we actually, there's a time, hopefully there's a time in all founders, um, experience where Their passion starts to see green shoots where you're like, wait a minute, you know, not only do I believe in this, but like other people believe in this and they're actually paying me money.
And, um, I think Steve kind of made fun of me because I'm, I'm a product CEO first and foremost, like, and I'm just, I love the customer and the product. Um, Steve kind of made fun of me one day where he's like, you know, we ought to probably try to sell this software. Like, you know, you're building this software and you're, you know, driving in your Jeep grand Cherokee knocking on trailer doors.
And, you know, we, Whatever. But I think it's time that we actually start doing this. And, um, and so I'm like, okay, well, I've never done this before.
Tooey: Steve had taken his last company public, a company called digital think. So fortunately for me, I paired myself with somebody who was far smarter than me and had a lot more experience in this world than I did.
And so Steve basically laid the groundwork for this process. Um, and we thought, you know what, if we can ladle some capital onto this business, we have proven that the folks that are buying our software love it. Uh, but no one knows about it. So like the, the, the obvious investment need was to kind of spread the word.
And, and I think that's, That's where like Bessemer and, and Iconic both came in and they're like, wow, this is, you know, they would do customer calls and whatever. And they're like, this is a company that just really needs a go to market engine. And if they do, this might be something big.
Logan: So, so at that point in time, um, I think I heard you say Bessemer underwrote the outcome or like the upside case to 300 million, uh, like as an acquisition or something. And now, uh, whatever, eight years later you're doing, Two X that and recurring revenue alone or something, uh,
Tooey: Three, three.
Logan: three, excuse me. Yeah.
Three X that. And, um, as you sort of zoomed out and went and got poked and prodded by, uh, different investors at that point in time, like what, when you dreamed the dream was 300 million, the number that made sense or what were you, I'm sure it wasn't 900 million in recurring revenue,
Tooey: No, um, if I rewind the game tape a little bit, like two years prior to that, I'll never forget. We were in a really small office in Montecito where we were before this campus. And Steve Zahn was standing in his office, I think we probably had maybe 12 employees or whatever. And I walked in and he was like writing on his whiteboard a whole bunch of numbers.
And he said to me, he goes, Hey Tui, I really think that this business someday could be worth a hundred million dollars. And I was like, you're shitting me. There's no way. Like, you know, and he's like, no, and by the way, I always look to Steve as he's the Stanford grad. He's, you know, he went to Haas. He's like, he knows the answers.
Right. I'm like, wow, that's really cool. Uh, and so then fast forward a couple of years. Now we're up talking to Bessemer and everyone else. And, um, by the way, I didn't know about this 300 million, um, story, which I got in trouble by the way, for saying this, I wasn't supposed to know this. And so somebody on the told me this.
And so Anyway, but I've said it, so I'm going
Logan: Yeah. It's in
Tooey: It's in public record now, so I'm going to say it. But,
Logan: going to edit out all the nice things about Pessimer and Iconic, and I'm going to put in all the, you know, the underestimating of you guys in there, so.
Tooey: so anyhow, um, you know, I didn't really know what their investment thesis was, of course, cause that's not really shared with us. But, um, I had a feeling this could be big. I, I, I never in my wildest dreams, uh, envisioned this. Um, so, uh, you know, good, good on them. If they thought we were worth, you know, the possible 300 million in the future, then.
You know, they had a good, they had a good eye.
Logan: Yeah, well, I want to come back to the founder journey, uh, in a bit, but, um, operating the business. Now, how many people do you guys have
Tooey: Um, south of 4,
Logan: of 4, 000 and, uh, in 2015, it was
Tooey: it was like 90. Between 60
Logan: so in nine years, uh, quite an exponential, uh, growth. So I, um, one of the things, I guess there's two different approaches to leadership and style.
One is that. You try to shore up your weaknesses and one is you hire people to, to augment your weaknesses. Which, which one of those two do you, uh, do you believe in more?
Tooey: It's not a binary answer. Uh, I think it's an 80 20 rule, but I, I think 80 percent you have to hire for, to augment your weaknesses. Um, I do think that if you're going to be successful as an individual in life and in business and everything else, you have to have a desire to grow personally. Uh, so I think you can, it can't be a hundred zero.
Um, but I, I, uh, I do believe that one of my strengths is recognizing my weaknesses and knowing who to surround, finding Steve Zahm, for instance, I'm, I'm. A broker would have been out of business long ago if I was in charge of the checkbook, right? Because I was, all I want to do is build product and satisfy customers needs.
Uh, so no, I think it's really important that you surround yourself, uh, with people that actually do augment that. And you know, the biggest privilege, Logan, is that I have at this scale, I come to work every day and I'm, I'm, I'm literally humbled and kind of blown away by the, uh, the caliber of the talent that I'm able to surround myself with.
Because of the, the, the success we've had. Um, it's really rewarding and I'm learning every single day and I've, I love it.
Logan: Um, one of the things I also heard is you've removed yourself from deal negotiations with customers. When, when did that happen and why did you do it?
Tooey: Uh, there's two stories. There's the, there, there's behind that one is that, uh, it was probably about five, actually, you know what, it's probably more, it's, uh, it's probably like seven or eight years ago. Uh, I was the primary deal negotiator, right? Um, and I, I think I had been in too many difficult negotiations where at the end I didn't have a great relationship with my buyer.
And so I was, uh, and partner. And so I, I, I had the revelation plus. I had brought on Dennis Landers, the head of, head of sales, and he was so good. And, you know, he understood the whole process of the, the science behind selling and mine was much more relationship building. So I saw him do it. I'm like, I want him to do that.
Plus I really wanted to develop a, a strong personal partnership connection with my peer. Uh, and not have it be a, um, a transactional relationship and the model yet then, and very similar to today. Was, uh, we renew most of our customers on an annual basis. I didn't want to have to like put on my sales hat and go do it.
I have a much, um, deeper relationship with our customers because I don't do this because they know when I call them, I'm not trying to sell them something. Um, and it's, uh, yeah, and by the way, the business doesn't suffer for it. Now, I do think, they do actually let me spike the ball, which is fun. So they'll do all this hard work and these long deal cycles or whatever.
Towards the end, I'm building relationships with their executives and they'll let me come in and like, You know, ring the bell and
Logan: holding the jumbo check.
Tooey: Yeah, exactly. Exactly. And I feel like I did all the work and of course all the people did the other, the rest of the work.
Logan: good.
Logan: Um, you've been fortunate enough to have some, uh, very impressive mentors in the technology ecosystem, one of which, uh, Toby Lukey from Shopify. I'd heard he imparted some advice that, uh, I'd be curious your perspective on, but involving, and you alluded to this earlier, that you're not immune from, um, if you're not performing, potentially being replaced, but there's a slope of the line of the company and then there's a slope of the line that you need to grow at as the leader of the business.
How do you think about that and how has that advice impacted you?
Tooey: It's funny. Um, it's not just the leader. Everybody at the business has got to grow at the, actually his, his advice was to have the business growing a hundred percent a year. You and your team's skillset has to grow beyond that, right? That's not going to be enough to grow at a hundred percent, which by the way is, is hard.
Um, and so that really struck, uh, stuck with me as time went on that, um, there's never a time to be complacent in your growth. And so I, till this day, I look at myself every day and, you know, what am I doing to, you know, be a better leader? Um, and so, uh, you never, you're never done with it. The sad part about it is, is that you end up having to say goodbye to a lot of people along the way that, that got you here.
