#10 | From Military to Startup: Revolutionizing Compensation Management with Peter McKee - Co-Founder & CEO at Aeqium

Peter McKee is the co-founder & CEO of Aeqium, a total compensation management platform. Prior to founding Aeqium, he spent his career leading teams as an engineering manager in the tech industry and as a cyber warfare officer in the US Army. He experienced the challenges of compensation planning firsthand as a leader at fast growing companies like Uber and Braze. Peter studied computer science at MIT and graduated with bachelor's and master's degrees.

Transcript

SPEAKER_00 0:10

Friends, welcome and welcome back, I hope, to the Vestigo FinTech podcast. I'm Fraser Anderson. My guest today is Peter McKee. Peter McKee is co-founder and CEO of EQIM, a total compensation management platform. Prior to founding EQIM, he spent his career leading teams as an engineering manager in the tech industry and as a cyber warfare officer in the U.S. Army. He experienced the challenges of compensation planning management firsthand as a leader at fast-growing companies like Uber and Braze. Peter studied computer science at MIT and graduated with bachelor's and master's degrees. Peter, welcome to the show. How are you? Thanks, doing well. How are you doing? Thanks for making the trip. We've got a big week ahead with Vestigo AGM, Boston FinTech Week, Vestigo Founders Day. We're we're really grateful you're here. I'm excited to be here. Nice to get all those things in with one trip across the country. So one of the things that always fascinates me about the founders we work with is that typically they could do anything else besides start a company and be successful at it. So really curious to understand what drew you to entrepreneurship in the first place.

SPEAKER_01 1:15

Yeah, great question. Definitely a challenging endeavor. So something you have to remember a lot as you're working on it. Yeah, I was an early employee at a company called Braze, so in the first uh 13 people there as kind of my second experience out of school. And that was an extremely rewarding experience for me. And I think the ways in which it was rewarding were ones that made it clear to me that working at startups was something that I wanted to do. I really enjoyed the small team dynamic. I enjoyed the ability to have such a direct connection to the business. And I had a couple experiences after that at larger companies, a little bit further from kind of an entrepreneurial experience that just provided that contrast even more of, hey, that's what I enjoy doing. That's the environment that I want to be in. And so in the few years before actually deciding to start EquityM, I was spending a lot of time figuring out how I get back to that. Could have been joining an early stage company, could have been starting something. And honestly, I was pretty open-minded about that. But I happened to find, you know, this problem set, which I was really passionate about solving and didn't see anyone else out there doing it yet. And so that's that's what led me to where we are today.

SPEAKER_00 2:18

And can you talk about Braze? Because I I think some founders that we work with tend to be very capital focused or sort of like sort of capitalistic in their reasons for starting a company, and some tend to be very mission-driven. Um, curious, curious how what Braze is actually doing influenced, you know, your passion for working in that environment.

SPEAKER_01 2:40

Yeah, I would say that it was more about startups and the people that I was working with than it was about the mission in particular, just for me. And particularly again, coming as my second job out of college. I was probably 23 or 24 when I started there. I was excited about the idea of being able to work with a couple folks who are friends of mine, with being able to be on a small team, with being able to have a big impact on the business. And I would say that's what really drove me as opposed to helping with marketing automation, which is really kind of interesting in the business. Uh and what was your first job out of curiosity? Uh I worked at a hedge fund called Bridge Water Society. Okay.

SPEAKER_00 3:21

Fantastic. A slightly different environment. And very different. You've excelled throughout your career in in fairly strenuous environments. You know, you have some military experience as well. Would love it if you could talk a little bit about that and how you if you see that as completely orthogonal to the startup experience. Is this just one more inexplicably challenging thing that you decided to do? What it means to call it a button for pain. Clearly, I mean, bridgewater, early stage startup, military, being a founder.

SPEAKER_01 3:50

Uh yeah.

SPEAKER_00 3:51

There's a pattern.

