Auren Hoffman – Growing Great Data Organizations – Ep.234

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(00:00:00) – Intro

(00:04:27) – What trend are you trying to learn more about in the Data market today?

(00:09:58) – Factors in why companies may not be buying data

(00:14:13) – Are there cracks in the “data is the new oil” thesis?

(00:15:50) – Common guidelines for data companies

(00;17:54) – How would you apply a B2B SaaS playbook to a data sales company?

(00:18:53) – What is the sales process for SafeGraph?

(00:22:17) – How have you reinvented yourself as a CEO?

(00:26:17) – How do you audit your time?

(00:28:40 – What traits do you look for in recruiting executives?

(00:33:47) – Leveraging tools to help one person be as effective as 2-3 people

(00:40:19) – Are there common reasons you’ve found someone not to be successful?

(00:42:41) – What questions do you ask to find if someone is a good fit?

(00:44:53) – What lessons have you learned from hiring and managing?

(00:55:46) – Flex Capital

(00:57:12) – How can folks reach out to you?

Alex Bridgeman: Auren, thank you for coming on the podcast. I’m thrilled we get to chat. I’ve listened to your podcast for quite a while. World of DaaS is one of the most frequent podcasts I forward to folks who are interested in learning about data and even some software businesses, as you’ve had folks like Goddard on the podcast. So, it’s been really, really fun to follow. So, I’m thrilled we get to chat. And data businesses are kind of a personal passion of mine. I just love studying them and following them and I send your podcast out all the time. So, I’m excited to chat through them. But do you- 

Auren Hoffman: Thanks, Alex. I’m very happy to be here, and thank you for the kind words. 

Alex Bridgeman: Of course. Is there anything about data companies today that you’re spending a lot of time trying to learn more about or the state of the market, state of DaaS today that stands out to you as a trend or a change that’s going on? 

Auren Hoffman: I think the biggest trend that’s happening in the data company world is that there are not as many buyers of data as I would have expected. So if you had asked me five years ago to predict the market, which I tried to do, I would have said just the number of buyers would be exponentially higher today than it was five years ago. People were much more data oriented even five years ago, there were all these new tools, Snowflake, Databricks, all these other types of things, tons of data scientists being hired, tons of new engineers coming on. The rise of AI was just starting to happen and LLMs. So you just would have thought there would have been way more buyers of raw data. And the number of buyers today of data is higher than it was five years ago, but it’s marginally higher. The market has not grown that much in the last five years. In fact, in some markets, it’s shrunk. The dollars have shrunk because it’s become very competitive and so you’ve seen price pressure and other types of things. So the data business is not nearly as good as I would have thought it would be.

Alex Bridgeman: What areas are contracting that maybe you didn’t expect or see coming?

Auren Hoffman: Well, I think almost every area of data is not growing that fast, with a few exceptions here and there, especially if there’s new data markets that are coming on, like unstructured data to LLMs from news sites or something like that. Or there’s been a bunch of healthcare data companies in the last few years that are doing really well. But what you start to see in these data markets is just this unbelievable rise of very, very, very fast growth because it’s like new and it’s exciting and interesting. And then lots of new people get into the market and then it kind of saturates. But it turns out that there’s only a certain number of buyers. And we’re seeing that, like a ton of healthcare data companies recently have done really well. And it’s possible though that just the number of buyers is not going to grow. And if that’s the case, then they’re going to kind of plateau and then they’re going to compete with each other quite a bit. Now, some people can move from being just a data company to being more of a SaaS or adding some API services or other types of things on top of that. So there’s a way out of that trap. And so maybe data can help you kind of get there. But sometimes it can really be a trap as well, especially if you’re venture-funded. The most successful data businesses are not venture funded historically. These venture funded data businesses can end up in quite a bit of a trap because they end up having a good business, but not a great- a good enough business to have venture returns.

Alex Bridgeman: And is the difference just that the data itself only applies to a limited market versus could scale into other verticals, or what else might be behind that?

Auren Hoffman: It turns out that most companies are not good at buying data. They don’t know how to buy it, they don’t know how to use it, they don’t know how to bring it in. So even if- the classic is hedge funds. So, the number of hedge funds that bought data, like in a significant quantity, five years ago was maybe 40, and I would have thought today it would be 400 to 500. I thought it was growing that fast. In fact, almost everybody did, if you ask people, and they’re all making investments to do that. Today, it’s probably going from like 40 to maybe 60 or something, so it’s bigger, but it’s still like relatively small that’s out there. The number of real estate companies that were buying big data five years ago was zero. Today it’s one. The number of retailers that were buying a lot of data five years ago was maybe 15 and today maybe it’s 20, 25. And you just go down the list. And so, it’s still a very, very small percentage of the market. It’s growing. It’s getting bigger. But it’s growing very, very slowly. It’s not growing at the rate that one would have expected it to, at least that I expected it would have grown. 

Alex Bridgeman: I love your analogy of selling butter to pastry chefs, or high quality butter, I should say. And that kind of reflects a lot of my own experience. I was a chief of staff at this company, HW Media. We bought a housing data business. And looking at the different clients we had at different industries who were buying our data and using it, they had this kind of alignment of a number of factors where they had the right expertise to intake data and make some analysis with it and understand, come to a conclusion about a market using our data or a combination of other data too. But also, there was the leadership team that used that data to make decisions. It’s one thing just to have data and interesting answers, but another to actually use it in decision-making and investments within a company. And so, the two of those had to be together. And there’s often some maturity as well where those two teams had been around for a number of years and then developed a rapport and they were working together really well. That to me struck me as a common concern or issue with trying to find other data buyers who might be a fit was that they didn’t have those two teams set up really well and connecting with each other. So that seemed like a barrier in my mind. Have you found that to be a barrier in why the number isn’t like 400 hedge funds or are there a number of other factors that you see? 

