The following interview is a conversation we had with Josh Merrill, CEO of Confirm, on our podcast Category Visionaries. You can view the full episode here: Over $11 Million Raised to End the Performance Review Nightmare
Josh Merrill
Thanks for having me.
Brett
Super excited for the conversation. And I’d love to begin with talking a little bit about your history and where you worked. And specifically, I want to talk about your time at Carta. So you joined the company in May 2013. Take us back to May 2013.
Josh Merrill
Yeah. So I was a Founder before Carta. My lead investor was a brilliant guy named Manu Kumar who started canine Ventures. He was the seed investor in, gosh, Twilio, Lyft, just tons of unicorns. And my company was sort of circling the drain. And he said, hey, I want you to meet this other Founder in my portfolio. His name is Henry Ward. I think you guys would get along. So I met Henry. The company at the time was called eShares remembering back to 2013. And ultimately I joined as the second employee.
Brett
What did you see in the company to make you say, yep, thats an opportunity that I want to spend my time on. And did you have any idea that it was going to become as big as it became? No.
Josh Merrill
None of us did. To be honest. What I really liked was the people that I got to work with. I understood the problem very well as a Founder, I had that cap table problem and I hated paying my lawyers to solve it. But I think we thought that wed do this for a year and a half and then it would fail and then wed actually go really start the company that we wanted to build. And lo and behold, that is not what happened. Carta did turn out to be wildly successful, and on reflection, thats a much more preferable outcome.
Brett
Trey, what do you think Carta got right? Im sure there were many things that have led to the success, but what do you think the company really got right?
Josh Merrill
Yeah, its interesting. I think when I look back on all of the decisions that we made, I really can attribute the success to just a few of them. And they were really sort of go to market and sort of product led growth decisions. One decision was focusing on selling directly to CEO’s in the long tail of startups. So we had tried, for example, selling to law firms. Law firms were the original customer. They were actually the ones managing cap tables. We tried to sell them software and they didn’t want to buy it.
Josh Merrill
So we tried that, we tried going through investors and then it was like, I want to say it was like new years eve of 2013 and were trying to get our homepage out the door and were like, you know what, we tried everything else, lets just go for CEO’s and see what happens. And that actually turned out to be the right target for our messaging. And the second was a product decision which was when you sign up for Carta, you’re going to issue electronic stock certificates to all of your investors. That was actually something pretty novel at the time. There weren’t any other products doing that.
Josh Merrill
But what it really meant was that when one seed stage company would join the platform and pay us a really modest amount of money, what was actually happening is that they were bringing 20 investors on board as well. Those investors sat on boards who were then tell their portfolio companies about us. So that was sort of the product led growth, but it was really just a couple of decisions out of all of the decisions that I stressed over that made the difference.
Brett
Trey, super interesting. What about founders that inspire you? Who comes to mind when I ask that question?
Josh Merrill
Oh gosh, I got to tell you, there are so many, but I will actually just throw out Henry Ward, who is the Founder of Carta. I’m not suggesting like he’s the greatest Founder in the world or whatever, but I love him. And I got to have the experience up close of seeing all the successes but also all the mistakes. And I think that when we look at founders who are sort of public figures, we get sort of one version of their story, but we don’t get the whole story. And I was really grateful to spend six years actually reporting to Henry and just seeing the way that he thought about things, the actions that he took, the choices he made, so he would be at the top of my list.
Brett
I had, of course, heard of Carta before, but I really started paying attention to Henry around COVID when they had a round of layoffs. And I remember the world was in an extreme place of uncertainty. Everyone was kind of freaking out. Everyone was starting to do layoffs, or some companies were starting to do layoffs and then Carta did their layoffs. And I remember the blog post he wrote just kind of talking through everything and the level of transparency and how he communicated the problems. I think it was just a very unique and a very effective way to communicate for news like that and bad news, like, totally remember that blog post.