SPEAKER_01 3:52

Yeah. I I think there there is a pattern, and and when you look at the pattern through the lens of these all being challenging experiences, I would say that the addendum to that is that they are challenging experiences that that have a reward on the other side of that. And I don't mean a financial or monetary one. You know, Bridgewater Associates place that is known for very particular culture that can be really challenging to participate in, much less thrive in. But much of the challenging aspects of it are oriented around making you a better person, learning, things like that. And I'd say that's true of other challenging experiences that I picked after that in my career. You know, talking about the military experience, I would say, you know, I decided to do that much earlier than I decided to be a startup founder. And so they're not, they're not entirely bound, but I the parallels that I would draw and kind of the ways that that's helped me with a startup, I guess maybe I could talk about, are maybe two areas that I'd focus on. So one is there's a in the army at least, maybe other branches of service as well called Embrace the Suck, which is really on topic for the questions that you're asking of going through challenging experiences. And one of the things that I like to say about my military experience that has helped me the most in other endeavors in my life has been just really going through a lot of challenging things, whether in training or kind of actual missions that were painful or frustrating and often didn't feel it didn't feel fair that they were. You know, you're just dealing with something hard and it doesn't seem like you should have to. And you really learn to deal with that in the military. It's just, hey, this is part of life. There's other people around you who are going through the same hard things, and sometimes you gotta stick it out and just make it happen. And I'd say there's a lot more of that kind of culture of embracing challenge in the military than a lot of other civilian experiences that I've had. I think that's really helped me as a startup founder because it is, again, on topic, a very challenging thing. Sometimes things don't go your way for reasons that you can't really understand. And I think that I've built up a lot of calluses, scar tissue, strength from the military experience. It's helped me through that. And then I'd say the other way that it's helped me, or maybe a parallel that I would draw, is just that you deal with very different types of people in the military from someone who may have just had a career within the civilian tech industry. I know I have to say.

SPEAKER_00 6:42

And I don't want to like sort of become overly analytical, but I would like you to unpack the experience you talked about in the military a little bit more. I mean, you touched on something which I thought was interesting in that fairly early on you you understand that uh outcomes are not necessarily fair and there are just tribulations and sort of crucibles that you will go through as a part of the service. Is there a moment where I presume that it's not something you know going in? So is there a moment, was there a moment for you when it was you said, well, if I'm gonna succeed in this environment, I'm just gonna have to get over this? And is it one you can talk about?

SPEAKER_01 7:25

I don't think there's a singular moment. I can there's a few that kind of are burned into my memory. Yeah. But I would say that the the thing that was kind of most impactful is having so many of these kinds of hardship experiences and seeing how I felt about the people around me who uh responded to them by complaining or by kind of disengaging, which was hey, what are these what are these people doing? You know, like we're all dealing with this right now, we're just trying to get through it. And so having that be a reflection that I saw of how I might have felt sometimes if I just wanted to complain and see that in someone else.

SPEAKER_00 8:02

You saw somebody do the thing you wanted to do and it was extremely unattractive. Exactly.

SPEAKER_01 8:06

And and it was clear that's how everybody else kind of felt about them too. One of the ones that's kind of most burdened into my memory is I was at the Army's jump school airborne training, and we were at the beginning of the week where you actually jump out of airplanes, which is only the final phase of it. You spent a lot of time getting ready for that. And the first day that we were supposed to jump out an airplane, the cloud cover was a little too low. And so the the scheduled jump time got delayed about four hours. Well, leading up to that, the the scheduled jump time was supposed to be maybe 8 a.m. or something like that. Uh we got up at 3 a.m., did all of our kind of normal stuff, and then went through the long process of the folks there getting all our equipment on, getting us ready to jump. And in the then, let's say seven hours or so that we were just sitting waiting to jump out of the plane, our instructions were to just sit on the benches and not talk to each other and not move and not touch our equipment. So had gotten up at 3 a.m., sat there, not talking for seven hours, and that was just how it was. And you have a lot of time to think when you can't talk or do anything for seven hours. And and that, I think, not only burned the memory into my mind, but also was one of those times where I was just sitting there watching some people kind of talk or complain and then get in trouble and seeing other people who I kind of respected just sitting there and probably not very happy, but but dealing with it and thinking, yep, I guess this is what you have to do.

SPEAKER_00 9:36

And it just out of curiosity, is that kind of order just something that when there is a sort of some kind of a logistical snafu, the the folks that are training you just sort of have carte blanche to say, well, just you know, screw with them a little bit, like give them something unpleasant, you know?

SPEAKER_01 9:54

You know, kind of like a lot of other things in an army training environment, there was a reasoning behind it. Yeah. There was a logic to it, but there were also a lot of reasons why it didn't need to be that way. The army reasoning behind it was, well, hey, there's hundreds of you who don't know what you're doing. We just went through the process of inspecting all of your equipment to make sure that it's safe and ready to jump. And now we need you to sit still and not touch it. And not touch it. Okay. Otherwise, you're gonna create a problem. Now, the you're not allowed to sleep and you're not allowed to talk to each other. That was, I think, a little bit more of the screwing with you. Uh or presumably they could have said, I already have taken that. Yeah, exactly. Presumably, if we'd been sleeping, we would have had even less likelihood of messing up our equipment. Uh so that was one of those, hey, you're in a training environment, you need to show your discipline, all this kind of stuff. Um so yeah, there's a little bit of that. And that is a lot of a lot of the instances, particularly in training environments, which are a common experience for a lot of people in the military because everyone has to go through the same ones of those. Um, a lot of those experiences are the ones that are hard, frustrating, painful, and often feel like it's kind of unfair. Like it doesn't need to be that way. Yeah. Certainly we could have figured out something that uh would have made those seven hours less unpleasant. Trevor Burrus, Jr.

