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Oxide raised a truckload of capital a few weeks ago to fund the business for the foreseeable future. Bryan and Steve describe the raise, and Adam poses the best the best (and worst) questions scraped from Hacker News.
Previously on Oxide and Friends:
- OxF s01e25 - Tales from the Bringup Lab
- OxF s04e30 - Intel after Gelsinger
- OxF s05e24 - Oxide’s $100M Series B
- OxF s02e18 - Silicon Valley Bank with Eric Vishria
- OxF s05e28 - Systems Software in the Large
Mentioned during the show:
If we got something wrong or missed something, please file a PR! Our next show will likely be on Monday at 5p Pacific Time on our Discord server; stay tuned to our Mastodon feeds for details, or subscribe to this calendar. We'd love to have you join us, as we always love to hear from new speakers!
Creators and Guests
What is Oxide and Friends?
Oxide hosts a weekly Discord show where we discuss a wide range of topics: computer history, startups, Oxide hardware bringup, and other topics du jour. These are the recordings in podcast form.
Join us live (usually Mondays at 5pm PT) https://discord.gg/gcQxNHAKCB
Subscribe to our calendar: https://calendar.google.com/calendar/ical/c_318925f4185aa71c4524d0d6127f31058c9e21f29f017d48a0fca6f564969cd0%40group.calendar.google.com/public/basic.ics
Alright. I can hear on my headphones.
Bryan Cantrill:Oh, yeah. Adam, can we hear you? Can you hear us?
Adam Leventhal:I can't I can't tell you if you can hear me, but I can hear you.
Bryan Cantrill:Wonderful. Can you hear us?
Adam Leventhal:Yes. Yes. I can.
Bryan Cantrill:Yes. I can
Adam Leventhal:hear you.
Bryan Cantrill:Can you hear us with the correct quality of audio, do think?
Adam Leventhal:I think so. You sound great. You sound like a millennial podcaster.
Bryan Cantrill:You're not hearing a difference now. It sounds good still.
Adam Leventhal:It sounds great.
Bryan Cantrill:I think that they may have very badly broken the Discord app on Pixel. Because I so alright. So my green bubble was was moving, Adam.
Adam Leventhal:I believe you. Everyone in chat is saying that the iPhone audio sounds significantly better.
Steve Tuck:Well, there's only one conclusion there.
Bryan Cantrill:You know, I I if I'm not in a mood to defend Pixel right now, I gotta tell you. You're catching me at a good moment. Like, if you're if you're trying to sell me if this is the iPhone salesman coming here, I like, I gotta tell you, like, you're
Steve Tuck:Came at the right time.
Bryan Cantrill:You are catching me at a vulnerable moment because I'm that was a pretty frustrating experience. I would be we're gonna have to debug that offline, but that is something that has always worked. I've always come in on my Pixel. And because it's got the best quality audio, I'll have people know. Although we can we can we can do a so yeah.
Bryan Cantrill:Adam, that was a very strange moment where we could hear you and you could obviously not hear us.
Adam Leventhal:So But but welcome. I'm glad you're here. So everyone's glad you're here, I think.
Bryan Cantrill:Yeah. I'm gonna need unfortunately, now now we need Steve's face ID to unlock this goddamn thing.
Adam Leventhal:Run. Run, Steve's. Okay.
Bryan Cantrill:So I was listening to to our to the series b podcast, and I don't think I was in the litter box. Steve, you were in your car, and I was somewhere else. I was because I wonder I just wanted I didn't wanna repeat anything from the series b.
Adam Leventhal:You're describing it like a dream. It's like, where was I? And Steve, you were there, but you were in
Bryan Cantrill:your car. You were there, and were there. Talking about we were talking about verb.com for twenty minutes. Right. As one would.
Bryan Cantrill:As one would. So I was just like, okay. And Adam, I gotta hand it to you. I was as I was listening to this, I was like, okay. We're like fifteen minutes into this and we're we we are now we're talking about like us trying to get money out of verb.com.
Bryan Cantrill:And you're like, didn't we do isn't there another reason that we're here that we should talk about? So you you you did a good job getting us back on.
Steve Tuck:Hey. We're only eleven minutes this time.
Bryan Cantrill:Yeah. Exactly. None of
Steve Tuck:that conversation.
Adam Leventhal:We're way ahead of schedule.
Bryan Cantrill:Way ahead of schedule. So, yeah, I think, we don't need to talk about verb.com, the.computertld. We spent at least twenty minutes talking about domain names before we got to anyone.
Steve Tuck:Fine. I will not bring up the fact that we got inundated yet again with
Bryan Cantrill:all yet again. I know.
Steve Tuck:All the, .coms.
Bryan Cantrill:All the .coms. Yeah. So I, no. We did you get in I I got inundated I felt like I got inundated more actually with a b than the c.
Steve Tuck:I did. More more on that in the b, but, some new unlocks in the c. So, apparently, in the b, we did not qualify for the sweet salespeople. And by sweet, I mean, s u I t e.
Bryan Cantrill:S u I t e.
Steve Tuck:So we had the, yeah, Golden State Warriors suites, the 49ers suites. We did not make the Giants or the As. I guess that must be series d.
Bryan Cantrill:We did however make the Ballers. We did. We did make the bottlers. So Which is great. You know, it's looking up.
Bryan Cantrill:What did that we we've got some exciting exciting plans brewing there.
Steve Tuck:No sweet plans, just to be clear.
Bryan Cantrill:No no, warriors, niners sweet plans. That's right. That's right.
Adam Leventhal:You know? Oh, but but It doesn't
Steve Tuck:mean there's not sweet plans.
Bryan Cantrill:Yeah. We're we're not taking indie league sweet plans off the table. Not not right now. Not yet.
Adam Leventhal:We've made it to the minor leagues finally.
Bryan Cantrill:I I will thank you not to refer to the independent leagues that way.
Steve Tuck:Oh, the the one that actually did make me chuckle is along the lines of, like, major mass market sports team suites. Yeah. The the the oscilloscope and protocol analyzer companies came inbound.
Bryan Cantrill:Oh, boy. Oh, they smell blood in the water. They were like, oh, now's the time. Now's the time. Because actually because
Adam Leventhal:200,000,000 is just the price of
Steve Tuck:the Just the price.
Bryan Cantrill:A $100,000,000 series b, that's not that's enough for a lot of things, not enough to buy a scope. But $200,000,000 series c, that is, that's Yeah. Yeah. So we should talk a little bit about kinda how we we well, in terms of the announcement, how we got here. So we had did we actually close the c?
Bryan Cantrill:What date? July. July. No. The b no.
Bryan Cantrill:Not not the b, the c. Or the other b. No. Take it from the b. Yeah.
Bryan Cantrill:We closed the b in July. Closed the b in July. And then announced that we were we deliberately announced that. We had a plan. We did a PR push.
Bryan Cantrill:We I would say, can I just say this for any potential founders out there? We got kind of talked into doing a formal PR push around that funding announcement. Think was
Steve Tuck:because you need to. I mean, you need to warm up the reporters and you want to tell the big story and
Bryan Cantrill:those are always a waste of time.
Steve Tuck:It was a waste of time.
Bryan Cantrill:It I I think those are always a waste of time. I just think that, like, their time is just better. And we kinda knew it was a waste. I hate when we
Steve Tuck:Well, I mean, it has a bit of an analog to fundraising because you have to go talk to a whole bunch of potential
Bryan Cantrill:story writers
Steve Tuck:Yes. To get the to to land the one, and you have to spend hours and hours and hours. And, you know, one could argue, oh, you're warming up, like, potential other reporters who are eventually gonna write. It's a lot of time.
Bryan Cantrill:It's a lot of time. It just did not have the juice was not worth and we knew, like, it's actually what when we do the b, it's gonna be the blog entry that gets the actual traction, not the actual like, the news stories. I mean, I would trivia question, like, actually published on the b that was under embargo, right, versus publishing because they see the blog entry. And so we kind of on the c, we're like, we're definitely not doing that. Not gonna do the we're not gonna go do a roadshow with journalists.
Bryan Cantrill:But we and I kind of so we closed the sea. I wanna say it was December 23, wasn't it? Yes. Right before yeah.
Steve Tuck:It was technically the twenty fourth, but
Bryan Cantrill:Technically the twenty fourth? Look at Christmas Eve. Christmas Eve. Christmas miracle. So, we closed the sea and and had, I would say, no specific plans to talk about it.
Bryan Cantrill:We were just gonna we were
Steve Tuck:No. I mean, we again, trying to make news out of fundraising is is not worth spending much time on, and we had a bunch of other things that we wanna talk about, new product platform, customers, etcetera.
Bryan Cantrill:So in this one, we took a a actually you know, Adam, I feel that, you know, laziness being one of the the virtues of programmers. Yes. You the the lazy evaluation has got some wins. And in this case, a reporter saw the form d and reached out to us and explained that they were gonna publish on this. So we're like, okay.
Bryan Cantrill:And we talked to the reporter, had a very good conversation with but like, okay. You wanna you wanna publish about this and the because we I think we talked about the form d last time, but this is a for regulatory compliance. You because this is a what is it the actual is it the change in bylaws or is it just any fund I actually don't know what the actual kind of triggering thing is other than you have to do it whenever you raise.
Steve Tuck:You have to file it when you raise.
Bryan Cantrill:When you raise.
Steve Tuck:And you have fifteen business days Right. From the time you close.
Bryan Cantrill:So
Steve Tuck:And again, we talked about this before. People
Bryan Cantrill:sit on that and
Steve Tuck:A of people like to sit on it so they can do one of these big announcements, that is not in compliance with the SEC.
Bryan Cantrill:Well, you know, I think we kinda did a good job in that in January because the reporter couldn't believe that no one else had written about it. Yeah. He's like, I kinda stumbled on this. And it's like, no one seems to have written about it and you haven't talked about it. Like, do I actually have a scoop here?
Bryan Cantrill:Like, you kinda do.
Adam Leventhal:Yeah. I saw that form d come out and I sort of expected the hoard to like show up at our gates and they just didn't.
Bryan Cantrill:They didn't. And actually didn't get the sales hoards also.
Adam Leventhal:Yeah. Exactly. So those folks are usually much more on top of it. Like, sure of the press or whatever, but they got their hands full. But usually it's like like folks wanting the oscilloscope folks showing
Bryan Cantrill:up. The oscilloscopes, like, you know, the like the yacht salesman and and they're kind of virtual equivalents. Because, like, I don't think they understand that, like, no. No. I didn't like, that I don't have that personally.
Bryan Cantrill:That's not what happened here. Sorry. Oh, yeah. I mean,
Steve Tuck:there was also, like, the all the wealth management folks. It's like, hey. Good news. Still zero.
Bryan Cantrill:Right. Exactly. The so but we when the reporter was gonna write on it, okay. We we we need to actually well, this will be fine. We'll we'll just get our blog entry out there.
Bryan Cantrill:They were reporter was very accommodating of moving their their schedule back a day or two so we could actually get our blog entry out so that that's kind of the in terms of like why we announced this thing now, that was kind of it. We didn't really intend to make, a big funding push. And when we the blog entries out there, I mean, and I don't we you kinda push it out there and you're like, well, I mean, I will see if this is a top hacker news story or not, but it did end up at the top hacker
Adam Leventhal:news. So Come on.
Bryan Cantrill:Like, hacker I news I would be when you there's there is like this kind of protracted period where it's kinda hanging out there for like, it's, you know, fifteen or twenty minutes, and you can kind of see it having a limited number of upvotes. Gonna well, maybe this one maybe the world is just kind of sick of it. I can't you know, who I I can't really blame them at some level. It's like these guys again. Yeah.
Bryan Cantrill:They just do this. But so anyway, that's it. But I think we wanna backtrack a little bit and maybe Adam, we can explain why we raise the C so quickly after the beat. Because I think I I I think it's fair to say, Steve, that everybody, including employees, was surprised by this. I mean, Adam, I think it's fair to say that employees did not see this coming.
Adam Leventhal:No. Totally totally fair. Yeah. Absolutely. I think I I think it made sense, but but, yeah, folks did not see this coming at all internally.
Bryan Cantrill:So, Steve, why did we raise see, so we raised a $100,000,000 B in July, and here we are, not six months later, raising a $200,000,000 series c. I mean, have we not seen Silicon Valley? But no, course. We've we've seen You're saying you could raise less? Yeah.
Bryan Cantrill:I could raise less? Such a good scene.
