AI Governance Before AI Breaks You | CEO Matt Kunkel

Speaker A: Talk to me about when you decided to start Logic Gate, when you decided to go from employee to entrepreneur. The experience of making that decision, starting

Speaker B: a company and building a company from the ground up is extremely difficult. I don't know if I would ever do it again. It's all about resiliency. You're going to have 800,000 things that go wrong for every one thing that goes right. You just have to work infinitely harder and be infinitely more resilient than your peers to even be on the same playing field as your peers. I had a cushy gig. We were making money hand over fist in consulting. We were on the up and up. I, uh, could call my own shots. We were helping a very large financial institution, the largest financial institution in the world, helping them get out of an OCC consent order. I was traveling every week down to Jacksonville, Florida to build out their regulatory change management platform. Really late nights, like we're talking one o' clock in the morning, driving back to the hotels and we're thinking, there's gotta be a better way of doing this. The tech that's out there is just so archaic and so legacy compared to what we are doing for these organizations. Why don't we create and enable these organizations? But oh, by the way, they know nothing about coding. So we got to make it so simple. It's like Excel. We called it the dream screen. They could build out these programs themselves, they could add all the processes, they could create all the routing logic and never need to know how to write a line of code themselves. That was kind of the genesis of, of it. And then it became the leap. I got a real cushy job here. Am I ready to leave my million dollar salary on the table and go take a leap and do this? My two co founders left. They created the entity. Two weeks later they sent me an email and said, hey, will you help us come run this? I then left my consulting gig and came over to start the company.

Speaker A: On today's episode of Boundary Breakers, I sit down with Matt Kunkel, co founder and CEO, uh, of Logic Gate, highly successful consulting firm and regulatory compliance space. And during our conversation, Matt provided the ideal entrepreneurial playbook. He explained how he raised over $100 million in capital without ever even creating a pitchbook. He talks about the ideal number of co founders that a, uh, startup should have and the specific characteristics that each co founder should have. He talks about what are the most important characteristics of a startup or for a highly investable business and then also gives some unbelievably thoughtful comments about how startups could be leveraging artificial intelligence. I really enjoyed this conversation and I think you guys are going to love it. Boundary breakers is brought to you by Carter and Clark. Again, Matt, uh, thank you so much. I'm excited about this. Appreciate you spending some time with me. Would love to hear just a little bit about your background, sort of where you grew up, family life, that type of thing.

Speaker B: Yeah. So I'm a, uh, I'm a Midwest guy born and raised. I don't know if you can see it up there, but born and raised in Ann Arbor, Michigan. So I'm a big.

Speaker A: Never. Never heard of him.

Speaker B: Yeah, big Wolverine stand. Worse. A lot of people say for worse, but I ended up not going to Ann Arbor or not going to Michigan for undergrad. I had to get out. I had spent 18 wonderful years of my life there. I. And then I ended up going to Indiana University, so stayed in the Midwest. So the last two years had been great. Me from a, uh, national football championship perspective, back to back.

Speaker A: Unbelievable.

Speaker B: But it was great. Growing up in a college town was amazing. Both my parents were professors at the University of M Michigan. We kind of grew up what I would call middle class. So not, not crazy with. I was talking with someone about this. Like our family vacations consisted of driving to see my grandparents. It, it was a, it was great. There was a lot of emphasis on my parents being professors, on school and you know, you didn't, you didn't get Bs, you got Ace and how you did in school. And I think this actually goes into, you know, my founder story is I, I, uh, was, I still am extremely dyslexic. So I had, you know, and back then there was, I think a big stigma around learning disabilities, but had a really, really, really bad learning disability and being dyslexic. And from m. Probably second grade all the way through middle of high school, went and saw a reading specialist almost every day of the week. And that really kind of changed my outlook and perspective on things. Just the amount of work, pure work that you would have to put into. Into that and the resiliency around it. And if you think about, you know, building a business, it's all about resiliency. You're going to have 800,000 things that go wrong for every one thing that goes right. And uh, I think that really hardened me very early on at like, you know, 7, 8, 9, 10 years of age of like, you just have to work infinitely harder and be infinitely more resilient than your peers to Even be on the same playing field as your peers. Uh, but at the same time I didn't really know the difference. I just, you know, my parents were like, this is what you will do, you're going to do this. And it's, that was the day to day routine in life of going through that. So it was great Growing up. And then went to Indiana. Always knew that I wanted to be, do something in business. Was a finance economics major there, had a, had a great run there, played club lacrosse there. So always kind of around team and team's a big thing at, at logic 8. And we have a value that's called BS1. And then didn't know what I wanted to do when I grew up. So I said, hey, I'm going to try this consulting thing out. And it had a bunch of consultants that came and uh, went to Chicago and started at a firm called FTI Consulting just as a business analyst and very quickly realized that you needed to know how to code to work on the big fun investments. So I taught myself how to code in a very old framework. I'm literally like a business analyst, so I know nothing about, nothing about coding. Taught myself how to code in a very old framework called dot net. And then there was a big Ponzi scheme, you might remember this, called the Bernie Madoff Ponzi scheme.

