In his relatively short career, Paul Judge has helped build and sell CipherTrust and Purewire – two successful information security startups, helping to bolster Atlanta’s reputation in that sector. As the first entrepreneur in the Southeast to attract funding from Andreesen Horowitz and serving as an investor and board member on several emerging startups, Judge is keen on sharing his insights to help other entrepreneurs succeed here in Atlanta.
Today, we are proud to release the full-length interview of the Fireside Chat interview we recorded with him in January. In those early days of Hypepotamus, we shared the livestream in real-time while also capturing the conversation with a full videography team. Many thanks to our friends at SUNO Media who stepped forward as our video production partner to capture this conversation for posterity’s sake. Between their edits and the David Seeney’s post-production magic, it’s time for you to see the conversation for yourself.
AUDIO TRANSCRIPT
Transcript services provided by TranscriptsHQ, a proud Atlanta startup.
Scott Henderson,Hypepotamus:
Welcome to the Hypepotamus Fireside Chat Series here in The Biltmore at the heart of the Atlanta startup scene in Tech Square. I really appreciate everyone coming out tonight and welcome to all of those joining us on the live stream. I’m really excited about tonight’s conversation and we have Dr. Paul Judge joining us. On twitter he is @pauljudge. Paul Judge is a serial entrepreneur, the Chief Research Officer and Vice President of Barracuda as well as the Executive Chairman of Pindrop Security and Limitless. He is also a leading expert at anti-spam so thank you very much for making my inbox better and he has also been featured in numerous press outlets and we will be talking later about one article that he wrote recently.
If you tweet about the event please do use the hash tag #hypefc. My name is Scott Henderson, @scotthendo on twitter and I am the Executive Director of Hypepotamus. We are startup community of those who believe in open collaboration. Hypepotamus is a non-profit here in Atlanta and we are focused on the ACE: massive awareness, diverse collaboration and peer-to-peer education. So let’s get started.
Thanks again, Pau,l for coming in tonight and let’s start at the beginning. Where are you from?
Paul Judge, Tech Entrpreneur: I am from Baton Rouge, Louisiana.
SH: Baton Rouge, I say it with a fake accent but you say it the right way.
PJ: Yes, “Bat Rouge” is how you would say it locally.
SH: So you grew up in Baton Rouge, Louisiana and how did you get involved with computers?
PJ: Growing up, my mother was an educator and she taught at the technical college and one of the classes she taught was office occupation. This class really taught you secretarial skills and typing and so I remember having a typewriter and then a little word processor with a little screen. I also remember our first computer, which we brought used from somewhere and we had the five-inch floppy disk.
There were these typing games back then and I was really into typing. And once I got bored of typing games, there was this thing where when you would take the disk out there was this command prompt. Then there was this DOS thing and you could kind of play with it and make it do stuff. This is probably when I first became interested in computing and later in high school I got into programming and programming competitions.
SH: What year was this?
PJ: This took place in the late 80s and I was in high school from 1991 to 1995. So growing up in Baton Rouge there are really three things that have a lot of presence. There are two big colleges, there’s LSU and Southern University. It is also the capital of the state so there is a lot of politics and then there are chemical refineries like Exxon and Dow, who have a large presence there. So growing up you really gravitate around one of three career paths: you either want to be an educator, a politician or a chemical engineer.
I grew up wanting to be a chemical engineer. I was working at the Exxon chemical plant and sharing the office with people that graduated from LSU with chemical engineering degrees. I was in high school at the time and I was working with chemical engineering but I was doing computer-programming work for Exxon. Things like database work to help classify hazardous materials and so forth but I still left Baton Rouge thinking I wanted to be a chemical engineer.
SH: So what brought you to Atlanta?
PJ: Well, I wanted to be a chemical engineer and started searching about where to go to college. There was this dual degree program between Morehouse College and Georgia Tech and I thought, “Well, that’s interesting. That’s the best of two worlds.” So I left Baton Rouge and landed in Morehouse to do a chemistry degree and to do a chemical engineering degree at Georgia Tech. However, one semester I took a chemistry class and I took a computer science class and I said to myself that the whole lab thing with the beakers is not for me. So I changed my major and switched it over to Computer Science and that’s what I focused on while I was at Morehouse.
SH: So you are in Atlanta and are doing a dual degree program. At this stage you were not interested in Los Angeles?
PJ: Los Angeles came to me at Morehouse and it was during computer science. I was in a hurry to do something so I took way too many classes at once and ended up finishing college in three years. So I was taking six or seven classes at a time and I didn’t really know any better. I didn’t know you’re supposed to take three, four or five classes like normal people and have a social life. So this was the social low point of my life but three years later I was done with college and the question arises – what do you do next?
Along the way I became interested in ecommerce and web development and when I looked at what was happening with ecommerce, I knew that all of this money was about to move online and this was 1998. I was interested in who was going to secure that money and who is going to steal it. There was a group of researchers at the University of Southern California doing research on ecommerce, SSL and secure sockets and I decided that that is where I wanted to go. So I applied, had a ride there and everything was ready. I had a going away party and then the last minute I said, “Wait a second.” Because I finished college in three years, it turned out that all my friends were about to start their senior year and they were about to have all the fun while I was about to be a graduate student living in the middle of LA off a stipend. And so I decided last minute to stay in Atlanta.
I went down this street to Georgia Tech and they had just announced that they were about to start an information security center. That sounded interesting so I went over and said, “Hey, I would like to meet all the people at the Information Security Center.” And so these two guys walked out and said, “Here we are.” This looked good and I said, “Let’s go.” So it was the three of us and we were doing PhD work and info sec and this was 1998. So now GTISC is 150 students and has spawned a number of companies. So this was my first time almost moving to California.