Auren Hoffman: Yeah, I think that’s definitely part of it. I mean, often when you’re selling data, you’re selling to engineering teams and product teams that know how to take it and then that becomes an ingredient into a total product that they’re building. And they might be combining with many other data sets. They are building a UI on top of it. They’re doing a whole bunch of other- they’re creating APIs. They’re doing other things that are really exciting and interesting, and you’re 1% of the puzzle or something, the data, maybe a very important 1%, maybe even more than 1%. But you’re just a piece of the overall puzzle, so they have to somehow have a vision and create it and then kind of understand that you’re needed to make that more complete or make that product more complete. Now, there are certain markets where it’s easier to bring in data, let’s say, marketing contacts or something like that. Everyone buys marketing contact data. It’s simple. It’s easy. But that market also has seen a massive amount of new entrants recently, and it’s not clear that the number of people buying marketing contacts is growing. So, there’s lots of folks that do buy it. It’s pretty easy to buy, and maybe nobody spends that much money on it, a few people do, but most companies won’t buy it, maybe the average ticket price is much lower. But there’s all these new entrants that have come in, so it’s super competitive. And they’ve got good products, and some of them have lowered their prices, and the switching cost might not be that high. So building tools on top of that could be more interesting. And if you even think of like these really awesome data companies that we all admire, like you and I both admire ZoomInfo, if you think of most of their new products they’ve announced, most of the acquisitions they’ve announced in the last few years, all of them have been in applications. None of them have been in data. So, they kind of also, even though they started in data, they’ve seen, okay, we’ve got to upmarket ourself, we’ve got to create bigger solutions, we have to do other types of things to really grow the business. And if you look at ZoomInfo, they’re really the only example of a unicorn data company that’s been started in the last five years, sorry, the last 20 years. So, there’s almost no other data company that’s been a unicorn and started in the last 20 years. All the other data companies are unicorns and there’s many of them, there’s some of them worth like $100 billion that are incredible, but they’ve all started like 40 years ago, 50 years ago, 60 years ago. And part of the reason why they’re so big is they have some sort of like capture, maybe they’ve created some other type of, maybe even through some sort of legislation or other types of things, they’ve created some sort of like monopoly in a particular thing, or they’ve done a really good job in cornering a certain market, et cetera. But most of the data companies that have started in the last 20 years, especially the venture-funded data companies, some of them have grown into really good businesses, but not great businesses. 

Alex Bridgeman: Yeah, and to your point earlier, ZoomInfo was a bootstrapped company, not venture-funded. 

Auren Hoffman: That’s right. ZoomInfo, all the money that went into the company went in as secondary, not primary. They didn’t need any money. They were they were profitable. And most of the money that they brought on to do acquisitions they did through debt. So, they didn’t need the venture capitalists. It was really private equity that kind of benefited from it. And then of course, the shareholders and Henry, who’s just an incredible CEO. And they built an incredible business, but they built it profitably, not unprofitably like so many others, so many like a typical venture business would build it.

Alex Bridgeman: So, the phrase data is the new oil is one that’s been popular for many years. And we’re talking here about different ways that there’s like not necessarily cracks in that armor, but maybe it’s happening slower than we think. I think of memes on Twitter of someone who’s like, I can’t wait to sell my personal data for 80 cents or something like that. Like, it’s just not that valuable. Does this indicate to you that there’s cracks in it, or it’s just happening slower, as you said earlier, than people are thinking it’s going to happen?

Auren Hoffman: Well, I think most data businesses probably shouldn’t be venture funded, but they are actually very good businesses. Just like most law firms shouldn’t be raising venture funding or most investment banks or whatever it might be. Even VCs don’t raise venture funding. So, it’s like, right? There’s lots of great businesses out there. There’s tons of podcasts and newsletters and media businesses too that are great businesses. In some ways, news businesses are data businesses, but very few of the good ones are venture funded. In fact, the venture funded news businesses turned out not to be good businesses. So it’s almost like building it profitably, building it smart, owning a bigger piece of the business, but maybe be okay with the growth being a little bit slower. Maybe that’s the smarter way to go to build most data businesses. Again, there are plenty of exceptions out there. And so, there’s still a lot of great data businesses that are probably worth getting venture funded, but not a ton. If you just, again, if you look at the unicorns in the last 20 years, there’s like a thousand SaaS companies and one, maybe two, depending on your definition, data companies. 

Alex Bridgeman: Yeah, it’s much more limited. You mentioned a common trap for data companies being not being able to bridge from just being a data company to workflow, application layer company as well. And we’ve obviously talked about ZoomInfo having done that very well. But are there any takeaways or principles or guidelines that you’ve found to be helpful amongst data peer CEOs of yourself in moving from just raw data to application layer? 

Auren Hoffman: It’s hard. It’s really hard to do. And partially because a lot of these applications, the UI is really important. And the sales motion is really important. And so, there are companies out there selling like a beautiful UI, and they charge $5,000 or whatever for a year for access to it. In most data companies, there’s no UI and they’re charging $100,000 or whatever for it. It’s a very, very, very different motion. And so it requires, it’s often a different DNA of the founders, a different DNA of the executives. And so it’s very hard to do both. It’s also hard to go the other way. It’s hard to become like a data seller on the side too. So they often require like different skill sets, doing different types of things. Now, not to say you can’t do it. There are plenty of people who have been able to do it, but it takes a unique founder, a unique individual who can do both. 

Alex Bridgeman: Are there certain examples today that stand out to you of companies that are making that leap now that you think are doing it pretty effectively? 

