Your Software Is Worth Nothing — The Business Is Everything

Nate Tingey: We basically said what's our whole process from? manager gathering feedback all the way to from design requirements building
Chris Chumley: Yes.
Nate Tingey: Let's take that whole process and let's let's it out and where where can we use it? We didn't we didn't take the big idea of like how can we just automate this whole thing with AI? We just took little chunks and said how can we use AI to like speed this part up and this part up? we've that and I feel like the gains have been incredible. managers cloud code, the engineers have cloud code, people in DevOps, everyone has cloud code. The product managers we're using Linear's MCP to connect Claude code with that, we say we create a in linear. We then pull that ticket in with Claude code and we say, okay, let's plan this out as a product manager. Product manager plans it out with Claude. Okay, let's put that information into the ticket. It puts it in information to the ticket. The engineer ⁓ takes the ticket, has Claude take the ticket and ⁓ run these shortcuts or these commands where it's like, hey, enrich this ticket. And it goes and looks at the ticket and then it starts. asking questions and adding things that it might need. And then we have another command that's like, okay, now go technically design this ticket. And it goes through and looks at the ticket, looks at our code base and says, okay, based on the way you got the code base structured, this is how you should do it. And that's really helpful for the next agent to pick up. We found that if an agent writes another agent's instructions, the agent who's actually doing the work will do very well at that work.
Chris Chumley: We'll do better. Yeah.
Nate Tingey: Yeah. And so then that, then you say, okay, agent, or oftentimes we break them up into much smaller tickets. We have the agents help us do that. And then we tell the agents, okay, now pick up this ticket and do it and it will do it. And then we have another agent that reviews it and we have all these rules for how to review it. And then, and then it's like, okay, let's make a merge request and let's get it out there. And obviously humans are still in the loop for so many pieces of that.
Chris Chumley: Yeah.
Nate Tingey: But holy cow, it has sped up a ton. we're gonna go really, really fast because of it, and it's very exciting.
Chris Chumley: yeah, so there definitely seems to be something that's inflected in with Claude code in particular. Like is the. ⁓
Nate Tingey: okay. I want to start with you grew up in central Valley, California. Did you always want to get into tech or ⁓ was there pushing you? Did you, grew up kind of around this age where like a lot is happening in technology early on. it's yeah, cloud code in particular because like cursor can do a bunch of stuff and it uses ⁓ can still use cloud but it's not as good as the cloud code stuff and I am not technical enough to put my finger on all the reasons why But our engineers are like I don't I don't want cursor anymore. I want cloud code Which is it's just crazy and I'm sure Anthropics revenue has shot up over the past two months
Chris Chumley: on. So I ⁓ didn't think I work in tech. I actually didn't even think I'd work in business. . But my first experience with technology, was I got in trouble in almost got expelled from for breaking into our classroom ⁓ to play Oregon Trail ⁓ on a PET. Now, ⁓ a Commodore PC had like ⁓ memory, ⁓ and you the from a cassette tape. And then were playing Oregon Trail. Yeah, well, and you see, and that's what's crazy is that it's going to go to zero, like so cursor is in the of millions in ARR and at risk. cursor is literally in the hundreds of millions in ARR at risk. Right. That's that's the, that's the crazy thing for an right now ⁓ is like, yeah, ⁓ like it used to like, ⁓ know, you get, you get past, they to say, like, you can, you know, if you can get to
Nate Tingey: Yeah, which is crazy to think about.
Chris Chumley: So me and a buddy had propped open the window to the classroom to where we could get back in so that after school we could sneak in and be playing on the computer. And so that was my first computer. I did a little bit of programming in BASIC, which nobody knows what BASIC is anymore, but actually found that I didn't have any desire to code. I was like, it was boring, especially with BASIC. If you can get to 10 million in ARR, you can get to 100. Then it's just a matter of just continuing to grind. No longer. Yeah. Yeah.
Nate Tingey: Because you've built that muscle, you know how to do that. And it's like the companies who go up really fast, I feel like they have no muscles for how to replicate that. The product is insane, the product is amazing, but there's no muscles to continue building a business. And so the product takes a turn or gets behind, you can lose that revenue in my mind just as fast as you got it. Now, like you said, probably not gonna go to zero, but.
Chris Chumley: So yeah, that was my first experience. But no, I'm old enough that was editor of the school newspaper. We were using a Mac, ⁓ original Mac, and to do that. I remember being in and hearing about internet thing and hearing about the IPO and thinking like, those guys, ⁓ those guys made so much in one
Nate Tingey: There are so many vibe coding apps out there that I'm like, who's going to win? And I don't know if the market's big enough for all of them. don't know. It's just thoughts that I have, but.
Chris Chumley: Yeah, no, no, that space is intriguing too. And, know, in general, because of ⁓ different products and what they're doing. And, but does seem like we're clogged and the agentic, it's more agentic cursor. because they were like my age, know, right my age. And I remember the breaking of the internet. I remember my roommate bringing home the first modem, dial-up modem, 14-4 modem, you and we would wait 20 seconds for a page to load. Yeah, so I mean, I go way back, but I ⁓ was always and around technology, but ⁓ didn't think was what I was gonna do. is more of like an ⁓ for engineer. The engineer is still like leading the work. Whereas it like more with Claude, it's like, okay, I'm gonna send this, because Bennett's been building some internal stuff for us. We're building a that's gonna map ⁓ all of our
Nate Tingey: Yeah, what did you study in college?
Chris Chumley: a psychology and then got a master's degree in organizational psychology. So I was always interested in social psychology. didn't want to counsel people. I want to be a therapist, but I was always fascinated with groups and people make and how influence each other and got into social psychology and then organizational psychology. and then our secondary networks to find founders. he's ⁓ LinkedIn and then he's doing some stuff ⁓ he's doing it all with Cloud Code. ⁓ so ⁓ literally like, he's like, yeah, like he kicks it off ⁓ he lets it run for a while and then he comes back. He says, ⁓ like having a team. He's engineers ⁓ are all now managers is what are. They're now like and reviewing.
Nate Tingey: Mm. Yeah.
Chris Chumley: I tell everybody I thought I was gonna be the next Stephen Covey. That was the career path,
Nate Tingey: Okay. Yeah, I was gonna say what was the career path in your mind because I mean, that to me is so ended. And like, there majors in school, CS majors where you just go straight into web development something like that. This seems very open ended. did you go into technology right after school or not?
Chris Chumley: and not Cody.
Nate Tingey: Yes. Yeah. feel like it wasn't as good four months ago, but now it is that good. And ⁓ Code specifically is very good at not taking shortcuts, coming back and asking you questions, not forgetting things. ⁓ Cursor, you can tell it to do the same thing and it will plan it out and it will start doing things and then it'll start to get lazy over time.
Chris Chumley: Yeah. I didn't and it was really, I was thinking about it, it was really a very similar time to today for college kids today. the world is changing and are going away and new jobs are being created. I wanted do something with helping organizations perform. So I went grad school, got the org psych, and then I went management consulting. So I did about ⁓ six years.
Nate Tingey: And just take shortcuts and you're like, wait, no, don't do that. Where cloud code doesn't get lazy. It's like, okay, this is the next step. Let's plan this out. Let's talk about this. Is this what we should be doing? And it keeps you more in that loop, which I think is really good. ⁓ But it's going to be very interesting how things evolve. we. ⁓
Chris Chumley: Yeah. Yeah, it's crazy. management consulting the ⁓ implosion. And a lot of the consulting we were doing ⁓ in ⁓ late early ⁓ 2000s was big technology implementations. Like everybody was transforming around software. And so was around tech a lot, but I wasn't the technical guy. I was the people guy. And then ⁓ the dot-com, everybody got laid All the consultants got laid off.
Nate Tingey: We've got big ambitions now.