Speaker A: Oh yeah.

Speaker B: And I helped code the solution that did all the fictitious profit analysis for the Madoff investigation. And that's where I cut my teeth in application development and creating solutions to help organizations. And I parlayed that into a career of building custom web applications to help larger enterprise organizations get out of OCC consent orders and regulatory compliance issues with different regulators. And that's really kind of the 10 years of domain experience. I got to say, hey, there's a better way to help organizations build and maintain and really operationalize through technology different aspects of regulatory risk compliance and security programs. So that's kind of my journey of uh, zero to starting the business.

Speaker A: I love that. I love it. So talk to me about when you decided to go, uh, to start Logic Gate. Like when you decided, when you decided to go from employee to entrepreneur and how that arose and sort of the experience of making that decision.

Speaker B: Yeah, great, great, great question. You know, it wasn't a overnight. I had a cushy gig. Like we were making money hand over fist in consulting. We were on the up and up. I could kind of call my own shots. I'd built up a very sizable P and L at this consulting firm, fdi and Then I went over to Navigant Consulting and uh, it. I was, I vividly remember this. We were helping a very large financial institution, the largest financial institution in the world, helping them get out of an OCC consent order. And I was traveling every week down to Jacksonville, Florida to build out their regulatory change management platform and then their, and then their policy management platform. And the guy that actually one of my co, I had two other co founders, one of them was traveling with me every week and he ran my implementation team at the time. And the three of us, uh, you know, really late nights, like we're talking, we're one o' clock in the morning, driving back to the hotels and we're thinking, God, there's got to be a better way of doing this. There's got to be a better way of like gathering all these requirements and hard coding something in and then it changes three days later and re. Hard coding it in for them. And we took a, we, you know, we took a spin through the market and we were like, the tech that's out there is just so archaic and so legacy compared to what we are doing for these organizations. And at the same time a lot of the money that we were doing obviously was all services, but it was just change orders. It was like, hey, this has changed from our business perspective and that means the process has changed. So we said there's gotta be a better way of doing this to really empower those business users that really understand program and process that they need to put in place at their organization to be compliant or, or to have the right program from a risk perspective or a third party perspective to, to run these programs. Why don't we create and, and enable these organizations to do that themselves? But oh, by the way, they know nothing about, nothing about coding. So we got to make it so simple. It's like Excel and they can build out the programs. And we called it, you know, this is midnight driving home. We called it the dream screen. We could create this dream screen where they could build out these programs themselves. They could add all the processes, they could create all the routing logic, they could create all the automations, they could create all of the, the reporting and never know, have to write ever, never need to know how to write a line of code themselves. That was kind of the, the genesis of it is literally just driving home a couple days in a car back to the hotel at, at midnight and, and then it became the leap, right, of like the three of us saying, you know, I got a real cushy job Here am I ready to leave my million dollar salary on the table and go take a leap and do this? And, and ultimately we decided to do. I actually had a couple of non compete, no solicitious agreements. In my agreement my two co founders did not. So they left, they created the entity. Two weeks later they sent me an email and said, hey, will you help us come run this? So I, I then left my, my uh, consulting gig as well and running the team and came over to, to start the company. And you know, it was, we bootstrapped it, right? We were taking a zero salary, I went from about a million to A0 for two years straight. And, and we bootstrapped it and then we got into. I actually didn't want to do this. One of my co founders, John really pushed on this, but we got into one of those business accelerators called Techstars and, and I was like, so we went through Techstar Chicago in 2015. Why should we do this? There's no reason to do this. Like we gotta focus on customers and building product and getting out there. And we got to the very last stage and they kind of bring you up there and do this kind of roadshow and they were like, you know, 90% of startups fail, 90% of companies that go through Techstars are either still in business, have ipoed or have been bought. And I was like, okay, that changes my perspective. Yeah, um, I'm willing to pony up kind of the equity side of the house and what techstars does really well, you know, they have some interesting programming for sure, but what they do really well is connect you with people. And I got connected with a guy by the name of Mike Gamson, who at the time ran global sales for LinkedIn. And he connected me with this guy Jeff Weiner. And Jeff was the CEO of LinkedIn at the time. And Jeb sat me down and within maybe a 10 minute conversation he was like, I absolutely love you, I love your business, I love the market, I want to invest within 10 minutes. It was great, you know, and that him and my dad led our seed route in Logic Gate and that was the first money we, we put in into the business. And he's been a great mentor throughout. He really, we can talk about this. He really talked to me about kind of culture and why culture matters and how you build culture and the strategy, just the strategic differentiation that you're going to get if you have a team that is bought in to culture. Um, and how do you do that? So we raised the seed round from them in, in 25 or, sorry, in, in about 15, 2015. And we were kind of off to the races then. And you know, we knew, we knew enough. Uh, the unfair competitive advantage that we had is we had 10 years of domain expertise in building probably 70 pieces of risk and compliance technology and seeing all the bells and whistles and the ins and outs and the features and what they do like and what they don't like. So we knew exactly what to build. We knew what technology to use to build it, which is very new technology. We use something called a graph database, which was like not a traditional relational database, which allows us to do a lot of things that our competition set, that's a big differentiator for, did not allow us to, uh, allow them to do so. That, you know, that was really, I think, a big part of our end, very competitive advantage. And frankly, when I look to invest in companies, that's the first thing that I look at for is like, a, where'd you grow up, right? What's your background look like? Are you humble and hungry and very resilient? Because you need to be very resilient. And then B, are you a subject matter expert in this or do you like, have a hunch? You're like, have you been doing this for five to 10 years and you know everything about, everything about this domain expertise? And if you have those two things, I, I, uh, would say you have an unfair advantage of beating the odds of creating some sort of meaningful business out there. You know, so like when I personally invest, those are really the only two, you know, and if is your market big enough? Those are really the only two to three things that I look for.