Auren Hoffman: Well, I think ZoomInfo, and I think ZoomInfo has a unique CEO, a unique founder who really has a foresight to do quite a lot of things, and he’s an incredible product person and also a very good salesperson. I think he’s a unique person to be able to build a business. But there are very few Henry Schucks out there. And so most other people are, if I was 25% of a Henry Schuck, I’d still be amazing. And so most people are just not at that level.

Alex Bridgeman: In thinking about our own sales motion for housing data, we modeled a lot off of some basic B2B SaaS type principles. If you just take a standard B2B SaaS playbook and you’re trying to apply it to selling data, what changes or adjustments would you make in transitioning to more of a data sales org in sales motion? 

Auren Hoffman: I do think the playbooks are pretty similar. So someone who’s good at selling one should be good at selling the other. There’s some small differences, but obviously I think those are pretty similar. One of the things that also depends is the market you’re selling to. So obviously, some B2B SaaS companies are very specific to an industry, and some of them are kind of cross. So some are selling to a vertical, and some are selling more to a horizontal. And same thing with data. Sometimes you’re selling to a horizontal, usually a little bit more likely you’re selling to a horizontal, but sometimes you’re selling to a vertical. And then you need people who are very good at understanding one versus the other. 

Alex Bridgeman: So for SafeGraph, for your sales org, how does it look today and what does a process look like within SafeGraph? You’ve been running for many years now, so I’m kind of curious what’s a more mature look. 

Auren Hoffman: The process for SafeGraph is pretty similar to a SaaS company that would be selling to a horizontal. So SafeGraph sells to many, many different industries. And so, you would probably have a very similar- so there’s no one dominant industry that we sell to, for better or for worse. There’s both pros and cons of having a sales motion like that. And then you need certain types of sellers that are good at selling kind of across industry, not the type of people who are just going to always go to the same industry conference and go really, really deep. Because the number of buyers in any given industry is very, very tiny. So, we couldn’t just sell to retail because there’s probably only 25 buyers in all of retail, and we sell to most of them already. So there’s only a certain number of buyers for us in each given industry, so we need to sell across industries. There may be certain types of data that you’re selling, often there’s like a financial data type of thing where you’re selling to a very, very, very specific type of industry, but still there, there might not be that many buyers, but maybe your dollar per buyer is up pretty dramatically. 

Alex Bridgeman: That’s one piece that I was thinking a lot about that you just put in a really clean and simple way of when we were- in thinking about who would be the right profile for selling something like housing data, we maybe thought more about the industry experience being really important for going deep into specific verticals. But to your point, that in any given vertical, there’s maybe only a dozen or two or maybe a couple dozen buyers for data, and so that horizontal kind of more broad sales experience was more important…

Auren Hoffman: Yeah, it’s very hard to afford a good salesperson, a good salesperson costs a lot of money. And so if you’re going to say to a salesperson, hey, you’re only going to sell to these 30 names and no other names, well, then you need to have a very- either you need to have an extremely high sales price, like okay, we do million dollar annual contract values on average, and then it kind of makes sense, they only have to sell two per year or something to hit their quota, or you need to get an extremely high percentage of that industry to convert over to you. And then if you do, then you might not need that salesperson anymore, then they’re kind of done. There’s a little bit of an odd- then they’re going to work themselves out of a job. If you have somebody who can sell into many industries, of course, obviously there might be people in your team who are like slightly better at one versus the other, or maybe there’s a geographic thing too, or maybe it’s easier to have people go and visit people in New York versus people in San Francisco or something. Then you have a little bit more flexibility, but again, it means they might not understand the industry as well, and so they may have some other disadvantages there, too. 

Alex Bridgeman: Yeah, that makes sense. I was thinking of like even if you’re selling planes for Boeing, there’s maybe 30 to 50 buyers for your aircraft anyway, so one salesperson could do that pretty well. But yeah, smaller dollar amounts, wider volume. 

Auren Hoffman: Yeah, that’s right. 

Alex Bridgeman: Yeah. In your own time running SafeGraph, have you felt like there’s been any distinct phases of time as CEO where either your role looked a certain way and then there was some catalyst or in some way it had to change dramatically or maybe even just subtly, but in your view, it was more noticeable to something different? Like what are some ways you’ve been reinventing yourself through SafeGraph? 

Auren Hoffman: Well, I think every CEO goes through different points in a year, different points over five years where they’re spending more percentage of their time on one thing versus another, and then it can completely flip a few months later. And so you could be spending massive amounts of your time on go-to-market and almost no time on product, and a few months later, that could completely flip. Or you could be spending all your time on recruiting and building culture and then that can flip to you’re spending all your time raising money or you’re dealing with financial things, you’re doing acquisitions. So there’s all these different things that you’re spending your time on. And there might be things you like to spend your time on, but you’re not spending time on things you like to spend your time on because there’s other things that you have to spend your time on, or you don’t have the right person in place to help you do that. So it’s very, very topsy-turvy, I think. And no CEO is happy with how they spend their time. Every CEO would say, I wish I spent more of my time here, but I have to spend my time in this place, et cetera. And there’s not always a good rhyme and reason. When I talk to my other friends that are CEOs, there’s not a good reason necessarily. Oh, I’m… why are you doing that? Oh- it’s very, very hard to know. There could be lots of different types of things. So with me and probably with every other CEO, it’s a very, very hard job. And there’s no right path, there’s no right answer, there’s often nobody who can direct you. Sometimes if you have good people, and I have some really good folks that I work with, they can help me make some of those decisions. I think you’re wasting a little bit more of your time here and I think you’re spending more of your time in this place. For me personally, I would love to spend as much of my time possible doing product, that’s what I like to do. And for me, that’s the most fun, I get the most energy out of it. But I would love to be spending 80% of my time on product, but that just never happens. I’m often spending time just doing other things as well that are very important for the growth of the company. 