Chris Chumley: I was unemployed. I spent six months unemployed in 2002. They said it was the worst job market since the Depression. enjoyed it. And ⁓ then an opportunity came up to lead ⁓ the implementation a information system ⁓ My bigger worry about AI is also just this big picture, like kind of existential. When AI is doing all this work and doing all this grunt work, how does anybody learn? How does someone become a partner at a law firm without being an associate? Or like Greg and Jeff were looking at some, now an agent that works in Excel, that they're like, it can do our associate's job. So because I had been around these big technology implementations, I had kind of a sense of how to lead it, but I didn't know anything about the tech. And so I helped roll that out to 120 locations across the country and then basically became the product manager for it post implementation for about three or four years. It was a brand new product from Oracle. It was a piece of junk. It wasn't done. It didn't work.
Nate Tingey: Yeah.
Chris Chumley: But if she doesn't work here for several years as an associate, how does she ever become? And so I was trying to make it work either through it with our own dev team or working lot with Oracle. We even went to Oracle headquarters a couple
Nate Tingey: Yeah, that is an interesting question.
Chris Chumley: You know what I'm saying is like we're it's also like my answer on thinking and writing We we we've messed around with having AI write our investment memos ⁓ It's well great. So it saves time on getting to an investment memo and the investment memo seems pretty but Is the of investment memo the deliverable or was it the thinking? went into developing it And so that was my break into technology and software and product.
Nate Tingey: So like most people age or even a ⁓ younger just happened to fall into product management, had no clue what it was, just kind of fall into it.
Chris Chumley: For sure. And it was not the field that it is today. product management was kind of a thing. So when I was in college, I wouldn't have thought I would study that or do that because it didn't really exist ⁓ like does now. because we now turn that thinking over to the AI.
Nate Tingey: Yeah.
Chris Chumley: You know, I mean, it's like we got so focused on like, let's just get to the outcome, which is the set of deliverables. ⁓ know, this report, this analysis, ⁓ user story, you but it's like, but we had deliverables that in the past to capture our thinking. You know what mean? Like, is there, ⁓ anyway, don't know. And ⁓ if you kids,
Nate Tingey: Yeah. I mean, when I was in school, I had no clue about it. thought I wanted to be a designer because that's what we had tracks for and product management was not talked about at all. And I fell into it as well.
Chris Chumley: I've talked to a lot of product people that's like that. It's more of a, I up here. I started out ⁓ as a or designer. In my case, I started out as more of a business analyst, ⁓ evolved into a manager. But I had done implementation work, which, ⁓ which ⁓ truthfully was ⁓ was great training be product manager. If you've implemented package software, you have kids, how you tell your kids? ⁓ My that are at BYU, I have no idea what to
Nate Tingey: I wonder... Mm-hmm.
Chris Chumley: do for a career or just study. ⁓ I'm like, ⁓ don't know.
Nate Tingey: Yeah. My general thoughts are we spent a lot of time thinking there were some deliverables that were to help that thinking, but there was a lot of other just tasks that we were doing that took away from thinking. And those tasks are more automated, then we can spend more time thinking that higher order of work, right? We can spend more time thinking to make the right decision. And ⁓ that's optimistic take.
Chris Chumley: you know, getting to understand user adoption eliciting requirements and discovery. so it was good training for that. had an opportunity to break into commercial software product management with a startup, a guy reached out to me and said, Hey, we're starting this company. We're building the first student information system in the cloud. So that was. Hopefully,
Nate Tingey: on it, but it'll be interesting to see where everything goes. It's wild.
Chris Chumley: I mean, right now, right now, engineers.
Nate Tingey: Hmm. Yeah.
Chris Chumley: crazy at the time. Cloud Software was a new thing. And so broke in and led product there. And it was really, really they hired me because I had domain expertise. ⁓ And at that point, at that point I had to figure out like, well, okay, ⁓ what a product manager really do then? ⁓ Like, I'm helping design ⁓ the and what it should do. But like I was getting introduced into, ⁓ how can management drive the business? It is totally well, but you but you think even like Brian, right? Like Brian can manage agents because has hand coded for years.
Nate Tingey: Yeah.
Chris Chumley: But we're going to end up generation from now with engineers who haven't actually hand coded. So how did they become engineers?
Nate Tingey: Yes.
Chris Chumley: That's where I'm worried. And then more skeptical because you hear these crazies out in Silicon Valley talk about like, then we won't need money anymore. ⁓ won't need jobs anymore. ⁓ I'm like, and you know what happens when that happens? Society fall apart. If human beings aren't anxiously engaged in a good cause, we will nothing but negative outcomes. I'm sorry. I'm not optimistic about ⁓ human beings. you know, positioning, differentiation, pricing, that stuff. ⁓ company is called Top School. And it was a start. ⁓ Yeah.
Nate Tingey: What company was this called? Yeah. Top school. Okay, so did they have any revenue when you when you started?
Chris Chumley: a hundred K. ⁓ I was employed. I was employee 12, not the dev team. The dev team was in ⁓ Skopje, Macedonia. so were two really interesting things about top school from a technology perspective. One, it was going to be cloud based in all ⁓ student information at all schools were still, you ⁓ on ⁓ moving the cloud the big idea.
Nate Tingey: That's true, that's a fair point. Yeah, I don't know.
Chris Chumley: so that was really unique about us. And the second that was unique about ⁓ was founder who had started the product was enamored with XML. ⁓ There was this time in the... in the mid 2000s where everyone said XML was now going to be the way we do everything. So he built this product on top of an XML database. It wasn't a relational database. And that seemed like a cool idea. It was only a cool idea until you figured out that it didn't scale and it couldn't perform transactions very well. And we got into revenue and... about 10 customers, 10 schools, smaller schools, but 10 schools, it just wasn't working. so we to the product on the fly still implementing and burning like crazy. We burned so much money. ⁓
Nate Tingey: ⁓ your burn probably really high, but what was your revenue at at this point? Was it in the millions or not yet?
Chris Chumley: at our peak we got to about two and a half million in ARR and about 40 employees and had raised 23 dollars in venture capital. ⁓ We raised our ⁓ A round the middle of financial crisis. We in February of 2009 and so that when I saw how powerful capital can be ⁓ we had money and we were hiring when the rest of the world was laying everybody off. ⁓ I was like, wow, is the of venture capital right here. This is awesome. But then we got to a point where just couldn't get more traction. ⁓ What was really hard was The student information system touches every aspect of the school. so your student information system is like doing spinal hard. ⁓ the costs are really, really high. So you combine it's really disruptive to a school's business. Implementations are six to 18 months. It's brutal for a startup. But the second was... A lot of CIOs at schools were not comfortable putting student data into the cloud. So our big differentiator, didn't trust. Our differentiator was actually, for them, like the scariest part about us. ⁓ So I learned a lot ⁓ as a product from that experience because it was a really category of software. There were incumbents that had been in place for decades. ⁓ The feature set was And so as a startup, we were constantly playing catch up on me too features. Things that were just bread and butter features didn't set us apart at all. So it's having to do all this development. Then we had to re-architect the database. And so we can never catch up. We can never do anything unique. And so you're not unique except for being cloud and subscription. And schools are actually not sure they want that. So getting product market fits pretty hard here. And then the switching costs are so high that of course we ran out of money.
Nate Tingey: Yeah.
Chris Chumley: And so, I said, we got to about 40 something employees to begin with and then the death spiral started. At the end, we were seven ⁓ the CEO himself and put me in charge. So I was interim CEO for about eight months ⁓ and sold asset ⁓ to a P company that was to put it with something else.
Nate Tingey: Wow.
Chris Chumley: They paid, they paid three million for that business. Uh, so the investors, uh, about, about two and a half. Yeah. They paid about one times revenue for it. Basically fire sale. They're all, by the way, they also didn't tranches. So they, they, they put 500 K and then, and then of an earn out after that. They basically it's a fire sale. Like, you know, it was
Nate Tingey: What was revenue at the time?