SH: So it was social relationships that kept you here? You had one more year left with the guys you were going to school with, they had a lot of things going on and then Georgia Tech’s program was here. So you graduate and then what things were you doing to keep yourself busy?
PJ: Well I thought I was staying to have fun with my friends but it turns out that they were finishing their last year of college and I was starting my first semester at Georgia Tech. Morehouse was a good school and I had a good education but when I started at Georgia Tech it was being in a different league. There I could walk the halls of graduate school and be in a minority because I was American, not because I was African American. All my friends that came from all over the world to pursue graduate studies here, they had a work ethic that was a step above many of us Americans and so we had to go into overdrive just to keep up. We would share an office with people and I would think of one of them, “When will you go home?” I measured how long he’s been here by how much Mountain Dew was left in the two liter. It was the same shirt every day and I could measure the stack of research papers, which ones he read and which ones he hadn’t read and so it turned out to be a new social low point of my life. I wasn’t doing a whole lot for fun, I was really trying to survive the first couple of years of graduate school.
SH: So in that process of graduate school, you kind of stumbled into this startup life? How did that happen?
PJ: I was trying to survive these graduate courses and queuing theory and algorithms and operating systems and I was actually in the hallway studying and met someone and said, “Hey! There’s this guy in town and he just sold this company and he’s about to start another one.” So I said, “Okay, well good for him, I’m busy, I have research papers to read here.” And he said that he is into security and all this other stuff and I said, “Okay, I’ll go meet him.” It turned out to be a gentleman named Jay Chadre and he had just sold a company called SecureIT to VeriSign and due to VeriSign’s stock going up, he created billions of dollars of wealth for himself and he was about to start a company to do email security. So I went to meet him and we chatted and I thought it was interesting. The company had to do with a lot of SSL security work and I was working on that in my research, so I decided to come over and work there. This was interesting because this took place in May. I told my graduate school advisor that I was going to take a summer internship and I didn’t exactly tell the people at CipherTrust that I was still in graduate school. So I was living this double life and my thinking was that I would go there for three months and see what happens. Three months turned into a year, then into a year and a half and I lived this double life for a while.
SH: So you were a graduate student at this time. How exactly did you start at CipherTrust?
PJ: This was in 1999/2000 and I was twenty-two years old meeting with this guy, Jay, on a Sunday, since it was the only day that he would do interviews. He told me to join the company and I told him, “Yea, I’m really great, you should make me the vice president of something.” So he looks at my resume, and it didn’t take very long because it was short, and he said, “I’ll tell you what, you can be a junior developer.” So they literally made a new title for me, called me Junior Core Developer and I still have the business card. I was the lowest person on the totem poll and this was very clear on my business card and if it wasn’t clear enough based on that, they gave me a little cubicle right outside the doors of the CTO. So they were just waiting to see what this graduate student would do. So I came in to write the security code and algorithms and that is how I started there.
SH: What was the biggest lesson of CipherTrust since it was your first startup experience?
PJ: There were a lot of lessons. The company’s original mission was to work in email security and the founders thought that they would build a mail server. I said, “Well you have an exchange server, I’ll tell you what, I’ll replace it with a secure mail server.” So we spent two years building up the world’s most advanced secure email server. We would knock on doors of companies and we would tell them, “Take your mail server out, and put in the cipher trust box.” And they would say, “Cipher who? Wait a second, you want me to risk my job and pull the mail server out and put in this thing from this unknown company?” So we spent two years building up this really cool product, it was secure, safe, fast but no one was willing to risk their job and pull Microsoft Exchange out. And so the company did everything but just go under. People laughed, we didn’t have revenue. It was eight people when I got there, we got up to about twenty people and then we got back down to about three people. So we were sitting around and thinking, “Okay, what do we do?” So I had this idea one day, “Wait, we are trying to make a mail server to give security, why don’t we put something in front of the mail server that has all the security so companies don’t have to replace the exchange. I think you can do that.” Nowadays that sounds obvious, a mail gateway, but this was 1999/2000. People were barely doing packet filter firewalls at the time. So we had built this thing but everyone else had left so I was the guy left holding the marker. Then we started coding it and people started buying it.
SH: So because of the lack of traction, you actually rose in the ranks?
PJ: Yes. I designed and built it and there were a few developers left and we got around a circle and started coding and we built this thing and we called it a spam firewall. The other thing that happened was that a customer called us and said, “Hey, I’m getting this unwanted email.” And at the time we didn’t even call it spam, we called it an unsolicited commercial email. Back then only 5% to 10% of email was spam and then it turned to 15% to 20% and no one ran anti-spam. So he asked us if we could do anything about it. We looked around the industry and found that there was only one company on the West Coast doing anti spam and we thought we should license our product. But then we realized that we could build something better. So we downloaded all these research papers on content analyses, machine learning and started experimenting. We built an engine that could detect spam. Then we started knocking on doors again and we ended up with a customer, then five customers, then ten customers. A few years went by and half of the Fortune 500 companies were using our product as their email gateway. I fast-forwarded through a few ups and down there but it was really the problem of anti-spam that fueled people to take care of email security. This grew into our success and we grew from three people to three hundred people and we were busy solving anti spam.
SH: So what happens to CipherTrust? What was the end result of that company?
PJ: We grew CipherTrust through 2006 and we were about 300 employees. Then we were acquired by SecureComputing, a publically traded company and I became the CTO there. Now we went from a 300-person company to a 1,200-person company and I was 29 at the time. I felt like I got introduced to a new toy store because we had a firewall team and a web filtering team and a two-factor authentication team. We had all these teams and I could fly around and build stuff. However, after a year I got bored.