And I think there's a real art to how you make those separations. Um, and I think we're pretty good at it, but, um, you have to be real and, you You know, um, some people, some founders think that they're going to kind of keep people around and just give them a kind of a soft landing. It is a, the worst thing you can do.
You, you need to be direct and honest and open with your employees. If they're not scaling, just say, Hey, I'm going to help you find another job somewhere else. And we call them graduates. People are going to graduate from here and go somewhere else. And, um, you know, but yes, you have to be prepared to make those changes.
Cause not everybody, I mean, frankly, most people can't scale at that pace. Um, somebody said to me the other, the other day, like, there's not a lot of founders out there that are running a billion dollar business that they founded because it takes such a completely different skill set. Um, and so I've spent a lot of time trying to develop those skills.
And really part of it is not only the skills you develop, but the skills that you leave behind, right? What got me here in the early days is kinetic energy of doing everybody's job for them and running in a million miles an hour in different directions. It is not effective at scale.
Logan: The tactical insight from that point, because it's a very hard moment in the journey that you're talking about of the executives that got you there aren't going to be who gets you there in the, in the future. So it sounds like being real with them about it, not trying to, you know, dance around it. Um, and actually moving on, graduating them from the company rather than trying to repurpose them.
Uh, are those the, the fair, uh, insights? Is there anything else that you guys have learned about how to do it?
Tooey: Well, I, I got, uh, so yes, one piece that kind of helps me with this was, um, um, I have the opportunity, uh, once a quarter to talk to Satya Nadella as a mentor. And I, one of the very first pieces of advice, I was kind of struggling with my leadership team and thinking about like, how do I think about my leadership team?
I mean, At the time we were a much smaller company, we were here in Santa Barbara and I don't have, I don't have exposure to a lot of different, um, kind of peers, uh, in the same scale and situation that I was in. And I said, how do you think about this? How do you think about your team? And he goes, it's really hard to, um, you know, really assess.
Your team because you're so close to them. He said, So what, what he does, and he goes, what I think you should do is always be in conversations with peers of your leaders. Um, so like once a quarter, have a conversation with the head people officer somewhere else that you respect and admire, uh, chief revenue officer somewhere else that you respect and admire.
Um, and it really helps create a, and by the way, this is I wish I, I wish I had known him many, many years ago and I'd done this earlier. Uh, uh, it's really helps to create a contrast between who you have in the seat versus what's available out in the market, or maybe not even available, but what's out there in the market.
Uh, and it helps you get, um, to, um, a real decision very quickly as to the, the skill and the scale of your talent that you have on hand. So having that piece, uh, that tool to my toolbox really, really works.
Logan: How do you keep your employees motivated to the ambition of where the company is and where it needs to go? Because if you're in San Francisco, you're, you have open AI over there and you have Stripe over here and you have Facebook down the corner and Apple and all that. But, um, here Procore in Santa Barbara is the huge fish.
And I'm sure when they go home, uh, to their, or go out to drinking with their buddies, like, you know, they've, they've made it. They're at a far bigger. Scale of a business than a lot of the other local companies, not to say there aren't other good businesses here, but keeping them aware that the mission is beyond, you know, what they see in Santa Barbara, but it's a global ambition.
Is there any way that you found to do that?
Tooey: Well, it's probably the hardest thing you can do. Uh, But in the early days it's easier because everyone, everyone feels, um, it's us against the world, right? So it's, so but driving a sense of purpose into your, uh, organization where, you know, the average, um, tenure at Procore is, you know, hands less than five years, right?
So how do you get, how do you get these folks, you know, engaged? Uh, and it's, there's not one trick, right? But it does start with hiring the right people. Um, I, I, Steve has this thing, which is, uh, the team hires and fires. So you, you really do, you You have to assemble the right groups of people in order to make it to be a place that people want to come to every day.
Uh, and so hiring to the values really matters, but driving a sense of purpose into the organization through your mission and vision. We have a lot of people here that really do believe in what we're trying to do here, improve the lives of everyone in construction, um, as well as just. Um, being engaged in the engagement.
One of the big tricks that we have is, um, we encourage every Procore employee to go to job sites. Just go sit in the job site trailer for a half day and learn, you know, see the whites of the eyes of the person whose problems you're solving for. Uh, and you will, the people that we hire tend to be like, I'm in this.
I'm going to solve for this. A couple great examples. One is, we send engineers to job sites. You know, instead of sitting in the darkness of their engineering room, they're sitting around job sites watching people use the software that they build every day. We tend to get engineers that will, there may be a feature enhancement that customers have been asking for for a while.
engineer sees it in real life, they will code and ship that code on an airplane on the way home from that job site, right? Because they're so, because that level of engagement is so high. Today we have, uh, 36 of our largest customers here on site. Um, and, uh, I'm encouraging everybody that possibly can be here at Procore to be in that room to really get a sense of what they are.
So driving a sense of purpose and engagement is, it's hard. Um, And, you know, it's, like I said, it's easy in the early days. The real trick is when you're shifting from first into second gear, which is, we are now big enough where people might not get it or whatever, so you have to really do everything you can to drive that kind of engagement and not assume that there, there's a better job offer right down the road that somebody might, might take.
Logan: yeah, it's sort of like, um, families with generational wealth. Like the first one makes it second one saw how hard they worked and the third one messes it up and blows it. You know, it's one of those things you got to be cognizant
Tooey: My grandfather used to say, shirt sleeves is shirt sleeves in three generations, you know, you work in the field, you know, make some money and then, you know, the next generation, uh, spends it and then the next generation has to go back to work in the field. So, uh,
Logan: That's good. That's a good lesson.
Logan: Um, what are the important jobs of being a CEO is capital allocator, uh, across the business. How do you think about, um, new initiatives and where to put money, what to invest in all
Tooey: Yeah, so there's obviously lots of frameworks out there you can use to use to do that. Um, I'm a, um, you know, we do the horizons framework, so that, that helps a lot when we, uh, when we think about where to make investments.
Logan: Maybe, maybe for people that don't know, like, can you give the brief?
Tooey: So uh, yeah, um, crossing the chasm, zones to win, Jeffrey Moore, Jeffrey's come and spoken to us about it. It's just a good framework, the, the four zones, and it's basically from the, you know, the, the, the, the core of your business that you can't break. Uh, all the way through these future investments that you want to make and how you allocate capital across those four zones.
Um, and for us, we are very, um, disciplined over, you know, which zone we're going to put capital into. So we kind of start with our capital allocation at that level. How much do we have to invest and where are we going to put it? So we don't, you want to avoid over investing in the long term over the horizon opportunities.
Um, but you want to make sure that you put the proper investments in, um, the ones that are really going to pay dividends today. So, and so you, we use that as a framework where to start putting our capital. Um, but it's, it's, it gets harder and harder, the bigger you get, uh, with capital allocation, because.
You know, we service a global economy and there's, you know, owners, general contractors, and subcontractors. There's the enterprise or mid market, the S and B there's a U S market. And these other markets that we're in, all of which have needs for resources in order to solve their needs. So it gets more and more challenging as you do so, but as long as you use a framework and we use that framework, uh, you will get the big pieces, right.
Um, the other thing as a capital allocator for CEO is. It's not just the capital you're going to, you know, that you're going to put into the business today, but like for pro core, we have to think about the capital that we have, that's, that we have to, you know, um, invest, right? So it's not, it's the, it's the capital that we have on the balance sheet.