Chris Chumley: It was another great lesson is that your software is actually worth nothing. your software ⁓ is actually worth nothing.
Nate Tingey: Yeah, it's the business that's worth everything. Yeah.
Chris Chumley: ⁓ The code's not worth much. It's the business worth everything. So that the other great lesson I learned from that experience. But then that led to CampusLogic.
Nate Tingey: Did you make anything on that or was it because it was a fire sale, like you were an employee at the bottom of the stack, the prep stack, ⁓ you're basically trying return money to investors and try to make up anything.
Chris Chumley: Yeah, that was another great lesson. Yeah, that was another great lesson going to work in a startup because they gave me options. had no idea how to value the options. And I didn't know enough to ask about preferences. And we investors who had, ⁓ you know, 2x liquidation ⁓ Others had 1x. And you're right. It apparent along that journey. It apparent along that journey. that my options were never gonna be worth anything, that my options were never gonna be worth anything,
Nate Tingey: So what was the reason that you stuck around try jump ship or was it just kind of like, I'm sticking around to see where my next thing is ⁓ safe?
Chris Chumley: Yeah, a great, that's a great question. Why did I stick around? I'm a sucker for a lost cause, I guess. I like the, I like ⁓ battle. ⁓ also, ⁓ asked me time about any time I've ⁓ a company, left product that I've worked on, you how do I feel about it? well, I always feel like I've left a child. I get personally attached to the product that I work on. so, it's good and bad, right? Because can look at it and say, well, from a financial perspective, it would have made a lot of sense to bail out a top school sooner. But look back at it and I'm like, well, ⁓ learned much ⁓ as we ⁓ the lessons learned while we were cratering about why it didn't work.
Nate Tingey: Which is good and bad.
Chris Chumley: is the reason in my mind why CampusLogic did work. Greg Scoresby, he was the CEO of CampusLogic, you know, ⁓ he hired me, he said, I'm hiring you because you know all the things not to do. I'm hiring you because you know all the things not do. And I was like, yeah, I am your expert on not to do. But ⁓ we did things differently at CampusLogic we did at Top in so many different ways from the product strategy to how we organize to. culture, and I do, think the success of campus logic, for me I can draw a straight line back to the failure of top school.
Nate Tingey: I to go back to you were talking about you were playing catch up these me too features. Your differentiator was scary at the time for many people, which is what we're living right now. Many people's differentiator is AI and many companies, traditional companies are very hesitant ⁓ to not to anything in AI. And half the time they don't understand how it works or what generative AI means.
Chris Chumley: Yeah, 100%. Yeah.
Nate Tingey: which is very frustrating on the selling side of things. How do you ⁓ balance that playing catch up and the me too features that are table stakes with other How do you wedge that in? How do you weave those all together to ⁓ have a good product strategy there?
Chris Chumley: Yeah. Yeah, so the first thing is, and one of the things that drew me to Campus Logic was the idea, the solutions we were building there were outside of the system of record. And so part of it, part of your destiny, so to speak, when it comes to differentiation is set as soon as you decide what you're going to build. Because if you say, like, I'm going to build a better CRM, I'm going to build a better accounting system. Like my mind, you've already lost. You're going to be playing the catch-up game and the switching cost game. I've always, and we did with Campus Logic because we built seven, actually eight products over years, is each time we were trying to build something ⁓ that didn't exist ⁓ or significantly different than existed. our ⁓ product strategy right up was. Go into a job to be done that nobody's doing, you're going to come in and do it radically different so that you don't put yourself into that game. ⁓ Once in that game, ⁓ functionality you have do. But I would probably leapfrog ⁓ some differentiator. you know, instead of trying to play the me too game. at it ⁓ a different way. Come at it with a different pricing model. leapfrog certain things that ⁓ the incumbents ⁓ say that have do. ⁓ And the discussion. know, being different is more important than being better ⁓ in my mind. And so
Nate Tingey: Yeah.
Chris Chumley: That's the high level principle on it. an everyday feature to feature level, we all know as product people that's easy to say and hard to do when you to close deals, especially if you're in the B2B world, you have to close deals. So sales teams always going to be pounding on you. ⁓ You're no guy all the time. ⁓ The CEO ⁓ wants grow ⁓ so doesn't have patience for long-term differentiation games. ⁓ You got find quicker wins.
Nate Tingey: Mm-hmm.
Chris Chumley: ⁓ That's why good product people are really valuable to a company because that's a hard job. ⁓ don't appreciate how it is ⁓ to what to do. because you make those decisions daily.
Nate Tingey: Daily is a reprioritization game. Anytime anyone asks you for a roadmap, it's the roadmap doesn't exist. It's like, yeah, this is the roadmap today, but tomorrow it could be very different.
Chris Chumley: daily. Yeah. Yeah, I, well, and you know my story. I was very anti-sharing roadmaps with anybody, my CEO. And so ⁓ I very hard not to play that game. But I ⁓ I did a lot about what's the lighthouse, ⁓ like where we headed? And, and I you know, it's like when you're sailing, a sailboat doesn't usually straight. it tax back and forth. so I said, look, this, this, the, the, ⁓ lighthouse is, we're going to ultimately have this thing and it's going to do these things. But ⁓ this, the sequence and big the tax ⁓ going to change a lot. And if I were to tell you what we're going to do next quarter, I'd lying to you as soon as I said it, because ⁓ it's just not true. And so a lot people.
Nate Tingey: Yeah. So.
Chris Chumley: A lot of people feel like their job is to plan elaborate roadmaps and show their genius of the roadmap. But they up being fictional most of the time and setting up expectations that don't get met. Yeah, it's just a trap.
Nate Tingey: So you talked about Greg, CEO of Campus Logic at the time. How closely did you work with Greg on the roadmap for what you're working on quarter? Was it super collaborative or were you pretty distanced?
Chris Chumley: Yeah, it would depend. ⁓ we were good ⁓ partners general. We were very on the direction the business and there was a high level of trust us. So, know, a lot of times Greg didn't pay ⁓ close attention ⁓ what we were doing. But we always had at least one strategic thing, quarter, ⁓ needed to accomplish. And those were the things that he focused on, ⁓ what always called the boulders. He was more focused on the boulders. ⁓ The stuff, he didn't worry about too much. Now, I say too, there were times where as the CEO, he came to me ⁓ and said, need X, Y, or Z by this date, period. And ⁓ said, sir, we'll do that.
Nate Tingey: Yeah.
Chris Chumley: ⁓ But those were not that common.
Nate Tingey: How did you develop that trust? Did Greg just immediately put trust in you and you saw that and kind of reciprocated that,
Chris Chumley: No, that trust develops over time. I would say it probably took us a ⁓ to to that level of trust. But we that trust by having a lot of conversations. We spent a of time together ⁓ just talking about ⁓ direction, just talking the business. sharing our thoughts, our philosophies, our instincts, and I think getting to know each other. And then I, as a product person, also had to deliver. ⁓ show some wins. But it was very rare that we sit down and talk about the direction of a product the direction of the company. and not have pretty similar ideas like, ⁓ we had built that connection. I think building products and building companies is a ⁓ team Like I believe in the singular genius ⁓ that is do this. the one ⁓ unicorn, I don't believe that. I don't believe Steve Jobs built Apple all by himself. Good products and good companies are built through a lot of interactions of people. And there's a lot of social psychology that goes on in a startup for good bad.
Nate Tingey: we were talking about differentiation and how you prioritize me too features versus differentiated features. And at least that ⁓ has worked really well us is just where in the market we are trying to attack. Like what part of the market we're trying to go grab market share, whether that's small SMB or mid market or enterprise. We started more on the. SMB mid-market size and we're slowly moving up, getting pulled up rather, ⁓ by customers. But for you guys at Campus Logic, is an SMB enterprise mid-market kind of landscape there or is because they're all colleges or is it just kind of the same?