You see, we sold CipherTrust for about $300 million dollars and our key competitor was this company called IronPort. So we sold CipherTrust, months went by, life was good and then I woke up one morning and grabbed my Palm Treo at the time and it says, “Cisco acquires IronPort for $800 million.” So I thought, “Wait a second, we sold our company for $300 million, they sold their company for $800 million. They are not three times better than us.” So I really started this process of figuring out what happened. How do we build similar companies and have similar success but then on the exit we have different results?
I got very interested in that because a lot of people spend time talking about the art of the start or about execution, but once you start something and spend some bit of your life executing on it, at some point you have some outcome. Now I spend a lot of time thinking about how do you optimize the outcome. And it’s the difference between do you exit at a one time multiple or a ten time multiple. You’re doing all the same work. You just have to look over the historical and see how people exit: when was it a strategic sale, when was it a value based sale and this changes life a little bit.
SH: So what was the difference between what CipherTrust was doing and what IronPort was doing? What was different about IronPort’s art of the exit?
PJ: There are a lot of moving pieces to this question and I cannot say that I have figured all of them out just yet. The CEO of IronPort was a gentleman named Scott Weiss. He is now a partner at Andreessen Horowitz and they invested in my last company Pindrop. He is the partner that led the investment and nowadays we have interesting conversations because we work together.
SH: So a former adversary with mutual respect?
PJ: That’s right. You never know, after all, it’s such a small industry. Business cards change, people’s roles change and you never know which side of the table you will be on. So we were arch rivals and competitors but now we work together. But really if you look at companies that have been successful, they really align with someone who could potentially be the strategic partner or buyer and you never want to build a company just for the sake of selling it. You don’t want to build it with such a short-term vision but instead thinking, “If I build this, who are going to be the strategic partners that will work with me and in whose portfolio I will fit? And how do these companies sell and how do they market? Are they appliances, SaaS, subscription based or revenue based, do they do in-house professional services or outsource that?” And you just have to think these things through so you could fit in.
SH: So it really isn’t just about building something so you could sell it even though you do not want to take that option off the table. You mentioned previously something you noticed about branding and color schemes. Can you tell us about that?
PJ: Well, the company on the West Coast that was doing anti-spam that I mentioned earlier was Brightmail. They were around when we started CipherTrust and Brightmail’s color was bright yellow and they ended up being acquired by a company called Symantec who also has bright yellow colors. Then if you go back and look, they actually had a Symantec person on their board and they were really being thoughtful. Then if you go back and read some of the articles around IronPort, you will see Scott and others talk about how they were paying attention to Cisco’s product literature and manuals and the way those things were written. And then they were acquired by Cisco. These things aren’t accidental. You have to be thinking about how do you align with your potential partners even if they are not your acquirer or think about how to align with people that can help you go to
market.
SH: CipherTrust gets purchased and then you become CTO of the larger company. When did you leave and what led to Purewire?
PJ: I left about one year and one day after the acquisition.
SH: After the contract was up?
PJ: Yeah, roughly.
SH: Fulfilled your obligation and you were ready for the next one, right?
PJ: It was fun though. I became the CTO and we were flying around and doing different things, we acquired some businesses, we sold some businesses. What we really did was we got SecureComputing ready to be acquired by McAfee. Then after the acquisition, McAfee had a large office here in Alpharetta and a lot of the people who had joined CipherTrust right out of Georgia Tech became vice presidents at McAfee. Many of those have gone on to start their own companies. However, a year later I shook hands with the CEO and told him that I had to figure out what I had to do next. I resigned and I really didn’t know what I was going to do. I went home and told myself that I might take a month or a year off, I simply didn’t know. So I told myself that I was going to go to sleep and maybe get plane tickets somewhere. But I woke up the next morning as early as possible, popped up and sat straight up in bed and thought, “I don’t have anything to do! What am I going to do?”
SH: Of course. You were taking six to seven classes a semester, going to graduate school, living a double life, being the CTO of these companies and this is the first day of no work and you wake up early.
PJ: Exactly. I woke up, went upstairs into my office and got back on the whiteboard. At CipherTrust I ran the technology side and another gentleman named Mike ran sales. So Mike and I got together and we started a company called Purewire and this was about a month after I quit SecureComputing.
SH: This is interesting because Purewire was an airport conversation.
PJ: Yes. Mike and I were sitting in the airport one day and we were just talking about the markets and about which companies were doing well, what spaces were going to take off. We did email security at CipherTrust and we were discussing the web security space and there was this one company doing web filtering in the cloud and they were based in Europe. They didn’t really have any competitors and were just having their way with the market.
So we were sitting there and joking about it: “Man, they are going to get acquired and nobody is competing with them, yea, you know we should go compete with them.” – “Yea… haha.” – “Hey, you want to go compete with them?”
Usually, you are accustomed to having a bright idea and then creating a market and solution but here we were intentionally deciding to be second mover. Here is this guy and he is running down the block and he is two blocks ahead and we are sitting here thinking that we could catch up to him. And that’s what we did. We started Purewire, got a lot of the band back together again, some from the sales and engineering teams at Cipher Trust and then we started building a solution.
SH: This is not a long-term exit though. How many months went from starting to selling Purewire?
PJ: Eighteen months from the moment that we hired the first employee to when the deal was signed.
SH: What happened in those eighteen months?
PJ: Well, we did not expect it to happen that fast. We knew that the market was taking off. People were working in web security and appliances and everyone was getting mobile devices and tablets. As people were going around the globe, you needed to secure those same users and the market was changing from appliance based to cloud based. We knew that the need was there, so we built a solution and went to market. We did the first funding ourselves and things were coming along. So we were raising a Series A on the West Coast when we started getting phone calls from some M&A teams. It turned out that the big guys in the network and security market were realizing that cloud based security was important and their customers were asking for it. And then the dance started.