Speaker A: Yeah, that's a, that, that's good insight and, and you know, it may be easier to talk about it in terms of. Instead of your own company. You, you, you are very professional and very humble. But it's. I was going to ask about, follow up on the culture question about the specifics of culture and why that's important. Uh, but let me ask it this way. So if you were going to invest, right, and maybe think about it in the same lens as back in the day when you guys were looking for investment. What is it about the character of the founder or founders? And then maybe weave in some of the things that you learned from your techstars connections in terms of that you bet that you've implemented. Why is, why are things like these intangible things like resiliency and company culture? I mean, how can those be mentioned before ROI and Revenue or, you know, why are those so important?

Speaker B: Why I think, you know, don't get me wrong. ROI and revenue and EBITDA and break even, those things are very important, right? And you got to have a plan to get there. That all of that, that was a byproduct. Th. Those numbers are lagging indicators on the forward looking things, right? And companies, especially software companies or AI companies, it's people, people build things today. You know, who knows what will happen five years down the road. People build software, right? People have interactions with customers and clients. People is everything in a company. And uh, in building and like starting a company and building a company from the ground up is extremely difficult. Like extremely. I, uh, don't know if I would ever do it again. It's now, knowing what I know now, I don't know if I would ever do it again because of how difficult it is. And you have to be so resilient because there are going to be so many more downturns, so many more nos, so many more bad things that happen. So many more like we're on life support, things that happen. How do we get through this then? The great upsides of like we just sold, you know, a um, $2 million customer. We just had the best record, right? So like resiliency is so important in company building, especially in the early days. Once you get to some sort of meaningful scale, you know, 50 million, 75 million, maybe even 10 to 20 million, you're, you're kind of on the path where it's like, all right, really bad things have to happen for the business to like go away. But in the, the 0 to 1, the 0 to 5, the 0 to 10 phase, you got to be really, really resilient. And frankly, I would argue all the way through. The second thing is when you think about kind of company culture, it's like the rally, right? It's, it's the rally cry of every CEO out there is going to say culture is important and culture matters. CEOs, boards, executive teams, they don't make the culture at the company. The culture at the company is driven by the, in Logic 8 case 200 and some employees that we have that on a day to day basis are probably making 200 to 300 decisions independently of what I can tell them or the leadership team or the executive team or the board can tell you. And we want those decisions, decisions grounded in things that we collectively believe in and care about. We want them grounded in our values, right? We want them grounded in, we are a customer centric culture. We call it, you know, empower customers. We want them grounded in being really curious and being innovative and like not just being okay with status quo. You know, we call that embrace your curiosity. We want them grounded in a team mindset and you know, picking up your team members and call that BS one right. We want them grounded in how do you get better every day and how do you just raise the bar this much so that over a long period of time we make really stem function changes across the organization. And if you have values, you then can use those values for two really important things. Probably I would argue the most important thing in any company, which is who you hire and let into your company and who you fire and remove from your company or nicely part ways with them. And we uh, are really. Maniacal is probably the word I would use about making sure that we are hiring and firing to those values that we have in the organization. And really when I talk to the company nowadays I talk about like really two big things. I uh, talk about where we're going, where the market's going, where we're going and how logic Gate is taking the market there. And then I talk about people highlighting values. I tell stories about people that I see day in and day out in the organization with our customers, with teammates, with cross functional teammates, living values. And that's basically it, uh, that's basically what I do day in and day when I'm, when I'm addressing the company, it's what I'm talking about. And it really I think galvanizes everyone in the organization around those values and around what we want to do and it just allows us to really kind of move so much further, faster. You know, I just believe culture is a huge, huge, huge strategic. And listen, honestly, day one of being an entrepreneur and thinking about this, I never thought of like we didn't really have values at ah, in our, in the consulting world. It was like get in there and grind guys. That by the way, that's another big thing is like you gotta be a grinder. If you're, if you wanna, if you wanna start a company from scratch, from zero, like goodbye, going out every night, you know, you're uh, if you're a young person, kiss your kids to bed every night, you know, because they're not gonna be up, you're gonna kiss them to bed when they're asleep. It's a grind and you have to really be a grinder. But it's, it's so important culture. And, and really I credit Jeff Weiner and Scott Dorsey for instilling that into me. Because day one of being an entrepreneur, I didn't think anything about values. I didn't think anything about culture. It was like, grind. Let's get code out, let's build websites, let's talk to customers, let's. And this is what we gotta do, right? Let's hire some great people. They're. They're gonna like what we're doing and, and we're off to the races. And they, uh, really switched my mindset on that, which is, I think, been extremely, extremely important for where we came from, how we got to where we are. And the other thing is those values change over time. You know, they're grounded in kind of the, the, the big rocks in there. But, you know, we talk a lot now about speed, about transparency, about accountability within the organization that we didn't talk about, you know, 10 years ago. So you can morph your values over time to meet where you are on the, the entre, the company journey. Because it's different, you know, day one is much different than year 10.