SPEAKER_00 11:07

This is starting to sound a little startupy, except like you're forbidden from actually building the startup. Like there's a something, there's a there's something that must be a better way. There has to be a better way.

SPEAKER_01 11:17

We need a startup to innovate the Army's airborne school.

SPEAKER_00 11:22

And it's almost I mean, perhaps this is more at big companies, but there is almost a cliche around parallels between high-performance civilian organizations and the military and you know sort of business books about SEAL training habits and and philosophies. I'm a little bit more curious around the specific things well, not only that you do take from that experience as a leader and make them part of Equiem's culture, but but the things that that you're saying this would this will just never work here. You know, so the do's and don'ts.

SPEAKER_01 12:02

Yeah, I they're very, very different cultures. Yeah. You know, and and I think for good reason. You know, when you look at something like a military training environment that is capturing everyone from a 17 or 18-year-old private who just got out of high school, you know, up to maybe more senior officers, that needs to then train the lowest common denominator, that is a very different experience from recruiting top talent from tech companies and universities and trying to get the best results out of them possible. So they are very different, and I would definitely start with that. And that's actually why you know the two kind of areas that I focused on that I've drawn from that personally are actually more about you know how I personally kind of persevere through those things and the ways that when I find other people dealing with hardship or struggling, that I try to coach them through that. I think that those are things that I I want to instill in our company that people understand that there are hard times and we work together and and have a good attitude about them, we can get through them. Beyond that, I mean it it would be very easy for me to pick a lot of the things that are not a good fit for Queen's culture or probably any startup's culture, right? And and a lot of those are things that are gonna lead to the environment being less innovative, right? There was no room for the kind of junior person on the ground to ask the authorities that be in the kind of seven hours of sitting on a bench whether or not it might make more sense for us to just call it quits for four hours and then do this again and a few hours later not waste everybody's time. But that's really what we want in circuit culture, right? We want innovation which only comes from the best ideas being surfaced and debated and then implemented, regardless of who they're coming from. And so the difference of what authority means and and what's expected from even the most junior folks in the organization at a startup relative to an early stage kind of military training pipeline is stark and for good reason, I think.

SPEAKER_00 14:03

And out of curiosity, would you do you have sort of cultural values at EQIAM that you've written down that you can share, or is this more something that's sort of lived?

SPEAKER_01 14:13

We do have draft values right now. And and so I think they're not quite ready to be shared. Not ready to find it. And actually the reason why, you know, even as a company now that's going on 12 people and been around for a couple of years, the reason why we chose, or I guess you know, you could say I chose to do it that way rather than writing the values down myself and then finding people who wanted to join with those values when it started as one person or two people. The reason we did that is because you know I had that experience at Bray's joining at around the same size that Equiem is now. And what I realized from being an early stage or yeah, a very early startup employee prior to being a founder was that those early people mean just as much in terms of what your culture is gonna be as the founders do themselves. And so it's great as a founder, in my opinion, to be able to put down what you would have the cultural values be if it's just a room full of you. But I what I've always told our team is that, you know, the the group of them and what they're bringing to the table are gonna define it, you know, as much or maybe more than I am at this point. And so we waited until we had about 10 people to kind of start working on drafting those out based on what each person was already bringing to the table and what people wanted to see in their work environment. So it's a it's a work in progress that I think we'll finish sometime pretty soon, but we delayed really writing those down and formalizing them until we were about this size anyway.

SPEAKER_00 15:34

Makes a lot of sense. We we have a slightly different approach in that we sort of reaffirm the modes every year and and they evolved. But I remember we had sort of we had fallen behind a little bit on our sort of annual cadence for that, and it was because our firm hadn't grown from fund one to fund two. And then when we brought it, well, we were bringing in new team members, you know, we we we pulled them out, and that was pretty eye-opening for me, and and it actually quite empowering as well, because I'd been here for long enough that I was able to push back, adjust things, and it felt like it was more of a living document than something that um Mark and Dave and Ian had kind of committed to um, you know, eight years ago, just because.

SPEAKER_01 16:18

So that's a great point, and I actually really like that technique because you know when we have a draft set of values now, we'll formalize them more very soon. But I could totally see that in a year from now, even the folks who participated in that may feel more empowered to contribute even more to that just by nature of having been around longer, too. And so love the idea of continuing to refresh it.