Steve Tuck:Such a good scene. Well, we weren't planning to raise. That's for sure. And we had just gotten through what was, I mean, you know, I think fundraising in hard tech in the earlier stages is never pleasant. And, series b was terrific because we ended up with, new investors and all of our existing investors that were really excited about putting capital into the company and where the company was and where it was going.
Bryan Cantrill:I would say that one of the reasons it's not pleasant is that be because it's so enticing. I mean and I I think I'm sure we've described this over the years before, but one of the problems we have at Oxide is that individual partners at VC firms fall head over heels in love with us. And they take us home to the parents and it doesn't go very well. And we that is a long maybe or a long no. Yeah.
Bryan Cantrill:And that's what you get over and over and over again in a hard tech.
Steve Tuck:Yeah. I mean, probably so many of these firms want to be a yes, but they can't get 100% firm conviction. And it is you know it is fear of jumping the gun before a company is ready and then immediately flips to fear of missing out. It's just VCs are living in one of those two paradigms. And so series b was convincing folks that all of the the these sort of seeds we had planted commercially and the improvements operationally and the continuing growing team were we had the right ingredients and good market tailwinds and the time was right.
Steve Tuck:And, it was again, kind of convincing folks to get over the line. And we had, again, found a terrific lead investor in USIT, and I think we talked about in the previous episode just, the maybe we didn't talk about the structure of the b. I don't think we we we've never
Bryan Cantrill:talked about the structure. And I think it is actually worth talking about the structure a little bit because I also just because I think it's this is not something that people necessarily give or get insight into. And on something like this, I don't know how unusual it is or isn't honestly, because there's not really transparent there's not transparency to how the stuff is structured. So yeah, think it is worth actually elaborating a bit on the structure of the B.
Steve Tuck:So we had a number of great investors that were interested in leading the series b. And And
Bryan Cantrill:she said we wanted to raise, like, 50. Yeah. That's what
Steve Tuck:we were thinking.
Bryan Cantrill:Yeah. Yeah. Raise, like, 50.
Steve Tuck:What were aiming for is, again, we had a bunch of this kind of pent up momentum that had not yet broken out commercially, and we certainly needed a raise for runway extension. And we were looking at
Adam Leventhal:A great euphemism.
Bryan Cantrill:What a great what a great euphemism. Runway extension.
Adam Leventhal:Yeah. Like, we're not making payroll. Right.
Bryan Cantrill:We're not making payroll or
Adam Leventhal:extending the runway. Right. Right. Exact
Bryan Cantrill:because we are rapidly approaching the end of the runway. Yeah. We need runway extension. And we're still on
Adam Leventhal:the ground.
Bryan Cantrill:We're just still on the ground. We just need We need it soon. And, yes, we're we're traveling down the runway. At increasing speed.
Adam Leventhal:Yeah.
Steve Tuck:So we we and we're working with a a couple of great potential firms to lead the round. And, you know, folks are are, of course, kind of negotiating to drive to what they think is the right value for being able to strike the balance of opportunity and momentum and and and then the eventual kind of commercial acceleration. And in so there were there were opportunities that were more straightforward. And then what we ended up landing on was a a tranche structure that kind of struck the the the midpoint, sort of the balance of what we believed in terms of the momentum of the business and where we were and where one might try to price things at that exact moment.
Bryan Cantrill:So you describe a tranche structure because I think it's Sure. It it tranche is not necessarily a a term that people would be familiar with. I think they're more common in the life sciences. I don't think they're they're all well, anyway, just explain what a tranche structure is.
Steve Tuck:So basically, it takes the the the size of around, and it divides that up in, you know, I guess it could be multiple tranches. And and maybe oftentimes, life science
Bryan Cantrill:I think a lot of times it is.
Steve Tuck:Yeah. Where it is. Yeah. You know, if if and as you get to this particular breakthrough in a in a particular research area, you can kind of unlock higher values of the company and and or unlock the capital.
Bryan Cantrill:I think I think in the life sciences, it is more frequent that you're unlocking the capital. I think it is more that we it's a tranche round and like when you hit FDA approval or when you hit You
Steve Tuck:get 33%. That's right. 33%. Yeah.
Bryan Cantrill:Right. Yeah.
Steve Tuck:And so maybe it preserves a little bit of optionality from an investor perspective, but it gives that that research firm or in this case the company the ability to better themselves a little bit. That's right. And, the risk associated with that is maybe if if you are not able to hit those milestones, then you, in some cases, do not get access to capital. In other cases, maybe you end up with a value that is not representative of maybe a a point in time negotiated value. And in our particular case, we were not gonna agree to anything that was going to put at risk the capital.
Bryan Cantrill:That's
Steve Tuck:right. So we, you know, were
Bryan Cantrill:There's not gonna be a regulatory milestone. And
Steve Tuck:we had opportunities to go raise the fullness of the round at at terms that I think relatively speaking were fair. But in this structure, it allowed us to bet on ourselves a little bit and and say, you know, we'll take, a portion of the round at this current valuation. And then if we hit a milestone, then the second portion of this round will be at a valuation that we think is fair given the momentum of the business.
Bryan Cantrill:And and if you don't if we don't hit the milestone, importantly, the capital is still committed. Yep. But the valuation would be
Steve Tuck:At the original number.
Bryan Cantrill:At the original number. That's right. You and had already kinda done the calculus of like, well, the valuation that that would be non ruinous dilution. It would be like the the the company would be Be good. It'd be good.
Bryan Cantrill:It'd good, not great. Yeah. It would it would not be, but it would also you and I have always said from the very beginning, the biggest risk that we have is capital risk. Something that VCs never wanted to hear, by the way. They're like, yeah.
Bryan Cantrill:Yeah. Other risks. No. No. No.
Bryan Cantrill:No. Like, this is an important one. VCs, like, this is this is your job. This is why you're here. You did this one.
Bryan Cantrill:And it's like the I we actually did have a VC who was like, I'm just very concerned about the capital risk. It's like, you You are the capital. You are the capital. You can mitigate this one. Like, this is good other people's capital, not mine.
Adam Leventhal:Biggest lever you have by far.
Bryan Cantrill:Ugh. So but this we like that. I mean, I Yeah. I mean, it was definitely it
Steve Tuck:it was I thought it
Bryan Cantrill:was great.
Steve Tuck:I It at the time, I think we definitely like, a lot of execution to go do over the over the over the period of time against that milestone. I mean, it wasn't a lay by any means.
Bryan Cantrill:It was not a layup. I did love the fact that, like, it was definitely not a layup. The milestone that they had picked, which was a, bookings milestone by the in the 2026. Yeah. Yeah.
Bryan Cantrill:Yeah. It was like it was an aggressive milestone. Mhmm. But it was also they were kinda reasonably be like, well, this is like the plan that you have. It's like, yeah.
Bryan Cantrill:I know it's the plan, but it's an aggressive plan. Was Aggressive. Yeah.
Adam Leventhal:That that was the plan when we wanted your money.
Bryan Cantrill:Exactly. Right. That's exactly right. Now that like,
Adam Leventhal:oh, okay.
Bryan Cantrill:And I mean, it's I mean, hey, to their credit, it's hard to have a rebuttal of that one. Like, yo. No. No. I mean, of course.
Bryan Cantrill:No. No. I mean, it's it's reasonable. It's just reasonably aggressive. And but it was, I think also the thought was too that like, well, if we don't hit the milestone, if we miss it kind of grievously, it's like, well then it's like, it's gonna be kind of a, it would be very nice to have because you and I are always mindful of things that are out of our control where and it's like, it's these are long sales cycles and things happen out of your control.
Bryan Cantrill:And I mean, sorry, Steve is already getting a long stare of less like all of the memories of I mean, you literally have I mean, we had and I was just reminiscing about this with the person who was on this deal. We had a deal that was on the goal line where the person was gonna get on the call with us to explain that we'd won the deal. It's an oxide. And they're and like, I was gonna get on the call to tell you that you'd won the deal, but now I have to tell you that my entire group has been let go This morning. This morning.
Bryan Cantrill:And we've well, the like, we've there's organizational chaos here. And like, this is my last day.
Steve Tuck:That's right. Instead of cloud modernization, it is, people cut back is the new strategy.
Bryan Cantrill:Yeah. It's a new rate shift in
Adam Leventhal:Did they cut out for you guys? So just me? Okay. Lost them. Great.
Adam Leventhal:Perfect.
Steve Tuck:K. How about now?
Adam Leventhal:Perfect.
Steve Tuck:Alright. I received a phone call.
Adam Leventhal:It's good to do that, sir.
Steve Tuck:And and yeah. Well, you know what? If we are we are nothing if not transparent.
Bryan Cantrill:It's a phone call. Wait a minute. This is a phone call from USIT. Just
Adam Leventhal:conference them in.
Bryan Cantrill:Oh. Oh, got you. They're listening in here. Wait a minute. Hold on.
Bryan Cantrill:Just well, end of the podcast everybody. It's real.
Steve Tuck:Alright. Let's get the do not disturb.
Bryan Cantrill:Yeah. There we go.
Steve Tuck:We'll get
Bryan Cantrill:to make sure that doesn't happen again. Sorry about that.
Steve Tuck:Things outside of our control.
Bryan Cantrill:Things outside of our control. Exactly. Totally honest. Well, just know that there are things like that absolutely happen. And we've, I mean, we've seen that happen so many times, Steve.
Bryan Cantrill:Think this is like why you There's a certain degree to which it, you know, it's ends up being scar tissue that ends up being in I mean, you know, we don't count on anything until money is wired, basically. Just because so much has gone wrong. And there was just plenty that could go wrong, you know? And it felt like we could miss this milestone for any number of reasons outside of our control. And we wanted to be sure that if we did miss the milestone, especially with economic headwinds and everything else, if we miss the milestone, the company lives is was was our priority.
Steve Tuck:Yeah. We would have years of runway to be able to to ensure that the company lived.
Bryan Cantrill:Right. So that that was the the rationale for the for the tranche structure. Yep. And and I don't even know what you exactly call it. I have like I think it's this is an unusual structure.
Bryan Cantrill:And I I think it was
Steve Tuck:I think so too. I mean, we we found that out as we took it to the rest of our investors.
Bryan Cantrill:Yeah. I mean, it was pretty pretty quickly evident. Right? It's like, oh, oxide. Can't do anything like a normal company.
Bryan Cantrill:It's like, God, it's gotta be weird. Everything's gonna be weird with you. It's like, is there anything that's not weird with you people? It's like how we mentioned that we did it on Switch. Yeah.
Bryan Cantrill:Yeah. Stop talking about it. Just yeah. The so but it was a good structure and I I I would I would actually recommend I mean, it's something to recommend. I remember when when we were raising the sea.
Bryan Cantrill:Something to contemplate. Something to contemplate. I I we were talking about a tranche structure with folks and that got totally shut down. They're like, well, you guys are just born weird. But I think it's a good hard tech structure.
Bryan Cantrill:So we were happy with that structure. And we I mean, our job was like, go execute. Hit these hit these milestones and, you know Well,
Steve Tuck:it should be said, I mean, we we were planning on raising 50. We ended up raising a 100. A 100. And so it was kind of you know, we had thought about it as effectively like $50,000,000 series b and a $50,000,000 series c sort of combined.
Bryan Cantrill:That's right.
Steve Tuck:And, so we got the got the round done and then it was on to execution. And and we had had in the kind of previous months, just a bunch of building commercial momentum and in this particular domain, you you've got, you know, somewhat longer sales cycles where folks are evaluating a material strategic technology partner and, and then they have to go through kind of the validation process with one before they're gonna contemplate many. And so we've been planting a lot of those seeds over the previous twelve months and, again, had confidence that that things were building, but, had to go execute. And suffice it to say, over the next several months, a bunch of those things started to blossom.
Bryan Cantrill:Yeah. I mean and, you know, it is important, like, a bunch of things I mean, we always think of the things, like, that are out of your control that go against you. There are also things that are out of your control that break in your favor that are also, you know, just the the right person comes to the right organization at the right time or the right person happens to have been a fan of the podcast or you those things that are just kind of like happenstance at some level. And we had a we just had a bunch of those break in the right direction.
Steve Tuck:Yeah. Which was fun because we quickly got to and surpassed said tranche milestone. Yeah. And along with that, of course, is a bunch of renewed investor interest,
Bryan Cantrill:which was it was really sad I mean, when we blew that milestone out, and you're like, we're calling the rest of the capital. I'm like, oh, right. I guess we are. That's great. Right?
Bryan Cantrill:We've the, so we we ended up blowing that milestone out much, much, much earlier than we than we thought we would, which is great, and was really, that was really satisfying.