That's not going to go into the business today. So it actually even gets more complicated as you get bigger. Um, the, the good news is, is that if you, if you're disciplined, you will, you will probably be right. Um, and the other thing is, is that we have. I do two things. I come up with the capital allocation in the strategy, uh, with input from my leaders, uh, and then I have them do a bottoms up and then challenge me on that.
Uh, and within that challenge comes out the answer. Uh, and that tends to be the right answer. We do find ourselves throughout the year making small tweaks to that because you learn things and some things don't work but also in the In the horizon for items that are over the horizon that are the the big bets You tend to make shifts on those pretty quickly because they're they're essentially startups in your organization You're learning something new every single
Logan: So as you guys have built more and more, um, uh, product surface area, and I don't know how many products you guys have today. 11. 11. So, so as you get those off the ground, uh, and, and, and empowering innovation and people to, um, be entrepreneurial in what they're going after while maintaining the consistency of what is the Procore platform.
Do you end up empowering like a GM type role to go after that and they get some cross functional resources or what have you found about launching new products?
Tooey: the The business, our business itself is very matrix, so we do have people that are focused on owners and the product organization, general contractors and specialty contractors, but the challenges that we're solving for across those three stakeholders, there's in the Venn diagram, there's about 80 percent overlap, so it doesn't make sense to have them focus on the commonalities and the platform features that kind of cross those.
So, uh, we do have, it's very matrix, but yes, we do have people that focus on, um, the different stakeholders because the differences between each one of those stakeholders can be pretty big. Uh, you know, what an owner needs is far different than what a subcontractor needs. So, so we do, but they're not, it's not really a GM model.
It's more of a specialized focus model. Um, and you know, the, the, it was the Conway's law that you ship the, you ship the, the code that represent that, that mimics your org design. We've learned that lesson over the years too. If you, if you over engineer your org design, um, incorrectly, you'll end up with a very inefficient, um, uh, product that, that is not going to market effectively.
So we've learned that it's, it's really important to get your org design right. That's one of the areas where I spend a lot of time thinking because as a business evolves, org design matters. When you go from a US business to an international business, how you organize your teams get, gets really, really complicated.
So, uh, you know, anyway, so I, I, org design matters.
Logan: the international point, like what, what, what are the lessons in that and the org design, uh, point you were alluding to there?
Tooey: So, uh, it's really interesting, but, um, from, from Procore, Procore standpoint, when we were, uh, in 2017, we went to Australia, uh, New Zealand and Canada, what we thought was going to happen was. Not what happened. It was a new motion for Procore. Obviously, we're a U. S. company. We hadn't done this before. And what we learned was, we were kind of spoiled by being a known brand in the U.
S. market. And we kind of showed up, and this is being euphemistic, we kind of showed up in these new regions thinking like, we're here, you know, and everyone's like, that's great, who are you, you know. So, uh, what we learned along the way was, uh, the, the team that does the beachhead landing or design has got to be a very small, tight, um, autonomous team, uh, that basically can find the referenceable customers, uh, do the brand marketing, build, build the brand, uh, and start building this organization.
But much like when you invest in a small startup, It very quickly, it gets to the point where you actually need a more of a formal design. 'cause that's not gonna get you to the next level. So you have to be, as a leader, you have to remember that though you have a mature organization here in the us, um, that little, uh, startup has got to be their, their talent has to evolve and probably has to change out as you grow.
So you, that's the talent side. And on the org design side. You definitely need somebody back at corporate headquarters that is, that is, um, uh, helping them get the resources that they need in order to be successful. Um, and we learned that somewhat of the hard way because, um, if they don't get the resources they need, they can't be successful.
Um, but it's also hard to listen to a five person team when you're. Running hard and fast in this market.
Logan: So, so do you send someone from HQ to the local market and then hire in people with the cultural expertise as well? Or how do you make
Tooey: That has been the, that has worked really well for us, um, primarily because of the people in the culture aspect of it. We, we basically are transplanting a, you know, a, a portion of Procore down there. Uh, that has worked very, very well for us, both in Australia and New Zealand and, uh, and in uk, Ireland, and Canada.
Yeah. So that, that works.
Logan: There's a, there's a trade off that exists with, um, expediency of decision making. Uh, and on the other hand, there's refinement of inputs, uh, and those two things are at odds with one another.
Logan: Um, how do you think about this trade off in being assertive and decisive, uh, but also methodical and, and thoughtful?
Tooey: It's, it's not an exact science, uh, at all. Um, my style is I like to gather. I like to gather probably more information than most before I make a decision, but I'm also very principled, so I kind of, I know where I stand on the important pieces. Uh, and on the pieces that are, uh, newer to me or, um, the blast radius is smaller.
I'm going to take more time, uh, uh, trying to understand. It's not really consensus building, but like, like, you know, as you grow, you hire people who know more about their function than you do. So I really try to just ask the right questions and listen. I have this whole thing around inquiry over advocacy.
Um, I would much rather sit in a meeting as a leader and ask, uh, for input. Uh, as opposed to tell everybody what the answer is and some leaders. Some leaders actually are the opposite. They, they just, they know that they know the answer. They go in and tell everybody how to do their job. And we've hired people from large companies that you would know the brand of that the CEO runs the business that way, who are very uncomfortable with my leadership style, because I'm very, very open.
And I want to hear people's input before I, you know, before I commit to a decision now, as my wife likes to say, the indecision is the decision. So you can't, you can't not make a decision. Um, and actually it's funny, Steve and I used to always say, uh, people would ask us why we're successful. And we would say, we make one better decision every single day than all the bad decisions we make, you know, but the key is, is that we make the decisions.
And um, we also look at, uh, problem spaces with, uh, uh, the blast radius in mind. So we very much consider what the, what the challenge, what the impact is going to be. Uh, and that's critical.
Logan: what about balancing growth and profitability? You've seen this pendulum swing back and forth and you've gone from more bootstrappy to more high growth. How do you think about that?
Tooey: Yeah, so, uh, when you, we, we actually are very fortunate to have lived through the phase of the market the way we have, which was, For the first, what, um, 20, 19 years of Procore's, uh, history, it was grow, grow, grow, market share, market share, market share, and for a, uh, a business, a vertical SaaS business like Procore that's in an industry that where it's going to be winner takes most.
That really matters. So we had the latitude to grow kind of at all costs, right? Um, now two things happened to Procore. One was, uh, in 2009, we ran out of money and nobody was going to invest any more money in Procore. So we had to get really scrappy, really, by the way, in the early days we had no money too, but we, Steve and I have no how to be capital efficient because we had to, right?
And so over the years we've, we've had to have that. So it's kind of in our DNA to be capital efficient. But then we were growing, growing, growing, uh, and then it was around three or four years ago where we started saying, okay, well, um, there are significant operational efficiencies that we can bring out of this business and not hamper our growth.
And so we started doing that. Now we started at like negative 35 percent operating margin, so we have a long way to go. Uh, and then we were marching along there and then along the way. The world that you live in, um, changed their mind and decided that it was all that mattered was, was profitability. Um, and the good news was we already had started on that journey and we had been marching away and, and giving back operating margin more and more over time.
Um, and so in here we are and, you know, delivering, um, significant operating margin last year and again this year. Uh, but we never do it at the, at the expense of growth. So to answer your question, we prioritize growth. operating margin, uh, uh, slightly. So if we ever see an opportunity to grow this business, uh, we're going to make the investment if we, if we feel confident in it.
And fortunately for us, there's a lot of things we can do, but we also know that the more we focus, allocating less capital can actually speed you up. And, and, and that is very unintuitive to a lot of founders. But it's actually true, uh, scarcity actually drives velocity and it's just something that we, we know.