SPEAKER_00 16:39

Do you have any lessons around recruiting you could share? Because I think, I mean, what brings it top to mind is I don't know, have you been following this Coach Prime stuff? No. Oh, it's absolutely unbelievable. Just just get on YouTube and watch and watch like like not hours, but watch watch some lengthy Deion Sanders interviews. But one of the one of his, he's got all these great lines, but one of them he's like, I don't want leaders, I want dogs, you know. Um, it's just like people that are so hungry that I mean what he means is like they're hungry, they're not ego-driven at all. Yep. And they kind of, you know, accept accept authority, work hard, they want to, they want to get in, they want to embrace the talk. Does that have any resonance from the sort of folks you admired working with in the military, that the kind of folks that you'd want to bring in to Eckey M?

SPEAKER_01 17:26

Yeah, I going back to that first parallel that I drew between the military and startups, I think that you need to have people who know that it's gonna be hard, want to work hard, and and understand why they might want to work hard in that environment. And I would say that that's something that I've impressed on all the people that I've talked about joining the team as part of interviewing and even as part of selling. And I would say that I learned, I think, as a manager at my last company, how important it was to me to tell people all the reasons they wouldn't want to join the team just as much as the reasons they would. And I think a lot of those things come across in that of, hey, we're gonna have to work pretty hard and you know, the outcomes are not guaranteed. And so if you're looking for a place where that's not the case, then we're probably not gonna be a good fit. Yeah. And the people who are gonna be excited are the ones who know that the outcomes are not guaranteed, know we're gonna have to work pretty hard, but feel like that is worth it because they have influence over the outcomes where they may not in a larger organization or a different organization.

SPEAKER_00 18:31

Yeah, one of our one of our other founders does that like try to get you to not join before you join. Have used derivatives of that in the past. It's it doesn't work in every case, but you know, it can be it can be powerful.

SPEAKER_01 18:43

Well, one of the hardest things for me personally as a manager, and I don't know if it's true for every manager, but I learned that one of the hardest things for me was dealing with coaching and trying to manage employees who found out that the thing that we really needed them to do was not what they wanted to do and not what they were expecting to do.

SPEAKER_00 19:01

So I just maybe it's it's it can be an ugly combination.

SPEAKER_01 19:04

Yeah, yeah. And so maybe even for selfish reasons, I'm just like, hey, I don't want to deal with what it's gonna mean for all of us if you show up and you didn't know exactly what you're getting yourself into, and it turns out one of the things you didn't know about is something that you were you did not want.

SPEAKER_00 19:19

So you and I have been chatting for 90 minutes and 35 seconds, and we haven't really talked about what Equiem is. Okay. Maybe it's time. I think it's time. And I think it would be good to start with how you came across the problem, and then we can go into why you said, now I'm now I'm really crazy, I'm gonna start a company.

SPEAKER_01 19:42

Yeah. Yeah, it's it's a kind of a cool story because I had exposure to the problem long before I ever started a company on it. And it's one of these things where, you know, there's there can be great, very young founders, and and but I think there are also advantages to experience. And one of the advantages to experience is just even noticing when something that you have everyday experience with probably shouldn't be that way, and maybe a company could solve that. So one of the first things that I did in my very first job out of college was work on compensation management software. So proprietary software within the company to help manage and plan for bonus awards during compensation cycles, to manage and plan for Bridgewater? Yeah, this is at Bridgewater. Amazing. And and yeah, first job out of college was a very good thing. Were they radical transparent? Not about compensation, no, actually. That was that was one of the one of the contradictions in in the principles, I would say, that you learned about pretty early, and and there were reasons for it. So um but but yeah, as it may be, they were not particularly transparent or compensation at that point. I'm not sure if that's still the case. Again, that was you know over ten years ago at this point. Ray Donald, please, please don't sue this podcast. Yeah, right. Principles uh owned by the principals company, not uh anyone here. But so I was working on software that was proprietary to Bridgewater at that point, and and there are other companies who have done this, by the way. So it's not like Bridgewater were the only ones who were crazy enough to build their own kind of internal software. And really, they weren't crazy enough at the end of the day, they wanted to get it right, and there was no other way to get this right. So I had that exposure very early on, and the seed was, I think, planted in the back of my head. But then I had an experience of actually becoming a manager in my the next two companies, both Braze and then at Uber as well, where I was a manager after that. And that was where I really started to get exposure to the problems that we're solving today. And I can I can offer a few anecdotes from across my experience as a manager. I please uh I had one experience where an employee was approaching, you know, the end of their initial equity grant. You know, you get an equity grant typically lasts four years, and they came to me and said, Hey, you know, I'm gonna be paid below market now, and and am I gonna get a refresh? And I I didn't even have access to the numbers. Much less know whether or not that was the case at the time. But when we looked at them, he was totally right. And so when I went and talked to our people business partners about that, they said, Hey, we've already identified everyone who's in that situation. They're going to get fixed. And asked if he was going to be getting a new equity award, and they said no. And so then we dug into the numbers even further and came to find out that after putting in a whole lot of time and effort in spreadsheets, the people team had only been able to identify folks who were not going to be vesting enough equity over the course of an entire year and not caught what was probably a lot of people in a similar situation to this person, where, you know, making a decent amount of compensation in stock over the first few months of the year and then almost nothing after that. And despite recognizing that that was a real challenge, the tools just didn't exist to find either this person who I was managing or basically anyone else at the company who had that problem. And that was a big kind of smack you in the face sort of moment of how can we not have that? You know, how can it be the case that the data about compensation is so scattered and that we don't have proper analytics on it when it's something that I could see as a frontline manager at the time is going to have such a bearing on whether or not this person even stays the company. And so that was a big moment for me. A couple other big moments involved seeing, after Bridgewater, also Uber building custom software internal to the company to help understand total rewards and analyze that with nothing, you know, custom to Uber really. Just this is something any tech company would need. And maybe the final one was just sitting in these compensation planning discussions as a manager that anyone at a company over a few hundred people has probably participated in as well. Where early on in my time at Uber, we were all staring at spreadsheets later on, custom software being implemented. And it was just hours and hours of planning over who's going to get what raise, who's going to get what bonus, or new equity award. And not only was I seeing that I, as a frontline manager, was wasting a bunch of time because of the lack of tools there, but that the most senior leaders in the room or VPs of engineering were also deeply frustrated with the tools that we had to make those decisions. So to piece all those experiences together, what I found out is that managers, people teams, I later learned finance teams as well simply do not have the tools to one, get the data they need to make good compensation decisions, and two, to actually make those decisions and manage the workflows and decision-making processes that go into that without these kind of you know hundred-person meetings where you're sitting in a room and banging your head against the wall. So that was how I got the idea and what really prompted me to investigate this space.