Steve Tuck:And again, back to the flip, it's like, oh, gosh. Things are so close. You know, if just there was one more enterprise deal, if there was just, which it never is just one. But once we had a number of things start to break, very quickly, it went to like, you know, greed, you know, fear of missing out. I mean, because because I mean, this is the this is the world of venture capital is that you wanna put as much money as you can behind, companies that are successful.
Bryan Cantrill:Yeah. And so I think this is a really important point, Steve, because I think that that this is the way the venture model works is you put a bunch of small bets out there and you spread them around. You've got portfolio theory. I'm gonna put a bunch of, like, little bets if they're precede. And the bets are gonna get gradually bigger and bigger as the stage advances.
Bryan Cantrill:But when you have a company that and so you you would think like, oh, okay. I get it. Like the model is you put a bunch of bets out there, and one of them is a winner, and the one that's a winner is enough to pay off like the ones that aren't a winner. Most of them are zeros. And the one that is, you know, the the one that is a non zero is a non zero to the point that it can make up the others.
Bryan Cantrill:And that's true, but they're and it's definitely true, but there's an asterisk on it, which is when you do have a winner, you wanna own as much of that as possible. And that the when you are investing in these companies at an earlier stage, you're not just it's not just the investment. There's some optionality that you're preserving for yourself that you know as an investor, hey, if a good partner, this is like I'll I will be in a great position to really be able to put a lot more capital into the company. And we had some investors that like really they were very explicit about that being like, this is why we we are investing because we wanna be able to put in more capital That's right.
Steve Tuck:Later. And that and that, you know, I would I would describe that a little differently than a a bunch of investors that have been kind of hovering for three years. Oh, just crash landed back in. Yeah. And that's the you know, I think as as compared to existing investors who the reason that we have them on the cap table is because they are long term investors and they were not only comfortable with but excited about the proposition of building a company over, you know, ten years.
Steve Tuck:And, and and so along with a lot of the the these other investors that again had kinda like done drive bys at at the series a and the series b, it it was it was exciting to then contemplate what it would look like if we were to go do a series c and be able to do that, potentially with with investors we have around the table.
Bryan Cantrill:Yeah. Exactly. And it was actually a very funny moment when, when one of our investors, you know, we we kind of closed the b. I mean, some level of coincidence. I mean, not totally coincidental.
Bryan Cantrill:But we we basically made our VCs look like absolute geniuses is what I'm trying to say. Like, the the the b closes and then, like, the company very shortly thereafter is like, wow. Okay. This is like you've got all of a sudden a lot of, like, long and these were, like, long percolating things Right. That kinda happened to hit at once, and we ended up with a lot of traction.
Bryan Cantrill:And so the our investors look like absolute geniuses, which I I think is kind of fun. I did enjoy that. Yeah. Definitely. You know, making them, you know, their secret was safe with us.
Bryan Cantrill:I mean, I guess we're I guess we're kind of, you know, calling them out now.
Steve Tuck:But the I I Not so safe.
Bryan Cantrill:And I'm so safe for the secret. They are geniuses. We didn't make them just look like geniuses. Do you know why we made them look like geniuses? Because they are geniuses every single one.
Bryan Cantrill:But I
Steve Tuck:will I I mean, I will say whether it was outside capital or, you know, in conversations about how we should further capitalize the business internally. You know, that there were there were a number of things that we needed to go stress test in the business first. And, you know, not to say that we were not operating a capital efficient business before, but as we were scaling up these commercial opportunities, we were picking kind of speed, and obviously quality over unit economics or cost.
Bryan Cantrill:What do you write
Steve Tuck:right now? We were prioritizing investing in things that would help us go faster, scale faster, ensure we had allocation and inventory. So couple of examples, I mean, were wire transferring money upfront to be able to get access to, parts of our supply chain even before the DDR five crunch.
Bryan Cantrill:Yeah. And important to say that like at no point where we I mean, one of the nice things about being a hardware company is, like, you can't really sell it at a loss. Like, that's not not only is that not like, you can't even do that once. Unlike, you know, I think there's a lot of VC backed companies where you can kind of have a kind of a loss leader for market positioning. You really can't do that here.
Bryan Cantrill:So it's like when we say we hadn't worked on the COGS But
Steve Tuck:even if if you increase volume.
Bryan Cantrill:That's right. Right. So But
Steve Tuck:I mean, first first things was like just supply chain management.
Bryan Cantrill:Supply chain
Steve Tuck:management. You know, we were we we had interest in raising more money and just said, look, we we have some things that we have to go get tightened up in the business that include thinking about how we negotiate better supplier agreements so that we are paying in arrears to then also think about inventory carry. We have a contract manufacturer. We were doing all first party procurement and and when you're doing that, rather than leveraging their procurement teams and them holding inventory on quarterly turns. Yeah.
Steve Tuck:And just describe that
Bryan Cantrill:a little bit. What is what is first party procurement and why is that why is that an impediment to kind of your best possible cogs?
Steve Tuck:Yeah. And and, definitely an impediment to your best possible cogs. And and so the reason for that is that you are paying dollars upfront for materials that you are then building your product with, that you are then selling to your customer, and then they are paying you. And you have to you have to to cover that whole carry from the time that you buy those materials to the time that your customer pays you for the product. And, so when one is working with a manufacturing partner as part of that agreement, you negotiate terms.
Steve Tuck:It says we will, carry inventory for x amount of time, and they normally wanna do quarterly turns so they can kind of cycle those things off the books. And as long as you are meeting your demand schedule and you are buying from them effectively that that fully built out product in time, they will carry inventory for all those materials. So that's great. I mean, that's that's hugely important for cash flow
Bryan Cantrill:conversion.
Steve Tuck:And so, as as you could imagine
Bryan Cantrill:It should be said the cash flow conversion. This is the I mean, as we've said, there's like for any given company in our kind of shared past, there are things we really wanna emulate. And this is something out of Dell that we
Steve Tuck:Oh, I mean, it was it was held up that the negative cash flow conversion, Dell and Costco are kind of the two companies that are the hallmarks of this. But Dell would negotiate terms with their suppliers that were not net 30, but more like net 90. And their suppliers would rent space on their factory floor so that they would not buy that hard drive until, you know, you had ordered the laptop, paid with a credit card so they already had your cash. Then someone walked down, a line worker walked down and like scanned one of the hard drives off of Western Digital's little island of real estate in Dell's manufacturing factory, and then it would go out the door like six hours later.
Bryan Cantrill:Amazing.
Steve Tuck:So they would have, you know, you know, a hundred days like throwing off cash in that whole purchase cycle, which is crazy. So I think we're we're a long
Bryan Cantrill:way through that because we're we're doing
Steve Tuck:the opposite of that. Right? Right. Like, we're wire transferring $7,000,000 to buy parts and then consigning it at our manufacturing partner. Right.
Steve Tuck:And so when I first went to kind of test this for operations team, you can imagine, you know, CJ and team are are and and Kirsten and and folks, I'm like, hey. Why aren't we leveraging our manufacturing partner to do procurement and be able to pick up that inventory carry?
Bryan Cantrill:I can see this is a bad time. I'll come back later. And they were like, yeah. No.
Steve Tuck:No. No. Totally. Yes. Why don't we do more of that?
Steve Tuck:That sounds great. I'm like, uh-oh. And they're like, by the way, are you okay if we have some real load bearing projects that are trying to ship in December and, you end up with a four month slip because there was a particular SKU that was incorrectly ordered by an analyst and, and and I'm already just backing out of the room.
Bryan Cantrill:Right. So,
Steve Tuck:you know, what you trade in a little bit and if you do it well, like, you can solve for both of these, but there is a certain amount of, expertise that you gain when you are dealing with procurement first party for what is a a broad bill of materials over years and, versus you are training up another procurement team to go do this. And so this is that kind of like balancing where we want to go from all first party procurement and consigning, which is very capital inefficient, but it is kind of order fulfillment, high confidence.
Bryan Cantrill:High confidence. Right.
Steve Tuck:To starting to blend that out. So we had to figure out, like, what is the percent that we want to effectively outsource from a procurement perspective and gain the benefits of inventory control, management over say ninety day turns, versus what wanna keep first party. So step one. And we don't need to talk about whether we should raise more money or not before we figured that
Bryan Cantrill:out. Right.
Steve Tuck:Exactly. Wildly capital efficient there, inefficient. We we can go figure that out first. The second piece after or the third piece after supplier term negotiation and then inventory negotiation is debt. Right.
Steve Tuck:Because when you are buying a bunch of materials for high confidence customer orders, which means creditworthy customers and high confidence of fulfillment, this is what debt is great for.
Bryan Cantrill:And the debt guys do love us.
Steve Tuck:The debt guys love us.
Bryan Cantrill:Because we make a physical stuff. That's right. When they were looking at the kind of because they get they get to actually collateralize it against the actual the physicality of it. And we did try to explain to them. It's like, you know, I'm not sure what if a gimlet is gonna be, you know, in this kind of first case of, you know, you're kind of like reclaiming a an oxide compute sled, like, not really sure, but the bones are worth it.
Bryan Cantrill:But you know what? I'm let me not get
Steve Tuck:They're like, Gimlet, pal, you know, there's DDR four in that thing.
Bryan Cantrill:That's right. Yeah.
Steve Tuck:Right. Like, just like I'm gonna go strip the copper out of that.
Bryan Cantrill:Right. I I guess that's it. That's it. Yeah.
Steve Tuck:Yeah. And and so it's not to say that you want to fulfill all of this with debt, but you this is what it is built for, is being able to borrow money and borrow that money for the period of time between when you have to buy the materials and or pay your manufacturing contract manufacturing partner, for the inventory turn to when you are gonna receive cash from the customer. Yeah. And that's how you get to, like, a a zero cash conversion cycle, and and, you know, maybe even push into the negative. But, debt plays an important role in that.
Steve Tuck:And we really had not, kind of productized any one of those three areas. And so that was you you know, while we were having conversations about whether we need to raise, which we didn't think we did, it made sense to go stress test that stuff first. And the conclusion of all that was we definitively do not need to raise.
Bryan Cantrill:Do not need to raise. So then the question was unfortunately is catnip to to venture capitalists. Like, that is like, we do not need to raise. And by the way, like, here's our quantitative model Right. Showing just how much we don't need to raise.
Bryan Cantrill:And also, we've got all this business traction. So why would we raise? I mean, that is basically an aphrodisiac for venture capitalists.
Adam Leventhal:Well, especially with their asymmetric knowledge. Right? They
Bryan Cantrill:know this.
Adam Leventhal:Right? Our insiders know this, but like the rest of the world doesn't.
Bryan Cantrill:That's exactly right. They know this, but the rest of the world doesn't know this. So this is like in like, you this is where they have to actually maximize their ownership to make their model work. And there was a very funny moment when investors like, we have to talk about your capital needs. And Steve's like, I think we've pretty definitively showed that we have no capital needs.
Bryan Cantrill:And and there's a little bit of like friction. And then she's like, think you mean your ownership needs. It's like, yes, yes, yes. My ownership needs. Yes.
Bryan Cantrill:I thank you. And it was just like, it was a good like conversation with your doctor. You know, we could just like, look, I I'm I'm your doctor. We can we can just we can really just talk about it, frankly. And we're fine.
Bryan Cantrill:Like, we we get it. Like, we're not we're we understand the way the model their model works. And actually, that we've got some things to gain from that too. I think that this is where you kinda get to like, okay, so why they've got ownership needs? Fine.
Bryan Cantrill:But we actually don't have capital needs. So why would we raise? Why would why not just like, if you we don't actually need it, why raise it at all?
Steve Tuck:So the, couple of things that we were we were chewing on when we were contemplating this. And, you know, one one of them still, even if it's kind of a a lower concern than it was in the b, is just make sure we can prepare for stormy weather.
Bryan Cantrill:You know? A lower concern for you. I mean, I feel that's that's never a lower concern. That is like I am just like Then
Steve Tuck:the b. I think I think the b was like, okay. We gotta we gotta brace for storminess.
Bryan Cantrill:Yeah. Yeah. Brace. Yeah.
Steve Tuck:And sure. Maybe it was a hangover of that same, fear of storminess, but I think, like, it was a consideration, not the consideration.
Bryan Cantrill:I just think the .com bust is never gonna come out of me. Deep. So it's deep deep no. It really is. It is like I because don't I think for I mean, must be for you as well.