What I mean by that is when a particular market is ready for M&As, all the big guys invite all the little guys and you come have your show and tell: here is what we do, here is how we do it, here is how we built it, here is our revenue, here is our product and technology. And so that’s what we did: we went from one company to another on the West Coast where we were invited in to come present and we actually received a few offers to acquire Purewire. However, we debated whether to raise a Series A or get acquired. A few things made us thoughtful about it. McAfee acquired a company called MX Logic that competed with us, Cisco acquired a company called ScanSafe which was the one that we wanted to catch up to. So we were all participating in the same dance. Eventually, we decided to get acquired by a company called Barracuda Networks. This was an interesting middle ground because many of the other companies were public companies but Barracuda was still a fast growing private company. We did a deal that was part cash and part stock and it was the best of both worlds. You get to participate in some of the value that you created as well as participating in continuing to grow this interesting company. So this is what happened with Purewire.
SH: You got a very healthy valuation and you currently serve as the Chief Research Officer of Barracuda. What is the calculus when it comes to the questions of whether to be acquired and what to take?
PJ: There is no perfect answer to this question and no science to it because often it’s a personal matter. When I speak to someone about investing or partnering with a new company, I ask a very personal question: “What do you want from this and what is the outcome that you foresee for yourself?” This drives how people grow companies and how thoughtful and patient people are in growing companies and taking risk. So it is a personal thing and there is no perfect answer. Taking Purewire as an example, Cisco, Bluecoat, and McAfee decided to enter this market. So we had to decide, did we want to be the last independent company to be in this space competing with the big guys or did we want to partner? So we were fortunate to find a situation that gave us a little bit of both abilities.
There was also another company who we were competing with called Zscaler and you remember earlier I was speaking about a guy called Jay Chadre. We had built CipherTrust together, went to SecureComputing together, and I was the Chief Technology Officer and he was the Chief Strategy Officer. We quit about the same time and he moved to the West Coast while I stayed in Atlanta. We talked here and there and we fell out of touch for a few months and when we talked again he told me about this company he was working on, and I told him about this company that I was working on. It turns out that we created competitors, I created Purewire and he created Zscaler and we were direct competitors. So we didn’t talk to each other for a year or two. It was amazing that we were thinking about the same thing. In the end we became part of Barracuda and Jay and Zscaler decided to stay independent and so they are still growing and building Zscaler and doing well. So really it’s just a matter of different variables for different people.
SH: Your role is Chief Research Officer and Vice President of Barracuda Labs but you are also involved in other things. After being part of two successful companies, you now have a reputation and a track record. Walk us through the decision to launch what is now Pindrop.
PJ: Well, I was at Barracuda minding my business. We had created two things from the Purewire acquisition: first was an enterprise business unit for Barracuda and Barracuda Labs, a security research group. Both of them are in Atlanta. This is what made it a strategic relationship: there were a lot of things that Barracuda was good at and there were a lot of things that Purewire was good at. We had a world-class enterprise sales team and we had a world-class security research team.
So we were busy doing that and one day I got a phone call from a professor at Georgia Tech, Mustaque Ahamad who was on my PhD committee a long time ago. He told me that he had a research paper and that they want to apply for a grant and maybe start a company and asked me to take a look at it. So I told him that I would take a look and Mustaque came to the meeting with another PhD candidate at the time, Vijay Balasubramaniyan. So I started flipping through the research paper. I had been looking at GTISC which was now 150 people and I had always been looking at most of the research projects from there to find something that I could work on. Vijay and another professor, Patrick, had come up with an algorithm to listen to phone calls and tell you where that phone call was coming from. They asked me, “Well, this is pretty cool, what do we do with it?” I said, “Well, it is cool but I really don’t know what you do with it.”
We started to meet a little bit and doing some research and looking at some market reports and I was the opposite of what the common advice is. The common advice is not to take a solution and go look for a problem. But that was exactly what we were doing. We had this solution, this puzzle piece but where does it go? What can you do with something that can listen to a phone call and tell you where it came from besides doing party tricks? What we found out was that dealing with banks comes in many ways. You can walk into a bank branch and do stuff, or you can do it online or you can do it on the phone. The criminals knew that and they realized that there were three ways to rob a bank. You can walk in with guns to steal money, you can hack into a bank website and steal money, or you can actually call the call center and pretend to be someone else and if you could answer a few questions like your high school mascot, your mother’s maiden name, or maybe your favorite color then you could take someone else’s money. This became the easiest way to rob a bank. So phone based threats have become the fastest going form of identity theft in the country and the fastest form of bank robbery. So we found a problem that our solution would help solve and we started the company two years ago.
SH: After you started the company did you go fundraising? Pindrop after all was the first Andreessen Horowitz investment in the Southeast, right?
PJ: Yes. This came about a year after we started actually. Vijay and I were working a lot on the idea and we were figuring it out. I felt like we had enough and we needed some cash on hand to get some basic stuff done. So I wrote a check and we had enough while we figured things out. Then we applied for a NSF grant because of our research focus. A bit later we got to the point where we felt like we were solid enough, we had a business plan and model, and we needed to raise funding to go execute. This was about a year later. We went out and said that we need to raise a seed round and then we got to meet with all the investors in Atlanta and then took a plane out to the West Coast to meet some investors there. Andreessen Horowitz was one of the first investors to commit to the round and it was their first time investing in the South East.
SH: Your former adversary is now a partner there. I’m curious, how did you get on their radar?