Speaker A: Yeah. Look, I got to tell you, it, it. I'm fascinated. It's always very clear within the first 10 or 15 seconds of hearing an executive or a founder and entrepreneur talk about something like culture. Because it's very easy to tell somebody like you that gets excited and speaks from the heart about the importance or somebody that just sort of gets it mid service, you know, with, with. With sort of a corporate line here or there. And I could not agree more with everything that you just said. And I, you know, I found that the tendency is we want to always have systems and processes and instruction manuals for exactly how to handle this scenario and that scenario and that scenario. But inevitably and often the most important moments happen on the margins or in the scenarios where there isn't a process or isn't an instruction. And so what are the guide posts that our employees are using when there's no manual for this particular scenario? And so how are they going to get there? Well, as long as they, the way I think about it, as long as they have the sort of navigation beacons of our company culture. Yeah. Then they'll get there. They'll get generally, all of us will get generally to a similar outcome or answer if we have the culture. Right.

Speaker B: So a hundred percent. I would also say, you know, I think great employees don't want to be put in boxes. Right. They want to be empowered. They want to say like, hey, here, here's where we want to get to. You get there yourself. You know, uh, obviously, especially in the early days, like having manuals and like, hey, this is how you do the demo. I've done this a thousand times. Right, but the more you can, uh, at least I found that the best employees out there that the real, you know, a plus ones. What you want to do is say, this is the destination. You, you help me, you help the organization figure out how to get to that destination. And the guardrails, the only guardrails I'm giving you is you live within these values that we have. You don't do it in a malicious way. You don't do it in a, uh, you know, politicking way. You do it in a way that brings others together. You know, you do it in, in a way where we're being curious and embracing our curiosity with the different types of, of avenues to get there. And I think that's, you know, a real. It's one of the reasons why I think, you know, we've gotten so far. I mean, you know, growing at 180% over the last three years. We grew our, our enterprise segment 50%. Our ARR.50 and you know, we're a scale company, so 50% year over year growth on our enterprise ARR. This year we just had our best two quarters in, in company history. And I think a lot of it is because, you know, you hire amazing people, you give them kind of where you want to go. You say, go figure it out guys. Figure it out. Within these cardrails though, our, um, lives.

Speaker A: Uh, great point, fantastic point. So, uh, a lot has, a lot has changed in the world of technology, the world where you guys sit since you started the company and as we sit here today, you can't turn left or right or even pick your head up without hearing AI, AI, AI, AI. Everybody's got an opinion. Everyone has a, ah, forecast, a thought. How has the recent sort of wildfire that is AI changed you guys both from what the customers are asking for and, and sort of how, how you're trying to navigate your company as we face this?