Uh, and so we don't feel like we're sacrificing anything. Um, and you know, we, we, we came up with this term efficient growth, which is kind of, um, just what we run the business off of. And when I said that to the leadership team, like, look, our new mantra here is efficient growth. Um, we need to make every decision kind of through that lens.
I, I was wondering, like, am I going to be fighting my leaders on this? Because they're going to be like, no, no, no. I, you know, the good news was a pro core, they adopted it and then it went throughout the entire organization. So we have people making decisions around not doing a, um, catered lunch, right? Uh, which we normally would do and just go in and do it a regular lunch and doing things like that, that actually.
Uh, matter all the way through the organization.
Logan: Was there a single all hands or something that you like really galvanized around it and did, was it, I assume, hard for some people to shift that, that
Tooey: Well, I think, and that's my takeaway was, it was surprisingly easy for this organization. I'm not a hundred percent certain why. I'm grateful that it was, uh, but yeah, I mean, we, I don't, I can't think of one difficult conversation I had with one leader around the fact that they weren't getting it.
Logan: That's interesting.
Logan: What advice do you wish you had about running a business that you would give to founders today or that you do give to founders today in the role of being a mentor to early stage companies?
Tooey: it's all, there's nothing that matters. Well, first you have to have a good product and you have to have big tam, right? Uh, but beyond that, it, nothing matters more than people. Uh, and so you can be fixated on, uh, I know founders, they get very fixated on their mission and they don't, they don't spend enough time thinking about the people, but it's all about talent and you just have to get really, really good at that.
Uh, and you have to get real fast. So I, I wish I, I've developed a very strong muscle over the years and how to attract and retain top talent. And also the jettison poor talent, but, um, I wish I had, I wish I had had a mentor early on who kind of taught me that because I, I, everything I learned, I learned somewhat the hard way.
I wish somebody would have helped me with that. And so I spent a lot of time with, um, founders, um, trying to figure out how to teach them that.
Logan: Pricing is an important derivative of all things, uh, related to the business and you guys made a conscious decision in the early days to pursue volume based pricing versus seat based pricing, I guess as a, this, this is maybe a little bit of a, uh, the specifics of it might be a little niche and bespoke to, to your industry or how you guys think about it.
But, um, can you talk through that, uh, that decision and how that. downstream sort of impacted a bunch of business considerations as well.
Tooey: Yeah. So, uh, this is, will, will sound strange to most people that aren't in our business, but, uh, we have volume based pricing. So if you're, uh, a general contractor doing a hundred million dollars a year, uh, you'll pay a certain basis points, uh, based on the number of products of ours that you run, uh, on an annual basis.
Um, but let me back up and tell you how we got there. First and foremost, this business is all about connecting everyone in construction on a global platform, owners, GCs and subs and material and equipment suppliers and insurers and lenders, everybody on a pro that's involved in a project. Everybody has got to be in the same ecosystem, sharing the same workflows and the same data.
I knew when I started Procore that if I did a per seat license model, which is, was, that was really the only pricing model that existed at the time, um, that, uh, our customers were going to start making value, um, decisions around. Logan doesn't need a license. He's only going to be on the job for whatever.
And then all these workflows are break and my vision wasn't going to happen. So I knew early on that that wasn't going to work. So, um, I remember talking to an early customer who was, uh, using a, uh, client server solution that was dominant in the industry at the time. And they were a seat licensed business.
And, uh, he's like, well, I'm going to leave this, this, this platform, uh, not platform, this client server environment, I'm coming to Procore and you know, how much is it going to cost? And I'm like, well, I'm, I'm still trying to come up with the yardstick, right? So I said, how much are, you know, how much volume are you doing every year?
I actually didn't, I think I said, how much construction are you doing every year? And he goes, oh, that's really interesting. You asked that because I buy my insurance based on my construction volume that I do. Uh, and he said, you know, if you're thinking about how to measure my business versus a competitor or another business.
Construction volume is a really good indicator of the size and scale of the business. And so all I did at that point was I took his per seat licensing model for, and it was like 35, 000 for X number of seats, uh, and then his volume. And I'm like, okay, I'm going to come up, I'm going to back into an equation that comes up with the number of basis points that equates to what he's paying per seats.
And that was the genesis of our, of our pricing model. Uh, and it was hard in the beginning and Frankly, it's even hard sometimes today, uh, for customers to, to, to buy into that, but CFOs love it because it actually, they only buy what they're going to use, uh, and it gives them the ability to kind of manage their consumption, uh, as opposed to it just being a bunch of licenses that aren't getting used.
Logan: And it's aligned with their success, right? Or their, their scale and their growth rather than headcount, I assume is a little bit orthogonal in some ways to the outcome.
Tooey: exactly aligned with their, their, their scale of their business. Their success and our success are very much aligned.
Logan: I want to Uh, back all the way up to, uh, your, your, uh, path to starting Procore. Uh, I would say we talked about Steve. Steve had a very traditional, uh, probably Silicon Valley, Stanford, uh, experience. You did not. Uh, it wasn't a traditional educational path to being an entrepreneur. Can, can you talk about early days, uh, and, and, uh, college and what led you to the Procore?
Tooey: Yeah.
Logan: Yeah.
Tooey: It's interesting as you kind of get to this point in life when you reflect on your, your, uh, on everything that happened to you. Um, when I was in, high school, uh, it, it was very clear that I was not a good student. Um, I was curious, but, um, I was only curious about the things I was curious about.
And, and so, uh, it turns out, um, uh, you know, I have a reading disability, uh, and also that, um, What you would call like an autodidact. I, I, um, I am, you give me something that I'm passionate about and I will become an expert on it in just a number of days. In fact, right now I'm, I'm, uh, I'm going through a course right now to become a timber frame, um, carpenter.
So I'm, I'm going to build a timber frame barn. Um, and so I'm learning all of the joinery and everything else. So like that's my personality type. That there was not society wasn't built for people like us, right? We didn't fit the mold. Um, uh, you know, my guidance counselor in high school was like, I don't know what to do with you.
You know, anyway, I go to university of Arizona, uh, and I get distracted and I essentially get kicked out. Uh, and so then I have to figure out what I'm going to do. Uh, and so I go and, um, become a security guard, uh, by, uh, Grandfather's building where he lived in, lived in an assisted living situation, uh, and decided that I didn't want to do that.
So I went back to community college and I got a 4. 0 because I realized, um, it wasn't about anything other than the fact I wanted to prove to the world that I was freaking smart. So I just brute forced my way, uh, you know, through some community college classes and I did pretty well. Uh, ended up being accepted into University of San Francisco's pre med program.
Uh, went, went up to the Bay Area to do that. Uh, I had a few months before this is the fall semester began. Got a job working in construction. I'd grown up in construction. I knew construction and passion about construction. Uh, anyway, the fall came and I decided that it wasn't time for me to go to school because I was having so much fun building.
Um, I essentially never went back. So, I'm a, essentially a college dropout, uh, without any of that experience. Uh, and, um, you know, but I found Steve and Steve had all the credentials and he was, uh, you know, he was just a great partner to kind of bring all of that kind of credibility and learnings.
Logan: Is, is there a, uh, I mean, I guess follow your passion and find what you're uniquely interested in, but is there any, uh, lesson you would impart, you have a son, uh, like that, that you have shared in that whole thing that's interesting for people?