SPEAKER_00 24:37

And can you talk about this? Is always the thing that I'm so curious about. You know, so okay, I'm gonna start a company, like you with your friends who have a you have a beer and you're like, I'm gonna start a company, I'm gonna do this. What what was that first month like for you? Did you start building in stealth? Like, did you did you quit your job? How did it get started? You know, was it I need to raise venture capital funding right away? I mean, how did all these things come together for you?

SPEAKER_01 25:04

Yeah, I was fortunate enough to get some coaching before I even quit my job, and actually before I'd really landed on this problem to solve on on how to decide if you should start a company. And and that I would say the the lesson that I really took away from that is you know, de-risk as much as possible before taking risky steps. Yeah. So what I tried to do kind of before actually quitting my job, but just seeing these problems and candidly also seeing other problems that I was interested in potentially starting a company on. What I tried to do was find folks who could be potential buyers of a solution in that space through my network and informally kind of get conversations with them, increasing informality as I identified that they also had these problems and it wasn't just head companies I've been at were unique in some way. So I spent some time kind of on the side, you know, moonlighting while I still had a full-time job. And then I got far enough along with multiple ideas, actually, including this one that I was pretty convinced I was going to pull the trigger and that I just needed more time than I had in my free time basically to make the decision even about which idea I wanted to pursue. So I left my full-time job and decided to spend the next basically however long it took to make that decision vetting a couple of different ideas that I had. And what I started to do even further than that, focusing in on this idea and another one where I'd seen kind of enough from those informal conversations was even just build a prototype, like the type of prototype that I could pull together, you know, overnight that doesn't actually work, but just kind of looks like real software, so that I could do demos with folks and be like, hey, is this something that you would want to use? And what that did for me was help narrow in on the problem set that Equiem is helping folks with today, because the difference between the reactions that I got from some of the other ideas that I was exploring and the reactions that I got to this idea was stark. It was, hey, on some of the other things I got, yeah, this is cool and that's really interesting, giving some feedback. And when I showed even those earliest kind of completely non-functional prototypes of Equiem to you know our target buyers, functional leaders, heads of people oper people or people operations, finance leaders, the reactions that I got were basically are you looking for like beta users or what stage are you at here? Like, are you charging yet?

SPEAKER_00 27:27

Yeah, okay. Yeah, when people are asking to pay for stuff, that's usually it's usually a good sign.

SPEAKER_01 27:32

Right. So I so I had pretty strong conviction, particularly from vetting a number of ideas in parallel and being able to see what good looks like, that this was something I wanted to do and and had already started to kind of build it. And for me, there I did decide to raise some capital fairly early on, largely because while I felt comfortable enough to hustle and kind of do that vetting and even building the actual product myself without any income, I knew that there was quite a bit that we'd need to build to really build something that could be used by the size of companies that have this problem and that it wouldn't make sense for me to do it alone. And I wanted to be able to pay other folks because not everybody can can make that decision to go without compensation for a while.