Speaker B: Well, I mean it, it's to your point, it's crazy. I mean it's, it's even crazy where, you know, it's common. Two years. You know, I think it is 2024 when OpenAI kind of launched the first models that were out there. That really is when people pick their head up around this. And I there. There's two big things for us. One is it's an amazing actual tailwind for us. Right? And the, the reason is, is every company in the world, big, medium, small is looking and their boards and their executive teams and certainly their CEOs are asking how are we using AI not just in our services and products that we are building and delivering for customers. How are we using AI to transform our organization to be more effective, to be more efficient, to be able to do more with less, to be able to put strategic resources otherware where uh, where we couldn't otherwise. So it is, and, and everyone that I've, in my circles, that I've talked to, my customer base is saying that, that, that it is a mandate from the CEO and the executive team of how are we using AI to do that? And if you think about it, how do you do that in a responsible way, especially when you're a even medium tiered to certainly enterprise company. So how do, how do you, how do you unleash the power of AI in a very responsible way, both to your customer base but equally if not more importantly to your shareholder base. And what I mean by that is like, you know, we can't just let everyone run a model or do something that they want to do using AI, right? If we uh. A great example is what happens if I'm an engineer and I'm like, you know, I really need help debugging my code base and I upload my code base into just a normal version of OpenAI or a normal version of Anthropic and now my company's entire code base is out in the public domain for the AI to use in a model to go answer questions on hey, how does Logic8 do this with their code base? Right? So you have to be really, really, really intentional and train and have governance in place on how you can use and how you should be using AI within organizations like it is. AI is a game changer and it is going to be, it's the electricity in my opinion of our generation. But it is also extremely, extremely dangerous unless you put guardrails in place on it. And that is where um, if you think about GRC governance risk and compliance, the G comes in and historically in GRC in the, in the market, I mean take a, out of AI out of it. The GRC market, software market has amazing, amazing tailwinds. There's, there's so many that I can talk about but the, the CAGR of the markets about is a uh, 15% annual compounded growth rate over the next five years is. That's the CAGR of the GRC. The CAGR of like just the software in general take out the last two weeks is, is, you know, probably 10%. So it, it is a point and a half better than that. And uh, if you then say, okay, we are going to be able to help with the G, the and, and largely it's been based on the R and the C, the risk and the compliance, right? Saying, hey, I want to get government, I don't want to get fines from government entities. So I need to be compliant with this. I need to have my sock in place or my ISO in place to be able to do business with customers, because they asked for that all the time. So the, the risk and the compliance in GRC has largely driven the growth of the market. However, with AI coming on the scene and basically we are now with the governance of AI, helping organizations be able to implement AI quicker and not be a bottleneck within their organization. I was talking with one of the largest retail companies in the world, the woman that runs their responsible AI program. And she's like, I get 150 requests per month of different ways that we should be using AI across our business in many different business units. And my team's the bottleneck for innovation. My team. And that's, you know, that is what any great company is. It's, it's constant innovation. And she's like, I'm the one that's bottlenecking this. We're coming in and we're helping or put in place a program that actually can, can use AI in some regards to triage. Those requests to understand which are the high priority, understand which are the requests that have critical information, critical data. What are the ones that have. We probably want to put human eyes on this before we just auto approve these requests, what they. The potential bad downstream impacts to the company could be. And we're going to unlock all of that innovation for them. Now that that's, you know, in the world of selling, you only sell on three things. I make you money, I save you money, I reduce your risk. And in this case, we're helping them do all three, which is kind of the trifecta of, of, of sales. I think again, that's why we're seeing the momentum that, that we are in the market. But AI is just, man, it's gonna be, uh. I also think, you know, in talking with a lot of chief information security officers, chief risk officers, chief compliance officers, privacy audit, those are kind of our buyer universe. Every one of them is saying we are getting mandated to use AI to drive efficiencies in what we do day in and day out. And at the Same time every one of them is also saying and there is no way I'm turning over how we manage third parties or how we manage our controls library or how we uh, do our risk and control self assessment if you're a bank to an agent that's going to run those processes at that we're still quarters months and years away from doing that. So you got to have you know, when we call it intentional AI, you have to have the ability to turn on and off these agents that really was where, where the puck is moving to and is going. And my market and I think in a lot of markets frankly take out risk and compliance call centers, you know, call centers. It's really actually already there but you know there's a lot of places. And how do you utilize agents at uh, maybe different steps in the process that are really manual intensive but not have purview over the whole end to end programming process within your organization. Still be able to put human eyes and make decisions on that. And I think intentional AI usage is, is where at least in the medium term the market is going to go.