PJ: As I mentioned, business cards change. So there was this gentleman, Caleb Sima who was in Atlanta and built a company called SPI Dynamics and then moved to the West Coast. There he took a position as an entrepreneur in residence at Andreessen. When Vijay and I were out on the West Coast going to investor meetings, I called Caleb, found out that he was at Andreessen and arranged a meeting. We went in and did the first presentation there. Then we came back to Atlanta and one day we were sitting in Starbucks in Buckhead and we got an email saying that we have a meeting with Andreessen. There was this miscommunication about what day the meeting was supposed to be on, maybe Monday or Wednesday, and it turned out to be Monday. It was already Sunday night and we were sitting in Buckhead getting an email asking us to confirm our meeting with them tomorrow at 2:00pm. They told us that we could do it over Skype if we wanted to but we knew we had to be there in person. So I said, “Let’s go”.
We got online looking for flights and by that point everything was sold out to get there on time. The only flight possible was one from Atlanta to Phoenix to Oakland and we booked it. The next morning we left at 6:00am, flew to Phoenix then Oakland, and then had to drive from Oakland to San Francisco to Menlo Park, and that takes about an hour or so. So we get to the car rental place, tell them that we have this meeting with Andreessen Horowitz and I showed the guy my membership card. And he says, “Yea, you can have that little car right there.” – “Come on man, I have this membership and I can only choose from those two cars?” And then he says that I can only get that car. So I tell him that I can’t drive to an investor meeting in that car.
SH: Is that the car without air conditioning, power steering?
PJ: I don’t know what it had but I think there were foot brakes. I tell him that I can’t take that car, drive an hour and a half and unwind, and then pop out of that car like a biscuit can. So we’re negotiating with the guy to get another car and this is Oakland. He has a baseball hat and goatee and he tells us that we need to go inside and get an upgrade. And I tell him that I don’t have time and ask him how much it is. He tells me it’s fifteen dollars! What? We’re talking about fifteen dollars?! So I reach into my pocket and there’s a twenty-dollar bill and I said, “Look, you want me to go inside or can you just take care of it?” So he says, “Yea, alright man, cool.” So then we’re going down Highway 101 in a nice Camaro with a top down, bluetooth, and everything is good and we called it our getaway car. So it’s the car you use to go get funding.
SH: These are small details that most people overlook but there’s not just the Camaro story. You didn’t wear suits on the plane? So you drive down into Silicon Valley and then what do you do?
PJ: Well, you go to the Starbucks on Sharon Park or the gelato shop. Or you camp out while you go back and forth on Sand Hill Rd. But what you are referring to is something you learn when you go back and forth enough and that is you don’t wear your meeting clothes on a plane. You go through Hartsfield, then security, on to a plane for four hours and you wear your suit on a plane and you get out and your suit looks like it came out of a brown paper bag. So typically you wear some travel clothes or you carry a bag over and it was not abnormal for us to take the first flight over and the last flight back.
SH: This is not a two to three week European vacation we are talking about. You can do back and forth in one day.
PJ: Yeah. You land at 10am and you have all day and the flight out is at 11pm, so you do business and then get back home the next day, almost like you didn’t leave. For some reason there are a lot of people who don’t go to the West Coast as much as we should. As much as we talk about the benefits of Atlanta, there are a lot of reasons to just hop on a plane and go to the West Coast. We hopped on a plane, went to Starbucks and changed our suits there.
SH: You changed and did your pitch. What happened? Did it go smoothly?
PJ: We did the pitch and it was still pretty early in the company’s life so there was a lot we were trying to figure out. You know it’s quite interesting because there is a difference in investors’ expectations in Atlanta versus the West Coast. In Atlanta you are rude if you walk into a meeting and say, “Yea, my company is worth this much. I think I’m worth $5 million dollars or $10 million dollars and I need to raise $2 million dollars and I’m going to give up 20%.” You are rude or arrogant if you say that. In the West Coast, if you don’t say that when the meeting is finished, then you are weak and you don’t know what your company is worth. So there are some subtle differences in the culture and the fundraising process that you learn along the way.
SH: You pitch, state your value and how much you are willing to give up. Then you head back to the airport in your getaway car. What happens before you get on the plane?
PJ: Before we were on the plane, we got the call and they said that they are in. So from Sunday night in a Starbucks in Buckhead to going through Phoenix, Oakland to driving and changing clothes to doing the pitch and heading back to the airport, we got the call saying “We’re in.” This made for a pretty comfortable flight heading back.
SH: So you get the investment and what does it mean to be an Andreessen Horowitz portfolio company?
PJ: Actually, it’s one of those few times in life where something lives up to the hype. You hear about it and then you get on the inside and you realize that yea, it actually is what you think. When Ben Horowitz and Mark Andreessen started the fund, they took a very different approach. They tell the story of how in traditional investment funds, all the power and value of the fund was in each individual partner. So depending on which partner did your deal, you had access to their network but if you had a different partner then it was hard to get access. One of the goals was to take that value and spread it around the firm. When they started Andreessen Horowitz, they looked at the problems that startups have and how they can help. So they have a group that helps with internal recruiting, a group that helps with sales and marketing. They hired some of the best sales executives in the Valley to be in-house sales leaders and some of the best PR marketing people to lead the marketing efforts. So you get access to that set of individuals and they will pick up the phone and work with you as you’re thinking through things. So for example, Vijay is on the West Coast right now at one of the CIO meetings, where they bring the CIOs of different companies and introduce portfolio companies. So it has been a great relationship.
SH: You stated that sometimes it feels like they work for you. What did you mean by that?