SPEAKER_00 28:21

You're building currently in a very interesting environment for the problem you're solving. I mean, you sort of, it would seem to me you identified the problem during a time of sort of extreme pain of a certain kind, basically growing pain and like retention pain. Now you have a different problem, which is still the same problem, but it's a different driving force, maybe. Um there's all this talk about um, you know, return to office being kind of the new riff. Yeah. Um there's a lot of dissatisfaction, not a lot of sympathy, I would say, uh, for the folks that um are feeling less engaged or they were sold a bill of goods because of how they want to work flexibly, and at least anecdotally, and I believe there's some data around this, a lot more folks in our industry are open to a move than one might expect. How are you seeing companies interact with your software? Like, is this intersecting with your software? What are you seeing?

SPEAKER_01 29:24

Yeah, uh definitely uh intersecting with uh our primary stakeholders, our primary buyers, and and really kind of stepping back to the point that you're making there, if you look at how it's been to be a head of toll rewards, a head of people, head of finance, or really a manager anytime in the last few years, the hits have kind of kept coming. Yeah. Uh and particularly in the compensation space, the things that have complicated the job have just kept coming. So, you know, rewind all the way back to COVID, and you had remote work start, and that made compensation even more complicated. How do we handle folks in a lot of different areas? And then you had one of the hottest job markets and hiring markets for a number of years. And then, you know, fast forward to today, other things that have happened have been pay transparency regulations. We've had an increase in people now wondering, you know, what they can afford as a business and whether or not they can continue to grow and being a lot tighter on budgets. And so the environment has been so dynamic that one of the challenges we've seen that I feel we've been able to help, at least for the few people who are using our platform so far, is really just keeping up with that complexity and having a compensation philosophy that can keep up with that complexity. And the challenge with that is that particularly when you look at all those different factors that are complicating the job, you often need a philosophy about how you're going to ingest folks' compensation that is subtle, that's nuanced, that has some complexity to it. And now, if you look at an organization of anywhere from a few hundred people to even a few thousand people, if you're trying to manage that in spreadsheets or you're trying to manage it in a tool. It becomes a very, very dynamic problem. Extremely dynamic, right? Extremely prone to error, um, prone to sending the wrong spreadsheet to the wrong person. So we've seen a lot more hardship among the people that we've been building the software to help, and we've seen a lot more demand for what it is that we're doing.

SPEAKER_00 31:19

One thing that I think I'm hopefully hopefully learning to identify in companies or at least in products that we invest in is the difference between a tool and a solution. And I think customers really want solutions, especially when the market gets more challenging. And you have some amazing logos, you know, between Bray's Whoop, Warby Parker. How consultative is your engagement with them? Are you bringing them best practices or are the situations so different that you're sort of learning together? Maybe describe you know that process and what they're doing. Yeah, I love that question.

SPEAKER_01 31:59

I would say that the range of how consultative we are on how to run your total rewards program is it's not narrow because oftentimes we're seeing a lot of things from a lot of different companies, so we get questions. But the reality is that those companies that you just named are larger companies, fairly mature. And when we engaged with each of them, they already had a compensation strategy that they knew worked for them. And what they were coming to us with was hey, this is how we want to do it, and we can't do it in our HRIS today because it's gonna take a six-month consulting engagement for us to set it up this way. Or we can't do it in spreadsheets because we just did it that way, and all of our managers are gonna quit if we go back and do that another way. And so the question about what we do and what our kind of services engagement is with the folks who are on our platform is actually something that we start to see prospects for us coming and asking more and more. The most common question that we get today is what can't we do in your platform? What do you have to do for us? Uh I think it's really illustrative of that pain point that a lot of our stakeholders are dealing with, which is that they've got some really nuanced compensation strategies they're trying to implement, or they've got a strategy that's been changing every six months as they try to adapt to an environment and they don't want to be in a situation where they need to have consultants, so they need to have customer success people set up their compensation planning cycle for them. How do you answer that question? How's that answer evolved? The answer has actually been the same from day one. Today, we emphasize it a lot more because we've learned how much of a differentiator it is, really. But when people ask us, what can't we do in your platform? We say nothing. We say you can do anything in our platform, and then we reiterate for them that you know, from day one, one of the way things we focused on and how we built our product is that if you can do it in a spreadsheet, you should be able to do it in Equiem. And we made that a core tenant as we were building the platform because what we realized was that that complexity that we've been describing exists in the compensation strategies that the folks we were talking to. And we also found that while all of them were very interested in a solution that could get them out of spreadsheets, that could help automate things, that could give them better data, that was all predicated on being able, and the solution being able to support what they had in that spreadsheet. And so if it then became a choice between, well, we'll get you out of spreadsheets, but you're gonna have to change what you're doing in this way and you're gonna have to adapt it in this way, you're gonna have to mold your process to the tool, it's a much muddier value prop, honestly, for those stakeholders. And so from day one, we've been doing that. And now when someone asks us, what can't we do, we say, hey, if you could do it in your spreadsheet, you can do it in Equium.