Speaker A: Yeah, and, and I'm glad that you went there. What, what, what I find is the, the, the natural tendency where what everyone wants to, to gravitate toward is sort of the story of the end. Right. Of what's going to happen. It's you know, all knowledge workers will eventually be replaced by AI or some take about what's going to happen right. In X number of years. And regardless of, I guess I'll say two things. Regardless of who's right or where on the continuum, um, the actual future is going to lie. I don't think anybody can argue that we're currently sort of at the precipice of one of the most remarkable times in history as it relates to business and markets and what the future holds. But where I think far there's so much noise and confusion and uncertainty is like okay, uh, let's forget about where, where exactly we land with all of this. What about the bridge between today and, and getting there and what on earth does that look like regardless of whatever you say it looks like. Yeah, and how, I mean good gracious. I mean governance of something that historically would take years or decades to materialize and we would have time to imagine governance about it just uh, happened last month out of some lab and now they're expected to be able to go. I mean how do you guys handle that type of thing?

Speaker B: Yeah, I mean it, it is difficult right, because the, the goalposts are constantly the goal posts are constantly moving on this. And they're not just constantly, they're moving like weekly, monthly. It's so, so fast. The, the other thing is there's no real framework out there right now. You know, like it in, uh, cyber security. You have frameworks, you have your NIST framework, you have your SOC framework, you have your ISO framework that is largely adopted. And customers and, and agencies are like, okay, we're, we're good with this. This is the first. There is nothing like that in AI, right? There's no federal AI standards out there of like, what is. What, uh, how should we govern this? What is the acceptable use of this? How, you know, what, what is compliant, what is not compliant? States are starting to put, I think Colorado just did one. States are starting to put something together. But that's another problem is like, there's no, there's no, like, hey, down the fairway. If we do this, we're in good standing with it and it is moving so, so fast. Going back to, uh, you know, something that you brought up, which I get asked all the time from folks coming up in their career is like, I'm terrified because I went to school, I studied real hard, and now I'm coming out or I'm, um, I'm a couple years into my career and AI is going to take my job, right? And what I tell them is AI is not going to take your job. Someone like you that knows really well how to use the AI tools that are out there, that's who's going to take your job. So you need, like, if, if I'm, if I'm someone coming up in my career, if I'm, if I'm a senior, sophomore, junior in college, I am getting really, really smart on all of the different aspects and all the different toolings that AI can provide you. Because organizations that, that is gold to an organization. Like, if I can, if you can be 10 times more efficient than someone else, I have to hire you and not ten of you, right? That's out there. So if that, that's what I think is, AI is not coming for, for your job tomorrow or even a year or even two years from M now or even four or five years from now, so long as you understand how to use AI. And that doesn't mean you need to be a coder and like, know how to build models means you have to know how to use the different tools and technology that is enabled by AI. Uh, that's coming up. You will be a massively valuable asset in your Organization. We are so far away from organizations being solely run by autonomous agents. It's not even in the hemisphere right now, even with how fast everything is moving. But I will say if you don't know how to use these tools in the next 18, 12, 18, 24 months, you, you will find yourself out of a job.

Speaker A: Yeah, great point. I totally agree. I think that there's a, there's currently a disconnect between the speed with which the capabilities of AI is moving and the speed with which actual businesses and entities are adopting those capabilities. Right. So in other words, just because uh, we may get to the point where AI is capable of running a single person, unicorn or whatever, all these things, but that doesn't necessarily mean, to your point, that there are actually businesses out there that are, uh, that have, you know, adopted agents for even for whole departments. But you know, one of my board members sent me an article earlier this week and it was, you know, essentially doom and gloom about everything that I was going to take and how fast it's going. But then at the end it said, but look, at the same time, this might be the single best time in all of human history to be an entrepreneur because the barriers and the uh, like the resources needed even two or three, four years ago to build a business are now easier to leverage or get a hold of because of AI. And I'm curious in terms of whether it be competitors for you guys or you know, disruptive innovations that, that, that flow out of your company or other related entities, how do you sort of see the playing field of disruption and startup in your world? And uh, do you expect to see a whole bunch, do you think it's easier, harder?