Chris Chumley: Yeah. Yeah, no, there are some differences schools. Yeah, ⁓ for who may not know, so CampusLogic was selling products that help the financial aid process at colleges and universities. ⁓ So ⁓ colleges financial aid there's federal financial and then there's institutional financial aid. So everybody has some flavor of financial aid because you have to pay school. what we found was not so much that there was a difference in the market for features or function. It was more of what was their motivation for buying. so for example, with our core product, we were eliminating all the paper in the process. Larger schools. wanted financial aid to run smoother, run faster, because they could enroll more students. And we showed data. We had institutions that increased their enrollment by as much as 5%. And when you about the cost of tuition, that ROI calculates really So they saw it as a way to drive enrollment. ⁓ So almost like drive more sales. Community colleges don't care getting more enrollment. They have all the enrollment that they need. They have plenty of students. ⁓ don't have is a lot of resources. So they ⁓ wanting our product ⁓ that they could do with less people. ⁓ So were looking for cost cutting. So ⁓ wasn't much that the product changed, ⁓ but how positioned and sold the product changed upon those two markets.
Nate Tingey: So did you start with one market and then move to another, or did you kind of attack both at the same time?
Chris Chumley: We attacked all of it. mean, one is vertical software. A lot of times you can't help but go after the whole vertical. And then over time, you might see some segmentation start to fall out. But higher education is a small vertical. There are 6,000 schools in the country, roughly, and about 4,000 of them. are like under 2,000 students, like really small. And a small school like that has a hard time taking technology, right? Like just, you know, it's you know, small mom and pop business almost. And so we did segment those out, but then for the rest of the market, that's not that many logos to go after. So. You have to go after everybody. Now, what I love about vertical markets is is really helpful for getting ⁓ a clear ICP and developing GTM that's very ⁓ targeted ⁓ around that then ⁓ you establish as a category leader and dominate. If you're in a market, you should be able to get pretty high percentage of the market to win, right? And so that was our That vertical market led to some other things. Like one, we had a real focus on ⁓ average revenue per So the product team to think about, not so much about differentiating the
Nate Tingey: Mm-hmm.
Chris Chumley: to serve different ICPs within the market, but more of like, okay, now we're into an ICP, how do we get them to buy more from us? How do we serve more? And so we had to organize, we really had to organize our product efforts around product expansion, cross-sell products.
Nate Tingey: Yeah.
Chris Chumley: you know, that kind of thing.
Nate Tingey: So how long did you have your main product before you broke out into your second product?
Chris Chumley: Less than a year. we and part of that was when I got to Campus Logic, the first product had just gone live two or three customers after some failed attempts. ⁓ first two versions of product didn't work at all. They had to go back and redo it. So the third version ⁓ actually got some customers. There two customers live when came on board. And ⁓ then the second product launched six months after I was there, but they had already kind of kicked that off. And they built it with a customer. So it was actually an idea that the customer had and the core product wasn't ready. ⁓ And so Greg said, well, how ⁓ you work us on this other little product, this other problem that you have while we finish this. ⁓ And luckily that ⁓ is Western Governors they were willing to wait ⁓ were excited to talk about the other product. so first kind of came boom boom. ⁓ But then that set an expectation that was possible. So Greg and I, one of the strategic conversations we always talked about was ⁓ what's product X? Meaning, like what's the we're gonna release year? And so we always had this, the set of candidates for, product decks didn't know what they were. And so what that meant was as product people, we had to we had to get really close to our buyer and figure out what their other pain points, other needs were. so that could find another opportunity. people down different paths. We went down the path of discrete products. So it a cross-sell motion as opposed to a usage model or a tier-based system with expansion. We didn't have a lot of expansion. ⁓ We had cross-sell. And so that how you organize the product team. That affects how you organize your sales team. And then, ⁓ you know...
Nate Tingey: Mm-hmm.
Chris Chumley: also then, we land with every product, but ⁓ the that was the idea was each product should be able to land on its own. so we did have some differences in which product the customer bought first.
Nate Tingey: Yeah, how does that work in your go to market motion? Maybe maybe you need to back up and tell me what was the general go to market motion for these? mean, only 6000 customers possible customers.
Chris Chumley: Yeah, it was all direct sales. Yeah. Well, that's the thing too. So like when you think about your sales team, so the sales team gets pretty close to the customer too. Uh, you know, we, we got to where they have 200, they have 200 accounts, right? Like a rep at our peak, a rep had 200 accounts, 200 schools that were in the, you know, above 2000 student range in their territory. I mean, you can call all 200 in a week.
Nate Tingey: because they're just trying to develop a relationship with them. Yeah.
Chris Chumley: You know, yeah, so the go-to-market motion was, yeah, pretty targeted. You ⁓ know, tried to have kind an account-based strategy. then we also had hunter farmers. ⁓ we had ⁓ ⁓ whose job it was to go sell and land an account. ⁓ then we had an account management team that to come along later and cross sell. Now, ideally, sell them everything upfront. It was rare that we sold them everything we had up. can only think of a handful of schools that did that. University of Utah did that. They bought everything all at once. ⁓ most didn't. ⁓ that was another part of the strategy is ⁓ lot of times product people think, ⁓ I'll build for this buyer within company and maybe this buyer within the company. ⁓ And I had early on in my career that universities
Nate Tingey: Was the buyer the same for all the products?
Chris Chumley: colleges and universities are actually like a bunch of fiefdoms. because you sold something to the registrar's office, ⁓ you no leverage to sell something into the financial aid office. Like they don't care. They don't talk to each other, there's different budgets. ⁓ might as well be different companies. So lot of people in higher ed have tried that mob. They're like, ⁓ well, ⁓ sell this learning management And in fact, Blackboard this. We have learning management system, and then they went out and bought a payments company. ⁓ ⁓ nothing to do with each other. And so ⁓ wanted an efficient GTM. And we wanted to sell to the same buyer. ⁓ Now, was a decision that changed. When Greg first hired me, the strategy let's figure out ⁓ there are gaps the student information system that I just built, and let's fill in gaps across the life cycle. which would ⁓ meant we'd have different buyers. ⁓ is the original strategy. ⁓ after I'd been there about a year, we you know what? We're getting such ⁓ good ⁓ with first two products ⁓ with financial aid office. And maybe should just focus there. And ⁓ at same Greg came up with a marketing tagline. we make financial aid awesome. I was like, ⁓ that's the rallying cry. Let's make financial aid awesome. Let's go deep, deep, ⁓ financial aid and sell to one buyer. So as the director of financial aid who reports to ⁓ the head enrollment, typically the VP of enrollment. So VP of enrollment holds the budget, all the products ⁓ helping the director financial aid. So that's who we built relationship with. then we moving into building a community. around those directors of financial aid. We saw things that Gainsight was doing with customer success managers and some of these companies who were really good at building community around their product. And we were like, let's do that. So that's where the idea of student financial success came from. ⁓ started saying like, hey, financial aid, this is the way we also tried to counter position. ⁓ said, look, financial aid is about administering. Financial is about processing stuff. Student financial success about helping students succeed. And that touched buyer. Our buyers were like, no one in school sees us as being important to students being successful. They see us as an administrative cost center. And you guys came and said like, no, the number one reason students don't graduate ⁓ is financial. The number reason students out of school is financial. And you, the director of financial ⁓ you're the hero. You're the champion of this here. we're going to build products that help you do that. So we're going to drive student financial success, ⁓ is going to drive ultimately more degree completion. ⁓ we're going to make you the hero. ⁓ so that the strategy was let's make the buyer the hero. Let's give a tool set that they've never had before.
Nate Tingey: Mm-hmm.