SPEAKER_00 34:44

One of my mentors talks a lot about customer-led innovation. Are there specific things that come to mind that either you have built in the last nine months that came from a sort of customer's want that had been an unlock for you, or are they more on the roadmap? Are there, I guess, what things about the product have really evolved driven by what the customer wants? Yeah, I think pretty much everything.

SPEAKER_01 35:10

So it's hard, hard to even find an example there, really. But I think some of the things that that were, when you say customer-led innovation, we certainly have a customer-driven product development process. I mean, there are, we knew from day one, from even the initial discovery that we did, there was a really broad set of functionality that we could bring to the product that would be useful. Far more than we had the time or resources to build, or that we would have the time and resources to build for some time. And so it was always going to be a prioritization game. So we run a pretty kind of quick planning cycle where, you know, certainly quarterly, but even every two weeks, we're reviewing what are the requests or the issues that customers have run into in the last two weeks, and what does that mean for how we want to change the prioritization of things that we have? It's it's fairly rare that we run into something today that we haven't already thought of or heard about once before, but we may have something that we didn't think we were gonna do for six months that we start to hear the signal coming in and we bump it up into the front. When you since you use the term customer innovation, I'll say that you know, one of the areas that we've moved up in priority a lot recently and that we're kind of excited about from sort of strategic perspective is really pay equity and pay equity analysis. So we've had a product in the pay equity analysis space that kind of sat alongside our core compensation planning product for the last couple of years. And it was always designed to help replace what a consultant might do to come in and really do a rigorous statistics-based analysis of your pay equity practices to let you know if you have a gap between gender or race on how you're paying folks. And not until recently we started really working with larger organizations, folks with a few thousand people, did we start to really get a pull for that product? And the innovation that I think has come out of that, and partly from customer requests as they've started to engage with that product, engage with other parts of our product, is really deep integration between that module and our core kind of compensation planning, which just makes sense, right? And it's not, it's not a brand new idea, even in that earliest prototype. I showed kind of places where a hiring manager, recruiter might be making a decision and us wanting to show insights about the impact that may have on pay equity. But today we're in a position where we have customers who want this and we're in a position to offer integration with a comp planning cycle and our software for determining whether or not you have pay equity challenges or issues at the company, which means that we can identify those problems even when you're just looking at proposed changes to compensation, which really has a potential to have a huge budget impact. Because if you think about folks who maybe bring on a consultant after they've done a comp cycle and are analyzing whether or not they have a pay equity issue, the only way you can really solve that problem when you notice it after the fact is by paying more money. Yeah. But if you're looking at a proposed set of changes and you realize that could lead to inequities, then you have a lot more options on the table and can not only get to equity faster, but but not have to spend as much money to get there.

SPEAKER_00 38:08

When you think about the things that are going to sort of impact this business in the next five years, like one will be scale, two will be more capital, more engineers, more engineering hours, more customer data. Is there a is there kind of a sort of frightening ambition to what this platform could be that you feel like is coming together that you could talk about?

SPEAKER_01 38:34

Yeah, I mean, scale. Yeah, I love how you use the word frightening. Talked about hardship as an entrepreneur, right? Like for something that can be really frightening is how big could this get, and and what does that mean for us? Um I think that what's really interesting about the problem set that we're solving is how broadly applicable it is. One of the things I'm sure as a venture capitalist, you ask this question a lot, and you probably hear this question a lot, is well, where are you focused? You know, what segment, what industry are you gonna focus on, what vertical are you focus on, all that stuff. And while, you know, there are definitely places that we focus and kind of our go-to-market efforts and things like that, it's always been a challenging question for us because the reality is that our problem is a bit industry agnostic. Everybody has the problem of how are we gonna pay our people and how are we gonna manage these decision processes. And so even just scaling to providing a solution in the compensation planning space alone for everyone who has that problem, is in my mind very big scale, right? It is a lot of folks that we're gonna be helping, a lot of people's livelihoods that were impacting, a lot of time that we're saving. If I if I take it the next step further, though, because I really do believe that that in and of itself is a problem that needs to be solved, which is why we're doing it. But the next step further for me is really just hey, a lot of the motivation that I had for this came from my time spent as a manager wrestling with spreadsheets and not able to focus on leading my team and motivating them, on setting vision, on helping remove roadblocks from them. And compensation planning was probably one of the biggest sources of that of time wasted in spreadsheets. But there are plenty of other processes like that. And if you look at the time spent by managers at any company of significant size where they're working with their people team, their finance team, kind of other operations teams just in spreadsheets, filling out numbers for headcount or comp or whatever it might be, and then sending that spreadsheet to their boss and getting some changes and sent back to it. You know, it just so many hours wasted. And while those are important processes, I say hours wasted because that's time that should be spent on, again, motivating the team and it should be a lot more efficient. And so the the maybe to the truly scary ambition of the company or the direction that we want to go is really eliminating all of that or or optimizing all of that so that managers can make the best decisions in these kind of operational areas in the minimal amount of time and really get back to the higher leverage activities that they have on their plates. And the same is true for the people leaders and finance leaders who we support with our platform. If you talk to your average head of total rewards or VP of people operations and ask them the things they're most excited about to do in their job, it's rare that you'll get the answer of, hey, I need to go make 80 spreadsheets for every manager participating in this planning cycle and then email those out, and I'm really pumped about that. They want to be focusing on strategic activities. They want to be iterating on the total rewards philosophy and helping the company navigate those dynamic environment challenges that we talked about earlier. And we want to help them do that.