Tooey: Well, I think it's, again, it's know thyself, right? I know my weaknesses. Um, if you're not gonna be a doctor or a lawyer or an accountant or whatever, um, and you don't need to get a four year degree, you should, the sooner you recognize that the better because now it's, now you're in the camp of, I have to develop a skill of some sort.
Uh, and hopefully you have some passion around something that you can develop a skill around. But uh, I think it's really important that we find a place for the people that have as much, um, passion and horsepower as I have. Uh, to have a place in the society where they can actually contribute. Um, and you look, you know, a lot of, um, a lot of founders are similar to me.
They're, you know, they don't fit into the normal mold. Um, but if you, uh, if you empower those people to actually. Go do what they're meant to do, you can get a lot out of them.
Logan: It seems like we've, we've, uh, maybe over rotated or definitely rotated pretty far to the four year liberal arts, uh, school degrees instead of, you know, uh, The more practical, applicable things that, um, translate to direct jobs in there. I know you, you are passionate about this, uh, but can you speak about like that, that
Tooey: well, yeah, so, uh, I'm so passionate about this. Um, like for instance, uh, one of the biggest crimes in America is the fact that we took shop class out of high school. I remember, you know, shop class was just, you know, it taught me so much about how to work with my hands and gave me so much confidence that I could do things.
So, um, you know, there, there, there's that aspect of it. There's, um, there's. You know, the trade schools that are out there, there's, there's so many different ways you can make a living in, in this world that isn't a liberal arts degree. Um, you know, so, um, I was just talking to all of our customers that are here on campus and we were talking about the, the labor shortage in construction and, you know, uh, high school guidance counselors do not get credit for sending kids to trade schools.
So they get, and by the way, there's this perverse, um, kind of incentive program, which is, You know, the, I think they get more points on their, on their, on their card if they send somebody to Stanford than if they send somebody to Santa Barbara City College and they get zero points for sending them to trade school.
So there's this, this inverse incentive program that keeps people out of trades, which is, which is. A huge crime. So that's an area where I really want to focus. And then it's the stigma of entering a job that doesn't have the kind of the shine and polish of a doctor, lawyer, accountant associated with it, that we still have to overcome.
So, we live in a society that I think doesn't quite understand that a Pipe fitter can make six figures a year, uh, being a pipe fitter and a college degree program, a person that has an accounting degree might make 65, 000 the first year with four years of debt behind them.
Logan: and maybe AI is going to come for in some way, who knows, right?
Tooey: And by the way, AI is not installing pipe anytime soon,
Logan: yes, we're, we're a long way away from that. Back up the Charlie Munger thing. I think he had a quote that like, I underestimate, uh, I consider myself top 1 percent in, uh, uh, In, um, taking into consideration incentives, and I still underestimate it every day or something.
It's interesting, like, how many societal ways we're, we're shepherding people to this path that I, I had no idea on the guidance counselor placement point system that's like discouraging, um, you know, trade
Tooey: yeah, yeah, yeah, yeah. We do live in an interesting time. I was talking to one of our customers about that, which is for hundreds or thousands of years, society worked pretty much the same way. Like I was talking about when I was a kid. Um, I had to be home when the streetlights went out, right? Like if I streetlights went out, I was going to catch almighty hell from my mom.
Uh, and then you think, you know, that was 75 years of, of that probably prior to that it was, you had to be home before the sun kind of came down. And then we lived through this era where now everybody's connected, right? And they're, they're always going to be connected forever. So we, we are going through a massive transformation of how the society runs and operates that we get this vantage point of seeing that nobody.
No other generation before us was ever going to see, uh, and it's both, both, both a blessing and a
Logan: Oh, it's crazy. I mean, there's there's if you think about like 1600 to 1750, if you drop someone from 1600 into 1750, they the world would look mostly the same to them. If you take someone from 1870 and drop them into today. I mean, just to think about the amount of change we've we've had in our lifetime, and it feels like we're just on the it's exponential, right?
It's definitely compounding in a
Tooey: Well, like if somehow I had gone to sleep in 1986 when I graduated high school and you woke me up today, I would be shocked by the way that we were talking about it.
Tooey: We all had encyclopedia botanica. That's where we got our information. And we were all, I was talking to my customers about this and that.
You know, if, if you had to do a book report on animals, uh, all the boys wanted to do it on lions and all the girls wanted to do it on horses. Right. So essentially the next day, when you do, you turn in your book report, everybody gave the same book report essentially, because you only had five paragraphs to gather the, uh, the data on your subject and like what a world we live in today, where
Logan: It's, it's, yeah, it's fascinating every single day and the manifestations of it, uh, I guess I'm curious the artificial intelligence point that you guys, uh, you, you guys are witnessing. Are there specific workflows or processes or things that you're observing or you see the opportunity for AI with, with broker's
Tooey: I just got a great example of one from one of our customers. Who's a subcontractor. Uh, subcontractors, the majority of their costs are people, right? You know, they're people fitting pipes or whatever. Um, and so if you can save, uh, if you can get the same job done with one less person, that drops into the bottom line and you're, you know, you're doing well.
This one, uh, company has figured out how to, um, basically get more done with less people using AI, essentially getting the right person to the right job on the right day with the right material and the right equipment. It's a really hard thing to do. Uh, and they've, they're using patterns in their, uh, data to get people to do that and they're, they're saving so many man hours.
It's, um, it's shocking. It was actually. You know, I think her example was they're taking a job that would take 12 people yesterday and now they're doing the same job with the same quality, same velocity with six people.
Logan: Have you guys started to input it into your
Tooey: Most definitely. Most definitely. Yeah. So for, so the beauty of Procore again, being a, being a platform is we have this corpus of data, right?
And. Construction though, everything is a prototype. The processes within construction are the same over and over again. So if you're building a 120 bed hospital in Miami Dade County, um, we have in our database, we have, you know, 3, 000 of those around the U. S. or globally, that we can then look for pattern recognitions and try to help identify challenges before they happen or next best actions for people to take in the field.
Um, so, I, we were just all talking as a group, um, with our customers about, um, what we're gonna, we're gonna look back on today, and we're gonna say, wow, this is, this is the time where this industry changed dramatically. Uh, it's gonna be much less of a, a lone wolf at the job site, kind of trying to assemble and figure stuff out to a data-driven, um, business.
Logan: and I guess you guys benefit from being, uh, back to the platform point, but you have the centricity of data to make those recommendations on, this is deviating from the standard pricing of that pipe or here's, you know, you're missing this part that checks a box from a compliance or safety standpoint or whatever.
So it's fascinating.
Tooey: Great. Here, I'll give you a great example. Um, everyone knows about the supply chain challenges. Supply chain challenges really hit the construction industry hard during covid. Um, and most of that has worked its way up, but except for, um, complex electronic equipment. Um, and so if you're building a building that requires a, you know, a lighting control system or something that has complex electronic equipment in it, um, certain manufacturers are taking about 24 months to deliver the, the, the, the equipment.
Um, that's, that's forever. That'll stop a job from moving forward. And that's, that's critical. We know in our system, which, uh, air handlers or which lighting control systems are actually getting delivered quickly and which ones are being delivered late. So if a contractor is putting together the plan and pro core for their next project, and they put in a lighting control unit that we know has a 24 month lead time, we can pop up and tell them, Hey, You might not want to do that.
You might want to look at these three other ones that are actually coming much faster. It's that level of detail that will, and by the way, that, that means that a project that would normally take 36 months can now take 22 months. And that's real money for everyone.
Tooey: So I was a, uh, prior to that, uh, somewhat of a privileged kid in a privileged society down in La Jolla, California. Uh, and, um, I hadn't really seen much of the world. When I walked into that cabinet shop that day, and they welcomed me, I was working with, uh, carpenters. And these were people that lived in a different part of town than I'd ever been to before.