Bryan Cantrill:It's like there were so many things that like so many things that couldn't happen that did happen in the .combust. Yeah. And it it is just never going I mean, in fact, I've always been concerned that it would cast a shadow in the wrong way, and we wouldn't take the risks we have to take because I would be too risk averse from the dot com bust. But it Plus there there's so
Adam Leventhal:much that that rhymes with the dot com bust right now.
Bryan Cantrill:Yes.
Adam Leventhal:And so many economic conditions conditions and, things that don't make sense, like like tariffs being illegal and going into effect at the same time. I mean, I just think there's so much uncertainty.
Bryan Cantrill:In addition to our finding that World War two is stressful, we have a we there's an uncertain climate. Yes. It is a lot of uncertainty. And So that was one piece of it.
Steve Tuck:Yeah. I think the but but, you know, one of the bigger reasons provided that it kind of made sense from a terms perspective was we were no longer in this experimental phase with large enterprise customers. Right. And and I think kind of like you saw in the, you know, kind of 2010, 2011, 2012 as folks had begun, like, trying public cloud and then being, you know, starting to determine, like, this is actually a substrate that I could depend on more and then that, and then what does this mean if I'm gonna actually start adopting this? Like, what what's the longevity of service or, you know, how do I think about architecturally?
Steve Tuck:We had started getting to phases with customers where they were not thinking about, like, okay, well, what if we quadruple the size of our pilot? And and we're really starting to ask questions of like, what are the next thirty six months, forty eight months, sixty months look like going from a more traditional substrate that we have been running on for the last ten years to one that is much more modern and cloud first. And oh, wait a minute. That all rides on top of oxide. And Yeah.
Steve Tuck:How do we have the conviction and know that they are going to be here in not just three years, but five years, seven years, ten years. And so, I mean, put simply, one big benefit of raising is to give our customers and future customers the confidence that we are gonna be here for a very, very, very long time, and that we're going to, be building oxide in the same way that we have been doing for why we started the company, why we've been kind of shaping things the way that we have, for many, many years to come. And we've lived it. We've lived the byproduct of companies that have been in situations where they had to contemplate acquisition. And and and as customers ourselves and then and then as an acquired company in in a past life, and having had those conversations with the customers of, like, what does this mean?
Bryan Cantrill:And I mean, just bluntly, I think you're gonna be bought by Dell. I'm worried you're gonna be bought by Dell. I'm worried you're gonna be bought by HP. Yep. I'm worried you're gonna be bought by IBM.
Bryan Cantrill:I'm worried you're gonna be bought and and worried you're gonna be bought by EMC. And for every one of these, like, we know all of the stories and we've seen it over and over and over again, where companies lose their independence and customers suffer as a result of that. And I think it was, when we were doing the analysis, the financial analysis of like, alright, what does this mean? It's like and the person we had doing the analysis, who's outside of Oxide was like, would so just so you know, like, if you were to raise a series c, it would make an acquisition much more unlikely. Like, great.
Bryan Cantrill:That is is great because we that that is not the objective of this company is not to be acquired. It's not to be a Because we know what that means. And that's not what we're doing. We're a big independent company. But there was In order to be able to do that though So that was a big reason to do it.
Bryan Cantrill:But we had to be able to do it in a way that I mean, when you raise this kind of capital, and I think there were a lot of questions out there, Adam, about like, what are the VC strings attached? And that's
Adam Leventhal:a good
Bryan Cantrill:question to ask because like it's yeah. There are strings attached. And so what kind of strings are typically attached, and how do we avoid those?
Steve Tuck:Yeah. I mean so typically, when you're raising a a a large round and you have a large lead investor who's coming into the round, which was New
Bryan Cantrill:investors. Yeah.
Steve Tuck:Yep. In the series b. Yep. We had a a large new investor come in. And, one of the things that changes is, board dynamics and composition because you have a new board member coming in.
Steve Tuck:And in some circumstances, maybe if you've got co leads, maybe you have two new board members coming in, and that then kinda changes the dynamics, changes the voting structure, changes a bunch about, can change a bunch of how the company is governed.
Bryan Cantrill:Yeah. And the board of directors close controls the company,
Steve Tuck:just
Bryan Cantrill:to be clear. Yep. Like like, you report to our board.
Steve Tuck:That's right.
Bryan Cantrill:That that is ultimately makes the end. So, it's a very big deal. Like, it's a big deal. What does the board structure look like is a very big deal. And there's a big difference between a board member and an observer.
Bryan Cantrill:The you know, and a board observer is allowed to be there in the board meetings, but, that board can go into closed session. The board observer is not is and that that observer does not have a vote. They they are truly an observer.
Steve Tuck:Now I would say that we have been extremely, extremely fortunate in that our board is, not in what? What are you laughing at?
Bryan Cantrill:I hate like, extremely fortunate is kinda like almost like not the words. I I mean, no. I mean, it's like what what's luckier than that? Yeah. No.
Bryan Cantrill:Right. I mean, if if you told us when we started the company six years ago that you are going to you will have raised your series c and have a four person board of which you two jokers, Steve and me, will be half of the board.
Adam Leventhal:Yeah. Almost $400,000,000,000 in and four board members, two of whom are the founder, CEO, and CTO. That's that's unique.
Bryan Cantrill:It is unique. We basically jumped from a building and lived. I mean, that's It's when we started the company, my belief was when we actually hit the series a, you and I would no longer control the company. I mean, it's like, that's just the way it works. Like, if you don't want to do that, don't don't have a venture funded business, don't go into solving hard debts.
Bryan Cantrill:It's like at some point, like people are gonna invest capital and they're gonna And I think that we had an advisor to the company because you and I have always, it's always been very important to us. The advice of the company, think had some good words just like, just so you know, there are in most companies, the founders are not in mathematical control, but that doesn't mean you don't have a huge amount of influence over the board. And so that's kind of what we anticipated. I when we started the company, I thought
Steve Tuck:And you and and therefore, you wanna make sure that you pick your investors carefully. And you gotta make you you wanna make sure that you have got as close to you you know, you want as good alignment as you can get. And so that means, you know, making sure that your whole process of fundraising is like trying on working with someone and they're trying on working with the founders. And you want to to understand that this person believes in this big opportunity and the mission and that it's not always gonna be easy and it's gonna take a long time. And and so long time now.
Steve Tuck:And and we got very lucky.
Bryan Cantrill:Oh, I'm just being reminded like when sometimes we would tell VCs that and they would get more interested in oxide, not less for the wrong reasons.
Steve Tuck:I know. I
Bryan Cantrill:know. Because they'd be when we tell them like, no, we're going whaling. Like, I wanna go whaling. It's like, no, no, no. We're gonna die at sea.
Bryan Cantrill:You don't wanna no.
Steve Tuck:You actually don't wanna go whaling. But we, you know, we and and you these relationships end up being extremely, extremely important. And being able to have hard conversations with each other and and, take in new information and kind of process that and figure out what what that means for what's next for the company. And we, you know, I think along the way got got very, very lucky with investors on the board that had the same view and same conviction that we did.
Bryan Cantrill:I you know, it's it's funny because we can't think about that. Like, we got lucky that it was just hard enough to raise. Because, you know, if it had been easier to raise Yeah. It would have been easier to have investors that didn't have quite the conviction. Totally.
Bryan Cantrill:Or if it had been a so It shook out a bunch. Shook out people that that would have been would have been poor fits. Yeah. Yeah. I mean, the thing that's that's kinda wild is, like, that we
Steve Tuck:I mean, we just there's so many times we're thinking about, like, just some some pretty big waves that we were that we were in over the last couple of years and just some investors that were really close that would have just been hurling over the side.
Bryan Cantrill:Oh, yeah. No. Yeah. Yeah. No.
Bryan Cantrill:Not ready for this. Just not ready for this. And because they're not ready for the levels of of technical risk involved. And, you know, we've always been very transparent about we've always been let let the, let the passengers know exactly the waves are going through. But the we we so we've gotten, I think, really, really lucky.
Bryan Cantrill:And you and I can There are lots of investors that would have not been But we kind of self selected for the ones that are been really durable, which has been great. We've been very, very, very fortunate in that regard. And then So the ability to raise that kind of money with
Steve Tuck:that being the same
Bryan Cantrill:structure and not having to go to new investors. Yep. That Again, keeping
Steve Tuck:it with a crew that has these large customers' best interests in mind.
Bryan Cantrill:I mean,
Steve Tuck:that really is what it comes down to. Yes. Is Yeah. You know, having investors that care about your customers and wanting to build and grow long strategic relationships with those customers, which leads to a big company and a durable company. And, you know, you've got not all investors are equipped the same way to do this, but investors that are excited to put more money in the company as it gets further along in its life.
Bryan Cantrill:And that that, you know, that those are, you know, we're fortunate. And so so that was the good news. Now the series c raising it did have challenges that we didn't have in the series b. And it was challenging for some different reasons, but I think it was actually for us both. I mean, it was there were some challenges.
Bryan Cantrill:These are now these are I wanna be clear. These are good problems
Steve Tuck:to have. Still problems.
Bryan Cantrill:But they are still problems. And so because as the round starts to come together, we we don't just have sufficient investor interest. We really have too much investor interest from our insiders.
Steve Tuck:And and outside capital.
Bryan Cantrill:I mean Outside capital.
Steve Tuck:Yeah. I mean, it it was there was definitely a lot of interest. And and, again, it was unfamiliar territory, in that, I think, we'd had a lot of interest, but it was a lot of window shoppers.
Bryan Cantrill:It was lot of window shoppers. Yeah. And Versus like Apex Predators. I I mean that, you know, the I mean that with all professional courtesy. That's right.
Steve Tuck:But it it yeah. It was it was definitely, in some ways, a less fun round even if not quite as stressful as the series b and the series a. Because the series a and the series b, you're kinda like getting all parties over the line and, there it's a little bit more little bit more of a celebration. And when you have a bunch of firms that want to put as much money as they can into a particular round, you kind of have disappointment to call around. Yeah.
Steve Tuck:You have a packing problem and and it's it's really hard and especially when you've got investors that have been, you know, with the company and and, have been investing with the company when things were not as, as positive. Yeah. You know? And
Bryan Cantrill:And we've had some investors that that deliberately put in a smaller amount in earlier rounds because they wanted to be able to invest more in later rounds and have been in the interim, have been extremely helpful. And we really wanted to reward those folks. I mean, we wanted those folks like Absolutely. And so it was really important. But like, we don't I mean, I would say we don't control it, but like at some level, we are trying to we're trying to negotiate kind of a compromise because there is more interest that can really fit.
Bryan Cantrill:And then everyone's like, well, why don't you just can't you guys just raise more? So Steve, don't we raise which we definitely heard plenty, especially as we're trying to get everything to fit. Like, why don't you guys just raise just raise more? It's like
Steve Tuck:Which again is why don't you sell more of the company?
Bryan Cantrill:Right. And it's like we already that's kind of like we already were kind of at the outside of what we wanna be raising right now. We did not wanna be. So it on the one hand, it would and also, it just felt like it would have been if we raised more, we would have had the same packing problem.
Steve Tuck:Oh, for sure. Why don't you raise just a little bit more?
Bryan Cantrill:It's like, well, okay. If you're gonna raise a little bit more, then I actually want a lot more. You're like, okay.
Steve Tuck:Don't you believe this is gonna be just a gargantuan? Why would you slow it down by any means?
Bryan Cantrill:Right. And then another person another reasonable thing. And Adam, this may be your immediate question. It's like, okay. Great.
Bryan Cantrill:Like, raise the price, which is reasonable, but you can't do that. You can only like, once you have a round coming together Yeah. It's really tough to go back and I mean, there's some things you just don't wanna renegotiate because you run the risk of the whole thing collapsing, and we don't want that. We did wanna raise it.
Adam Leventhal:And there's an element of good faith there. I mean, can't sort of shop it around and then say, actually, you know, what if it's 10% more? Because there's
Bryan Cantrill:That's right. That's right. And we, you know, I think we, you know, we talked about this in our episode with Seth where we had a firm walk away from a signed term sheet and they tried to reprice us and it was dirty. It was gross. They they tried to reprice us because the climate had shifted in their favor.
Bryan Cantrill:Yep. And we didn't wanna like yeah. The climate was shifting in our favor. But, yeah, Adam, you're right. There's a good faith aspect of this.
Bryan Cantrill:So we like, no. We're not raising more. We're just gonna have to like someone some of you are gonna have to be disappointed. Okay? I guess all of you are gonna have to be a little bit disappointed.
Bryan Cantrill:And I mean, Steve, you and I both like love our investors. So it was painful. All of them. Yeah. To to disappoint folks.
Bryan Cantrill:We really, really did not wanna disappoint folks.