Alex Bridgeman: So, what types of things- like within product, what kinds of decisions do you like being a part of or projects do you like focusing on? Is there anything specific within product you really enjoy? 

Auren Hoffman: I like all the aspects of it, understanding the engineering, why are we doing things the way they are, why are we designing something. There’s a product marketing component to it, which I think is pretty interesting as well. It’s creative. It’s interesting. There’s lots of different trade-offs. There’s hard decisions that have to be made all the time in product, almost every day, if you’re in it. There’s lots of very, very interesting decisions that have to be made that there’s often no right answer to. And so you have to be in there kind of doing that. And often, you’re working with really dedicated, great people who are on the product and engineering teams that are doing really good work. So I personally just find it really fun and interesting to do that. Now, the other aspects of the company are also fun and interesting. They might not play to my core skillset as well, but sometimes they require quite a bit of time and effort, and sometimes they require more time and effort. I mean, there are definitely times when I’ve been CEO where I’m spending 0% of my time on product. At least in my case, every time I’ve done that, that’s something I’ve regretted. And so, you just have to make that right balance. 

Alex Bridgeman: Is there any systematic way that you audit your time to see the last quarter, last month, how did I spend my time? As a data person, I feel like you could go either way and get really granular and look at your calendar and all this other stuff. But what are some ways that you audit your time and figure out what are the numbers on where I’m spending my time and how could I fix that or adjust it? 

Auren Hoffman: I personally don’t do a good enough job on that. And so I’ve tried, I’ve done a few things here and there over, let’s say, my 30 years of doing companies. And I’ve certainly tried to do better at it, but it’s very, very hard. And most of the people I know, some people I know are very rigorous and they do a significantly better job than me, but most people I know struggle with it as well. 

Alex Bridgeman: The times you remember at SafeGraph having the most fun and being the most engaged, what were some of the reasons for that time period being really enjoyable for you? 

Auren Hoffman: Well, first of all, my job is very fun.

Alex Bridgeman: Perfect, that’s great. 

Auren Hoffman: So it’s super fun. So it’s really fun and it, almost every day, is incredibly fun and interesting and enjoyable. Could it be even more fun and more enjoyable? Sure, but it’s definitely very, very- so it’s almost like, the question is almost the opposite, like when do you not have fun? It’s pretty rare. Partially, one of the great things about being CEO is you get to choose who you work with. If you’re working with people you like, you’re probably going to have a good time. You’re probably going to enjoy it. If you don’t enjoy it, well, there might be something wrong with you. You’re with some people you like, and you’re working on something that’s hard and interesting. Like, why are you not having fun? So I generally think it’s almost hard not to have a good time and have fun when you’re doing something creative, when you’re at a startup. Yeah, there are things you have to do that you wish you didn’t have to do. Like, we all have to take out the garbage and do the dishes and other types of things at our house, ah, really wish I didn’t have to do it, but that’s life. Those aren’t such bad things. 

Alex Bridgeman: Yeah, I agree. The more time I’ve spent within the podcast or in my chief of staff role, the more I see that kind of like people are the most important part of a business as such a- it seems kind of corny at first, but now I’m starting to understand it quite a bit more and it’s such a- the people you work with in your team set such a standard for what you produce and create as a team. Have you found any, like within your experience recruiting executives and recruiting folks to SafeGraph, what kind of characteristics do you look for for like, ah, that’s going to be someone that I really enjoy like creating product or thinking through sales with or designing a good finance org? Are there certain things you like to look for that indicate that this will be a really competent person who will add a lot to our team? 

Auren Hoffman: Well, I think recruiting is extremely hard. And it’s extremely hard to know. Obviously, once you’ve worked with someone for X number of months, it’s really easy to know. But during an interview process, it’s extremely difficult. Your hit rate’s only going to be so good during that process. And even the people I’ve worked with that are the best people I’ve ever worked with in my entire life, if I rank the top 10 people I’ve ever worked with in my entire life across every job I’ve had, yeah, I hired them, and I thought they were good enough to be hired, but I wouldn’t have thought they would have necessarily been like the best people when I hired them. I thought they were good enough to get hired. It’s very, very hard to know, and it’s very hard to know if that person will have like an outsized influence on your company. And you can do some things, you can do some things to weed out the terrible people. You can do a few other things to try to figure out who the best people are. And of course, some people are much better at hiring than others. I’m probably in the middle of the pack. I’ve been maybe more lucky than good. So, the people I’ve hired have been- I’ve been super lucky to have hired some just incredible people and get to work with them. One thing is if you do hire a really great person, you really have to make sure you’re treating them well. So give them more responsibility. Give them harder things to do. Help them grow faster. Great people, that’s what they’re optimizing for. Great people want to move fast, they want to take on more responsibility, they want to learn more stuff, they want your feedback, and if they’re not doing something well, they want that feedback, they want you to tell them when they could be better. They also want the positive feedback as well, so that’s really important. And they don’t want to be layered. So if they’re doing a really good job, and they might not be necessarily qualified for the role, they don’t want someone to have to come in over them to take over that role. They want to be given a shot at it, again, if they’re already in that kind of excel world. And so, until they kind of like cap out or something, or until they- so, that’s a way at least you get to keep them. You keep working with them. And so, if you happen to hire someone who’s just really great, you don’t want them leaving your company, at least not right away. Sometimes, some people are so good, eventually, they do have to go start something of their own. And then you have to support them when they’re willing to- when they’re at that point when they want to do that. The other hack is to try to hire very few people. And so, most companies, I think, probably hire anywhere between 2 to 10x the number of people that they need. So almost every company has 2x more people than they need, in my opinion. And so, you could try to spend more time hiring fewer people, giving those people leverage, adding contractors if you need them, adding APIs, adding software, adding vendors to scaffold them. You can hire better people. You could pay more for the people. And then hopefully you can potentially get a lot more done. Those people could be happier because obviously the more people you have, the more bureaucratic things there are, the more people are in internal meetings, the more you have to align everybody to get somewhere, and none of that’s ever that fun. No one likes to do that stuff. That kind of saps your energy. So if you, again, instead of being 100 people, if you were 40 people internally, it doesn’t mean you don’t have contractors, it doesn’t mean you’re saving any money, you might be spending more money because you might be hiring people on higher salaries, you might be having to hire all these contractors to scaffold them, you have to spend more money on, I don’t know, vendors and APIs and other types of software. So hiring fewer people does not necessarily mean spending less money. In many cases, it’s a wash. But it does mean you could potentially move much, much faster. So that’s also a way of getting better people. And then also you could spend a lot more time on the recruiting because if you don’t have to hire somebody, there are points in my life where I was hiring many people per week, and so you’re doing, sometimes you could be doing five interviews a day or something for months and months and months. So you just don’t have time to be in the business and you don’t have time to mentor the people you have and you don’t have time to do other types of stuff. So, if you say, okay, no, we’re hiring very, very few people, we’re only going to hire who we really need to hire or someone just kind of lands in my lap that’s amazing, of course, we’ll hire this person,, then also, that’s just another way of growing people as well. 

