The following interview is a conversation we had with Ian Coe, CEO & Co-Founder of Tonic, on our podcast Category Visionaries. You can view the full episode here: $45 Million Raised to Build the Future of Synthetic Data
Ian Coe
Hey, thank you.
Brett
Let’s go ahead and just kick off with a quick summary of who you are and a bit more about your background.
Ian Coe
Yeah, totally. I’m Ian, Co-CEO and one of the founders of tonic. Tonic is a Synthetic Data company with the mission of protecting data and boosting productivity. You can kind of think of us like an ETL for data protection. We make it easy to move and transform your data so it’s both secure and available in the right environments for development, testing, or developing models. Today, we have hundreds of customers across industries using data generated by tonic to build data driven software and prep data for training models. The reason they do this is they get all the value of production data without actually having to copy sensitive data around their organization. And so what we see is these teams, they authorize fewer defects, they ship faster, and they have a much better security posture that works well with the.
Ian Coe
Rest of their organization.
Brett
Checking out your LinkedIn, I see that you worked at Palantir for five years. So before we dive deeper into tonic, I’d love to start there and just learn a bit more about Palantir and your experience there. So I’m sure you learned a ton from that experience, but what would be, like, one big takeaway that you learned while you were there? Yeah.
Ian Coe
So tonic actually came out of some of the challenges that me and my co-founders saw at Palantir around the ability to have data where you want it, to build software, develop models. A lot of the work, as you know, at Palantir was sensitive, involving sensitive data. So often, if were having an issue, and this happened to me personally while I was there, if you were having an issue on site, you couldn’t just send that data over the wire back to Palo Alto, where maybe someone, a developer, was sitting. And so we had to come up with ways to have that conversation. And one of the solutions were, I would say, the earliest versions of what you might call Synthetic Data, where you make data that looks like some of the challenges that you’re seeing, and try to get that over to developers so.
Ian Coe
They can help solve the problem.
Brett
Trey, take us back to the founding of the company in 2017. What were those early conversations like as you guys were getting the company started?
Ian Coe
Yeah, I mean, a lot. Obviously, founding a company is not easy. A million things to figure out. And I’d say the interesting thing is there’s sort of an insurmountable challenge. The world knows nothing about you, and you’re trying to build something from nothing. So a lot of what we talked about is just starting with what would have been useful to us and then trying to quickly go from there to how can we talk about this to other folks that they understand it quickly, and then also figuring out what early things can we deliver value on, because you’re not going to be able to build a giant, scalable platform out of the gate.
Ian Coe
So what are sort of the incremental wins for the customers, and a lot of what we did is iterate on what those should be and go to folks that we knew in our network, or even push out of our network, which is actually often where we had the best conversations to showcase what we could do and say, hey, is this nugget interesting to you?
Brett
And where’d you decide to begin then?
Ian Coe
Yeah, it’s a good question. So, I mean, I think when were first starting and had this idea that Synthetic Data could really change the world, it’s a very important point of where you start, right? Because you can’t change the entire world at once, even if you’re right, which is always a big question of if you’re right. But assuming you are, where do you start? And so we talked to a lot of folks, and what we concluded was that the best place to start was really helping developers. Obviously, developers are a massive part of the tech ecosystem, and there were a lot of data challenges there. The interesting thing that we found is that Synthetic Data could solve a lot of those challenges quite well. Basically, for developers. What we really thought about initially was.
Ian Coe
Preserving the graph of the data so.
Ian Coe
That you can run your application on.
Ian Coe
Top of that data.
Ian Coe
When you go into the data science world or analytics world, the question changes a little bit. And the graph may be important, but it’s really also about relationships in the data, statistical relationships. And we didn’t want to start there because our sense was that was a little bit more of a research problem. And that to add that nugget of value to a customer would require a much longer, uncertain process. And that’s where we began. So we ended up focusing on developers.
Ian Coe
Out of the gateway.
Brett
How long did it take until you started to really feel like there was a viable product and a viable business here?
Ian Coe
Oh, man, I feel like it’s asking. That’s like asking a parent, you know, when did your baby start sleeping through the night? You don’t always remember. That’s very.
Ian Coe
My kid is still not sleeping tonight, so don’t stress me out.
Brett
I have my first kid on the way, so that’s not what I want to hear, Ian.
Ian Coe
Oh, it’ll be smooth, you know, you’ll pick up a few new hobbies, get a lot of rest. Don’t worry about it. Yeah, I would say I think we started helping our earliest design partners within a few months. I think we had a product that someone who had no familiarity with us and had no reason to trust us at all would give us money for. I think within six to nine months is my memory of how that went. And that’s the point where we felt like we could look someone in the eye and ask for money, and it wasn’t unreasonable.
