The following interview is a conversation we had with Lukas Gentele, CEO of Loft Labs, on our podcast Category Visionaries. You can view the full episode here: $5 Million Raised to Build the Virtual Kubernetes Category

Lukas Gentele
Yeah, thank you so much for inviting me. 

Brett
Yeah, no problem. So before we begin talking about what you’re building, let’s start with a quick summary of who you are and a. 

Lukas Gentele
Bit more about your background. Yeah, absolutely. Essentially, you can probably already spot my accent. I grew up in Germany, made to transition to the United States in 2019. And essentially in college I started a company that was a services business. We did contracted software development, and I hired pretty much any great engineer that I met in college, including my current Co-Founder and CTO, Fabian. He was actually one of my first hires in that services company. And yeah, within that phase where we build a lot of software for other companies, we did a lot of projects in the Kubernetes cloud, native space, worked a lot with this new cloud stack, including Containers, Docker, Kubernetes. And to simplify our own work, we built a project called Dev Space. We put it on GitHub, we open sourced it, and we got some early open source traction and people just started using it. 

Lukas Gentele
So recommending that to other folks and we’re like, oh great, this is super interesting. That wasn’t really what we’re going for, but it was so interesting to see that community effect and it was so inspiring that we thought, hey, there’s an opportunity to build a business on top of and that’s how we got started. 

Brett
And what was that like for you in 2019 when you moved from Germany? Were you scared coming to America? Were you totally calm and excited? What was going through your mind then? 

Lukas Gentele
Yeah, my back then girlfriend, now wife is from Florida originally, so we did meet in Germany and she lived for five years there. So I’ve always been since 2014, always going been back and forth between Florida and different other parts of the states and Germany. But it was just vacation, so it wasn’t really a permanent move or anything like that. And when we had this early open source traction, built this project Dev Space and put it on GitHub, we looked into a lot of the spicy startup school and a lot of the things that you can learn about building a startup. We were just used to building a services business, and the mentality is way different than building a startup, right? It’s about getting the contract first, getting a partial upfront payment right? Finding the customer first, and then actually doing the work and potentially staffing and hiring for it, versus building a startup. 

Lukas Gentele
You raise capital, you have a visionary idea, you build out prototypes. You iterate before you even it takes a very long time before you even see any revenue, or you’re thinking about Monetization, especially when you’re operating in the open source space. So there was definitely a little bit of an adaptation in terms of thinking about scale and thinking about that scale mentality first rather than focusing on monetization first. But I think we started out at UC Berkeley’s Skydeck accelerator program, and that was super helpful because it’s a six months program, and they really helped us a lot to get to know VCs, get connected with mentors and early customers here. And that was a good launch pad for our company. 

Brett
Nice. That’s amazing. And two questions we’d like to ask just to better understand what makes you tick as a Founder and as an entrepreneur. Is there a specific CEO that you’ve really studied and learned a lot from and really admire? 

Lukas Gentele
Yeah, if I have to pick specifically one, it would probably be Sitsy Brandy, the Co-Founder and CEO of Loft Labs. I think ultimately I admire him because he built this open source rooted, highly distributed culture way back when they started. And they have this concept of this radical transparency. Their company handbook is open source. They build their product in the open. They really involve users and customers into their product vision, into their roadmap, and all of these things I find totally fascinating. And with that mentality, they made it all the way to the IPO recently, and I just find that journey really impressive and inspiring. It’s definitely a role model for me. 

Brett
Yeah, we worked very closely with a couple of his portfolio companies through Open Core Ventures. So it’s a company called Flow Forge and Fleet VM. And they followed that exact same approach that Sid took with Loft Labs. And it’s pretty fascinating to see an inside look at that whole transparency structure and openness. I’ve never seen anything like that before. Working with these two companies where everything is just literally wide or right out in the open, it’s amazing. 

Lukas Gentele
Yeah, it’s definitely very impressive. And I think he was probably years and years ahead when he started this. Today with COVID and everybody kind of having the more open work from home culture, I feel like that was for them. There probably wasn’t a lot of a transition going on in 2020 versus a lot of other companies. Probably had months and months to kind of change their work habits and everything. 

Brett
Yeah, for sure. And what about books? Is there a specific book that’s had a major impact on you as an entrepreneur? And this can be a business book or it can be a personal book. 