Alex Bridgeman: Can you spend a little more time on the leverage piece? Like you mentioned contractors or different software and tools that could help one person be as effective as two or three. Can you talk a little bit more about some of the ways that you’ve given your team leverage like that? 

Auren Hoffman: Well, the simple thing is, how much of your time is doing things that are hard for you to do? It should be very high. It should be over 50%. If it’s under 50% of your time is doing things that are very hard to do, you should try to figure out a way not to do those things. Trying to figure out a way not to do the things that are not hard to do is always hard to do. So that is an extremely hard effort to try to figure it out. And maybe there’s somebody else in the company you could help who could do it. Maybe there’s a contractor that could go do it. Maybe it’s a piece of software. Maybe you don’t even need to do this. Maybe it’s not adding enough value. Whatever it is, maybe there’s an automation, maybe there’s a ZAP you could build. There’s probably lots of different things that you can kind of think about, but you should try to be spending as much time as possible. And you’re never going to get to 100%. That’s impossible to do things that are super hard to do. But if you can get to 50, 60, 70%, 75 maybe percent of your time, well then that’s going to be great for you. You’re going to be growing. You’re going to love your job. Like doing things that are hard is always exciting and interesting. And you’re going to be motivated. And then the company is going to get the most out of you. The company is not getting a lot out of you when you’re doing things that are easy for you to do. So, the company is paying too much for you, clearly, at that point. Like that makes no sense. That’s a bad ROI for the company. So you’re not investing the company’s money well. If you make X dollars per hour, like the company needs probably 3X of that in return, as a return. So, you just kind of think about it, okay, well what’s 3X my rate? I get paid, whatever, 100 grand a year, that’s 50 bucks an hour, the company, that’s 150 bucks an hour that the company is really expending on that that they’re kind of expecting from me. Am I really giving them 150 bucks an hour for this particular job? And then you have to kind of go through all those things. So most people don’t think of themselves as a capital allocator. Like you are an investor, you are allocating capital, you’re allocating your time which is capital, you’re allocating other people’s time by sending them to do stuff in the company all the time – hey, can you review this, look at this? Now you’re allocating other people’s time. You’re spending the company’s money on different tools and et cetera. Like you need to make a return on that capital. Now Warren Buffett can only make 20% return a year over year, but Warren Buffett is investing billions and billions of dollars. And so making 20% year over year is like a momentous effort, it’s incredible. For most of us, for most of the people working at a company, you’re allocating maximum in the hundreds of thousands of dollars per year. You could make 100% year over year return. That’s not hard. There’s probably all these things you could do where you could probably spend 10 grand and that could be like easy 40 grand to the company, like right off the bat, like really quickly. So there’s lots of different ways of being able to spend money to add, and that could be, again, getting a contractor to go do something for you. There could be all these different things that could pay off really, really fast. So if people start thinking of themselves as an investor, as a capital allocator, which we all are, and really focus, okay, what am I going to- how good of a return can I get on this capital, especially since it’s low dollars, then you’re going to have just better people, they’re going to be happier, they’re going to be more successful, the company’s going to be more successful, it’s also going to allow everyone else to do better. So, there’s like a real flywheel that can happen with thinking that way. 

Alex Bridgeman: It strikes me too that that would be an effective recruiting story to tell that we care so much about your time as a new potential hire to join SafeGraph that we’re going to make sure you’re not spending your time on stuff that is not basically what we hired you to do or what you’re most engaged with and most excited to do. We’re going to try to take those off your plate. 