Brett
What phrases were you using to describe the technology then? Were you already using Synthetic Data or data, or when did that start being a term that you used?
Ian Coe
Yeah, we started talking about that, I think essentially at company founding.
Ian Coe
We do actually have a lot of thoughts there.
Ian Coe
It’s not a straightforward category, partially because I think there’s a geeky question that is exciting to us, and I’m always excited to everyone. But there’s a big question around what is Synthetic Data? What is masked data? And data masking is often, I think, looked at as an easier, trivial operation. And Synthetic Data is viewed as this complex, more advanced operation, but the lines are often very blurry. I think there are some things that are obvious. If you take a column of data and you redact it trivially, just null it out or something like that is masking your data, that’s doing some trivial reaction. But what if you take that data and you replace it with data that looks somewhat similar, like it’s column of names, you replace it with things that look like names. Is that Synthetic Data? Is that mass data?
Ian Coe
I think it gets even more complicated if you take that column of names and then preserve some kind of relationship with those names to another column, let’s say a gender column or something like that. And what is the threshold for sort of moving from masked to Synthetic Data, and there’s no one, I think, out there that has an exact answer. We have our thoughts, but we talk about Synthetic Data, and what we really like to do is actually talk more about the customer’s problems and what do they need, and what’s the bar for them to be productive and get value out of the data that we’re producing. And that’s what we like to think about. What attributes of the data do they need as opposed to, is this Synthetic Data?
Ian Coe
Is this mass data, but for shorthand to help folks understand the domain that we’re talking about? Yes, Synthetic Data is something that we talk about all the time.
Brett
And was that a phrase that you coined, or is that a term that was being used and you really just ran with it?
Ian Coe
It’s a term, I think it comes out of academia, actually. That’s my sense. I mean, there’s Wikipedia pages about it now.
Ian Coe
I wish I could take credit for.
Ian Coe
Coining it, but we call ourselves the fake data company because we think that’s amusing. And in reality, that’s what all these things are. Is there various versions of fake data? So that’s what I think we can claim credit for, is calling ourselves the fake data company. I can’t claim credit for Synthetic Data.
Brett
I think when you go back and look at all of the companies who are celebrated as category creators, most of them didn’t just up with that phrase and pull it out of nowhere. Like, yeah, they hijacked it from somewhere. Someone was already using it. Like, gainsight, I think, is a very famous example. They didn’t invent customer success as a category. They’re celebrated as the category creator there. But they’re the ones who just really were the loudest voice in the room, and they brought the whole profession and discipline and category forward. So sounds like it could be something similar here with Synthetic Data for you. What are your views long term on the category? Is that going to be your category, or what do you want your category to be three, four, five years in the future?
Ian Coe
So I view Synthetic Data as what I alluded to as a tool to enable customers to do things that they want to do. When I think of three, four, five years out, yes, I think we will be in that Synthetic Data category, but I also suspect we will be pushing into broader categories around how customers operate with their data and really protect the security of their data in a broader sense and move their data, because that’s really what it’s ultimately about, getting a big new feature out to our customers around making it possible to containerize their data. We’re going to make it possible to synthesize databases, move really large amounts of data really fast. So I think Synthetic Data is the.
Ian Coe
First part of this.
Ian Coe
But the broader story is really around solving your data problems and making it really easy to work with secure data in a way that protects your customers privacy, but also makes it easy to develop software, build models, and not spend a lot of painful time on the data challenges, which isnt where you want.
Ian Coe
To be focusing your energy.
Brett
Trey, and when it comes to your.
Brett
Marketing philosophy, how do you think about that?
Ian Coe
Trey? This is something that we’ve learned about over time. All of us came from the more technical side, even this. So theres four founders at Tonic, two of us on the business side, two of us are purely on the engineering side. So Carl and I are on the business side. We came from Palantir and did business development there, but obviously, you know, didn’t do a ton of marketing. So it’s something that we’ve learned. And I think, you know, what we’ve come to believe is that being generally honest and direct and also producing really high quality content is the best way to reach our audience. You know, we’re, you know, the people that benefit from tonic are, you know, technical folks. And so I think they appreciate candor, they appreciate substance. So that’s what we try to focus on.
Ian Coe
So, you know, we do blog posts that, you know, attach to open source project that we think are genuinely useful to the community. We try to do blog posts that are actually instructive and help people level up. So that’s really where we try to focus a lot of our effort, because.