Lukas Gentele
Yeah, I think, honestly, Loft Labs’s Handbook is definitely looking into quite a lot, and I think it’s great for me to kind of see all the advice that’s in there, all the structure they put in there. It’s so great that all of this is open source and freely available. It’s a really great resource for me. Another actual physical book that I have on my shelf that I’m sometimes referring to is A High Growth Handbook. I think Ela Gillis’s name wrote that, and he scaled the team at Twitter. And I think the book is less of a I guess I’m a handbook guy. None of these neither The Loft Labs Handbook nor The High Growth Book is a book that you read from front to back. Right. It’s more like a reference thing that when you’re particularly interested in something, you have, like, four or five pages that really go into detail about a topic. 

Lukas Gentele
And especially The High Growth Handbook has a lot of interviews throughout the book, which I find very interesting because it’s not the perspective of one person. It is obviously one person putting it into perspective, but it’s also, I think, one of the stripe founders is in there, and a lot of other great founders have their quotes in there and have their statements in there, which is super helpful to get a perspective on how did other people approach these challenges. And there may be opposing views or different perspectives in there because a lot of things are just there’s no solution that kind of fits for every type of company and every kind of problem at hand. So it’s kind of good to get these multiple perspectives. 

Brett
Yeah, I love when books do that. I feel like it’s so much more interesting, compelling to learn that way. 

Lukas Gentele
Absolutely. 

Brett
Now let’s talk a bit more about Loft Labs. Can you give us a high level pitch? What’s the pitch that you’re making to developers and to users to get them to use the platform? 

Lukas Gentele
Yeah, I think recently in the team, were kind of brainstorming, what is our 25 word pitch? And then suddenly my head of Growth marketing, Raul, asked the question, what’s our three word pitch? And I’m like, oh, my gosh, three words for technology. But I think ultimately it would probably be virtual kubernetes clusters. And I know kubernetes do is a technology and probably a very abstract term for a lot of folks, but it’s essentially what we’re doing. We’re taking this technology called kubernetes, and we’re virtualizing it. When you’re thinking about all the way back to, like, the 90s or so, when you wanted to host a website, you typically had to rent some kind of physical server, right? And you put your files on there, and hopefully your server didn’t die. It was really your pet. It is really a slow workflow. It’s very capital expensive to do that. 

Lukas Gentele
And then virtual machines came along, and they made the whole provisioning of software and of servers so much more flexible, because suddenly you could have these big physical servers that could now host multiple virtual servers on top of it. And these virtual machines enable business models like AWS, which is like high velocity, very flexible, price by the minute, very innovative concepts that were enabled by the virtual machine. And I think we’re trying to do the same for Kubernetes. Kubernetes. Today, everybody who spins up a Kubernetes cluster in their company, or even for learning purposes, et cetera, treats that cluster as this pet. And they really essentially have this bulky thing that is very expensive that they really handcraft and take care of, and we’re virtualizing it. That means we’re essentially saying, give us this Kubernetes cluster. We’ll spin up these light rate virtual clusters on top of it. 

Lukas Gentele
So you have a lot more dynamic provisioning of these clusters of this technology, and you save a ton of cost while doing it. You’re a lot more flexible. And that’s essentially at the core of what we’re doing. 

Brett
And could you define ton of costs, like what percentage are we looking at or what types of savings do organizations typically see when they embrace the platform? 

Lukas Gentele
Yeah, it depends a little bit. If you’re going with our open source technology, V Cluster, which is the really true core innovation of what we’re building, it’s entirely open source. Everybody can see the source code, pull it from GitHub, build another commercial business on top of it. It has a very open licensing model. Or if you’re talking about our commercial product, which builds on top of it, if you’re just talking about the core innovation of virtual clusters, the typical cost savings that we see for most scenarios is about 40%, and that’s a huge chunk of cost when you’re thinking about your AWS bill. Wow, that’s amazing. 

Brett
Especially in the current state of the market, that has to be very compelling to any of the organizations that you’re speaking to. 