Auren Hoffman: It’s a very good recruiting story for very talented people. It’s a very bad story for people who don’t want to, who aren’t as excited, which is great. Another thing companies don’t do is they don’t weed out the people that aren’t going to be great fits at that company. And just because somebody- there’s people who can be successful potentially in many different companies, but not at your company, for various reasons. Every company is its own little snowflake about how it works and the culture and other types of things. So one of the things when you’re interviewing people is they know themself, but they don’t know your company. And so you have to try to gather enough from them, just because they’re really good, you don’t want to convince them to join. You want to kind of really lay it out there and get them to understand what they’re tapping into so that they have a pretty good understanding of whether they’ll be successful there. And you can look for different flags too. And of course, when you hire somebody and they’re maybe not excelling in your company, it doesn’t mean that they’re not great. They actually could be an incredible contributor to another company. And I think it’s important to help them understand that. Sometimes when people aren’t successful in a role, they feel really down on themselves. They get fired or whatever, they feel really down on themselves. But it’s actually sometimes the company’s fault. The company shouldn’t have hired them in the first place. Usually when we have to let someone go, I’ll be honest with them, I’ll say, look, it’s probably my fault, I shouldn’t have- we did something wrong, or this wasn’t right, you obviously are- I think you’re a talented person, and you could be really successful. And I’ve seen many times where people are super successful in one company, and they move to another company, and they’re not successful at all, and then they go to another company, and they’re super successful again. So, it doesn’t mean- it’s very, very hard to know offhand, and so you want to be just very understanding with people as well.

Alex Bridgeman: For your own team, and if you think about SafeGraph, if you’re not doing something to enable a talented person to be successful, are there any common reasons that you’ve found for why that’s the case, or is it purely just a mismatch of skills, talent, personality, what have you?

Auren Hoffman: I mean, are you single, are you married? 

Alex Bridgeman: Married, yeah. 

Auren Hoffman: Okay, well, before you met your spouse, were you dating other people? 

Alex Bridgeman: Sure, yeah. 

Auren Hoffman: Okay. Some of those people that you didn’t end up marrying are incredible people, and they’re probably going to be super happy with somebody else. And they probably wouldn’t have been super happy with you and you wouldn’t have been super happy with them, maybe as the long term. They’re still incredible people. They’re still great people. So for whatever reason, it wasn’t the right fit for you. And you found somebody else that hopefully will be your person forever. That is great. That’s amazing. And we all know that in looking for a spouse and a mate. We all understand that, of course. There’re millions of people out there and many of them are great people, but they’re not necessarily the right fit for me or I’m not the right fit for them. It has to be a two-way thing. But somehow, we forget that at a company. Just like, we’re all different. And people have different styles, people communicate in different ways, they do things differently, it’s okay. It’s totally fine. And so, the most important thing is you don’t try to appeal to everybody. If someone’s like, oh yeah, I like places that have a work-life balance, and then you interview somebody else like, I want to be like all in and just work like crazy, well, you can’t have both of those people at your company. That’s just not going to work. You need to really, instead of just being like vanilla ice cream that everybody kind of likes, you have to be like that weird flavor that only a small number of people love. 

Alex Bridgeman: So talking about the I want you to be spending at least 50% of your time doing hard things that you really enjoy, that sounds to me like a question that would quickly weed out whether this person is a good fit for SafeGraph or not. Are there other questions that you found also helpful in figuring out where does this person fit, whether it’s with us or someone else? 

Auren Hoffman: I think every company is different. So I think you should lead with what you care about the most in your company, maybe have some core values. And ideally, your values are different than what every other company has. So if your values are like the same thing at every other company, well, that’s not a value. Your values should be some sort of like cultural thing that makes you different, that doesn’t appeal to everybody. That’s a little bit odd or a little bit quirky or something like that, and then you should make sure people understand that, and then buy into it, and then realize what it is. And just one of the things I appreciate, there are some companies that are so well known for their values, and then people who are going there are opting in to that. If you think of like Bridgewater. And regardless, a lot of people I know, they’re like, I would never work here, that place is crazy. It’s insane. Great, great, great. They don’t even apply. And there’s a small number of people like, whoa, this is like, I love this idea, this is so cool, I’m totally into it. Great. And again, it could be like less than 1% of the people in the world could find that appealing, it doesn’t matter. Like, you don’t need that many people to find it- especially if you couple with the part that we talked about earlier, like don’t hire everybody. You don’t need to have- most people have anywhere between 2 to 5x more people than they need. So if you can hire fewer people, you can raise the bar, you can bring people into the culture and allow them to really opt in to what you’re doing. You don’t need to hire, like most companies don’t need to hire a million people into them. A few people do, a few companies do, Walmart or something, you just need to hire so many people, US Army or something, you need to hire so many people. But most of us work for companies that don’t need to hire that many people. Most companies, maybe they need a thousand people tops, most companies maybe need under a hundred. And there’s under a hundred people that look differently all over the world that are probably a good fit for your particular flavor of how you want to run your business. 

Alex Bridgeman: Yeah, absolutely. When you think about your skill set in learning how to hire and manage a team, are there any lessons that maybe were the most challenging for you to learn that come to mind? 

Auren Hoffman: Well, I think the most humbling thing about working with people is that you can make the same mistake over and over and over again. This is terrible. This is the thing you never want to do. Most people, you make a mistake, okay, I made a mistake, and then you want to learn from that mistake, and then you don’t want to make that mistake again. That would be the ideal scenario. Unfortunately, at least for me, that has not been the case. So many mistakes, especially personnel mistakes and other mistakes, I’ve made them over and over. This time it’s different or other types of things. I’ve constantly made many, many mistakes over and over and over again, and it’s extremely humbling and very, very, very difficult, and that is life. So you have to come in with like a little bit of a humble mind. You have to come in with the fact that, hey, I don’t have all the answers. And there are people who are better at hiring and are better at doing types of things that are certainly way better than I am that I’ve met. And they may have higher hit rates and they may do other types of things or they may learn from their mistakes much faster than I’ve learned. But it’s hard, and so you just have to be humble when you’re dealing with people.