Chris Chumley: I mean, even that line, put it on coffee mugs, I make financial aid awesome. And I directors of financial aid say, ⁓ no ever uses the word awesome when talking about financial aid. Like everybody it. It's the office no student wants to go to. ⁓ And so was part of idea of like wrapping our arms around an underserved buyer ⁓ and then using of the to be done framework to say like,
Nate Tingey: Yeah.
Chris Chumley: What are all their jobs? How can I make every job they do easier? that's our that we're to build towards. ⁓ And so that was price strategy.
Nate Tingey: Mm-hmm. interesting is I'm so many similarities and differences ⁓ with companies. for example, at Nectar, we often sell, of the time we sell to HR. However, HR is, there's multiple within HR we've found. so ⁓ much like the financial office, I assume, there's probably multiple buyers within that, but you guys made, had great relationships with the person who holds the purse strings for everything. And that sounds like the key to me. I wanted to contrast this and ask you, Qualtrics got into the higher ed space. And they built one product and then resold that product to other departments, ⁓ other buyers within university.
Chris Chumley: Yeah.
Nate Tingey: from the outside looking in, it helped that product become very, very sticky because you get multiple departments using this. If one wants to change and replace it, now have to fight all these other departments. I'm curious to know. Is that just because it was one product that could work really well for a bunch of different organizations?
Chris Chumley: Yeah, one is the beauty of Qualtrics in my mind, always ⁓ its general applicability to any workflow. ⁓ so then it's just packaging ⁓ the go-to-market ⁓ messaging a solution. ⁓ like, yeah, hey, it's an admission solution ⁓ and it's a application solution. And yet they didn't have to change functionality. They had to build features for that. That was all in the marketing and the messaging and the go-to market. And that's brilliant. ⁓ as ⁓ we to grow and you get to a point, ⁓ we start having conversations about opening up ⁓ our product, the student forms product, to be Qualtrics for education. That's actually what we said, ⁓ is we like, We're already there, right? We're digitizing all these workflows in financial aid. would we need to do to open that up to the rest of the school? we got to 50 million in ARR, but my belief was to get to 100 million ARR, we were going to have to finally grow beyond student financial success. going to have to. Yeah, we had. We had looked at all the interesting jobs to be done in financial aid. We had products for all of those. And so then it was OK, so there aren't going to be more schools. So.
Nate Tingey: because the tam is just tapped.
Chris Chumley: Some people were like, why don't you go international? Well, the school model is really different internationally. And distribution is a lot more expensive. that didn't seem like a great idea. But we were like, could our products? And we had another product that was called Virtual Advisor. it started getting pulled outside of financial aid they were like well can we use this to answer question support questions outside of financial aid we're like We technically you can you just have to train it so Yeah, if you want to do that knock yourself up, and that's where the light bulb went off of like well Maybe we can start to open up like Qualtrics did but I really believe again coming back to you know putting my my VC hat thinking about startups. You don't want to try to boil the ocean when you're a startup. So I actually think the reason Campus Logic was so successful was because of the way we niched down and built that intimacy with the director of financial aid, built that feature set for them, built that core business that at $50 million was both growing and pretty profitable. It was a solid business right then and there. gave us the platform to then go outside. Too many startups try to do everything upfront. specifically your GTM is just scattershot expensive. And you can high growth and be efficient. ⁓ You really You have to be smart about how you focus energies.
Nate Tingey: I think the temptation for most people is to build something that's niche and then as they're going to market, they haven't figured out their go-to-market motion yet. And then they're getting potential opportunities to close deal if you have X, Y and Z and they're ⁓ so on growth that they just start doing those but then the long-term effects is that you get spread way too thin and then you become a nothing to like you're not something you're ⁓
Chris Chumley: Yeah.
Nate Tingey: everything, which is nothing to most people. And they already have a product that they like better. there is those some ⁓ bundling unbundling there. And I feel like the market flows ⁓ right with ⁓ where at. Sometimes it's in bundling and sometimes it's an unbundling mode. Right now I feel like we're going into a bundling mode.
Chris Chumley: Yeah. Yeah. I think so. Yeah, mean, ⁓ everybody got to the point that they were logging into 20 SaaS apps ⁓ day, ⁓ was suddenly like, OK, we're too fragmented. And ⁓ people started consolidating, and people started bundling, ⁓ you start to see it move. ⁓ feel like as you go through innovation cycles, we start out with a lot of narrowly products, because that's where it's easier to innovate. and then you bundle back up, And so it seems like we go back and forth every time there's a big inflection some technology. And so, yeah, I with you. I think you see that cycle go back and forth all the time. And I think as a product person, you have to always be thinking about where does make sense for us to bundle and where does make sense for us to go outside? There's no one path, truthfully. But ⁓ used to say to Greg that all plans miss something and models are flawed. But ⁓ you where your gaps you can manage around them. But the most important is have everybody moving in the same direction. The alignment is the really important part. ⁓ When you have an ⁓ in the company that going to focus on financial aid. Then when a salesperson comes in and says, I can get Ohio State if we just agreed to do this one HR form, As a startup, that's seductive. It's so seductive to do You're like, we just need revenue, right? ⁓ And the CEO can be I just need the revenue so can raise the next round. But a really good CEO, like was, will say, ⁓ you know what?
Nate Tingey: Yeah.
Chris Chumley: If Ohio State doesn't see the value of the product today enough to buy it, we'll get them later. And not going to take those deviations.
Nate Tingey: Who is your biggest competitor in this space? Because ⁓ are like, if we're not going to get them now, they're going to go with this competitor and they're going to be locked up and then the switching cost is going to be really high.
Chris Chumley: Yeah. Yeah. Yeah. So, again, back to my statement a minute ago, you know, trying, trying pick something where there's not going to be competition either within your segment or what you're doing general really, really helpful. ⁓ Our very first core product didn't, ⁓ were replacing paper and pencil and and literally fax machines. was the alternative to what they were using. ⁓ so that was a great competitor to have. ⁓ that product then was always the flagship. Later on, we got into products that competed. And so then ⁓ we trying to position them in a way where it was like, there are other alternatives, but we're the only one doing what we're doing. our scholarship product definitely had competitors that were scholarship competitors.
Nate Tingey: great competitor to have.
Chris Chumley: but we felt like we were doing it in a really unique way. ⁓
Nate Tingey: a lot of people, ⁓ entrepreneurship is ⁓ super hyped right now. It been for the past 10 and many go into college thinking I want to be an entrepreneur and I to go build the startup, make it worth billions, sell it, But in your mind, when is the best time for somebody to start that?
Chris Chumley: Yeah. Yeah.
Nate Tingey: or when is the most advantageous time to start build a company ⁓ where you can find some insight or into the market?
Chris Chumley: Yeah, so I'm definitely biased in this regard because one, we only invest in B2B. I think it's really hard. not that it happens, but it's really hard for somebody to come right out of college and build a B2B solution because you've never worked in a business. You have no real life experience around the problem. And so it's not that it's impossible. It's just a lot harder in my mind.
Nate Tingey: Why is that?
Chris Chumley: to get the insights to come up with a new idea and then to be able to, know, for in financial there's a whole set of regulations ⁓ and terminology things that like, if you go in to do discovery with the director of financial aid and you don't what SAP is, you don't know what IV is, it's gonna be hard to to them. ⁓ One, you have no credibility them, ⁓ right? So they're gonna... blow you off and two, just understanding being able to conceptualize how everything works. I actually think people getting some work experience. is powerful to being an entrepreneur. If you want to build stuff for business customers. ⁓ if you're an entrepreneur that's like, ⁓ want to start some kind of retail business, some kind of e-commerce business, ⁓ or restaurant, or something that's consumer, ⁓ yeah, I think can do that right out of school, because you can the customer so to speak. But I think in a B2B context, a work experience is important. I joined my first startup at 37. then I was like 42. And Greg was like 45 or 46 when we started Campus Logic. we were on the older side, on the more experienced side. But I think that was a benefit to us. We also had both worked for Big Six consulting firms. I had worked for Arthur Anderson. I had worked for EY. So like methodology process, some of this. training that we had was informative to how we built the company. For company building, it was important, not necessarily for building the product. ⁓ ⁓
Nate Tingey: Yeah. How do you balance that with being to things? To where like most people would be like, man, all this regulation, all this stuff, it's just not worth going into this market. But some people are naive and they're like, ⁓ just going to go into this market and figure it out as we go. And lot of time that's very good. How do balance those two things?