Uh, but they also had a different mentality than everybody else. These were like people that were craftspeople that took pride in what they were able to do, and they did things that were awe inspiring to me with their hands. Uh, and so all of a sudden I was like, I found my people. I, this kind of sounds funny.
I say it that way, but I did. I'm like, I want to be like these people. Um, and by the way, my dad was a banker and I've gone to like the big corporate board rooms and, you know, and the bring your kid to work stuff. I'm no interested in any of that. I wanted to be a craftsperson. Um, uh, so. That got me excited about it, and all I wanted to do was learn, and fortunately for me, Woody, um, um, Jesperson put me, who ran the company, put me into the Journeyman Apprentice Carpenters program at the local union hall when I was in high school, and gave me the opportunity to become an apprentice carpenter.
Um, and that just kind of sealed my fate. Funny thing was, too, in 19, like, uh, whenever they came out, like, 83 or whatever, I got a TRS AD computer, Uh, and I loved BASIC, I loved programming. My dad was saying not that long ago to me, we were talking about like my childhood and stuff like, if you looked at my passions, right, they, they collided into Procore.
It's technology and construction, so.
Logan: It's fascinating. And your mom also got you a book, How Things Work or something, which I assume was around the same time.
Tooey: Yes. She actually, funny enough, she got it from me, but she kept it on her bedside table as I was growing up. And we would just spend lots of time going through it and just, and then, oh, and I'll never forget, so then I, I got to be, um, fascinated with how things work. So I started dismantling stuff around the house.
I'll never forget, I dismantled my dad's, uh, corded drill. Uh, and I couldn't get it back together again. And so I kind of like put it in a drawer where he couldn't find it, and I was just waiting for him to come pick it up. You know, and, and, and kind of ripped me apart and he finally was looking for it. I had to fess up to the fact that I, I did it too with a carburetor.
I did, my, my, one of my first girlfriends had a car that back in the day he had a carburetor and she's like, I have a problem with my carburetor. I'm like, I could fix it. I took, I took it apart and it was like, probably, I don't know, 140 pieces. When I put it back together, there was like 17 pieces left over.
Logan: from the,
Tooey: And I'm like, Oh, I am so, I am in so much
Logan: I assume ex girlfriend after that.
Tooey: Yeah, yeah, yeah. She was not, she was not very happy with me.
Logan: Um, the, the early days of like the original Insider, the kernel for Procore was, was Was it actually rooted in your own home and sort of seeing how inefficient the process was? Like, what was that? You guys moved from San Francisco down here to Santa Barbara, uh, and your wife said, you can come with me or not, but I'm going there.
So maybe take us through the actual kernel of Insight.
Tooey: So she did. So I was at the time, um, doing this HR consultancy. So I was on planes all the time. I was in Charlotte and I was in Dallas. I was never home.
Logan: Was it, was it like PeopleSoft, like,
Tooey: But we actually, actually putting web front ends on PeopleSoft. So PeopleSoft time was, at the time, was client server. And we, I was in the interactive voice response business.
Do you know what that
Logan: Yeah. Yeah.
Tooey: So I was putting telephony front ends on PeopleSoft. Uh, this is before the internet
Logan: for people that don't know very, very sexy stuff, but IVR. So PeopleSoft uh, company that was started by Dave Boosery, which they've now started
Tooey: work day, right?
Logan: version of it. But IVR is like when you, when you call a phone and it's basically like press one for this, two for this and that kind of stuff.
Tooey: And for, yes, for all the old timers, you used to have to call your bank to get your bank balance and put in 900 numbers to get to it. That's IVR. Uh, and so it's really a technology interface to analog phones. Uh, and how I got into that is a whole nother story, but I, um, yeah, so I was doing, I was, I was, uh, doing that with, um, um, uh, these kind of fortune 100 companies, um, and traveling all over the world, putting these.
Telephone front ends on, so you can enroll in your benefits program at bank of America or whatever, because that was the way you did it. They had call centers too at the time. Cause if you couldn't figure out your numbers, you had to hit zero and you go to a call center. Bank of America had a call center.
I think they had like 300 people in it only for bank of America employees,
Logan: if I'm an employee of Bank of America and I need to enroll, it's open enrollment, and
Tooey: employee stock purchase plan, or you want to get into,
Logan: in, now it's obviously all on the internet, I, uh, but, but I'm calling in and saying press 1 for this, press 2 for this, and that was how you did the triaging of what plan you wanted to pick or
Tooey: And then I also would became the voice. So I was like the voice of applied materials, a university. Like, so I would, I would program the call tree and I'd be like, you know, press one for, and then I'd hit save. And then I'd program the call. Anyway, it was very weird. And, um, but at the same time, the, the industry evolved and all of these companies started coming to me saying, Hey, um, I was working for somebody.
Hey, do you want to, uh, there's this new thing called the internet. Can we, can you put a web front end instead of a telephony front end on front of this? And I'm like, Sure. So, uh, that's kind of how I, I made that transition into that part of my world. So, and I, I got good at writing software for the internet.
Logan: And so then you moved down here, uh, in 2000, 2001?
Tooey: Yeah. So I eventually was, it was, uh, it was in 1999
Logan: Okay.
Tooey: When I got the phone call, she's like, we're moving to Santa Barbara. I was in Charlotte at the time. And I'm like, no, we're not. And she said, no, yes, my, your son and I are moving
Logan: Yeah, yeah. I don't know how we define we, but
Tooey: Yeah, yeah, we is really not you. Um, she's like, I don't see you ever anyways.
And you know, anyway, so we ended up coming down here, bought a house, uh, she wanted to remodel it and that's kind of where, so then I would fly in on Thursday nights and, um, I, the first thing I do is go to Kinko's cause I, I'm really passionate about scheduling. So I was doing all the scheduling on this job with Microsoft project.
And so I would go to Kinko's and print out a big Gantt chart and I'd go back to the job site trailer and I'd meet all the subs and I'm like, Okay, last week you said you're going to do this. What did you do? And whatever, you know, and next week, what are you going to do? And so I'd write on the thing and then I'd put it back into Microsoft Project.
And then anyway, uh, what I learned was a lot of times when I showed up, a lot of things that they said that they were going to do that week didn't get done. What I really found out was, by the way, right there is a surf spot called Rincon, which is one of the most famous surf spots in California. What I found was when there was a point break out there, um, nobody would go to work.
Right. And so I was trying, I created a correlation between my schedule and the surf report. And anyway, so I'm like, wow, there's, um, There's no certainty in the schedule, but these people all know what they need to do. So if I can web enable this, I will. So essentially I took the, that's a funny story too, but essentially I took the, the needs I had as a person building a house, watching my money fly out the door with no accountability and no, no telemetry into how it was going, uh, to, I'm going to corral this whole chaos and I'm going to put together a system that's going to actually allow me to manage my
Logan: Hmm. And there's probably a lot of dependencies of if this person needs to do this on that time and a bunch of derivative considerations and so the logic building all that
Tooey: Yeah. And if the carpenter, you know, Jim and, uh, drywall, drywall, or whatever, Mark are sharing information about the, it's a six foot break. And we're in kind of, they're both not going to show
Logan: Yeah, that's funny. In your mind, what's the coolest construction project that Procore's worked on? Anything that
Tooey: so many cool ones. It's such a privilege. By the way, last week I went to go see a data center that I'd never been in a data centers are highly secure facilities. It's like government facility. So I got somebody kind of. Essentially sneak me into a data center that was under construction. But I will say, uh, without a doubt is, uh, it's a project called ITER, I T E R.