Alex Bridgeman: Are there any mistakes you’ve made repeatedly that maybe took the longest to fix? 

Auren Hoffman: Well, I think probably the most, the biggest mistake is just over hiring. And so even often when I’m saying you shouldn’t over hire, I’ll probably over hire, and that is almost always a mistake, at least for me. It’s been almost always a mistake. So, hiring slower has been better, spending more time with the folks, and having fewer people doing more impactful things has generally been better and more fun. 

Alex Bridgeman: How do you figure out if a given team or person is- I assume you want them pretty close to capacity, you don’t want them overworked such that they’re going to burn out, but you want them to be kind of getting close to that capacity point. How do you figure out if someone is there or beyond it, or maybe they feel like they’re being overworked but there’s actually stuff that, kind of like we talked about earlier, that could be taken off their plate and given to a contractor or someone else? Like, what are some ways that you try to measure and figure out, is this person being overworked? Are we overstaffed, understaffed? How do you answer those questions? How do you start?

Auren Hoffman: I don’t know. I don’t know. And again, if you have fewer people, it’s easier to know because then you can be there. If you have many, many different layers, it’s hard to know. The fewer people you have, and of course, it’s easier to know when you have an IC versus a manager. And so, if you have fewer managers and more ICs, then it’s easier to know. So, there’s lots of different ways to hack it, but it’s hard. And my guess is, at most companies, most internet companies, my guess is the average person does not work very many hours, like real hours per week. So, my guess is most people are actually underworked and not overworked. But there are certain cases where it’s opposite. And at the same company, there might be like 20% of people are completely overworked, 60% are completely underworked, and 20% might be like reasonably worked or something. And by the way, sometimes you’ll see companies and they do layoffs. And the reason why, like when Facebook, Facebook did like many rounds of layoffs over the last few years, or Meta or whatever it’s called now. The reason why I think they just didn’t do one round of layoffs, one big, because I think they knew they had to lay off a lot more people. And so, they did like these kind of small cuts, and small cuts are really bad to do at a company. You want to do like a big cut and then telegraph to everybody, okay, we’re never going to do a layoff again. Meta got so big though that they couldn’t do that because they just didn’t know what people were doing. They didn’t trust the managers of the managers to make the… They didn’t know who to cut, how to cut. So they kind of lost that feel. And so they had to do these much more surgical cuts, get a little bit more in, then do a few more surgicals, then do another, and again, that’s very bad for morale. But they had no choice because they had just overhired. 

Alex Bridgeman: So what are some other ways to do- well, actually, as you were talking about that, it made me think of listening to the Acquired podcast about Starbucks with Howard Schultz, where he’s talking about- 

Auren Hoffman: Yeah, I listened to that. It was awesome.

Alex Bridgeman: It was awesome. And he was talking about meeting Steve Jobs and describing some challenges he was having with his executive team, and Steve just told him, you need to fire everyone. Go back to Seattle, fire every single person immediately. And he didn’t do that, but six months later, everyone but one had left, and he comes back to Steve at a different conference and says, hey, by the way, you were totally right. And Steve was like, think about the six months you spent and what you could have accomplished if you had just done it all at once versus these little bits and pieces just like you were talking about. 

Auren Hoffman: Yeah, and by the way, that’s easy to give as advice, and maybe Steve Jobs actually took that advice. I’ve given that advice to many, many people before. It is extremely hard to take it and act on it. It’s very easy to say, oh, you should fire all these people. It’s very hard to go do it. Firing people is terrible. If you’re firing someone, it’s really your fault. You don’t want- see then, you have to admit it yourself. And then, of course, it’s never fun. And you have to have this awkward conversation with somebody. And then, of course, like that might mean more work for you because you fired them, and now you have to jump in and do their job while they’re doing it. And of course, you have to pay all the severance. And so, wow, there’s all these things that go in to folks. And so even if intellectually you know it’s the right thing to do, it’s just like, yeah, I know intellectually I should be working out more instead of eating ice cream in front of the TV, but it’s very, very hard to go do it.

Alex Bridgeman: Yeah, your point there too of now that- if you don’t have an entire executive team, someone still has to be managing to those teams and it’s probably going to be you while you’re also trying to simultaneously rehire all of those positions. 

Auren Hoffman: Totally, totally, yeah. So yeah, they’ll try to hire behind someone’s back, that’s always a bad idea. 

Alex Bridgeman: What do you mean? 

Auren Hoffman: Well, sometimes someone’s like, oh, my VP of sales is not doing a good job, so I’m going to go hire somebody, but I’m not going to tell them while I’m hiring, it’s like that’s terrible. Like, if you want to replace somebody on your team, I think you should be completely up front with them, and you should say, hey, we’re going to replace you. Either there’s a spot for you on this team to report to that person or not, and we’re going to replace you, and that’s like coming six months from now. It’s going to take a while for us to do that. We really want you to stay during that time. We really value you, but just to let you know, and then here’s the package we’re going to put in place for you when we do hire this person and just be completely up front and honest with them. Yes, you- they might leave. You risk all these different things. So, they might be really upset. But I still think it’s always better to do that than to like do something behind someone’s back. Just like always try to be as forthright as possible with them. And then, frankly, if someone’s leaving your company, hopefully they do the same. Instead of like going and getting a job or just tell you, hey, Alex, I’m leaving your company, and I haven’t started interviewing yet, but I’m going to start interviewing starting tomorrow. I’m going to start interviewing. And my goal over the next six months is to find another job that is like this and here’s why, and then I hope you don’t fire me and I want to stay on and give my best effort. So I think it’s a two-way street. People should just be like upfront and honest with each other, and life would be better if everyone was just like upfront. Most people appreciate that, and they respect those that are up front with them.