PJ: I mean exactly that. Literally you can pick up the phone and say, “Hey, I’m really trying to get into the Bank of XYZ, can you help?” And they will go through the rolodex and help. Or they know that you are recruiting for a particular role and there is a number of people that call them that say that they want a job and they are looking to get into a hot startup. So I get emails regularly referring people who are looking for those positions. So we can get access to the very top talent in the Valley which otherwise would never have found out about a company in Atlanta. Also, they introduce us to a number of angels and if you look at the round that Pindrop did, it’s probably half West Coast and half of Atlanta based investors. So getting access to those networks has been a good part of the experience.
SH: Having built two successful companies with exits and now building Pindrop, you have seen our ecosystem in Atlanta and ecosystems in the Valley and other locations. What are the lessons that we should be learning as the Atlanta startup community?
PJ: In the Valley, one thing you see is repeat entrepreneurs continuing to stay engaged. In Atlanta for some reason, people can have a modest exit and then disappear into the sunset and you never hear from them again. Whereas in the Valley, those same guys will pull up their boots and hop back in. We need more of that.
Also, the Valley was built on startups and so you see the largest companies there consistently work with the smallest companies. You are starting to see that here in Atlanta but we need more of the large Fortune level companies working with the smallest of the companies in Atlanta. That’s a key piece of it. Outside of that, one interesting thing happening in the Valley right now is recruiting talent has become very difficult. There is so much capital and there are so many ideas but talent is very limited.
One thing that Atlanta has a lot of is smart people with smart ideas willing to work hard. So our shortage now is really capital to fuel those early stage and c level ideas. We need to look at all these things in the community and ask ourselves how can we solve it and how to take advantage of our benefits. I used to go to an investor five years or seven years ago and tell them that I have an Atlanta based company and one of the first questions would be, “Are you open to moving, are you open to relocating?” You don’t get that question anymore. Now you hear, “Oh, you are in Atlanta? Aren’t there a lot of engineers there? Cost of living is low isn’t it?” So it used to be our little secret but people have realized the benefits of building a company here in Atlanta.
SH: You are still in Barracuda and you have Pindrop. And now you are into Limitless which is not in information security at all. How did you get into that?
PJ: Limitless is this smart shot, a two ounce drink, and I actually finished one before I came up. Earlier I told you about sitting in the Georgia Tech cubes drinking two liters of Mountain Dew. And that is part of this lifestyle, Mountain Dew and Red Bull and whatever you can take to keep you going. Everyone has their own little secret of what they use. But when you look around, most of that stuff was not made for people like us, it was made for people who like skateboarding or partying. For people like us who need to think while working, if I’m taking things that are keeping me awake then the question is, what can I take that will make my brain work at its best? And I had some friends who were taking other things like Adderall or Provigil and I sort of started seeing the side effects. I would see someone taking it and he would start foaming right here, forget to eat lunch and all these weird side effects. So I started working with Tanya who has a healthcare background and I asked what we could do to actually help your brain. I had no idea how the brain worked, had no clue about biology, it was never my thing. So I ended up learning about how these drugs work, how they increase your citicoline where you actually think faster and they increase your dopamine so you can focus. So we looked at natural ways to achieve that. What they ended up finishing is taking a whole shelf of brain stuff and squeezing it into a shot that tastes good and it’s made for people like us.
SH: It’s actually quite delicious for an energy shot. I would even call it a brain shot. But most people don’t want to take this especially when you can get drinks like this in truck shops. This is different right?
PJ: Very different. Speaking of people not wanting to take this stuff. Just a day or two ago I was talking to someone outside and they were smoking and telling me that they weren’t really into energy shots all while puffing away on their cigarette. They were telling me about not really knowing what’s in that stuff. So you are absolutely right that energy shots have this really negative connotation, so how do you do it healthy? This shot has very clear benefits and it’s targeted for people like us but then you get into the whole business side of it.
SH: How is it interesting on the business side?
PJ: Well, half of the world consists of white-collar professionals and students, and we think for a living. And there really is no beverage that is created for us. There are the Gatorades for those who run for example but you realize that there is this market of people out there without their own drink. Not only that, but there are a lot of people out there who are concerned about the long-term health of their brains and these are the people who relate to this theme. But how does the supply chain work in beverage? I know how the supply chain works in the information security area. It’s interesting that the biggest company Atlanta has built is a beverage company, so we have this startup community but we don’t have many beverage startups here. So we got excited about it and people like it. There is a lot of ecommerce and social branding around it, so we can leverage the things we are accustomed to doing.
SH: You are involved in so many ventures and ideas. Earlier you shared with me a quote from the first guy that hired you and made you a junior developer. Can you tell us about that?
PJ: So Jay Chadre had created a lot of wealth and his biggest exit was CipherTrust that we created together. One day he made a comment in passing that he invested in eighty companies, probably helped start thirty companies, but he said, “You know Paul, one great company is better than a lot of good companies.” So if you focus and build something that is great then sometimes that is better than having your hand in too many things. So you don’t want to spread too thin. It really is about partnering with the right people. You mentioned Social Fortress (now Ionic Security). So there is this brilliant young guy who has been doing stuff since he was twelve years old figuring out cool things that he can do with his computer and he started building this company to save core data. He had a pretty bold approach and it was an area that I knew a lot about and it made sense for me to join as an investor and advisor. So it really comes down to the people, to someone who is passionate and who will refuse to lose and will not give up and will pull success out of whatever they are working on. And there are some people in life who are like that. When there is a chance to work with somebody like that, it’s hard to say no. Moreover, if there is a way that I can add value and help, then it makes sense.
SH: Well, I think we have come to a point here where we will hear some questions from the audience. We welcome your questions.
Question: Hi Paul. I know from reading your blog that you are an avid reader. Can you share some of the articles that you read on a daily basis for technology and business?