Lukas Gentele
Absolutely. Yeah, I think we’re one of the startups that actually, in a way, has an advantage in this current downturn environment where everybody is looking for cost savings and optimizing their workflows and cutting budgets. We actually too, like, even when you go over a commercial product, we even save you additional costs by turning environments off and on when they’re not being used right. Save these idle workloads and really optimize for additional efficiency on top of these virtual clusters. All of that is enabled, of course, by the fact that you now have these virtual clusters, and that can now save you over 75% to 80% of the whole Kubernetes cost. And that’s obviously very massive. So most of the time when we talk to customers today, they come to us with a huge cost problem. They have hundreds of Kubernetes clusters. Not a lot of governance around these issues, whether that’s isolation or security standards or cost control, none of these things are really standardized and in place. 

Lukas Gentele
And with virtual clusters, you can make that possible in days rather than years without building something homegrown. And typically our product, in a way, pays for itself right through the cost savings. And that’s obviously a pretty easy pitch to make. 

Brett
And what’s that time to value for them? When do they start to see that cost savings? Is that within the first month of adopting the platform? 

Lukas Gentele
Yeah, absolutely. So we’re a product that you install into your own infrastructure. So it’s not a SaaS product. We don’t have a hosted version of our product. It’s purely the software that you license. Right. So you’re essentially buying the software for a year and you’re putting it in your own AWS. You’re running it there. Setting it up can take from five minutes up to a couple of days, depending on how complex and how large your system is. But typically when we’re talking about maybe 5100 Costars, you can set that up in a day. And then you see these cost savings pretty much immediately. Of course, there’s like a little bit of organizational change where people have to adapt to using virtual clusters now in a way get familiar with this new way of provisioning things. But other than that, the great thing is virtual clusters are just like real clusters, right? 

Lukas Gentele
It’s just like a virtual machine and a real physical server. You don’t really have to change your application to run it on top of there. And that’s the great part, right. You can essentially migrate, workloads very quickly, and gain these cost saving benefits in a matter of days. 

Brett
Wow. And is there a specific point that you really see that Ava moment with customers and with users? 

Lukas Gentele
I think when they deploy their first couple of applications on virtual clusters and then when they’re using them in pre production, so in development or CI in testing and QA rather than in production, and they see these virtual clusters going to sleep when they’re not using them. So let’s say you go get a coffee, right, and you have a little 30 minutes break, and you come back and you’re like, oh, that went to sleep in the meantime, right, and you’re essentially realizing, I was gone for 30 minutes, but it saved me 25 minutes of cost, right. I think that’s when they see that a high effect. The same happens overnight over the weekends and long meetings. And I think the beauty of it also is that these environments spin up so quickly that your work is not really disrupted. So typically these environments, a real Kubernetes cluster, you’re creating that in. 

Lukas Gentele
Usually if you take like, EKS, which is Amazon’s way to provide Kubernetes clusters, real Kubernetes clusters, it takes about 40 minutes to create a Kubernetes cluster. That’s a lot of time, right? For us, virtual clusters, they start in less than 10 seconds, and we can put them to sleep in like, two or 3 seconds, and we can start them again in like, 5 seconds. That means, literally, on Friday, 05:00 P.m., I stop working. Right. Ten minutes later, everything goes to sleep. The company has zero cost for the environments that I’ve created over the weekend, and then Monday morning, I type in the first command, I hit a URL in my browser, and yeah, that first request may take 5 seconds instead of 100 milliseconds, but we saved a whole bunch of cost over the weekend. I think seeing that effect and then obviously looking at the AWS bill and the cost going down is definitely a pretty impressive moment for a lot of customers. 

Lukas Gentele
And it fuels a lot of velocity for companies as well, because suddenly you can now do more than just give everybody one. Kubernetes cluster. Right. An engineer can now create ten of them, because only the one that they’re actually using right now is producing costs. The other nine are going to sleep, and that’s very powerful and really fuels a lot of new use cases, new possibilities for developers, really creates a much better experience in a lot of cases and fuels that level of velocity that a lot of people are looking for in the engineering workflows. 

Brett
Interesting. Makes a lot of sense. Are there any numbers that you can share just to highlight the traction and growth that you’ve seen over the last, let’s say, twelve months? 