Steve Tuck:It was tough. It was definitely definitely harder than the series b in that respect.
Bryan Cantrill:In that respect. And also then the other thing that so we the other thing that made it challenging is when investors invest, they they often, maybe always, but certainly very often have pro rata rights. And pro rata rights give you the the right to maintain your ownership percentage of the company by investing as time goes on. And there's a bit of a like, when you've got an oversubscribed round, you know, what are people gonna do? There are people out there with pro rata rights.
Bryan Cantrill:And I think that there was some conventional wisdom like, oh, don't worry. Like, they won't take their
Steve Tuck:pro rata rights. Sharp elbows is just a just a myth.
Bryan Cantrill:Yeah. Sharp elbows is just a myth. As it turns out, like, I don't maybe this because these folks haven't been around a company that it's like, no. It's like, no. You should just assume everyone's gonna take their pro rata rights.
Bryan Cantrill:And that made it uncomfortable. You know? It's like people are like, yeah. Sorry. I've got the right to do this.
Bryan Cantrill:So, I wanna invest a lot more. I know I've been you know? And it's like, okay. So we gotta find a way to make it all work. And which I mean, and that was on, I mean, that was a lot of shattered diplomacy from you Steve to get it all to fit.
Bryan Cantrill:But I think you succeeded in that everybody was a little disappointed. Exactly. Good job. Job well done. Job well done.
Bryan Cantrill:Everyone is little bit disappointed. But so And then we closed, which is great.
Steve Tuck:Closed and
Bryan Cantrill:It closed without So we did not add any new investors, did not add any board seats, and, put a whole bunch of capital into the company, which is a lot
Steve Tuck:And it mean it had the effect that we were hoping for, which is while we did not wanna go spend a bunch of calories trying to come up with a big fundraising announcement. Yeah. All of our customers, all of our prospective customers, our partners were like, wow. That's great. That's that's big news and, and and, you know, gives them the confidence to just
Bryan Cantrill:lean in further. Yeah. Which is great. And also, I I think have you found it also I have found I mean, this is okay. This is, maybe I shouldn't be saying this in a a rather public spot.
Bryan Cantrill:But the I just feel like for so much of the company, it's like, this might work. This might work. Okay. Yes. It seems like increasingly likely this will work obviously.
Bryan Cantrill:But I feel that especially with the series c, having absolute confidence that we we are absolutely gonna be here for a long time. Yeah. Like the podcast has been renewed for many, many, many seasons. Kind of changes like the disposition about the way we handle ourselves, the way we kind of consider decisions, the way we consider potential customer conversations. We talk to a potential customer who's like, look, I love you guys, but it's like, I'm not gonna be at a decision point for like eighteen months.
Bryan Cantrill:It's like that, there was a time when that would be like, no, no, caloric budget dictates that we like, we'll just come back to you later. And now that's a conversation that we can, like, actually, we we can cultivate over time. It just feels like I felt that people have asked us like, is this are you does this stress you out? And the series c lowers my own personal stress levels quite a bit. Is that?
Adam Leventhal:Yeah. How would the opposite be true? Like, if because it raises expectations or something?
Steve Tuck:I think so.
Bryan Cantrill:I think so. I might that's a good question. Yeah. I think so. I think it's because it I also think that, like and this would be reasonable.
Bryan Cantrill:I don't think people realize, understandably, when we say we didn't need to raise people are like, okay, that's obviously just a fib that every startup says, which is what I used to believe. I used to think that any company saying we don't need to raise them like, it's always a lie. It's definitely not always a lie. And I remember talking to, Tom Preston Werner about the GitHub. When GitHub raised, and they said we don't need to raise, I'm like, it's a lie.
Bryan Cantrill:As it turns out, it was not a lie. They really did not need to raise when they raised. And Adam, do you know the story about the their term sheet?
Adam Leventhal:No. Oh, was it, like, fill in the blank or something?
Bryan Cantrill:It was fill in the blank. Yeah. They wrote the term sheet. They wrote the entire term sheet with the only numbers that you could fill in being capital in and valuation. And they sent it out to to Sandhill, and they said we're not taking any meetings.
Bryan Cantrill:And I'm like, it's pretty strong. Like, damn. That's really don't need to raise. That is and even Tom was like, that was probably a bit much. We we got we got lucky.
Bryan Cantrill:But the and we so, you know, that's there are companies that don't need to raise. And so I think that, Adam, I think where that's coming from is I mean, when Docker raised that kind of a money, would be like, you guys should be stressed out. You don't have like a revenue model.
Steve Tuck:Like, that's like,
Bryan Cantrill:you know You have nothing figured out. Right? You have nothing figured out. And you've just like poured a ton of fuel onto like a fire, frankly. Yeah.
Bryan Cantrill:It's like, yeah, you, so I I I think that, that's where that question is probably coming from. But I think in our case, it's given us just a lot of confidence.
Steve Tuck:Well, I think having to go through the process of, again, sort of stress test in the unit economics of the business before doing it relieves some of that stress because you could raise a bunch more money and then be concerned that you have got a bunch of inefficiencies in the business that are just gonna get kind of propagated everywhere, and you're gonna blink. And two years later, you're like, wow, I need to go raise again. And Yeah. Having gone through that, I think gives us the confidence. Now, we still we're still being very thoughtful about how we spend and where we spend.
Steve Tuck:But
Bryan Cantrill:And my anxiety is all shifted to the problems that we have in terms of like, we gotta make a bunch of these things. That's right. That'd be all
Steve Tuck:that's all of the operational challenges. Scaling manufacturing operations. I mean, we we are
Bryan Cantrill:hiring across to
Steve Tuck:do and every single team. Yeah. It was kind of funny. I was I I saw you had a post right before we raised the b where you were like, god, nine open racks on the career pages. Like, that is more than double we've ever had before.
Steve Tuck:Yeah. And I think we're at, like, 16 now. Yeah. And that and multiple I mean, would hire multiple people for a bunch of those roles. So, yeah, I mean, I think it just gives us the confidence to, to continue growing the team and certainly to make sure that we are investing in all the things, looking at you DDR five, that are, you know, have have started to get probably expensive and just investing in in inventory manufacturing operations, test equipment,
Bryan Cantrill:scope scope providers. We maybe we'll need a series d after all. But yeah. We can actually for those who don't know the the the test equipment, although actually d d r five is beginning although, you know what? That test equipment has d d r five in it, I'm sure.
Bryan Cantrill:That we it's gonna get yeah. Like, the it is gonna be get multiplied by itself. Yeah. It's it's it's gonna be an excuse for that to get much more expensive. So, Adam, I know that was but that that was way too long for context.
Adam Leventhal:No. Great context. That was awesome.
Bryan Cantrill:But but who doesn't
Adam Leventhal:love, tranche talk?
Bryan Cantrill:Who doesn't love tranche
Adam Leventhal:talk?
Bryan Cantrill:It's a tranche talk. You definitely I love a little tranche After After hours tranche talk?
Adam Leventhal:They they tranche talk. Hell yeah.
Bryan Cantrill:Absolutely. So so we announced and then so I am we get a blog entry out there. And then, Adam, I I feel we we have to do the the the Passover tradition that Yes. We talked about this before that like I mean, Hacker News, if you're listening, wise child, wicked child, simple child, the child that doesn't know how to ask, please let us mark Hacker News comments in this way.
Adam Leventhal:The the I mean, I don't know I I don't know if you read all Hacker News threat, but I now. And, yeah, it's a it's a great lens. Like, nope. That's just a wicked child.
Bryan Cantrill:Wicked.
Adam Leventhal:Know. That's Yeah. Wicked.
Bryan Cantrill:You just don't know
Adam Leventhal:how to ask. That's fine.
Bryan Cantrill:Simple. Deserves a response.
Adam Leventhal:Yeah. Well, I like the ones that start start simple and kind of dive into wicked, but there are a bunch of great comments. And I thought we could walk through some of the comments and questions Yeah. Hackers.
Bryan Cantrill:Yeah. Yeah. Yeah. Yeah. Yeah.
Bryan Cantrill:So some well, and also, like, my alts, and I think I think we might have discovered one of your alts in here.
Adam Leventhal:We'll we'll we'll see. We'll see.
Bryan Cantrill:Not to call you out,
Adam Leventhal:but I So there a lot of good stuff. I think the I mean, just not to bury at the lead. Best comment I saw was, can they reraise it in series rust instead of series c?
Bryan Cantrill:I lulled.
Adam Leventhal:I I left it out. And then I saw your comment saying that you left out loud. So I appreciate it.
Bryan Cantrill:I thought that was very funny. Can they rewrite it in series rust? I thought it was actually I thought thought that was an underappreciated comment. It sounds like you thought that was an underappreciated comment too.
Adam Leventhal:Loved it. Then just some nice stuff before we get into some less nice stuff. I I love seeing this one from RG. Said, anyway, I'm I'm glad to hear the raise because the team seems exceptional. And I in this area that's good stuff, good luck, congratulations.
Adam Leventhal:Another one I saw was, god, I'm so glad to see these guys succeeding. The sun may have burned out, but the sky is still bright. Thanks to them. I thought that was really
Bryan Cantrill:Very, very poetic there.
Adam Leventhal:But to bring us back down to
Bryan Cantrill:Yeah, exactly. That's right enough of that.
Steve Tuck:Actually, there's lot we're here for. Yeah,
Adam Leventhal:a lot of podcast critique. I tried to like the podcast. It's been a few years. So it may have improved. Topics were so good.
Adam Leventhal:The guests were great. But Brian Cantrell was just terrible at letting his guests actually talk. Brian, if you're listening, please let your guests talk. And then you actually had a very thoughtful response to that guy, which I thought was kind.
Bryan Cantrill:I well, of course, it's like and this is like it's human nature. Right? You are like I mean, because you say the comments are basically overwhelmingly positive. Yes. And you're like, you got you got there are 99 positive comments here.
Bryan Cantrill:And you're like, nope. It's the it's the one comment that said that I was and So, yeah, I did. Would I
Adam Leventhal:yeah. And and and to his credit, he was like, you know, thanks for the transparency. I appreciate the response. I still think you talk too much. So all of those things.
Bryan Cantrill:Oh, so okay. I 're not gonna I I would like to point out is now the time to point out that the last time you listened to the podcast was the when we had Jonathan Blow on on on the metal in 2019? I mean, the the I'd
Steve Tuck:That was, like, three and a half hours. That was a long one.
Bryan Cantrill:It was three and a half hours, and he was accusing me of interrupting Jonathan Blow. I'm like, like, that guy is like a weather system. If you like, he would we do not know. Humanity does not know how long he will go because we and it wasn't that long.
Steve Tuck:It would have gone further.
Bryan Cantrill:He would have gone further. Right? Oh, for sure. And we were I was freezing. Freezing.
Bryan Cantrill:We were in the garage, the literal garage. Absolutely freezing. I had I had to pee like
Steve Tuck:like so badly.
Bryan Cantrill:Like it was a road trip. Like, was like one of those road trip peas where you can't actually pure pain. You can't even like walk to the restroom and then
Steve Tuck:I couldn't even concentrate the
Bryan Cantrill:last forty five minutes. Exactly. It takes like eight minutes and the so road trippy, I am gonna miss my flight. Remember, was going to New Zealand. It's pre COVID.
Bryan Cantrill:We're going to New Zealand for Christmas. And this is like not a flight you can miss. It's not like, oh, we'll just catch the next flight to New Zealand. It's like no. Like, this this could ruin Christmas.
Bryan Cantrill:And this guy is like, it was like a hurricane that had crossed Florida and fucking blew into the Gulf and was picking up steam again. I'm like, this is gonna hit Texas. It's like, this is is attic. This guy and so yeah. Okay.
Bryan Cantrill:Yeah. I interrupted Jonathan Blow. I'm really sorry that I interrupted Jonathan Blow. Okay? I did You sound sorry?
Bryan Cantrill:I did. I know. This is now you're getting my my actual real thought. That that that comment may have been written several times to be as
Adam Leventhal:At least as much time on that comment as the blog post. I love it. Maybe more. Significantly more. Well, actually, dumpster dove a dead comment because I asked like the the now in browser LLF.
Adam Leventhal:They said, I like how everyone has their own explicit theories about what oxide even is. Dot .dot. Definitely a scam at this point. Hundreds of millions later and not a single video of someone using the product in detail. Yet you all suck up to it because you can't handle not sharing the same opinions as the popular kids.
Adam Leventhal:No videos?
Bryan Cantrill:No videos seems like you know, like, look. We're willing to wear a couple of accusations.