Ian Coe
Generally we think that’s valuable to the.
Ian Coe
World and valuable to our customers.
Brett
How do you think about ROI when you’re investing in content?
Ian Coe
Well, not getting into geeky marketing attribution stuff, generally, yes. We run a business. We can’t just produce content solely for charitable reasons. But I think, like I said, we try to make sure that it’s high quality and generally is helpful. But then when we are trying to measure ROI, we do have attribution. We look at web traffic, we look at time on page. There’s a lot of different metrics we can look at. To look at a piece of content and saying, does this look like this is generally valuable? And then obviously you can look for things like sign ups and other types of conversion metrics.
Brett
What’s the competitive landscape look like today for you?
Ian Coe
Yeah, good question. So there’s different styles of competitors that we see, so we sell from companies.
Ian Coe
That are all, from SMB all the.
Ian Coe
Way up to large enterprises. And depending on who we’re talking to, we see different competitive dynamics at the large enterprises. We typically see some of the older test data management folks out there and sort of the ones that have been around for a while. And generally, I think the conversation there is really about time to value and things like that. And then with more SMB and mid market folks, we’re typically seeing more contemporaneous startups. And really there, I think, again, it is a time to value conversation, but it’s also a completeness of platform conversation.
Brett
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Brett
Now back today’s episode.
Brett
What about your messaging? How have you seen that evolve over the last twelve months? From my conversations with other founders, they’ve had to make a lot of changes, just as the market’s undergone a lot of changes lately. Have you had major messaging changes?
Ian Coe
A little bit. I wouldn’t say we change a core messaging. I mean, we’re still the value of Tonic’s. The value of tonic. It’s building better software faster, it’s protecting your customers data. Changing that would require changing a lot about the product. But what we have helped our customers work through is building business cases, talking about ROI in a more direct way, helping folks understand there are ways you can use tonic to do cost savings, things like that. So helping customers think through those business cases has been something that we’ve pushed on, and then I’d say outside of the economic environment, we have actually launched some products that do help with Genai and things like that, which obviously that is new messaging for us, but those are also new products.
Brett
Trey, you share any numbers that highlight the attraction and growth that you’re seeing.
Ian Coe
Generally, that’s something that we keep confidential, but we have hundreds of customers across industries, especially folks in financial services and healthcare.
Ian Coe
But I think that one of the.
Ian Coe
Things that’s really been exciting for us is we have seen tonic be a really ubiquitous problem for all developers. And so that’s been really, I think, something that was actually surprising to us and also really reassuring as we think sort of about the future of tonic.
Brett
And looking through the website, I see some logos that everyone will recognize. We have the NHL, we have eBay, we have Flexport, bill.com dot. If you reflect on the success of landing logos like that, what do you think you’ve gotten right as an organization?
Ian Coe
I think the most important thing you can do with a customer thats significantly larger than you is do the things you say you’re going to do. They’re obviously going to have more complexity than you likely do. If you are a 50 or 100 person company and you’re working with a 10,000 person company, they’re going to have a lot more complexity. And I think that’s something that were fortunate that we had experience there. My co-founders from Pound here, we saw a lot of that. I also worked at Tableau with one of my other co-founders. So we saw what it looks like to solve data problems at very large organizations, at large scale. And so I think were able to have those conversations.
Ian Coe
But generally, I think for anyone trying to work with a much larger organization, it’s having the respect that the complexity is going to be a lot higher and that you need to, you know, if you say you’re going to do something, you’re going to have to do that in that complex environment and do it at high quality.
Brett
One thing that really caught my attention when I first heard about you probably a year ago is your brand is fun. And just looking through the website, you know, check out who’s faking it. The hashtag real fake data community. When we got on our call, you had the fake data company hat. So you have all this fun stuff in place. Talk to me about making that decision. Were there any people on the team or internally, did you wrestle with that idea? Like, should we really embrace this and be memorable, or should we just stay more serious and just focus on the product? Was that a debate that you had to decide on how much fun the brand would represent?
Ian Coe
It totally was a debate because as you asked about, we work with some large, serious organizations. We’re working in an area that touches risk and security and privacy. So it’s a serious area. Right. It’s something that we have to, you know, we have to take very seriously and is very serious for our customers. But I think early on we just felt that this was authentic to us, you know, starting companies very hard. I think having a sense of humor and not taking yourself too seriously and accepting that there’s going to be challenges is really helpful. And we felt that having a little levity in our brand was, you know, very authentic to us. And, you know, as you said, I think generally the biggest challenge for any company is being noticed and being detected in this very noisy world.