Lukas Gentele
Yeah, we’re still super early. Of course, we just raised the first round of capital besides the accelerator program. Of course, we raised the first round of capital in March 2021. We raised two follow on rounds, both by internal investors and one is disclosed. The other one is undisclosed. I can’t really speak to that one, but we’ve really seen a lot of traction in that period. We scanned over 40 customers. On the commercial side, we really scaled up the team to really handle that demand from were two people in March 21, and now we’re over 25 people 18 months later, and there’s 1200 people in our Slack channel talking about our open source technologies, that space and V cluster, and especially these virtual clusters. Now, our V cluster open source project has gained a lot of attention in 2022. There are 25 million virtual clusters created in 2022, and that number is up from 1 million in 2021. 

Lukas Gentele
So that’s a 25 X growth within a year. And the number is actually likely underreported because there are a lot of big enterprises who are starting virtual clusters in their private data centers, in their virtual private cloud, in their air gapped environments, so we don’t even get all the data of when they are spinning up virtual clusters. And 25 million virtual clusters just was a huge milestone for us. And what’s even more impressive is hearing people’s story about how they put our technology into practice. KubeCon our major industry conference was just a few weeks ago in Q Four and Adobe gave a talk about how they’re using V cluster at scale. VMware gave the keynote at this massive conference with thousands of people and they talked about how to use V cluster and gave a demo on stage within the keynote. Super impressive and obviously makes us super happy. 

Lukas Gentele
All of these success stories in the open source space. And that really spills over to our commercial success as well because more and more companies obviously are reaching out for a ready to go solution that they can buy and build on top of. 

Brett
And what’s that go to market motion look like when you’re just looking at the 40 paying customers that you have today? Is there a sales team that went in and closed those deals or was it all PLG? What does that look like? 

Lukas Gentele
Yeah, so until October 2022, everything was inbound, right? And everything was Founder led, essentially. So I was the only salesperson until that point. October 1 was when I hired the first account executive. He does an amazing job. I’m so glad that we’re finally building out a sales team. We have two SDRs on board now, so we’re slowly starting to do outreach and we’re starting to build that sales team and that repeatable process. But beforehand it was the majority of these 40 customers were essentially coming to our website, reading blog posts, seeing a talk about what we’re doing, hitting the contact form, getting a demo, and then starting to work with our technology and then reaching out about commercial license. Our product is intentionally I think we have a very interesting mix. It’s kind of intentionally built as a mix of enterprise first, but at the same time it’s very product led growth in a way. 

Lukas Gentele
So we have a free tier you can obviously run with our open source solution, but even our commercial product, you can just go to the website, download the software, get started with it. Obviously there are some limits, and then you can swipe a credit card or unlock a trial to see more and more features and explore the product. Because we really believe that engineers want to see value first, whether they’re in a large enterprise and they’re testing it on their laptop to try it out, or spinning up a little AWS cluster to test it out. They want to see the value first before they hit the schedule demo button, before they reach out. And we really want to make sure that experience is very smooth. And some customers in the startup segment just go ahead and purchase a license key. They’re stripe heavy as stripe via credit card on the website. 

Lukas Gentele
But the big enterprises, obviously they want a classical we want to run a POC, we got to send you a purchase order, and it’s more a classical sales process. 

Brett
And what about market categories? I know it’s still pretty early on in your journey, but have you put much thought into what that actual market category would be. From doing initial research online, it looks like Kubernetes management may be like the very broad category, but what are your thoughts there? Is that the right category or is it virtual clusters? What are your thoughts? 

Lukas Gentele
Yeah, it’s very interesting because we created this virtual cluster technology, which, in a way, I guess, is the same as a real Kubernetes cluster. So in a way, it is management of Kubernetes, but none of the existing Kubernetes management tools support and can support virtual clusters because virtual clusters are very different under the hood from a real cluster if you treat them like a real cluster. So, of course, when you run your application side, from a developer perspective, it’s the same, right? But from an operator perspective, running these virtual clusters, if you run them like a regular cluster, you’re actually doing it wrong, because a lot of the benefits that you can gain, including the 40% cost savings, you’re not going to get them. When you actually run them like we do with our commercial product loft, then you get these benefits. So in a way, I would say we create a little subcategory inside that bigger, cloud native Kubernetes category. 

Brett
Got it. That makes a lot of sense. And as I’m sure you’ve had to navigate, there’s a lot of tools out there that are fighting for the attention of developers. So what would you say you’ve done to really rise above all of that noise and capture their attention in such a noisy world? 