It's in the south of France. It's a, I think, uh, 35 nations have come together to build a nuclear fusion reactor. Uh, and, uh, it is, first of all, it's in the middle of, um, south of France. So it's, it's vineyards as far as the eye can see. And then there's this machine that's the size of a city, uh, that they're building there.
Uh, and, uh, just. Just to be able to walk through and be on the inside of a nuclear fusion. I was like literally inside the, uh, the fusion reactor itself. Uh, it's not done
Logan: Yeah, yeah.
Tooey: you know, you're like, I can't believe I'm able to do that. And the scale is
Logan: Yeah, you say a city. I mean, how big is it, is it actually?
Tooey: It's, um, it's a, it's a whole complex of buildings that are the size of, in some cases, like multiple sports arenas put together.
And, you know, ceilings that are, you know, I don't know, 150 feet high. Like it's. It's, yeah, and bolts that are this big around, like it's, this stuff's big. But by the way, if you think about it, when they conquer this fusion, uh, the world's gonna change, right? The dependency on energy is going to hopefully go away.
And I just look at it like, man, the things that we're building are going to change the world. And it's a privilege to be able to see, you know,
Logan: That's super cool.
Logan: Um, we talked about you mentoring founders and getting to meet early stage founders, but, but I heard you say that you, uh, have gotten good at figuring out who has the fire in the belly to, like, go the distance on that. I guess that's partially, uh, my job as well, but I'm curious, are there any things that you've, you've found either question wise or deterministic, uh, like, uh, things you can figure out from
Tooey: you know, it's funny, the best, the best way I, I, I kind of test it is I challenge them on their beliefs around their product and their mission and their vision. And the ones that just. Take the punch and come right back and have, you know, and basically you're bought in are the ones that I believe are going to have the, the, the kind of the kinetic energy necessary to get through.
Uh, it's funny. Um, so there's a technology, uh, program at UCSB for people. It's like an entrepreneurial program. And so I've talked to them several times and they'll come down here. Um, and I'll get, I'll often get the question, which is like, you know, um, I'll ask people like, what do you want to do? And when people answer, I want to be an entrepreneur, I'm like, that's not a thing, right?
Like you don't become an entrepreneur.
Logan: a basket of like a category. There's like specific things underpinning that.
Tooey: right. And really what it is, is that you're going to do something that is, is, is novel and unique more than somebody else. And you're going to deliver value that hasn't been discovered yet, uh, in a way that's going to make you differentiated in the marketplace. Then people say you're an entrepreneur, but it's so I always say to them, like, I'm like, you want to be careful because people that say they want to be an entrepreneur, they haven't found the thing.
So you just want to be careful that you're not, you're not just doing this because you admire people who are successful entrepreneurs and you want to, you want to be Mark Cuban, right? Like you can't be Mark Cuban, right? Like you, you can go do something and you can, but, but I, I'm very cautious of founders.
That are doing it for the wrong reasons,
Logan: And so, so does that mean that they need, there needs to be a unique insight and resonance with the problem that they're going after rather than just wanting to solve something and finding the opportunity within it?
Tooey: uh, absolutely and better. And hopefully they actually really understand the problem space that they're getting into. Uh, and that means that they've either been exposed to it. It's something they're knowledgeable about. And it's also funny with these tech, with these, um, entrepreneurial programs, which is, Most of the products that they're building up there are related to student issues, like, you know, like, Oh, textbook aggregation or student housing or whatever.
And I'm like, you realize students have very little money, right?
Logan: exactly. But it's, it's their, their only exposure. It's their world view is, uh, yeah,
Tooey: They didn't, they didn't have the privilege of being in the eighth grade and working in a
Logan: That's right. That's right. Yeah. It's, it's a funny thing that, uh, it's hard to, without working to some extent, especially B2B problems, consumer, you can have a unique insight just as a person in the world.
But with B2B, you're not really entitled to an opinion about construction platforms unless you are somewhere in the industry or have some exposure to it. Right. So it's
Tooey: Well, the beauty of our industry too, is a lot of people, the construction industry is huge. A lot of people grow up, you know, their families and I mean, everyone seems to be in construction or knows somebody in construction. So, uh, but it's even more, you know, uh, out there. Like, I don't think a college grad is going to write legal software, right.
You know, uh, but they might be able to, you know, compete with Procore because there's a lot of people that understand construct.
Logan: that's interesting. Um, we were just talking about, uh, you know, random points of serendipity along the journey of people that intervened and sort of changed the course of your, your life, uh, as we, as we wrapped. I'm curious. It sounds like someone comes to mind.
Tooey: Yeah. Well, by the way, there's, there's a handful, cause I think we all have them, but the one that really comes to mind is someone I, I wish I could find, and I, I don't think I'll ever be able to find this person again. But it was when I was, um, I was being, I was a carpenter in the Bay Area before I was supposed to go back to, to USF.
Uh, and it was late in the afternoon on a Friday. I was working on building a deck for some high net worth person, um, under the Sutro tower, uh, in the Bay area. And um, the, uh, personal assistant to the owner of the house would come out every day and we'd have lunch together and just talk. And it was a Friday and it was the end of the day and I was putting my tools away and she walked out and she goes, she goes, you know, Tilly, um, I think I'm, I'm just gonna, I want to say something to you.
And I said, what? And she goes, You seem like you're in the wrong job. You seem like you, you know, you grew up in a good family. You seem pretty intelligent. You seem like you could be doing more than what you're doing or building a deck right now. And I went home that day, I quit my job. The next day, a guy named Skip Stevely, who was running a technology company in the Bay Area, literally knocked on my front door and offered me a technology job out of another story, which should have never happened, but I just happened to be home because I quit my job.
And that would have not happened if this person hadn't had given me that thought.
Logan: That's fascinating,
Tooey: and I wish, I don't remember her name, and I, I, I, but yeah.
Logan: change the course of, of the, and yeah, I mean the randomness and the serendipity of some of these interventions, I, uh, yeah, we were saying like, uh, the folks at Lead Edge, Nime Meta, who was one of your investors, like sort of connected me with battery, which otherwise I wouldn't have gotten hired in the venture.
I had nothing that jumped out from my resume that said, Oh yeah, this person is going to do it. make it, which is, uh, yeah, I'm, I'm indebted to them for, for having done it as they remind me occasionally.
Tooey: And we, so we all have these people and we all have to be, take a moment. I, and I always say like, sometimes I'm shaving in the morning and I have a moment where I'm just like, there's like four or five people that without their kind of belief in me, I don't know if I would be doing what I'm doing today.
You know?
Logan: You've taken to building complex Lego structures as like a therapeutic exercise. Uh, can you speak to why you enjoy this so much?
Tooey: It's funny how uncomfortable of a subject this used to be for me because, because, well, because it's like, I had somebody make fun of me one time, like I'm a grown adult. They were making fun of me like, um, about it. And I was like, I'm like, I can't believe that I'm, I'm reacting like a sixth grader on this one.
Logan: Yeah. The bullies from,
Tooey: yeah, but, um, uh, look, I'm a builder at heart, uh, you know, like I said, I'm doing this whole carpentry program right now to become a timber frame carpenter. Uh, and, uh, so I'm always wanting to build something. It's not always practical to put your tool bags on and go out, you know, and build stuff.