Steve Tuck:Yeah. Can accuse us of some things.
Bryan Cantrill:You get definitely but that is a that is a wild one. That's a tough one. Yeah. Yeah.
Adam Leventhal:Lot of videos. I mean, I did this a moment. Your Friday
Bryan Cantrill:FAQ Friday? FAQ Friday? Actually, and and Kevin Spring is that was that was Kevin's idea that we need to do FAQ for those of you who are seeing too much of me on LinkedIn, it is because Kevin Spring has mastered the dark arts of LinkedIn. I'm sorry. The guy is like, he did his homework.
Bryan Cantrill:He found like the various like technical ways that you have. So and it is very effective. He's like, I found the ways for you to get picked up by the algorithm. So now I'm sorry. I get like really thrust it upon everybody.
Adam Leventhal:And you get the walk and talks,
Bryan Cantrill:which are I get the walk talks. Favorite. Yeah. And I'm still, like, I I as you know, I I still believe you're being sarcastic when you say that. But, you know, unknowable.
Bryan Cantrill:Unknowable. And does it matter? I mean, does it does it No. Maybe it doesn't matter in the end. Yeah.
Bryan Cantrill:Yeah. Exactly. It doesn't matter. Yeah. I I like to do the walk and talks.
Bryan Cantrill:I I I do like the walk and I actually the walk and talks are much better than the alternative. Steve, you and I tried to do those when you first started doing those. We tried to do those completely
Steve Tuck:Stand in front of a tripod in
Bryan Cantrill:front of
Steve Tuck:the rack.
Bryan Cantrill:It was not good.
Steve Tuck:It
Bryan Cantrill:tough. It was really, really tough. Actually, it's like, I was so you recording trying to record forty five seconds, and, Adam, it is really hard to say something Anything. Anything in seconds. Forty Mhmm.
Bryan Cantrill:Maybe this is what the comment on the I know. I've been reading comments to that effect. Yes. Exactly. That's right.
Bryan Cantrill:But the it was really and so I I took me, like, thirty minutes, and I kinda had, like, something that was not very good. And you were off doing something else. And then just like, oh, god. Can't it took you thirty minutes to record forty five seconds. I'm like, yeah.
Bryan Cantrill:I'll I'll come back here in an hour and a half when you are
Steve Tuck:Actually, no. You sat on the couch to watch it.
Bryan Cantrill:It was too tough to watch. Honestly, it's too painful to watch. I I can't but it's a it's the walk and talk is actually a great the the is because it's in and then forty five seconds feels like a more natural amount of time. So, yeah, I like the walk and talk.
Adam Leventhal:Good. Pro take them. Tip on the There there was a comment here. Very I don't know if it it was wicked child or child unable to ask. And I won't read the whole thing because it's voluminous.
Adam Leventhal:This and sat aside raising money in substitute for growth and quenching their business with VCs and letting them control business and ownership. I Oxide wouldn't have to keep getting owned by VCs and would inevitably lead to to pay back the VCs. If Oxide followed the model of Valve, 100% founder and employee ownership, profitable, and so forth, then it would be a different situation. So I think you've you've addressed this by and large, but maybe even talk a little bit in basic terms on even more basic than you've already talked about about the necessity of investment.
Bryan Cantrill:Yeah. You can't be a 100% founder owned. I mean, like, that means, like so that to us for us to be founder owned and not rely on venture capital means
Steve Tuck:strap this.
Bryan Cantrill:Yeah. It means that Then you had $200,000,000. That's right. I mean, that's like that doesn't but it's so it doesn't work that way. It's like you're you're getting someone to to invest.
Bryan Cantrill:And that investment does not necessarily and this is where, like, control and the board structure and governance all becomes like really, really important. And the and there are it gets really it can get really gritty too. I mean, I think this is where there's a big difference between good deals and bad deals and bad deals and deals that you Good investors and bad investors. And I mean, bluntly, you've got There's a big difference between kind of top tier Silicon Valley firms. And then you can get You can go pretty far down the market where you get firms in this.
Bryan Cantrill:Think I will say that this does tend to happen more in other geographies, because I think it's just less competitive from a venture capital perspective. Where Adam, get like, you know, participating preferred and you get ratchets and you get all this other kind of like nonsense that really does put the company's kind of in jeopardy. Now, people are raising money like that because they feel they have to. But we are not in that situation. Fortunately, we have not sold the company to VCs.
Bryan Cantrill:We have we've got we've got venture capital as investors, but we are and and resisting in certification. It's very important. Yeah. Yeah. So
Adam Leventhal:Yeah. This comments are also was concerned that they would be acquired or IPO. It's like, well, are those are other Worried about an IPO. Yeah.
Bryan Cantrill:Those are very different things. Think that yeah. I I think that that to be worried about being acquired and to be worried about being an IPO, an initial public offering is when you sell a fraction of your company to the public. And that is not a failure of a company, by the way. It's just that is There are a lot of great companies that are public.
Bryan Cantrill:Yeah.
Adam Leventhal:It turns out.
Bryan Cantrill:Turns out.
Adam Leventhal:Then questions I thought about the market and and a couple of from the the wise children. One says, you know, they're doing neat stuff. I wonder how many other potential customers feel that way too. What is OXY's market? It feels like advanced alien technology that is ultimately a little too weird and expensive for most enterprises to adopt.
Adam Leventhal:So, you know, a little wise, a little wicked. You take the mix. And then another one asks, how does it compare to Nutanix? Which I thought were both good questions.
Bryan Cantrill:Yeah. That's interesting. Yeah. The the Nutanix questions that I think that people are because they do we do get like, you know, he's your competitor, and we kind of assumed that we started the company, there'd be a competitor that would follow us, that would raise behind us, another startup. Turns out it was a little harder to raise than we thought.
Bryan Cantrill:And we kind of I feel like we took all the good investors, so we have the other ones.
Steve Tuck:That's right.
Bryan Cantrill:But that just didn't happen for a variety of reasons that that didn't happen. So, I mean, it Nutanix is the the problem, the channel and I and I don't I don't wanna disparage Nutanix. I would just say that just in terms of what Nutanix is, and they make a hypervisor, they make orchestration software around it. They have not done have not engaged in hardware software co design. That is just where they you know, initially, you would buy the I think that they were in endeavoring to label hardware, but I think that at at this point, it's kinda bring your own then then they've got a hardware compatibility list, and it's all looks very familiar because we did a joint statement.
Bryan Cantrill:That's what we had. The the hardware compatibility list and you you ultimately bring your own hardware and like you can do stuff like that. But the reason we did oxide the way we did it is because we feel that you can't that there are problems at scale that you simply can't solve with that approach. So I would say that Nutanix is taking a it just it's it's fundamentally a different approach.
Steve Tuck:Yeah. And to the to the comment about, maybe a little too weird. Public cloud has done a lot of heavy lifting to help enterprises appreciate that cloud computing is not weird. Yeah. And, what you're presented in the public cloud is a set of elastic infrastructure services that make it really, really easy to build, deploy and operate software.
Steve Tuck:And you don't get to know a lot about the implementation details. And the more you are running on it, the less you care to because it works and it's helping your business go faster and it it I mean, we we far less often these days need to need to advocate for the benefits of cloud computing kind of writ large to enterprises. And obviously, what we believe is that you should have those same benefits in the other 50 or 60 or 70% of your IT infrastructure that today is, made up of more rack and stack kind of multiple vendors smashed together that takes a big operational army to to then serve up as virtual infrastructure to your internal constituents and give that same developer experience and operational efficiency under a totally different cost profile than public cloud and in your own data center or colo or wherever you need to run your facility. Facility. You can have kind of the best of all things.
Steve Tuck:You can have cloud computing capabilities that you can rent from a service provider or that you can own and operate much more efficiently. And so by that measure, it's not weird at all. The the the the questions from customers, you know, two, three years ago were more like, you know, do I do I want this? Do I need this? And, you know, then a year ago was like, okay, well, how do I get there from adopting a little bit of it to this thing kind of running wall to wall in my data center to much more now.
Steve Tuck:Like, are you guys gonna be here in three to five years? Like, can I truly depend on this? Can you know, if we're making a bet that is measured in tens and hundreds of millions of dollars on oxide, can we trust that that this is the early days of what is going to be a household name, a generational company, and and that was, a a big reason to to raise. I mean, think in retrospect, it it made it makes all the sense of the world to have raised to ourselves whereas
Bryan Cantrill:Didn't make sense at the time? I mean, we did this over our own free will.
Steve Tuck:No. I just mean at the time, we were we were we didn't need to. And it was and and it was it was very much elective in some regards. I think And I think in retrospect, it's like, no. I mean, absolute no brainer.
Bryan Cantrill:Yeah. No. And yeah. And I think it is the I've I I probably was more fixated on the just the risk elements of, like, the storms that we can weather, I mean, quite literally any storm with this.
Adam Leventhal:Could you say that out loud? I'm cutting that from the pipe.
Bryan Cantrill:No. Nope. Nope. I'm saying it out loud. No.
Bryan Cantrill:I'm saying it out loud, and I'm not knocking on wood. Wow. I I Okay.
Steve Tuck:Okay. Don't double down.
Bryan Cantrill:No. The god Jesus Christ. You heard me, gods. Bring it. Oh.
Bryan Cantrill:Come on. Let's go. No. No. Listen.
Bryan Cantrill:We Adam. Adam.
Steve Tuck:You know what to do.
Bryan Cantrill:We have we have gone through bank failure at this company. We have gone through bring the chime for that one. We we have gone through machines that would not come out of reset. There's another chime you can ring. No.
Bryan Cantrill:ASIC funerals. Alright. I'm I'm knocking on wood. Gods, I'm begging for your goodness. I don't know what I I'm so sorry.
Bryan Cantrill:I I Thank you. Good. Thank you. I have
Adam Leventhal:a shiny object to distract you with anyway. So
Bryan Cantrill:Oh, thank you. Excellent.
Adam Leventhal:Yep. So one person says, if I recall correctly, Brian Ketrels compared the value proposition of an oxide rack to an IBM a s 400, to which someone reasonably replies, for those of us who are unaware of the value proposition of the IBM a s 400, could someone spell it out for us?
Bryan Cantrill:It I think didn't someone did come along and spell it out, I think. Well, I so yes.
Adam Leventhal:But I would I'd love to hear I'd love to hear you talk about the a s 400. This is like you love talking about the a s 400.
Bryan Cantrill:I do love talking about the a 400, but I feel like you're if you ask me to do a walk and talk on the a s 400, I'm gonna know that I'm being pranked.
Adam Leventhal:Okay. You're this is staying in the episode and everything. Like, think
Bryan Cantrill:I'm I'm just saying that you have overshot the mark if I do. Okay. I are you Right. You know what? I will do a walk and talk on the a s 400.
Bryan Cantrill:You can't stop me.
Adam Leventhal:Well, if you think it's a good idea, boss.
Bryan Cantrill:Yeah. Exactly. Meanwhile that's right. Kevin is like, well, RIP being a LinkedIn influencer. He's the he's gonna lose it on the a s 400.
Bryan Cantrill:Yeah. The a s 400, a code named Silver Lake, at IBM was a really I'm really interesting project, really interesting history. It was I the IBM Rochester. It comes out of the origin of actually a system called future system FS, which was post IBM IBM, the OS three sixty rather, system three sixty. And future system kind of I think it is one, and maybe folks in the chat can let me know.
Bryan Cantrill:But I think future system may be the canonical second system. I think it is possible that I that, Adam, I may be a bit over my skis, but I believe that's the second system syndrome, maybe a Fred Brooks ism and may come from future system. We can go fact check all that. But that turned into system 38, which ultimately turned into the S-four 100. There's a bunch of value in there, very much hardware, software co design, and very much designing for the actual business case applications.
Bryan Cantrill:So they did an excellent job of really delivering tremendous value to customers in this kind of, I think they called mid frames. And it was a very extremely successful product. I think it was one of the most successful products in IBM's history and a bit of a veteran or a bit of a casualty of the great IBM civil wars between Poughkeepsie, Rochester, Austin, and Boca Raton, which is kind of the history of IBM as those four entities that they all hated one of those guts and spent all the time fighting with one another. So I the AS four hundred ultimately, I think the you we were talking to a large retail customer, Steve, that had that had just decommissioned thousands of them, like in the last two years, which is not at all a surprise. I mean, you saw that they were absolutely dominant in car dealerships.