Ian Coe
So we felt that not only was it authentic, but that our biggest risk was not being, not serious enough, but actually not being known. So I think there was a little bit of heartburn, but it was a fairly easy decision.
Brett
Trey, have you had any situations come up where you’re like, oof, maybe we shouldn’t have gone with this fake data idea.
Ian Coe
I can’t think of anything. I think as long as wear collared shirts, we’re.
Brett
That’s awesome. What about community? So I had mentioned community there. What role has community played in your growth and your success?
Ian Coe
A good amount. A lot of our customers have found us for referrals. We’ve even had customers where they were working somewhere, they moved somewhere else, and they brought us into the new company. So I think reputation and community has been incredibly important. We have a handful of open source projects. I mentioned that also, folks, we have some engagement on. And so, yeah, it’s been really great getting to know all of our customers. And especially it’s always very humbling to have someone bring you into a new organization after working with you somewhere else. I mean, that’s something that I think it always makes us feel really happy and confident that we are helping the people that we think we’re helping.
Brett
As I mentioned there in the intro, you’ve raised 45 million to date. What have you learned about fundraising throughout this journey?
Ian Coe
I think theres a few things that I would say to anyone sort of considering it is obviously its the best way to move really fast. You get access to capital that you would otherwise not have. And so I think that is the big lever for any Founder. I mean, obviously it also comes with a set of responsibilities and expectations around it, and I think thats something that we take very seriously. Recognizing that you’re taking money from someone who believes you’re going to do a certain set of things and your reputation is now on doing those things. So that’s something that I think everyone should keep in mind. The other thing I think to keep in mind is that it’s helpful to build a relationship. That’s what we’ve always found, is that everyone we’ve raised from, we’ve gotten to know for a really long time.
Ian Coe
And then I think that builds a degree of trust that’s really helpful for both sides. So you go into it with, I think, a really good set of expectations out of what the next year is going to look like, and obviously no one can, theres always going to be uncertainty. Obviously we raised our series a shortly after COVID happened, and that was unplanned. But the relationship had been building long before that. So were getting to know Glenn and Oren over at GGV for a long time before that. So that was really helpful. But obviously there was no way to predict COVID, at least for us. I don’t know, maybe theres someone out there, some genius out there who could predict it. But for us it was a surprise.
Ian Coe
So I’d say that would be sort.
Ian Coe
Of my two cent for anyone is build a relationship, build that mutual trust, and then what any surprises could come up will be more blips than really hard mountains to climb.
Brett
Trey, both from a fundraising perspective and just a company building perspective. How important do you think it is to be in the Bay Area, Trey?
Ian Coe
It’s hard to say.
Ian Coe
I mean, I’ve always been here, so I cant say how hard it would’ve been to not be here, although I suspect it would’ve been very hard, especially initially with raising our seat around. A lot of that came from meeting folks that we knew that were out here. Also landing initial customers were able to have a ton of meetings out here because of the tech ecosystem, especially were in devtools. Obviously that made it really helpful. I cant say what it would’ve been like to try to fundraise sitting in another city, but the fact that I can go to coffees with people and have these casual conversations does enable kind of that relationship building. So for me, I personally wouldn’t do it anywhere else.
Ian Coe
But I can’t specifically say I haven’t actually done the a B test, but I can point to a lot of things that feel like I would only be able to get that experience here.
Brett
Let’s imagine you were starting the company again today from scratch. Based on everything you’ve learned so far, what would be the number one piece of advice you’d give yourself?
Ian Coe
Listen to your early customers. And that activity is more valuable than planning, especially early on.
Brett
Final question, let’s zoom out three to five years into the future. What’s the big picture vision here?
Ian Coe
Yeah, like I was alluding to, I think it’s really about basically making it so that developers, data scientists, those folks, don’t spend time on data problems. So for me, tonic will be a success when people are able to focus entirely on the intellectual challenges of their work and not on the painful data privacy, data cleanliness, data portability, challenges that plague so much of work that touches data today.
Brett
All right, Ian, we are up on time, so we’re going to have to wrap before we do, if there’s any founders that are listening in that want to follow along with your journey, where should they go?
Ian Coe
Check us out on our website, Tonic AI. We’d love to hear from you.
Brett
Awesome, Ian, thanks so much for taking the time.
Ian Coe
All right, thank you.
Brett
All right, keep in touch.
Brett
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