SPEAKER_00 41:45

Is there anything that I should ask you before we shift into rapid fire?

SPEAKER_01 41:51

I think we've covered it fairly well. I'm I'm now kind of prepping myself for rapid fire.

SPEAKER_00 41:58

Buttress your will to something.

SPEAKER_01 42:02

Who impresses you? Who impresses me? I, you know, the the the rapid fire answer for that are the the people on my team today, the people I'm working with. I I was asked, you know, something I'm excited about recently, and one of the most rewarding experiences for me recently has been hiring people who are clearly better than me at a lot of things and seeing the benefits that we've reaped from that. So yeah, the folks at Equity.

SPEAKER_00 42:27

What piece of media, book, podcast, movie, article, essay have you gifted or shared the most?

SPEAKER_01 42:35

I'm gonna focus, I mean, there's so many, right? But I'm gonna focus the rapid fire answer on kind of what we've been talking about on entrepreneurship and total rewards. And I think for that, the the ones that I like the most have actually been both of Ben Horowitz's books. Okay. And so The Hard Thing About Hard Things, and and then I'm gonna, I'm always gonna I'm gonna get it wrong. But the second book, which is what you are, who you are is what you do, or something like that. Yeah. Look it up. But but building culture and dealing with hardship as an entrepreneur, a lot of what we've been talking about here, and I think those are really solid books.

SPEAKER_00 43:09

What is the skill that you spend the most time developing? It can be work or non-work related, but but what's what skill do you spend the most time developing?

SPEAKER_01 43:19

I think that uh rapid-fire answer and even work focused is probably outside of work too, because I spend as much on work as I do on outside of work, but it's gotta be sales of every kind for me. And when I say when you say the skill I spend the most time developing, and I say sales, what I really mean is the ability to honestly and and effectively pitch people on something, whether it be pitch people on on joining the company, pitch people on using our software, and that is that's something that I both need to continue to get better on and spending a lot of time on. Who are your mentors? You know, that is a question that I get a lot, and it's always a hard one for me to give a rapid fire answer to because what I've Done, and I hope this is the right way to do it, is pick a different mentor for sort of every area where I feel like I need some mentorship. So I have a different person who I go to when I have questions about marketing, and a different person I go to when I have questions about sales, and a different question who I go to when I have questions about you know working with our team. And so I've kind of always just like I try to pick employees who are better than me at the thing that we're hiring them for, I I go to mentors who I know are better than me at a certain thing because no one's amazing at everything. And so that's kind of how I've done it. What's the topic that people should learn more about? Ooh, that's a fun one. I think that people should learn more about what's going on in the world. You asked about the kind of like gifting books or knowledge or something like that. You know, another one that I a book that I often recommend is one that kind of talks about the US-China power dynamics, the evolution of that over time. And there are a lot of things that are that are going on outside of the tech ecosystem, startup ecosystem that are not only really important to our everyday lives, but are ultimately going to end up infecting, you know, those things, even if you are laser focused on your startup. And so paying attention to what's going on in the world, being informed enough about it to make good decisions about who our leaders should be and and even the impacts it could have on your day-to-day, I think is something that a lot of people could benefit from.

SPEAKER_00 45:24

Cool. Well, Peter, it's past six o'clock. We've got a big week ahead of us. I think it's time to get some dinner. That sounds good to me. Let's do it. Let's do it. Thanks so much. Thank you. Hello again, friends, and thank you very much for listening to the end. One final thing before you go. If you enjoyed this episode, do you think you might also enjoy a monthly email from us where we share more stories, news, and perspectives from our early stage fintech ecosystem? If you think the answer might be yes, head over to our website, vestigoventures.com, and sign up for our Envisions newsletter. In addition to blog posts with our latest thinking and updates from our portfolio companies, we always include a short video interview with incredible people from our network. If you do sign up, I hope you enjoy it.