Lukas Gentele
Yeah, that’s a very good question. Especially the Kubernetes ecosystem is incredibly saturated with solutions. There’s 50 storage solutions and 100 monitoring tools, like a lot of solutions for the same kind of use, case, and problem. And of course, all of them have their differences, and all of them have their specific niches, potentially to kind of go after and specific advantages. I think the big revolutionary thing about what we’re doing is virtual clusters has not existed, right? So we’re not just taking monitoring and bringing it to Kubernetes and making it more efficient. We’re essentially changing the core technology of Kubernetes itself. And I think very few other startups in the space, I guess, dare to do that. And the way we did it makes you get that sense of what a virtual cluster is very quickly, because we intentionally build virtual cluster as a very lightweight abstraction layer. 

Lukas Gentele
Of course, if you go into the commercial product, it has all the enterprise bells and whistles that you need, like high availability audit, logging, single sign on all of these things. But if you take the barebone open source project, it’s super lightweight. You can run it on your laptop. It takes a minute for you to set up and really understand, oh, this is working. And because ultimately, once you have it started, it is like a real Kubernetes cluster. So there’s zero learning curve, right? You’re essentially learning two new commands to spin it up, because they create to create it, because they connect to it. And then it’s a regular Kubernetes cluster. So everything you already know, all your favorite tools that run on top of Kubernetes, well, you can just use them on top of a virtual cluster that integrates with all of these other solutions and all of these other startups out there, which is super helpful for us in terms of joint go to market efforts, et cetera. 

Brett
Take a note of sense. And last couple of questions here for you before we wrap. So I can hear the passion in your voice. You’re clearly excited about what you’re building, but what would you say excites you the most about what you get to do every day? 

Lukas Gentele
I think the most interesting part about my job as a CEO is I think every day is different for me. And that really gets me excited because I don’t like monotonous work, right? And I don’t like repetitive things. I like challenges. And really, I think in the beginning, my role has changed like a hundred times over the past 18 months. In the beginning it was like, I’m an engineer trying CEO, right? In the beginning it was like coding, helping to build the product, fixing box in the UI, those kind of things, helping people with support. And then it turned more into obviously talking to investors, raising capital, running board meetings. And then it started with hiring. It’s about building the culture of the team. Now we start to see things like streamlining enterprise sales process and growing, that part of the business. And now we’re thinking about post sales activities, customer success, expansions. 

Lukas Gentele
There’s just always a new challenge and always something new to learn. And more of these handbooks for me to go through, learn from other people. And I find that most exciting. And then apart from that newness of everyday’s work, I also really like to see my team grow. And I almost feel like CEO is like the Chief enablement officer. Right? I’m in a way, my core responsibility is hiring really good people and then enabling them to really exceed expectations and do everything to unblock them and move faster and make the right decisions. And if you do that and you see them succeed, it’s just very fulfilling to see that. Nice. 

Brett
I love that. Chief Enablement Officer, one other question for you. How important do you think it is to be based in San Francisco? If you’re building a tech company like you’re building, you’re obviously based here, you’ve chosen to stay here. It sounds like despite your families, your girlfriends, wife’s families in Florida, the rest of your family is in Germany, so why are you still in San Francisco? Would be the question, based on the media narrative that San Francisco and Silicon Valley is dying? 

Lukas Gentele
Yeah, absolutely. I think given that my wife’s side of the family which I love very dearly. Right. I really love that part of the family. The Florida, more like they’re very living on the countryside. It’s like a very opposite life, and it’s more like how I actually grew up in Germany as well, rather than the bigger city life and the Silicon Valley core and innovation, venture capital. Right. It’s obviously very different world, and I love that part. But in a way, I feel like I need that challenging environment here. I need all of these buzzing ideas. And although I guess I’m a prime candidate to make the move to Miami, that side of the family to be closer on that end, physically, I think what I really like about this environment here is the diversity that you get here. A lot of my friends here are from India, from Colombia, from different parts of the world, and they obviously have very different traditions, different learnings that they’ve made over the years. 