Alex Bridgeman: Yeah, talking about advice that is easy to give but hard to implement, that certainly seems like one of them. Are there other pieces of advice you’ve given or heard from others that is easy to say but can be really hard to implement well?

Auren Hoffman: I mean, most things dealing with people are like that. So they’re just like very, very hard. And also because everyone’s so different. And people are not like code. People are a little bit more like LLMs where you could have the same input and have very different outputs. You could say to somebody, I love your shirt, and the same person, you could say something in the morning, I love your shirt, and in the evening, and they could have completely different reactions to you. And you could say it in the exact same way, in the exact same tone, and whatever, but there’s something going on in their head that’s different, that’s happening that you might not know about. And so it’s not like code. In code, ideally, you have the same kind of input, and if you put the same kind of formula with the same numbers in Excel or something, you should get the same output. And people are very different. And so they’re hard to predict what is going to happen. And so sometimes it leads to uncomfortable situations you have with people, et cetera. And I consider myself someone who has very low EQ. I would say I’m way below average on the EQ side. But I also have never- I’ve had very few issues with people. So I think if you’re kind of like just upfront with somebody and you just kind of like tell them, even if you have a low EQ, even if you can’t read the room, I can’t read facial expressions. I have a bit of like facial amnesia. If I saw you on the street, Alex, I wouldn’t know who you were. And so that’s just one of my downsides. And so everyone has different types of things. But I feel like if you are upfront with someone and you just kind of tell them that and you just kind of like tell them how you’re feeling and what’s going on and you don’t try to sugarcoat anything and then usually you’re going to- usually, it’s going to be fine. And of course, you want to treat people with respect, and so if things don’t work out you want to treat people with respect. And there’s some bad people out there, but they’re very few. Most people, in my opinion, are good, they’re reasonable, they care, they want to do the right thing, they want to do a good job, and there’s a few bad apples. But almost always, you’re going to be dealing with people that are generally good people, and as long as you treat them reasonably well, they should reciprocate.

Alex Bridgeman: Working towards close, one thing that you’re working on that I’m curious to learn more about is Flex Capital. I haven’t met a ton of investors looking at kind of startup data companies or growth data companies. What are you looking for and what types of companies stand out to you as ones you’re excited to invest in or be involved in to some degree? 

Auren Hoffman: Well, I mean, in some ways, venture capital is pretty simple, especially if you’re doing relatively early stage venture capital, which is like you’re investing in, you’re trying to invest in great people. And it’s very, very hard to know in those few meetings if that someone’s great. It’s kind of like hiring, but it’s not like- it’s a little bit different than hiring. You could unwind it later. In venture capital, once you put money in, like they have your money. So, you don’t have to put all your money in to anybody. You can put a certain percentage, but you have to have a relatively good hit rate there. And generally, my mistakes in investing have been in investing in businesses that are growing well, but where I didn’t think the founders were super high quality, but I still invested because the business was doing so well. And so now, of course, there’s been time where people I thought were high quality still didn’t turn out to have a good business. Having a good business is extremely hard. And just because you have high quality founders does not mean you’re going to be successful. But the outsized returns have generally been from ones where the founders have been just absolutely extraordinary.

Alex Bridgeman: What kinds of, if there’s- let’s see here. How can folks reach out to you if they want to learn more about SafeGraph or Flex or see if you want to invest in them or work with them in some way? Where do you want folks to be going? 

Auren Hoffman: So I spend way too much time on X or Twitter, whatever you call it. I’m @Auren, A-U-R-E-N. This is my one device. I spend just like way too much time on it. But if people want to interact with me there, if they @ me there, if they DM me there, if they just tweet or something that they think I should check out, I will probably check it out. Of course, anyone can email me as well. I probably spend way too much time on email as well, which is a little bit old school. And then, of course, like you, I have a podcast, World of DaaS, D-A-A-S, for Data as a Service. And I would always appreciate people’s feedback. You just reached out cold to me, that’s how I met you. And so I always appreciate kind of people reaching out, as long as they have- I think when you’re reaching out cold to somebody, you should reach out with like you’re trying to offer them something when you reach out cold. So, when you sent me a very interesting like great cold kind of message, I think those can work well. It’s kind of like the cold messages where you don’t really offer something that usually don’t work. If you’re offering something or you’re trying to give to them or you’re trying to show them or you’re adding some value, then those work generally really well. When I’ve done that, I’ve usually had good responses. And when people do that to me, I almost always respond. 

Alex Bridgeman: One thing I was thinking about for cold outreach is like sending a domain name. Like if you see that they run a company and there’s some variation of their domain name that they don’t own, buying it and then saying, hey, I bought this domain, I was thinking about you and I thought this would be kind of a cool like forwarding domain if you wanted to use it. That could be another like give. 

Auren Hoffman: I love that, that’s awesome. That’s so awesome.  Yeah, I mean, especially if you think it would be helpful or something like that. Or it could even be funny like, oh, well, I know you run ZoomInfo, I found ZoomOutfo, and I think it’s really funny, and I got it because it was 10 bucks, I’m sending it over to you, like, hey, I just thought that would be so hilarious, maybe it’s like a hack day, you guys could have this ZoomOutfo thing. So, it could be somewhat funny, too. But humor’s great. Like, just have fun in life. Joke around. It’s okay to joke around with people as well. People are sometimes so serious and stuff. So just like, yeah, some of those things can be good too. 

Alex Bridgeman: Yeah, I agree. Auren, thank you so much for coming on the podcast and great to meet you and chat with you a little bit more. I really appreciate you sharing your time. 

Auren Hoffman: Alex, thank you so much for inviting me.