Speaker B: Yeah, well, I, let's just take it in the macro of just any startup, right? And then we can go to kind of the risk and compliance space. But in my world, but if you think any startup, I 100% agree with you. Right? A, uh, the next five years in probably all of human history is the best time to, for value creation in my opinion. Because if you think about what I had to go through, I had to raise capital. I had to raise capital because I needed more people, I needed more engineers, I needed more AWS power, I needed more, you know, processes. And uh, largely that was people to put into place. I needed more marketing help, I needed more agency help, you know, and I think we raised $156 million of capital throughout the years and we got some pretty good valuations at different times, but I still took a whole chunk of discounting. On the equity that I had to give out for myself and my other two co founders in that with the advent of AI, an individual or two or three. By the way, I think you should always start a company in threes and I can talk to you about why I think that is in a second. But I, you are going to be able, if you have the things that we talked about, resiliency and grit and grind and work, you're going to be able to build a similar size company to Logic Gate or a very scale company with infinitely less capital in an infinitely quicker period of time because of what I will unlock for you and how it will be able to do that for me personally. We certainly look at the landscape in the risk and compliance space and who are the folks that are coming up and honestly those are our lovely acquisition targets for us. We though deal with really upper mid market large enterprises and those folks are very, very, very, very have like high, high, high bars for security standards, reliability standards, performance standards that are out there and that when you're a uh, start like I'm just taking my, my own journey day one, I wasn't thinking about security and reliability and scalability. I was thinking about what are the features and functions to get Jane and this company to go buy my solution right off the bat, right? That you know, if you think about kind of crossing the chasm, you're not thinking about those like, okay, I need these security protocols to be FedRAMP compliant so that I can fed into the federal government or be able to work with the largest companies in the world, right? So I think we have a, we have a bit of a moat around a startup company because only because of the, the market that we sell into is very, very, very upstream. We have a bit of a moat around, I would say around kind of like is there an AI company that's just going to totally disrupt how regulatory risk and compliance is done in the enterprise? And oh, uh, by the way, we are putting 80% of our engineering resources against that as well. So someone asked me this once, it's like what, what, what makes the best founder? And I said well I don't think there is a best founder, I think there is a best founding team. And you need three people on that founding team. You need a hipster, a hacker and a hustler. So you need a hustler who's kind of your CEO, that's your frontman that can get capital raise, that can tell the story, that can hire your first 50 people across to any, any domain that can get your first 50 customers in the door. You need a hacker who is your engineer and you know, full stack can build out anything you want. Can do the DevOps side of the house, can do the front end side of the house, can understand. I can uh, build models and can, you know they talk about these 10x engineers if you can find. We found one of my great friends and, and partners is this guy dan Campbell. He's 100x engineer, right. And then you need a, a hipster and the hipster is kind of the jack of all trades guy early. The person that can set up your HR program. They can do the accounting thing. They can build the website from scratch for you. They can work as your early CS team. They can work as your early implementation team. They're your early marketing team. They, they can do. And that was my other co founder, John. And the three of us really, really. I, I would. The hustler in the story. But the three, the three, obviously the three of us really complemented each other well. And I think that's another thing that's very, you know, we're 11 years into the journey and the three of us are all still in the business on the leadership team working on that. And I think that is a very unique thing. You don't really find organizations that have three founders that have stayed together for that period of time and have built something at the scale through all of the different kind of milestones of building a company that, that we have. It's very unique and I think it is because we complement each other so well and we stay out of each other's lanes very well too. Yeah.

Speaker A: Ah, that does. I mean I would give you significant kudos on that. I don't know, I mean I'd have to think long and hard, but it's highly unusual that three founders would still be involved after a decade. So. So hustler, hipster and a hacker. Gotcha. I like that. I've heard similar story, but it's minder, finder and the grinder. I like yours a little bit better. It's certainly a little bit. It's a much better story. Much better story. So reflecting on the last 10 years, certainly, obviously you've uh, done unbelievable things and are among, I mean would be in the top 1% of the top 1% in terms of business success and or growth over that timeframe. What about mistakes, errors or when you guys stepped in it?

Speaker B: There's uh, so many to count along the way. I mean I think looking back, like knowing what I know now Looking back on it, there's so many things that I would have done differently. Some are, like, tactical things of, you know, raising capital and cap table things and money I wish I didn't take at time. Right. And those are just, you know, I almost think of those as, like, badges of that, uh, kind of through and. And get.

Speaker A: That's funny.

Speaker B: Culture. The culture thing is a big one that I wish I had learned earlier on in the journey. I mean, it was still pretty early in the journey, but earlier on in the journey, we were going through a huge raise. At the time we had. I mean, it was. So, uh, we've raised 156 million. We did 113 of that in the summer of 2021. So, like, valuations are sky high. Right. So I raised from a great firm out of. Out of Boston called PSG Providence Strategic Growth. And as we were raising, by the way, we never put together a pitch deck. I've raised $156 million and never once have I put together a pitch deck. And I give you. I get the audience kind of the, the secret sauce to that. But, yeah, as we were raising, we went through a security incident. I'm a risk and compliance company, and I had a security incident myself that I was going through. Right. It wasn't a giant one. It wasn't a big one, but, like, it was one of those things that we had to kind of go back and rely on our values. I talk to the CISOs that we had problem that we had were affected. And a lot of them, you know, the good thing was they. They were in my shoes. They were like, listen, we're going through something similar. I get it. I appreciate you being so open and honest and transparent with what's going on here. And we literally didn't lose one. It was. It was amazing. We closed around with them and we were off to. To the races. The one piece of advice, if you want to raise capital when. Without putting together a pitch deck, it's two things. One is you take every single meeting. Even in the early days, I. I don't. It was an analyst and I was talking to them. So you take every meeting, and at the end of that meeting you say, hey, I, I put out a. A weekly or a monthly or quarterly. Like in the early days, it was weekly, and then it went to monthly, and now it's like quarterly. Just update on. On how the business is doing, and I'd love to include you, and zero of them are going to say, no, please don't include me on Your updates and every one of them is a, uh, yes. So you create a CRM of everyone you talk to and you put them on this basically a uh, newsletter list of Logic Gate. And you be really transparent with what's going on in the business, with the bets that you're taking, with the direction that you're taking. And what it's going to do is it's going to allow them to over time track you. Because everyone knows this investors and don't invest in like dots here and there. They invest in points over time that are together. And it allowed me to uh, get in front of so many people over time and basically have a weekly meeting with them because I was showing them the progress of. Now the big gotcha in this is the business did very well over that period of time and we were almost up into the right every time. But that's basically how I got inbound interest and we just got unsolicited term sheets for, you know, the A round, the B round and the C round based on these update newsletters that I would put out to, uh, to a very large swath of investors.