Chris Chumley: Yeah, could you see it from a new perspective? And so I get that too. But The best founders that we come across are ones who experience the problem themselves. and then want to solve it. And so have to put yourself in a place to into the problems.
Nate Tingey: so you went you were at Campus Logic you built eight products in like seven years and is a is a term that I mean people call lots of things products ⁓ some I mean some products are like big features if we look at rippling they have a lot of products that To some others would just say our features. Is this mostly just a packaging and positioning thing or
Chris Chumley: Yeah. Yeah.
Nate Tingey: Or did you see these things as distinct enough and separate enough that you marketed them as products? ⁓ but all these different products, Did you lead your founding product?
Chris Chumley: We didn't, but there were probably only two or three that ended up being led with. The idea that our CRO wanted the reps to go into was go in and get to know the customer, get to do discovery, figure out what's their most pressing pain point, and map that to a product in the suite, and land with that. That was her ideal. The truth was, We usually landed with two or three of them. And then yes, you hoped to sell them, ⁓ more of them up front, but a lot of times you didn't because schools didn't have budget for it. ⁓ ⁓ my mind, a product, so lot of times people call it product ⁓ because they packaged something on top of their existing product, excuse me, on top their existing application. For us, a product, was supposed to be able to operate by itself. also in our case, these actually all were ⁓ applications. So were actually separate code bases. ⁓ mean, had shared ⁓ platform piece it that we call platform manager ⁓ that managed common like authentication, user management, integration, communications. Those were all built into it. this one platform manager app then the other products can connect to it. But they separate code bases. Distinct projects is I should say. They weren't really separate code bases because we were using components. So they were distinct projects.
Nate Tingey: Okay, were ⁓ separate deployables?
Chris Chumley: Yeah, they could be. Yeah. Yeah, now they might have, yeah.
Nate Tingey: Okay. And looking back on that, was that an advantage or a disadvantage after you look back on it?
Chris Chumley: So I think it was an advantage what it did was gave us enough ⁓ logical separation kind of manage it as a but reuse components and reuse across the entire suite too. And ⁓ so they all ⁓ had same UI, UX. shared components, they data in lot of ⁓ cases, but yet they could be deployed. individually. So we weren't huge on a lot of microservices. We had seen the craziness that people had done, just bonkers with microservices. were like, we don't really want to that. But the platform was modularized, right? So these were like modules that could be upgraded, deployed separately, but it could also share where it made sense to share.
Nate Tingey: too far. Okay, ⁓ I want
Chris Chumley: And they all had, from a GTM perspective, they all had their own identity. So ⁓ they had their own brand name, their own icon. They all had their own one pager, for lack of a better term. They each ⁓ because they solving a specific problem.
Nate Tingey: Gotcha. It sounds like because your competitor is oftentimes fax machine, pencil paper, and as you got into other products, you had other competitors there. I look at a company like Gong, Gong is still very known for their call recording. That's what they're known for. That's what they lead with still. But they have a suite of products and they are so much more than call recording. They lead with the call recording because that's what got them to this place, that's what they're known for, it's how people discover them.
Chris Chumley: ⁓ I do see a lot of products, that ⁓ I think you have to have a hook. There's the one thing that causes people to find you that causes you to stand out. Gong is definitely the call recording. That's number one reason I think of buying Gong if I'm a buyer. So that's what's positioned in the buyer's brain. So I think companies lean into those things. And I don't think that's a bad thing. Truthfully, again, even back to the Qualtrics example. Like when you think Qualitrix, what's the number one thing you think?
Nate Tingey: service.
Chris Chumley: Surveys, yeah. ⁓ Now, tricks do a lot more than just surveys. But, you know, and they're probably people are like, oh yeah, that's so, that's so reductionist. Just call it a survey tool. And I'm like, yeah, I get it. But at the end of the day, that's what the buyer, that's what draws the buyer's attention. And you have to stand out in the crowd because there's so many solutions out there. I mean, Gong's in the GTM space is probably the most crowded market there is, is GTM tech. There's all these tools there. So you have to have something that the customer's like, oh yeah, if, you know. If I buy Gong, I get this, and that's something that I want. So get that. ⁓
Nate Tingey: Okay, want you to take me through after you've built these products, you're at 50 million ARR. How does the process of CampusLogic getting acquired go? ⁓ Take through that story.
Chris Chumley: Oh yeah. You know, we were watching the marketplace and there were some things happening in the marketplace that gave us some concern. So we started worrying about our market a little bit. Higher Ed was going through a big shift in demographics where there are fewer students. So we're like, how's that going to impact them? there was also financial aid is tied to politics and there was some political. stuff going on that we were like, mm, and you know, we might some headwinds. ⁓ So we're mm, okay. ⁓ And then, then truthfully, there was just a really big opportunity of ⁓ a large in the space that we always thought was a potential acquirer traded hands from. I forget who was in them before, but Blackstone and Vista bought into them and Greg very savvy. He said, well, you know, it's going to be number one in their playbook is acquisitions after they do this. he said, ⁓ so went to the board and he said, look, ⁓ they're to be in market. We've got this great asset and we these market concerns. Should we, should we take a look at it? And And the board said, yeah, that seems prudent. if another financial sponsor had come along, we might have done that also. We kind of out and the process to see what the options were. But if it had been another financial ⁓ another ⁓ equity or something, then there would have been some ⁓ &A involved in that too. So the would have changed. The strategic allowed. know, for the, for the real exit, you know, and, and, while we loved what we were doing, after, you know, ⁓ after 11 years, there, there some fatigue that starts in a little bit ⁓ and you to think, you start to think that maybe there should be some, some new energy, but, that was kind of a confluence of events there.
Nate Tingey: Yeah.
Chris Chumley: of like. changes in the marketplace. metrics were ⁓ at the time, right? So like, know, ⁓ ⁓ profile, you know, was roughly, like I said, we were approaching 50. We profitable. We were a, we were over a 50 on rule of 40. We had gross retention ⁓ in the ⁓ 90s, retention around
Nate Tingey: Yeah, I was going to say, what was your profile?
Chris Chumley: We had good numbers. Yeah, it was a good profile. But then also because you're in a smaller vertical, there are only so many buyers in the vertical. So you don't know when there's going to be somebody in market shopping again, too. That was part of the calculus a little bit. was like, this company, Lucien, is probably going to be in market shopping. The other big buyers aren't necessarily shopping right now. Maybe they won't for a
Nate Tingey: Yeah, it's a solid profile.
Chris Chumley: You know, if higher ed goes through this kind of headwind phase, the M &A market is going to be cold. so Ellucian. Yeah.
Nate Tingey: eventually bought you. What did they do and how did your product fit within what they were doing?
Chris Chumley: Yeah, they were they were ironically were ⁓ student information system company that at top school I was trying to displace. Yeah, so ⁓ they the established market leader in student information systems. They have schools than anybody else in the country.
Nate Tingey: Okay.
Chris Chumley: and their international, I they probably do about a billion and a half. They've been around 50 years. Yeah, they're the granddaddy in the space. So we just gave them a way to... have some products that were more growth oriented. ⁓ student information system space is pretty saturated. It's not a high growth ⁓ ⁓ gave them a growth factor synergistic their products. And ⁓ then also CEO ⁓ was very in ⁓ bringing in entrepreneurial blood.