PJ: Whenever I’m going into a new area and trying to learn more about a certain company or sector I just read everything. I don’t read a lot of fiction and I have this joke with a girlfriend. I told her that I don’t read. “What do you mean, you don’t read?” What I meant was I don’t read fiction. When I’m working on a new area, I go to Barnes and Noble and Amazon and buy every book. I go to Google Scholar and read every research paper and this is just a trait that is carried over from graduate school. I threw all these binders away the other day and it had a ton of papers about multicast key management. I don’t know who wrote so much about this topic but I read it all. So if you are going to get into a new area you have to be an expert and read everything that is out there. You can’t just walk into an area and not know anything about it. Outside of that, I read the normal stuff, Tech Crunch, Business Insider and sometimes I read locally the Business Chronicle. However, sometimes you need to turn it all off and not hear about what other people are working on. I just need to focus on what I’m working on. Sometimes you just get too busy reading these articles, everybody is raising a seed round, everybody acquires somebody and you just get confused and distracted.
SH: What was the article that you wrote for Tech Crunch?
PJ: Tech Crunch published one of my articles and we called it “Greed Trumps Race” and it was a debate about the role of African Americans in Silicon Valley. This started because CNN has a series called Black in America. They did one episode about Blacks in Silicon Valley and there was lot of online debate about that. Some of it was fueled because they took one sound bite from a gentleman called Michael Arrington, where he said that he didn’t know any black entrepreneurs. People ran with it and it created a bug fuss. I got tired of reading misinformed information so I sat down and wrote down my opinion. I actually borrowed the title Greed Trumps Race from Ben Horowitz. I was at an event that Ben was hosting about diversity in Silicon Valley. As they were hosting this event, one of the statements that Ben made in his comments was about greed trumping race. Really creating values and opportunities is much more important than the criteria of race. I actually paraphrased something else, a Kanye West lyric that says, “People say I’m racist must be on one basis that I only like green faces.” The point is that it is all about the money and that was the theme of the article. The episode highlighted a handful of entrepreneurs that were in the Valley and it was titled, Black is in America. So these were smart people who I had met and who were doing smart things but they were not the full set of African Americans who have been successful in Silicon Valley. So I took the opportunity to do a little bit of education and talk about the long history of people who had been successful in the Valley.
Question: Hi, my name is Vince Baskerville, co-founder of TripLingo and product manager at Lithium. I loved that you talked about race. The other thing that people talk about at Georgia Tech is the single life. I don’t know how you keep your personal and business life separate. I myself am married but I am not sure about your personal life. How do you balance this personal life with this crazy, fly into Cali on a drop of the whim moment? How do you balance that?
PJ: Well, there is a balance. I mentioned that graduate school was a social low point of my life and I have been making up for it ever since. You tend to hear the words “Word Hard, Play Hard” and I take that seriously. When I am awake, I am doing one of those two things. So if I am not doing one of those things then I am doing the other and by doing that you can get a lot more accomplished in life. I try not to have a middle ground. If I find myself halfway working and then watching TV, then that just doesn’t work and I might as well go and play. If I find myself halfway playing, I might as well go home and write some code and just really maximize whatever you are doing. Then in terms of relationships, they just have to understand that this is a lifestyle. Right now I work with people who have wives and kids and so the startup lifestyle does not have to mean that you stay up coding till 2 or 3am every night. It’s about time management. If you get in a solid 10-12 hours a day, then you are working, but if you are just working 6 hours then you are probably not. With a solid 10-12 hours a day, you can still balance life, family, go to the kids’ soccer games and I work with a lot of people who do that. So it really is a matter of time management.
Question: You talk a lot about startups in Atlanta and the West Coast. Can you share your thoughts about dealing with the dynamics of having a startup in the North of the US?
PJ: Well, I have not had a lot of direct experience of dealing with startups in Boston and New York. There are actually one or two companies that I am advising in New York so I’m getting a little bit more understanding of that area. But I think that in every community you figure out what’s going on and become part of it and navigate it.
Question: Hi Paul. Throughout this discussion you kept bringing up academia so obviously you are still considering all the emerging research. I come from an academic background myself. Could you please comment on the difference between developing technology outside of academia versus taking technology that has been developed in academia and commercializing it from there?
PJ: They are two different things. Sometimes in academia a person creates this breakthrough innovation but the question is whether it fits in the market. I use this term a lot, but is it a valuable problem? Not is it a hard problem, or an interesting problem, but is it a valuable problem? This means people are willing to pay you to solve this problem in a repetitive fashion. That is very different from the goals in academia where everyone is trying to solve a hard problem. In academia you are rewarded by solving hard problems and in business you are rewarded by solving valuable problems. However, sometimes there are problems that are solved in academia that are hard and turn out to be valuable and Pindrop is a great example of that. Right now we are right down the street from Georgia Tech and there is a ton of research that happens there and a lot of it simply ends up sitting on the shelve. So there is an opportunity to go through that material, get to know the professors, and get involved in that commercialization process. There is certainly a lot of opportunity to commercialize the research that is being done in places like Georgia Tech and more people should get involved in it.
Question: As a young African American male, you got involved in business early on and sped through pretty quickly. We have heard a lot of the things that you did really well, what were some of things that you really struggled with and how did you overcome them?
SH: You want to go back to 8th grade? What was that like?