Bryan Cantrill:So there's these kind of verticals that were, that were really so yeah. It's 400, and it was technically very interesting. So there is a the there is a great book on the Silver Lake project. I think it might be called the Silver Lake project. But on the kind of history of that that development, but it was always kind of an inspiration.
Bryan Cantrill:And Adam, it was an inspiration for us. But you remember us talking about the s 400 when we started Fishworks. It was definitely
Adam Leventhal:I don't actually.
Bryan Cantrill:Yeah, know. Think it was a very direct inspiration for us at Fishworks. The and wanting to deliver that the other thing the S 400 delivered was a real appliance experience from an operational perspective. It did not require it's just like, wow, this thing, like, just kinda just works.
Steve Tuck:You didn't have to put it together.
Bryan Cantrill:You had to put it together.
Steve Tuck:And I mean, the end the the experience of the product was just an output to make it easy to get your job done.
Bryan Cantrill:That's right. And not That is why
Steve Tuck:it made sense to use it as a reference when raising a series seed on Sand Hill Road.
Bryan Cantrill:Yes. When we were raising a seed, I the a firm asked us what the best historical analog is. Final partner meeting.
Steve Tuck:Final partner This is like we are we are down to the the last at bat.
Adam Leventhal:And Steve's like saying
Steve Tuck:They said Please say we'll get help us understand like what is something how do we how do we what's a good comparison to crystallize what this thing is? And I thought it was a great answer.
Bryan Cantrill:I well, I really love your retelling of it. Yeah. That was I I didn't realize I that the entire the company hung in the balance at that moment. And, and what did I say? Said the AS 400.
Steve Tuck:I And important technology products.
Bryan Cantrill:If I had given the answer in Navajo, it would have been more broadly received. I mean, it was like it was just like just an absolute still pond of quizzical looks and and my
Steve Tuck:In fairness, I took that and just doubled right down on it with like, well, let me reframe this for you. Think about like Pure Storage or Nutanix. That was also not the answer.
Bryan Cantrill:No, not the answer they were looking for. But the but you know what?
Steve Tuck:I think they've they forgot all that because They did. Because and it as predicted.
Bryan Cantrill:As predicted. Because, Robert Downey Junior appeared in the partner meeting.
Steve Tuck:They had, like, simulcast between the New York and the Menlo office, and he pops in. He's like, what's happening? Is this, one of those pitches? Yeah. How's it going?
Bryan Cantrill:And And Jess did say, all they're gonna remember is that Robert Downey Junior was there. I think that is actually all they did remember.
Steve Tuck:And they said that was the best partner meeting we've ever
Bryan Cantrill:had. They said they said yeah. They did say that. Their words. They said it was and, like, that is not it.
Bryan Cantrill:Anyway, should have given them a, a a pop quiz on the s 400. Sorry, Adam. Long answer.
Adam Leventhal:No. I love it. And that's I mean, I wouldn't have kept it in the mix if I didn't, if if I wanted just to walk and talk. I want
Bryan Cantrill:I want the sitting suck. The the walk and talk of the s 400.
Adam Leventhal:Couple simple questions I thought about about the product. One says, I'm confused what their product is. The cloud you own, isn't that just a server? Sure. It looks like a very nice server, but is there anything special about it apart from that?
Adam Leventhal:You know, Steve, you talked a bunch about the value of cloud, and and we've talked at length on the podcast about what makes the servers great. But, you know, do you feel like there's some some answers for for that kind of question?
Steve Tuck:Yeah. And and we you know, it's it's understandable because we've we've bitten off a lot here, and it it is a akin a bit to, like, what's the what's the thing that makes the iPhone special? Just like pick one thing. Like, tell me what is Right. So special about it.
Steve Tuck:And the answer for that too is kind of, I mean, not complicated, but there's a lot there. There's a lot of different things that
Adam Leventhal:Functional audio with Discord.
Steve Tuck:Exactly. Four words. Alright. Right. Next next conference.
Steve Tuck:But I think the when when you try to solve for outcomes that deliver some of the benefits that cloud computing delivers, yes, there's all the kind of the developer benefits which are more qualitative and you know, speed to be able to to get their job done, provision infrastructure, etcetera, that you you don't get out of I mean, a server is a piece of hardware that needs a whole bunch of software to do anything interesting. And, and and a cloud computer or the infrastructure that the hyperscalers run-in support of cloud computing look nothing like what off the shelf servers and storage and networking equipment look like, because it was designed for the purpose of extending an API to a software developer that allows them to not have to plan ahead based on their app, the hardware that they're gonna buy, and then assemble it and run it. The service is gonna do all
Bryan Cantrill:that for you. And if you if
Steve Tuck:the needs of your application change, guess what? The the infrastructure is gonna be kinda reconstituted without you having to be exposed to it to support those changes in applications. And so from a developer perspective, it is simplicity. It is the ability to use modern tools to be able to deploy and manage software. From an operations and a and a and and a security and a financial team's perspective, the the differences are really stark because it turns out when you design a a rack scale system for the same kinds of things that the hyperscalers had to go design for for themselves, which is how do I get much better density?
Steve Tuck:How do I get vastly better energy efficiency? How do I get, you know, how do I have systems that are much easier to operate? Well, the outcomes are you can, you know, you can get a system that will do twice as much for the same kilowatt of energy. And especially when things are extremely power constrained in on premises environments today, that really matters. And you can't get there by tuning a particular server.
Steve Tuck:You have to kinda take a holistic approach and and be thoughtful about the architecture and design of that. You when you build a system, I hate to call back to the a s 400, but when you build a complete system, you are just kind of plugging it in and starting to operate against it. And today, on prem is a mismatch of of different things that need to get, unboxed and integrated and combined and tested and then handed off to the teams. That often takes weeks or months before a developer's on that infrastructure. And with Oxide, it's an hour and a half.
Steve Tuck:And that
Bryan Cantrill:That has been some of our most gratifying moments.
Steve Tuck:It's really meaningful.
Bryan Cantrill:It would being with a customer when they're provisioning their first VM after I mean, it's it's it's pretty
Steve Tuck:And there's team I mean, there's there's, you know, Fortune 500 IT teams that are today trying to figure out how do I run shared infrastructure across these different business units that have to be inherently isolated without having islands of infrastructure that, I run-in a low utilization manner and and, you know, five x my infrastructure costs. And, to have a system that already has multi tenancy built in where you can have shared infrastructure and you can run different BUs across it that have inherent isolation, to the standard that the hyperscalers have for themselves and and have a security substrate that supports that. So, you know, if Amazon or Microsoft or Google were sitting here today, they'd be like, god, I mean, come on. You're touting all these these things as like innovations. This is how we we run our business and that was that big big cliff where on prem never had access to these, those those sort of outcomes.
Steve Tuck:And so it's a it's it's a it's a it's a lot of things, but most simply, is kind of the old adage, like better, faster, cheaper.
Adam Leventhal:You mentioned Amazon, know, I can blow by this comment. Someone asks, are services like AWS Outposts from public clouds the main competitor for Aux?
Bryan Cantrill:The mean, AWS Outposts
Steve Tuck:Knowing of AWS Outposts, I wanna give credit to the commenter. Like, that's
Bryan Cantrill:Yes. Yeah. Yeah.
Steve Tuck:Yeah. I I Appreciate that.
Bryan Cantrill:Yeah. I was gonna say if our AWS Outposts were more commercially successful, it would be a competitive competitor. The, I mean, AWS Outposts kind of looks similar, but it's very
Steve Tuck:Well, to start, I think AWS Outpost, like, from the concept of bringing cloud computing capabilities into one's data center. Sounds great. Sounds great. Right. Right?
Steve Tuck:Good good vision.
Bryan Cantrill:Adam, have we talked about this on the podcast before about about our shared discovery of AWS Outposts? I'm not sure we have. Well, if we have them, we're just gonna Oh,
Adam Leventhal:maybe not.
Bryan Cantrill:Yeah. So it is the 2018. It's re:Invent twenty eighteen. I have told exactly one other person about oxide. It is you, One of my oldest and dearest friends.
Bryan Cantrill:Thank you. You I I had to tell you three separate times because I thought you couldn't hear me. And and I would say our friend Lucas, but I think it's your friend Lucas, I guess, would turn to me and said, he heard you. I'm like, okay. It's and you finally turned me like, you wanna start a computer company?
Bryan Cantrill:Like super micro? I'm like, okay, this is alright.
Adam Leventhal:Screw it badly. Right?
Steve Tuck:We're off
Bryan Cantrill:just going over there. It's like Gotta work
Adam Leventhal:on this pitch.
Bryan Cantrill:Yeah. I'm gonna work on this pitch. Thank god our BART train's here. And then I felt like it was I mean, we can actually oh, no. Actually, we can figure out when it because that was election night twenty eighteen.
Bryan Cantrill:Yes. Because you you you and I were the the the because we were at this the the the Beastie Boys Out Loud reading
Adam Leventhal:That's right.
Bryan Cantrill:That was an extremely narrow Gen X event that, like, you're you're you were you were absolutely born in the nineteen seventies. Like, you were not born earlier than 1970, you're not born later than I guess I Adam, you're born in '80. Right? So I guess it
Steve Tuck:was No.
Adam Leventhal:'79. '79.
Bryan Cantrill:'79. Yeah. Yeah. Yeah. Yeah.
Bryan Cantrill:Yeah. Right. Killed our company. I haven't even started it. And as I'm kind of like emotionally, which kind of processing this, I get this very cheerful DM from you saying, I think Amazon just killed your company.
Bryan Cantrill:Yeah. And I'm like, like, the that what? They can't do that. Like, we you can think they're killing companies that haven't even started yet? I mean, guys are absolute animals.
Bryan Cantrill:And I I I tweet I actually had one of my most viral tweets. I I I tweeted out at that reinvent. I was not there. I was watching it remotely. Although, I guess if you're there, you're also watching it remotely because no one can can actually get into the the hall.
Bryan Cantrill:That I'm waiting for the reinvent in which Amazon locks the doors and goes full red wedding announcing that everyone every attendees product or service is a forthcoming product or service from Amazon. Or maybe that was this year. And I think that that got that that got, like, obviously, that got retweeted from a bunch of folks because a bunch of folks feel that way with that that their offering was becoming an AWS offering. But I don't think people realize like, no, I was talking about oxide. That was an oxide subtweet.
Bryan Cantrill:We literally didn't have a name for the company, and Amazon had already killed it with outposts. But I had a bunch of questions about like, is it rented or owned? I think it's gonna be rented, but they didn't you know, this was by 2018, Reinvent had changed. It used to be like, you know, the re:Invent announces something and Jeff Barr is demoing it on stage, and you can provision on it right now. And it was just they were such killers.
Bryan Cantrill:And I think by 2018, that was starting to fade. And like now we're actually kind of like putting things on stage that actually aren't available yet. Oh, by the way, we're not any details on this. And there's kind of some stagecraft to it and blah, blah, blah, But we the the full economic analysis, Adam, I don't think I mean, I think you were one of the first ones to really take it apart. Is that I think that's right.
Adam Leventhal:That's my recollection. Yeah. I don't remember folks kind of digging into it.
Bryan Cantrill:And you were digging into it in part because I'm going to prove to everyone that oxide is doomed. I mean, is that is that being too reductive? Maybe that's being too reductive.
Adam Leventhal:I don't think that's true.
Bryan Cantrill:I think Okay.
Adam Leventhal:I think I I I think I was contemplating my future prospects and and and wanted to see if oxide was doomed. That's slightly different.
Bryan Cantrill:Right. Oh, okay. Yeah. When you when you you would, emphasize the words differently in the sentence, it does have a slightly different implication. Yeah.
Bryan Cantrill:Yeah. Okay. Yeah. Yeah. Right.
Bryan Cantrill:And but I think what what you discovered there is like, oh, economically, this thing is pretty grim.
Adam Leventhal:Yeah. Disaster. Yeah. Mean, priced I mean, you say that Outpost was an economic failure. I actually think it's a success.
Adam Leventhal:No, but hear me out. I think it's a success in terms of like, they don't wanna sell it.
Bryan Cantrill:Yes. Yes. They want they want to sell public cloud.
Adam Leventhal:Want is to tell about how they don't want to sell you public cloud. And then once you start seeing the numbers, you just decide to buy the public. But anyway, so I
Bryan Cantrill:think it's outpost. Got it crazy like a fox that company. You know?
Adam Leventhal:They, I mean, I know I think you might be kidding, but like, they are crazy like a fox. Like they
Bryan Cantrill:They okay. They are crazy like a fox. I will tell you that we I I do know Outpost was extremely controversial inside of Amazon. And Outpost was a kind of a civil war inside of Amazon. And it was very contentious.