What I like about Lego or two, two, two fold. One is you get the satisfaction of building. By the way, Same as a business, right? Every day I'm building Procore. Like I, I look at that, that's probably one of the reasons why I'm so engaged with Procore is I'm, I'm never done building it. But with a Lego set, like you start with something and when you're done an hour later, you've, you've actually done something, even if it's a component of something bigger.
And you get this sense of satisfaction of actually doing something, building something. Uh, so for me, it's that. The other is that, um, and my wife will attest to this, Procore consumes me, right? Um, she always goes, God, I hope someday if you're not a Procore, you figure out, you figure something else out.
Logan: Another
Tooey: Yeah, because this is like, this is all you do. And so it really does help me shut off the kind of never ending problem solving Procore engine that's in my head. Uh, and allows me to like, not think about it. I also like to hike a lot in the, and I find that if I go off the trail and I, and I rock hop up the, up the riverbed, um, it's the same, same sensation.
You can't stop and you can't mid, mid hop, stop and think about pro core. If you get your foot footing wrong, you're going to fall and kill yourself. So like, I find like doing things like that are great distractions as well.
Logan: Interesting. Yeah. Have you, have you ever looked at Lego's business?
Tooey: Oh yeah. Uh, by the way, I just listened to a podcast, uh, three part. Uh, it is fascinating. Yeah. How they, and how they started off with the, with like, they were a toy company and they were failing and yeah.
Logan: It's a fascinating, uh, company, uh, and, and structure and all of that.
Tooey: I really want to meet the current CEO. I, I, I'm very, uh, very interested in, in the way he thinks about the world.
Logan: How do you use Lego in the business?
Tooey: we have a, um, uh, we, we have a program where we educate, uh, students. Uh, we want to really get them excited about construction early on. And we partner with Apple to do some stuff. And we were very interested in solving the labor problem.
And we think what's the best way to do that. Let's get them young. So we have a, a Lego game that we have put together. Uh, in fact, uh, and so the students, uh, use Procore to build a Lego building. Um, and there's, you know, there's RFIs that have to happen, there's submittals and there's change orders that have to happen along the way.
And actually the building that they're building is this building. It's an exact replica. So it's a full board game with an instruction manual and as well as an access to
Logan: How old are these students?
Tooey: We do K through 12. We also, uh, I've done
Logan: Yeah. Yeah. Yeah. Oh.
Tooey: Uh, all of us kids. Uh, but yeah, uh, it's, it's a really good way to get people to kind of understand what Procore does.
Logan: Can you custom, uh, commission things from Lego to, to build designs of your
Tooey: you certainly can there, but there's a whole industry out there around this where, yeah, you can go and have, you can send a set of blueprints of your house and they'll, they'll make you a replica of it.
Logan: That's fascinating. And it's actually Lego proper. It's not like some offshoot derivative brand.
Tooey: I don't believe in the offshoots. Yeah. I'm a, I'm, I'm a purist. I'm a purist. If it's not Lego, it's not
Logan: What's your, what's your, uh, what's your favorite structure that you've actually built?
Tooey: uh, I just finished, um, uh, Notre Dame and it's like a 9,000 piece and it weighs 40 some pounds.
Logan: how long does that take?
Tooey: Well, it's funny. People keep asking that and I, I do it in fits and starts, so like I'll do it at like an an hour and a half after dinner or
Logan: Sort of episodic.
Tooey: So Yeah, it's, you know, if I added it all up, it's probably 30 hours.
Yeah.
Logan: And what do you do with them? Are they displayed around your house? Do you break them? Break them
Tooey: No, uh, well, the two, two quick stories. Uh, my wife will not let them stay in the house. She, she, she, she refuses to, uh, so we send them
Logan: like she's a, she's a tough customer. She runs a tough, uh, ship and how, uh,
Tooey: something to be said for having a, uh, having a strong wife, right? Yeah. Uh, and by the way, talk about humble. Like she keeps me as humble.
Logan: that's good. That's what you
Tooey: she is so unimpressed with me, Logan.
It is, it is absolutely remarkable. So we send these things to our regional offices. So like, uh, our Dublin office has the Titanic. And, uh, you know, um, the, the Paris office got Eiffel Tower and like, you know, so I do that. Plus I, um, I selfishly keep, I have a kind of a man cave up at my ranch. Um, and so I keep the construction equipment ones I built, like I built a D11 bulldozer and I just built a construction crane.
That's, and you can control it with your iPhone, you know, the hook, the, the crawler and everything. It's really pretty cool.
Logan: fascinating. It's a, so, so, uh, you finished Notre Dame recently, but is that the favorite? Uh,
Tooey: Well, you know, the funny one on the favorite was I built the Millennium Falcon, um, which was, uh, probably 8, 000 pieces. Also huge and big
Logan: I actually bought that. One of my, uh, partners is, uh, kids are really into it. And so as a thank you, he got me to come over to, uh, Red Point. As a thank you, I bought the Millennium Falcon for his son to do. So
Tooey: it's a, it's a, it's, it was probably my favorite. It was really intricate. But the funny thing was I'd been working on it for a long time and it was on the dining room table. And it was done and my wife's like, okay, well, that thing's got to get out of here. And I'm like, okay, well, I don't, I can't really do it now.
And she's like, well, we have people coming over. And so she's, we had this, uh, like a piece of furniture in the dining room. It was really tall. She's like, well, why don't you put it up there? No one will see it. Right? Right. Right. So we pushed a chair up against the piece of furniture and I went over to the table and I, I held it and I put it up above my head and I'm step up on the stair on the, one foot up on this, on the, um, chair and the chair fell and I fell over backwards and you know, 8, 000 pieces exploded, right?
And it was funny,
Logan: scurrying around picking it up before people come over.
Tooey: the first thing that happened was my wife started crying because she had seen me put like 40 hours of my life into this thing and she's like, I just made him break this thing. But it was the moment where we both realized I don't care about that much about them after they're done.
It's the project I care about. So like swept it up, put it in a garbage bag, gave it to my friend's kid, let him go off and do it
Logan: There's an interesting, uh, lesson there to bring it all the way back to the picking the board members you work with and the people on the journey, like the process. If you're not enjoying the process, the outcome isn't that satisfactory, right? There's not like some hills you climb and get to the other side and you're like, I've, I've totally made it.
You find new hills or things to compare yourself to along the way.
Tooey: I had never thought of it this way, but you are a hundred percent right. Which is. I am much more interested in the journey than the destination, though I like the destination has this nirvana state, but I also realistic it's never going to happen. Uh, but there are certain people that are only fixated on the, on the nirvana state.
Um, but yeah, I, I, I take a perverse, a passion that kind of enjoyment out of the chaos. That's today. Process.
Logan: of it all. It's interesting because I'm sure you've now found that you just recalibrate to new expectations. And so when you're talking to Satya Nadella or Toby from Shopify or whatever, now you have a new peer set. Once upon a time, your peer set was just the people in the construction industry trying to get by.
And so if you're too fixated on the outcome, you're just going to recalibrate to new people. And so you'll always feel Uh, unsatisfactory of where you're going cause Satya is running a bigger business or Toby or whatever it
Tooey: Yeah.
Logan: just like you have to enjoy the journey of it all because otherwise you recalibrate
Tooey: Yeah. Yeah. No, it's a, I live in this very interesting world. Where, uh, I'm solving a problem that most people don't know or care about. But, um, yeah, this is, this is, this is my world and I'm having a
Logan: It's a fun one. Well, thank you for doing this. This was great.
Tooey: Fun conversation, Logan, always. Yeah. So thank you.