Lukas Gentele
And bringing all of this together in this vibrant city is great to see, I think San Francisco, I was just last weekend, I think we have these slideshows outside of here now for Christmas. And I’ve been wandering on the streets and I’m like San Francisco is not that there’s a lot of people walking around looking at these light shows, going to Macy’s, being on Union Square, right. And I think San Francisco is really coming back to life. Of course, it was definitely a sad phase throughout, especially the beginning of the Pandemic, because I think people were very reasonable and stayed home. But actually for a lot of people, it was also the decision to, I guess, close down a local store and things have been changing, definitely in downtown. But I really see the San Francisco coming back, and I think it’s a very European city in a way, which I personally like a lot. 

Lukas Gentele
It’s walkable, I guess, if you ignore the hills a little bit, but it is nevertheless very European in a way that you have like, alleys and walkable cafes and restaurants. And actually one thing that the Pandemic brought to the city is a lot more outside dining, which I personally enjoy a lot. And that’s something I’ve been always used to in Europe, and I see it very rarely in a city that’s not as hot as Miami, I guess. So I really appreciate that part about San Francisco as well and being a. 

Brett
German walking around during the holidays. Do you miss gluevine or where do you find your gluevine? 

Lukas Gentele
That’s a good question. My wife actually loves gluevine, so we always have to go to World Market or sometimes they have that Trader Joe’s as well. Not here for the infomercial, but we definitely have to get the glue wine every year and season. We also bring it home to Florida to have it with the family there because, I mean, it’s hot in Florida, right, and still like the glue wine as. Well, they just love the taste of it. And yeah, I’m definitely bringing some German traditions over here as well with my friends and I guess doing the friends givings and stuff like that. I’m definitely cooking some German dishes rather than the classical American dishes, I guess. And, yeah, I love that intermingling of cultures, and that’s what I really value here. And, yeah, of course, I love to go back to Germany as well, to actually see the Christmas markets in person and be there. 

Lukas Gentele
I haven’t gotten to do that actually since the Pandemic started, but I’m very much looking forward to hopefully be able to do that soon. I think this year doesn’t work out timing wise, but maybe next year I’ll be able to go to a Christmas market again. 

Brett
It’s always next year. Yeah, I couldn’t agree more on San Francisco. You and I have talked about it, but I moved here about five months ago and I had to make the decision, do I move to SF, despite the stuff that you read online? And I think it was one of the best decisions I ever made, and that’s always my advice. And I tell other founders it’s just move to San Francisco. I think it’s the best place to be for a Founder. It’s the safe bet, and it’s a really great city, apart from, what, maybe like three or four streets that you probably don’t want to go around, but apart from that, it’s such a great place. 

Lukas Gentele
Absolutely. 

Brett
Now, last question here for you. Let’s zoom out into the future. So three years from now, what’s the vision for the company? 

Lukas Gentele
Yeah, I think definitely since virtual clusters is such a key part of our strategy, I think we really want to see the majority of enterprise workloads and a majority of Fortune 500 companies be using virtual clusters. And really, developers should become as familiar with the term virtual cluster as they are with the term Kubernetes today. And I think if we achieve that in the next five year, we are definitely on a road to success, and I really want us to be on the forefront of this next technological evolution in the cloud native category. That’s really what we’re working on. 

Brett
Amazing. Unfortunately, that’s all we’re going to have time to cover for today before we wrap. If people want to follow along with your journey as you build, where’s the best place for them to go? 

Lukas Gentele
Yeah, I do have a Twitter account where I share a lot of our company news and we have a lot of blog posts coming out discussing our journey and what we’re working on. And obviously, we are a very open company. You can join us in our Slack channel at slack love sh. You can join on Slack and DM me if you want to reach out. You can connect on LinkedIn. I think all of us are super responsive, no matter who you are in our company, we’re all super approachable. We’re in touch with all of our users, customers, and anyone who wants to get in touch, because I think that’s the beauty of building a community and building open source technology. You just need to have that exchange with everybody who’s willing and open to trade notes. So definitely feel free to reach out on Slack, LinkedIn, Twitter, whatever platform works best for you. 

Brett
Amazing. Well, Lucas, thank you so much for taking the time to chat and share your vision. This is all super exciting and look forward to seeing you execute on this vision. 

Lukas Gentele
Thank you so much for inviting me. Brett all right, keep in touch. 

Brett
Our channel.