Speaker A: You almost, instead of going and pitching and telling a story, you almost let them in the business.

Speaker B: Right?

Speaker A: You come guys and watch 100%.

Speaker B: And a lot of people will say that is crazy because what if you've got downtimes and my. You're always going to have downtimes, right? It's just how I think you articulate that. And I think a lot of folks that I talk to is like, even folks that never invested in the business that I still talk to, like your transparency is just off the charts from what we've seen and they really appreciate and enjoy that. And again, there's also like nuanced things of like, hey, I feel really good that this bet is going to work out. I'm going to talk about this bet more than I talk about, you know, other things in there. So like there's ways that you can do it, but you just allow yourself to get in front of such a wide audience and, and give them the dots that they need over time. Where then you don't have to say, okay, I'm going to go on a roadshow and I'm going to do this, I'm going to do this. And I have a really finite period of time that has, that this has to happen in. Right? The old adage is if you want money, go ask for advice. If you want advice, go ask for money. Right. And you know, this is kind of

Speaker A: that, well, look, it fits. It goes. You know, you mentioned when we first started talking about this is that if you're investing, you're investing in people and

Speaker B: you're investing in culture and subject matter, expertise, People, culture, subject matter, expertise. If you have three things, you know, you, I, I would argue you have the recipe to have a great business.

Speaker A: Yeah, but it, it's just interesting because it fits. I mean, you were, that's how you demonstrated, right. What those things are sort of like a window, come look and clearly unsolicited term sheets. You clearly demonstrated to the satisfactions of, of lots of potential investors that you had those things in spades. And so I promised you that I would look at the clock. I know, right? So I just got one final. I wish I could ask 500 more because I love your story and I love your, the way your mindset about business and how you run your business. But so for the people that are exactly at the point you were when you were midnight at the hotel, late night drives, right? Maybe they're, maybe they're an accountant or an attorney or hell, an architect. I mean, who knows, bookkeeper. But they're reading all this. They, they hear all this noise about AI. They've always wanted to become an entrepreneur. They've always wanted to make the leap, but they've been petrified because they've got young kids. Whatever.

Speaker B: Yeah.

Speaker A: What do you, how would you coach one of the. Coach them if they said, what? What do I do? What do I do?

Speaker B: It's easy. You just take the leap. That's the one, one step. And don't think about where do I have to be in 1 year, 2 years, 3 years, 4 years? Think about what is the first thing. Okay, I gotta, I, I have an idea. Okay, can I validate that idea? Okay, this looks pretty good. Can I talk to four or five people about this idea? Okay, I'm getting some traction here. You know, can I just take the leap that that's the biggest thing I would argue, looking back on this. And I was in, again, I was in a great spot in consulting. Like a lot of people told me, you're crazy to do this, what you're doing. But in my mind I said, what's the absolute worst thing that happens? The absolute worst thing that happens is I leave in a great way with a lot of great relationships, and in 18 months this doesn't work out and I'm right back where I am, Right. Or I'm working for some other consulting firm. Right? So. And what's the downside if I don't do that every day of my life. I'm gonna wonder should I have done that? Should I have tried? Should I have taken the leap? And like that was the biggest push for me is like I'm gonna have too much internal guilt for myself of not trying and just putting one foot out there. So take the leap. That's it. No matter what it is.

Speaker A: I love that. Well, Matt, I wanna be respectful of your time, but the what. What a joyful to hear your story, uh, and how you're leading your company and your employees. They're very fortunate.

Speaker B: Fortunate to have them.

Speaker A: Thank you. Don't forget everybody. You can find Boundary breakers in a lot of places. You can watch our episodes on the Boundary Breakers YouTube channel or you can listen to each podcast on Spotify, Apple Podcasts or any of the other major podcasting platforms. Thanks for listening.