Bryan Cantrill:And I I think that it's it it is I I don't but maybe maybe that's all part of the like, no. No. No. That is what the that is what the Fox wants you to believe. These these rumors of organizational strife is actually a deliberate misinformation campaign, which hey, you know what?
Bryan Cantrill:The truth is, I wouldn't put it past them because they are that good. So who knows? Yeah. I think the big problem with outposts, you got you got a couple of big problems. The economic problem is a big one.
Bryan Cantrill:It's very expensive. And then I think that you also have customers like, no. No. This has to be on prem. The cost, I can't love the cost, but like, okay, fine.
Bryan Cantrill:It is the connectedness back into Amazon and the the necessity that and then that becomes load bearing. Yeah. So, you know, you it's like, oh, US East has an outage for four hours and like, oh, outposts were down for eighteen. Yeah. And, you know, I think people think when I'm running in my own data center, some of this availability risk, I'm mitigating and you're kind of magnifying it because Amazon has made decisions for your outposts that makes sense when you're deploying thousands of racks, but doesn't make sense for the two outpost racks that you've got.
Bryan Cantrill:Yeah. So yeah, I think that outposts, it is trying to solve a similar problem, although we're really trying to address the economic problem. But I think for folks that are using Outposts because of its locality, and obviously, disappointing Amazon by being customers of AWS Outposts and undermining their master plan to actually commercially fail with it. I think that, yes, that Yeah. Oxide looks very compelling.
Bryan Cantrill:Yeah.
Adam Leventhal:There's a I thought it was a good opportunity to to address. One person amid other comments says their hardware is multiple generations behind at this point. Yeah. I wonder if there's Ed, that's you know, we had some recent announcements about that. I thought you might talk about that.
Bryan Cantrill:Yeah. I think that we I know. Like, look. Sorry. We do things because, yes, we've done a podcast on the bring up of Cosmo, like, quite some time ago, but there there may not have been a real marketing launch.
Steve Tuck:And not announced Cosmo.
Bryan Cantrill:We may be otherwise unannounced. We may be selling it without having announced it.
Steve Tuck:Until now.
Bryan Cantrill:I didn't exactly welcome to the Cosmo watch. I think poor Kevin
Steve Tuck:is like Kevin is having an interest
Bryan Cantrill:Kevin in
Adam Leventhal:Kevin is like this on on the register. Is that not true?
Steve Tuck:No, we did. Did. We did.
Bryan Cantrill:Okay. We did. Thank God. I I was
Adam Leventhal:like, oh, God, Kevin is.
Bryan Cantrill:No, no, no. We definitely have. I mean, is why Kevin is like, Kevin's like, you know, I I this why I can't work with you people. Right. Because we are, we have not done a formal and I I think the website might not even reflect it, but yeah, we've definitely been selling it.
Steve Tuck:The website will very shortly reflect it. We, in fairness, have just started shipping it.
Bryan Cantrill:Yes. It has been shipping only recently.
Adam Leventhal:Do you think the folks at Amazon are like, wow. Those guys didn't even announce it? And someone's like, no. No. No.
Adam Leventhal:That's just their whisper campaign. They're playing five d chess.
Steve Tuck:That's just
Adam Leventhal:They're just trying to juice up demand.
Steve Tuck:God. This is just like we talked about in the preshow.
Bryan Cantrill:Yeah. I did Excellent. I did hear we've got I got a colleague from Amazon who was there when we announced Oxide at them, and they actually it kinda made me feel good. They were actually laughing at us.
Adam Leventhal:They're like, so they like play it again.
Bryan Cantrill:Yeah, exactly. We brought them mirth with it, which I think is great. Actually, I didn't think we we merited that kind of attention. I think we merited that.
Adam Leventhal:In the Atlantic, we do see people like watching, like some people watch the walk and talks over and over again, and I guess we know who they are.
Steve Tuck:But, yeah, briefly, we, part of the design of the system is to allow customers to adopt new technology without having to replatform. Yes. So, one of the difficulties of kind of traditional non cloud infrastructure is that when you want to adopt a new chipset, you want to adopt a new platform, there's a bunch of work you've got to do in between that hardware and your application software to validate all of that. And, you know, when you're running in AWS, there's a new instance type. There often is new hardware underpinning that, and we want to deliver a a as close to that experience as possible.
Steve Tuck:So with this new platform, called Cosmo, which runs on AMD Turin chips instead of, what you see right now on online, which is reasonable for one to infer like, wow, you're you're you're running on AMD Milan. AMD Milan. I guess Yeah. Was long in the tooth in 2022. We, you now can get racks that are, all Cosmo, which is all Turin based.
Steve Tuck:You can get, you still can get Milan, which by the way is like extremely energy efficient, and, there's a bunch of value around that. And then you can mix the two. So you can have, different types of sleds in your series of racks so that you can have different classes of instances, and you can you can point internal workloads at, one generation, kind of one pool of resources or another. And, along with that announcement soon to come, we are also The just made? Yeah.
Steve Tuck:One just made. Yeah.
Bryan Cantrill:Yeah. You got it.
Steve Tuck:Yeah. Well, just just three more seconds.
Bryan Cantrill:Yeah. Okay.
Steve Tuck:And, but, you know, we are continuing to update software as we go and landing new software services that will show up both in existing customer racks and then anyone that is that is buying our next gen systems right now. So, new storage service and new networking capabilities and, you know, again, kind of like in in in the fashion of public cloud, these are new capabilities both in hardware and software that should just be showing up over time without you having to kind of forklift up and out what you have paid for and bought.
Bryan Cantrill:And see our podcast episode with Dave Pacheco on how we update you. Sorry to make you ring the chime again, Adam, but that was a good one.
Adam Leventhal:Ring it again. So, getting towards the end, but there were a couple of, ones about Yeah. You bet. 1%. As a teenager, I dreamt about working for Sun.
Adam Leventhal:Oxide comes close in a way. I already know it's out of my league. However, the podcast too, one with regard to is the only company where I the career hoping that they have a position that I can apply to. Happy to see their success. And then one
Bryan Cantrill:person have SSV? I I think people do have an SSV. No. No. We it's which in terms of like new because I think it's and we already have folks at Oxide who that a role opened up later that was better fit for them, and they are now been colleagues.
Adam Leventhal:So And and one person noted, I I thought that the process of writing the materials was great. That that person was ultimately didn't become an oxide employee. But I just wanted to echo that that, like, the materials do take a while, but I found very, you know, instructive myself, you know, years ago when I was doing them. But it Yeah.
Bryan Cantrill:I think that they're they're helpful to figure out what what you wanna do.
Adam Leventhal:Yeah. And it should be noted that you go to careers.oxide.computer, and there are many jobs job listings available there now. Along those same lines, someone says, wow. Amazing. That's some serious money.
Adam Leventhal:What do you do with so much money? And I'd love to hear the answer to that. But just before you say it, one of the one of the responders says, if then bald buy all the DRAM they needed for their near future before prices spike, they probably need more than 200,000,000 just for the DRAM. So in addition to DRAM, what's the plan with the money?
Bryan Cantrill:So so DRAM then test equipment,
Adam Leventhal:then Warriors tickets.
Bryan Cantrill:Then Warriors tickets, and then we're kind of like, I don't know. Now we're scraping the bottle and we're gonna get enough for a chicken sandwich or something. And
Steve Tuck:no. But wait. Wait. Wait. The DRAM just depreciated in the last ten minutes.
Adam Leventhal:Oh. Oh.
Bryan Cantrill:Oh. We are now selling off some of our DRAM to make payroll. That's right. Yeah. We we are We've
Adam Leventhal:been getting paid in DRAM for months now.
Bryan Cantrill:That's right. Which you probably would take. Absolutely. Yeah. That's like the the miners being paid with the gold nuggets.
Bryan Cantrill:The, yeah. That's a good question. I mean, it because well, yeah. That that's that's a good question for you, Steve. Yeah.
Bryan Cantrill:Mean, there's there are a bunch of things we we can go do constructively with the cash.
Steve Tuck:There are. But, there are also things that we constructively can do with the series b cash. So, among among the things are, again, you know, we we are not going to completely flip into outsourcing procurement. We are definitely taking still taking on, some first party risk and also, assurance that we're gonna have the materials to be able to build larger and larger projects for our customers for years to come. And so it gives us a little more flexibility to invest into that.
Steve Tuck:We also are expanding manufacturing operations more and more and more. So that means more dedicated lines for oxide computers kind of being manufactured. It means, more test equipment kind of broadly. We are It means, potentially more manufacturing sites. More manufacturing sites.
Steve Tuck:We're supporting customers that are Global expansion? Yep. They're gonna be outside The United States. And it means that we are able to again grow the team at pace kind of in every conceivable dimension. And that includes much broader support and warranty and field services coverage for our customers who don't just want crates and crates of oxide racks to show up but would love us to help as they are deploying them, integrating them, expanding in their own environments.
Steve Tuck:And so, you know, on the one hand, investors are like, well, we don't wanna just put money, you know, transfer money from our bank account to yours. Right. That doesn't make sense.
Bryan Cantrill:I would do that. There was a moment like, are what you gonna use the what are you gonna use this new capital for? Right. Well, it's a as a
Steve Tuck:Surely, you'll deploy it.
Bryan Cantrill:As I told you, we we don't actually need to raise. So I mean but it but there are I mean, there are things that do open up when you've got it. Totally.
Steve Tuck:Yeah. It's And and, you know, it again, it it almost all aligns with making sure that we're staying ahead of our customers. Yes. And, we have a lot to go build.
Bryan Cantrill:Yeah. Absolutely.
Adam Leventhal:Well, congrats congrats to the team, and, been exciting to watch the journey. And we've got a lot more runway ahead of us now.
Bryan Cantrill:Yeah. We got a lot more runway ahead of us. The podcast has been re up for many more seasons. And yeah. I mean and, Adam, I know we we've we hear from from employees, but also increasingly, customers about how the they're they're fans of the podcast.
Bryan Cantrill:And, you know, they don't seem to mention the me interrupting guests, but I you know, maybe they've listened since the Jonathan Blow episode. I am trying to I I do I do listen to myself. I'm very self conscious about it. I try not to interrupt. So I do I have I'm now reading from the index card.
Bryan Cantrill:That that that you have
Steve Tuck:time to wrap
Bryan Cantrill:it up. Exactly. Yeah. But thank you very much. And thank you all the folks that are we obviously huge debt of gratitude to everyone involved to obviously the team, but the broader oxide community.
Bryan Cantrill:Yes. It it is oxide and friends. And I think Adam, the the question that you that you didn't ask that I I think does merit and ask is just how many hundreds of millions does it take before someone could get an oxide t shirt? What what does someone have to do for an oxide t shirt? And and I know that that people were being very, very gentle by not asking that question.
Bryan Cantrill:But I know you got that question on your mind. And I I'm gonna say that we've got some special T shirts that are that are in the works. So stay tuned on that. But I think we do, we wanna get folks some swag. So
Adam Leventhal:Awesome. So regardless of whether it's two x or one x swag, I guess, stay tuned.
Bryan Cantrill:I think stay tuned for some swag. Yeah. We we we we're gonna have some good swag coming out, and we we we'll we'll figure out how to how to get it to you. But thank you all for people have been hugely, hugely supportive. We really appreciate it, Steve.
Bryan Cantrill:When we raised initially, we said that the Internet was gonna be rooting for this company is what we told folks. And we as we've always believed, that's not sufficient, but it is necessary. It's great to have those those fans. Like, we need to actually make a make a product that works and and we need that to to have, something that's actually solving customers' problems and so on and so forth. But, having all of you be out there rooting for us, it really is deeply meaningful for us.
Bryan Cantrill:So we really deeply, deeply appreciate it. Carried us
Steve Tuck:through tough times and just all that much more fun in the high times.
Bryan Cantrill:For sure. We appreciate you. And if you need any help working on that on that crusty boss of yours or educating the new one about the importance of an oxide rack, I'm happy to help you out on that too. So thank you. And thank you again, Adam, and for doing an excellent job of of pulling from the hacker news threads.
Bryan Cantrill:I can say Well, it's
Adam Leventhal:it's very positive. So it's fun to funds to read through all the praise.
Bryan Cantrill:Yeah. It was a kind of amazing that that we didn't get caught in any of the the oxide divots there. So Yeah. Who knew? Alright.
Bryan Cantrill:Thank you, Adam. And see you next time. See you for many, many
Adam Leventhal:more
Bryan Cantrill:episodes to come.