PJ: There was this girl… I’m just kidding. I honestly struggled with each step along the way. Even if we go back to Baton Rouge there was the struggle of doing the right thing and getting out of there. In college when I got dropped off the first summer I remember calling up my parents and saying, “Yea, when you come see me you might want to bring the big truck because I’m not sure this is going to work out.” In high school I was able to get by on some natural ability and I didn’t study or do homework. Once I got to college that really wasn’t going to cut it so I didn’t know what studying was. I remember being in the dorm one day, my roommate was sitting there studying and I asked him, “Oh no, is there a test today?” and he says, “No.” -“Well, what are you doing?” – “I’m studying.” – “But we don’t have a test.” You see growing up in high school, I had never captured the fact that you actually have to study books along the way and not just the day before the test. You make your cheat sheets and then you study. So I struggled there because I had to literally figure out how to study. Then I got to graduate school and there people’s work ethic was really intense so I struggled. I struggled through a lot of things along the way but you just have to refuse to lose and push through.
Question: There is a question related to developers I want to ask. For many of us developers you just code all day and the minute we have to run a business, we fail at that. Can you give us some insight about how you went from pure development to running a business?
PJ: When I finished college I knew that I needed to go to graduate school because I wasn’t the best at something and I felt like I needed to be an expert in something. Halfway through school we had to pick a minor so I walked across campus to the business school. I was sitting with a professor and I told him that I knew how to build technology but I needed to learn the science of turning technology into a business. So he laughed at me and said, “Science? At best it’s an art.” So I started reading a ton about the management of innovation and process, and business models. I was doing my PhD in computer science and reading a stack of Harvard Business School case studies learning about companies and what they did and what failed and what didn’t. Then I learnt more about business and got access to the spreadsheets and learnt about the reality of costs. So I was able to do that at Cipher Trust and I was sitting next to the general counsel and this was two doors over from the CFO. When we started Purewire, by the way don’t name two companies after each other that start with the same letter, Pindrop and Purewire gets confusing. With Purewire we jumped in and did all the spreadsheets, business model and everything ourselves, and this gave us another view. However, when you are funding a company and something goes wrong, there is not enough cash in the bank and payroll is tomorrow, and you have to call your banker and tell him to wire the money to cover payroll for forty people, you get another view of things.
Question: My name is M. Cole and my question is about relationship etiquette. When was the time when you tried to communicate with someone and it was not effective and when was it effective? Can you provide us with advice about how to communicate and network effectively?
PJ: I think that if you are trying to reach out to someone in the community who has been successful then they are probably busy and they are getting a ton of emails and a ton of phone calls. So do your homework before you reach out to them because that first impression is the lasting one. Also, have a clear view of what you need to achieve from them at that moment and not just this open-ended thing of, “Hey, can you help me?” So have something very specific in mind when you approach people, because often they want to help but they are just limited in time. With some people there will be a match and with some people there won’t be a match, but if you meet with enough people then you will stumble upon your match. Someone who is interested enough in what you do that they will actually call you back.
SH: Before we get to the final flurry I just want to say thank you to Startup Chicks who provided the food and wine tonight. Startup Chicks just had a pitch contest last night, who won that? Oh, Limitless Shot.com.
PJ: It was an amazing set of companies at the Startup Chicks event. There were eighteen companies pitching to get into the accelerator program, and I think the pitches going into the program were better than some pitches that I have seen coming out of accelerators. So I think there is a lot of good happening with female entrepreneurs in Atlanta.
SH: I agree with you. Seeing the ecosystem here and seeing the diversity in gender and in race and industries. Atlanta has a tremendous amount of success already, it’s just a matter of us rising up and saying, “Hey, we are startups and we are leading.” Also, thank you to SourceUNO, a great startup here locally who is helping to underwrite our production costs so thank you very much for that and for helping people find the jobs that they want. Also, thank you Paul for a very fun conversation tonight. I now have five quick but very difficult questions. Dr. Paul Q. Judge. What does the Q stand for?
PJ: Qantus is my middle name.
SH: You are from Louisiana and it has some great food. You can only have one food from your home state. What is the one food item that you would eat?
PJ: Crawfish etoufee.
SH: Very nice. What advice would you give to your former self?
PJ: Whew. Take chances and don’t sleep.
SH: As a business owner, investor, and as someone running companies, what are the talent trends you are seeing? What are the skill sets that students are not getting through their formal education that they need to have to be hired to your team?
PJ: Right now there are a lot of people that are gravitating towards UI design work but not really focusing on the usability side of it. Not focusing on questions such as how do customers use this and how is this going to make this product most effective, more viral and popular, and increase the amount of time people spend on this product. So UI designers can make great layouts but not enough of them are thinking through the customer user experience and the benefits of it. Then on the other side you think about backend programmers, where you have to be thinking about the latest deployment tools that are being used in the real world. There needs to be a little more of that connection. It is getting better though. Many people nowadays are interested in startups and students are paying more attention to the real world than what I saw seven years ago. The disconnect between academia and the real world is getting smaller and along the way more people got interested in startups. Even when the movie the Social Network came out, people saw it and thought, “Wow! You can get rich over a weekend.” So now a lot of people are thinking about how to take their skill set and monetize it.
SH: What are the three biggest selling points of Atlanta as a startup community?
PJ: One is Georgia Tech. It is central. Two are the clusters of expertise that we have – info sec, marketing and sales automation, healthcare and financial tech. We can continue to reinvest and create companies in those areas. So that is our advantage. And the third thing is the people. We are smart, hardworking, we lend a hand and reach out to each other and we have Southern hospitality, and when you apply it in business we improve a lot. People don’t talk about this much but it makes a big difference.
SH: My hardest question. What is your favorite childhood video game?
PJ: Duck Hunt.
SH: Home or arcade Duck Hunt?
PJ: At home, I like to take my guns with me.
SH: I like that we brought the gun debate into this conversation. Excellent. Thank you everyone. I do want to do a special thanks to James Harris from N4MD and his team who have helped put the live stream on tonight. For more information on what we are doing here in Atlanta go to hypepotamus.com. We are on twitter @hypepotamus, @pauljudge and @scottyhendo. Thanks again.