Nate Tingey: What year was this that you guys did the deal?
Chris Chumley: The deal closed on New Year's Eve 2021.
Nate Tingey: So did, had Greg had a relationship that he had been building for years with this company or did happen quickly?
Chris Chumley: Yeah. Yeah, no. So we knew the CEO there. We had had several conversations with him. We were a member of their partner program. Yeah, so we had built a relationship over several years. Greg was always really good at always building pipeline for. fundraising or acquisition. Yeah, he was always cultivating those relationships so that had options.
Nate Tingey: That's what a good CEO does. so acquisition happens, you end leaving after what, less than a year?
Chris Chumley: So I made it three months post-close.
Nate Tingey: Couldn't handle that corporate life, huh?
Chris Chumley: It turns out I'm not a very good employee. Yeah.
Nate Tingey: Ha ha ha. So you made it three months. Greg had already left the business. ⁓
Chris Chumley: Technically no, they had him in a strategic advisor type role, but he had already started building Phoenix Ventures. then once we signed the deal for the company, then he started ⁓ focusing that more. I wasn't sure what I was going to do. The original plan was, I was going to stay. Like, Greg had promoted to president, so it was totally positioned ⁓ during the deal of Greg's gonna move on and Chumlee will stay for transition. know, and maybe for the long haul. mean, I had spent most of my career in higher ed ⁓ ⁓ and this is the biggest higher ed tech company in the market. So, you know, went in thinking, yeah, ⁓ maybe this will my home going forward. But, ⁓ you know, I now lots of thoughts for founding teams when they get
Nate Tingey: Yeah. So three months and ⁓ then was it instantly jumped over to Phoenix Ventures ⁓ or was there a there?
Chris Chumley: Yeah, yeah, well, Greg, when they decided they were going to part ways with me, they actually had Greg come tell me. And so Greg came in and he told me this. And he said, I know you're probably disappointed a little bit. He says, it never feels good when it's someone else's decision. but this is like Christmas for me, because now I can hire you without any. non-compete, non-solicit stuff. And I was like, well, that's great. I said, but you know, Greg, it's been 10 years I've been a free agent. I feel like I should at least test the waters. ⁓ I didn't accept a job with them right away. I talked to a few other people, looked at a couple other opportunities, but then back and the ultimate my wife even said this to me. ⁓ She said, you have this relationship with Greg. And Greg is going to be successful no matter what he does. ⁓ she said, most people spend their whole life trying find that business partner. She's like, why would you walk away from that? And I was like, yeah, you're right. You're right. ⁓ So I called up and I was like, yeah, I'm on board. but yeah, this ride with has been pretty great. There's no better person.
Nate Tingey: as you join Phoenix Ventures, what's kind been your role in the
Chris Chumley: Yeah, that's evolved a little bit too. At first, we thought we were going to run a venture studio, which again, as a product person sounded great to me. was like, ⁓ yeah, so I'm just going to spin up stuff, build stuff. This would be great. And so we ⁓ did few of those. And for a lot of reasons, that's a really hard model to make work. And so we kind of backed away from that. And so then I was leading our pre-seed investments, we did a bunch of those. ⁓ then ⁓ we've of figured out our identity, we've found that we're definitely more in investing at ⁓ the seed stage than the pre-seed. And ⁓ I actually that with AI now is really hard ⁓ to out. Especially if you're gonna have a regional focus like we do just a really hard model to make work. ⁓ know, I've even seen some people say like yeah pre-seed investing is now ⁓ foolish to even participate in ⁓ It's never been easier to build an application ⁓ Like you ⁓ that to be a barrier to getting a startup off the ground was ⁓ building Well now you can build it easy the GTM getting to and getting traction and getting retention That's actually now the thing that you're looking for as an investor. And so we're now investing more between 500K and a million in ARR. We want to see some proof points. I'm sure there are still investors who invest in ideas. I tell people all the time, I don't invest in napkins. I don't invest in ideas. We invest in,
Nate Tingey: Mm-hmm.
Chris Chumley: burgeoning businesses. so ⁓ want to see some business building happen. ⁓ if it's founder led sales, even if it's still within your network, ⁓ we to see ⁓ a bit of traction before we invest now. And that's what our core fund was raised to and so that's what we focus on.
Nate Tingey: Yeah. Okay, so you previously said like, I don't really believe in like the one person I don't think Steve Jobs was he was a catalyst, but he wasn't the genius that build Apple by himself. And are built between lots of people. It's very much a team sport. As you go into investing, many people ⁓ are the founder and saying, I'm investing in this person. ⁓ are and ⁓ Ventures, are they? often investing in the person or is it so much like I just want to see the business give me the numbers like how much does the person influence the investment?
Chris Chumley: the is really important at this stage. Because what you're trying to underwrite is that person's growth. Trevor is a much different CEO now ⁓ when we invested in Nectar. He's grown a lot. And so that's actually what we're for a lot is ⁓ because we that the job of the CEO is going to change over time. And the things the founder has to be good at is... learning growing has be really good at being able to bring people together and put a team around them. You know, like I said, it's a team sport, but at the seed stage, you don't have the full leadership team even built out ⁓ know, normally, ⁓ the founder still doing all the sales or the founder is still the product person, you know, and so not so much like that there's a team we can invest in, but we have to invest in the ability and our belief that the can build it. founder can build a team.
Nate Tingey: How do you gain that belief?
Chris Chumley: spending time with them lot of times. Definitely you look at some of their past experience, ⁓ a lot of it is conversations with them where we ⁓ push to talk about the future and how would go about hiring people, how they see their looking, ⁓ how they would put together. Maybe one of the biggest ⁓ is trying to gauge. Are they good at seeing where they have gaps? Are they self-aware enough say, ⁓ I actually know that really good at sales, but I really don't know ⁓ how build a product. And if stay involved, ⁓ we'll build because I'll build whatever any customer asks for. Are they aware of that? ⁓ Or if they're you know what? ⁓ I'm a ⁓ picture person. really need a CFO. who can run the financial operations because not very good with spreadsheets Really good ⁓ figure out to ⁓ leverage by getting somebody better at certain ⁓ and then out what is it that I add that's unique. they can build around that. ⁓
Nate Tingey: company building has changed a ton in just the past two, three years with AI coming on the scene. How has that, yeah, in the last three months, how do work through that? I mean, it's got to money the waters a ton, but is it still just going back to the same principles or do you have to evolve in your thinking
Chris Chumley: last three months. No, think we evolve our thinking all the time too. you know, would say the number one thing that I have found I didn't anticipate moving over to be an investor versus an operator is this all about learning. ⁓ It's all about And so, you know, we spend a lot time ⁓ talking to our portfolios about what they're doing, they're seeing, ⁓ you know. We're consuming all the content that I'm sure most of the founders are too. And then we have a lot of internal discussions where then we're trying to filter that through our experience. Because some of the company building things that people are talking about now, the new ways to build companies, we're kind of like, we don't believe that.
Nate Tingey: What are some examples?
Chris Chumley: Well, ⁓ okay, this is gonna be my own little rant, but like, vibe coding driven me crazy. ⁓ Like the that, you know, we're gonna need engineering anymore. I'm like, that's just stupid. That's not true. Now, do I see roles collapsing? Yes. Do I see people doing it with fewer people? Yes, absolutely. I ⁓ think a lot of what we're is the old benchmarks. and your spending capital is changing you know I still believe ⁓ you're still gonna have driving the direction of product you know somebody who's driving the of the product ⁓ that you're still gonna have you a team ⁓ that team may be smaller I I think that people most in danger are pure designers. I think they're the ones that are going to have to expand their scope and their breadth. I think we're going to see more full stack product type people who are doing everything from discovery to building prototypes with Vibecode and everything in between. So I think you're going to see a lot more generalists in company building. You your revenue per FTE be much higher than it used to be at sooner stage. Profitability should probably happen sooner than it used to. Those of things we're seeing for sure. But yeah, we're learning at the same time everybody else is, ⁓ is my answer, is that we just try to stay on top of what everybody's doing and then bounce off of our portfolio ⁓ and then bounce off of our own experience.
Nate Tingey: Yeah. mean, the vibe coding, all the AI stuff is very, very interesting. Just in the past month, I feel like things have taken a massive turn. I mean, especially for us, we going faster than ever. We're using agents more than we ever have. Things just got a lot better. ⁓ And it's exciting and slightly scary for people. And they're like, well, man, if... If headcount's gonna be smaller at all these companies, is headcount gonna be smaller at my company? And I generally am optimistic on we're gonna become more productive, so we're going to do more. people compare it to past innovations. It's like, okay, we can all make our own bread, but are we making our own bread or are we buying our bread? And we're buying our bread. Not a lot of us are making our own bread.
Chris Chumley: Yeah.
Nate Tingey: However, my thought goes to, well, are there as many bread companies and are those bread companies worth more or less than they used to be? So when we take the software companies, there's a lot of software companies and a lot of them could be worth a lot of money. Do their valuations come down and do they become less software companies because those software companies are producing more and more? are your thoughts?
Chris Chumley: Yeah, that's a big one to unpack. one is back to the idea that we're all producing more than we've ever produced before. I do think that it used to be that speed was the best differentiator, right? The fastest team won. I think the competition vector is going to change now. You can build tons of stuff now, and you can build it really fast. being able to build stuff that has impact. Figuring what to build. ⁓ If it excites me as a product person because I think ⁓ the manager type person is more important than ever Because now it's longer a barrier of like, how long will it take engineering to build this? ⁓ Yeah, no, we build this right away. ⁓ But is it it? it going to make a difference? ⁓ Like ⁓ being impactful going be, worth it. the great companies are gonna win, because they're gonna build the right thing, not just build fast. As as the market for software, this has been a conversation I've had with a lot of founders ⁓ who getting worried. Early stage founders are worried. like, am I building something that's not even worth any money? I agree with you. just because I build the apps I'm using, do I to? Why don't I take this capacity and this tooling that AI has made possible? Why don't I point that at my core business? Right? So, you know, if I'm, you know, desk booking software, okay, and a customer is using me, like, yes, could they, they vibe code my solution, you know, in a weekend or a couple of days? Yeah.
Nate Tingey: Mm-hmm.
Chris Chumley: They probably could, but will they spend that attention on that problem? Should they be putting that attention on that problem? You've solved that problem for them. like, why wouldn't ⁓ put attention on the core of their business is what think will happen in the enterprise. So I think there will still be ⁓ commercial enterprise So I agree with your bread analogy completely. The difference may be ⁓ pricing power for software ⁓ going to get harder. by the way, I've seen this in the past. ⁓ I'm enough to remember ⁓ when were paying Ernst & Young ⁓ to them a website for hundreds thousands of dollars. And no lie, the ⁓ 90s,
Nate Tingey: Wow
Chris Chumley: people were paying millions of dollars to build their website. Okay. not because it was that hard, it was because they just didn't have the know-how, ⁓ So the people who had the know-how, the knowledge can monetize. If it's easier and easier to build software and there's more and more competitors, you're going to lose pricing power. I do think it's going to be harder to extract the same value for software that you couldn't past, which of course will then actually impact economic value of software long run. I do think ⁓ will be harder. There'll fewer winners ⁓ and outcomes, I in the future of software ⁓ than have been in the past. ⁓
Nate Tingey: Yeah. Yeah.
Chris Chumley: But I'm still an optimist ingenuity and creativity ⁓ and we're going to to problems now that ⁓ never to solve.
Nate Tingey: So as a venture capitalist, if there are fewer winners there have been in the past, that makes your job a whole lot harder of figuring out which companies to invest in. Do you invest in more companies so that you hit winner? do you take more time to look ⁓ at companies and more selective bets,
Chris Chumley: Yeah. Yeah. Yeah, both. And there are different strategies there on that too. in the last couple of investments that we've done, we're looking for high complexity. Are doing something that, you ⁓ know, have you tackled a problem that's kind of painful to go By way, that's also ingrained in us. Financial aid was something that most people didn't want to go learn. just invested in a company that AI deliver quotes in contract manufacturing. ⁓ So, ⁓ the has to understand the bill of materials from a spec ⁓ and it to then source from suppliers what components will cost and it ⁓ generates a quote. that ⁓ used to take a month to six weeks to get a quote back. Now with this tool, you can get a quote back in a couple of days, Convince that quote cycle significantly. They ran into a lot of technical challenges in doing that, right? The way they chunked and processed the quote into the AI. But just the very nature of going in and understanding that domain is a little bit of a moat itself, ⁓ right? ⁓
Nate Tingey: Yeah.
Chris Chumley: If you're a simple SAS product, simple workflow, ⁓ simple survey tool, then might be hard to win. But I still think that ⁓ solving really problems ⁓ is still investable.
Nate Tingey: Yeah, that's interesting.
Chris Chumley: That's what we're looking for. the
Nate Tingey: do you think private equity makes a bigger presence in software over time ⁓
Chris Chumley: I mean people are already making the statement that BC is looking more and more like private equity all So yeah, I think that the venture world is changing. think one of the great things about investing, one of the great things about technology is both are fields that are constantly evolving, reinventing. a lot of disruption, been several disruptions. I went through dot-com boom. I went through the to cloud and mobile. Now I'm going through AI. ⁓ It's actually gotten easier and to build software. at top school, we had to hardware. We to rack it. ⁓ We had to plan capacity. There weren't... as many libraries and frameworks for building software that there are today, even before AI. my whole career has gotten easier and easier to build software. But we keep building new and interesting things.
Nate Tingey: Yeah. What's best book you've read recently that you would recommend to others?
Chris Chumley: So I'm finishing a book right now called ⁓ The Strategic Enemy. And it's about ⁓ positioning and which I is ⁓ going to where ⁓ people are to differentiate more ⁓ in the ⁓
Nate Tingey: Nice. Okay. What do you think is the most underrated business skill?
Chris Chumley: Post-undary business skill is becoming, I think, writing because outsources AI. I think talk all time about the fact that people are outsourcing writing to AI and ⁓ writing something is best way clarify your thinking. And so I think people ⁓ still write ⁓ are going be the strategic thinkers.
Nate Tingey: Interesting. What's daily habit that you have that makes you better at your job?
Chris Chumley: I always think it's the minutes that I spend each morning planning my day, assessing my day, my day, ⁓ rethinking my day, like throwing my list away and starting over.
Nate Tingey: Why is that? Why does that help you?
Chris Chumley: I just clear out all the clutter and all the stuff that didn't really need to be done. You know, know me, I'm a real big like every day reprioritize.
Nate Tingey: Okay. funny how that works. So did you change your mind about recently?
Chris Chumley: was actually the hardest question. Like what did I change my mind about recently? I, did change my mind. I did change my mind about, the ⁓ you build an app with, with AI because someone, someone me I recently had a founder bring me something that they over a weekend. And ⁓ every question I said, ⁓ about What about that? It it. And I was like, this was a non-technical guy who built the whole application a weekend. ⁓ had things like e-signature built into it, had API connections in it, had barcode in it. And I like, wow, OK, ⁓ this more a prototype. This is actually something usable. whether it's scalable and be supported and whether it'll be successful. I don't know, but I had to change my mind on whether you could something over a weekend.
Nate Tingey: You don't change your mind easily, so that's pretty impressive. All right, Chris. Well, thanks for coming on. Appreciate it. I think that's the pod. That's
Chris Chumley: Yeah, exactly. Anytime.