Josh Merrill
Not only do I remember that blog post, I remember Brian Chesky publishing almost the same blog post a month later when Airbnb did their layoffs. It was a model. I mean, I think the way that Carta approached that riff was a model for how companies should do layoffs. It’s never fun. It’s never a fun thing to have to do. But, yeah, he walked through all of the decision making. It was humane. It was transparent. I can’t think of a better way to do a riff.
Brett
Makes sense. And on the topic of angel investing, lets talk about some of those investments that you’ve done and really what you’ve learned from that whole process. So if we just dive into that, what are some of the big takeaways that you’ve learned from being an active angel investor?
Josh Merrill
Yeah, its a good question. So first, my first caveat is I wouldn’t ever profess to be the greatest angel investor. I’ve been in maybe 50 or 60 deals now or something like that. And I think what I would say is what I look for is theres this short checklist of things that make a story or a deal, like really tight, and I wont even get into the deal mechanics. Lets just assume that its a basic seed or series a or series b round. Its just like, do they have a great team? Do they have a good go to market plan? Is the product solid? Do customers have great things to say about it? Are they referring, does the business model make sense? Its just this short checklist of things that I really like. And if it has that, then im in.
Brett
What about books and the way we like to frame this? We got this from an author named Ryan Holiday. He calls them quickbooks. So Quickbook is a book that rocks you to your core, really influences how you think about the world and how you approach life. Do any quickbooks come to mind?
Josh Merrill
So you may be disappointed with this answer, but it was a book that, I think I read it back in 2014. It was Peter Thiel, zero to one.
Brett
Never heard of it. Josh.
Josh Merrill
I know. I know. Well, you know what it really did for me. So obviously the book is about monopolies and specifically network monopolies. But what it reframed for me, I think as human beings were much more comfortable thinking in terms of normal distributions that, like, there is this idea of like an average. And then there are, like, some things that are below average and, you know, some things that are above average. But fundamentally, the world kind of converges on this idea of, like, normal, you know, like, this average. And I think what zero to one opened up for me was that’s not actually the way the world works. Like, the world is actually distributed in power laws, not just the world, but nature itself. And they’re difficult to think in.
Josh Merrill
But when you actually start looking for power laws in the world, you just see them all over the place. And if you accept that, it’s a really different way of thinking.
Brett
Trey, that’s also one of those books that I read. Yeah, probably around the same time, and I haven’t read it since, but I do need to probably go back and reread it again. I think the version of myself who would read that now is very different than I was and years ago, or however long ago when it first came out. So I’ll have to double back on that one.
Josh Merrill
It’s really good. Yeah, but I think that was, like, my big takeaway was like, oh, actually, the world is not normally distributed. The world is distributed in power laws. And, like, what side of the power law that you end up on really determines quite a lot of your happiness.
Brett
Makes sense. I love that. All right, let’s switch gears now, and let’s talk a little bit more about everything that you’re building today. So how we’d like to begin. Part of the interview is really focusing on the problem. So what problem does Confirm solve?
Josh Merrill
Yeah, the problem that we solve fundamentally is measuring employee performance. And today, the primary tool that we use to do that is the performance review. It’s that typically five point manager rating scale that, again, averages around meets expectations. The reality is that methodology is 100 years old. It was invented by the US military at the end of World War One. And the way we work today is completely different. Today, we work in networks, we’re collaborative, we’re creative, and the way that we work has transformed. But the way that we measure that work is sort of frozen in time. And so we have a new take on the performance review that reflects the way we actually get things done, but also reflects the way that talent really distributes, which is in power laws, not bell curves.
Brett
When it comes to your marketing philosophy, how do you think about the marketing philosophy?
Josh Merrill
Well, in our particular case, so it’s hard to separate out, like, the marketing from the go to market. The reason I say that is, like, if I were to use Carta as an example, we had a sales team and they were fantastic. But what they had behind them was really good product led growth and really good virality through the product. Carta did not have a marketing team. I want to say were 150 people before we hired a marketer. Confirm is totally different. I mean were using its enterprise sales, its sales team driven. So its very different for us. We had to get marketing early on and invest in it.
Josh Merrill
But I would say that in general, the thing that I have learned from marketing from now, having done it for a few years at Confirm, is number one, its a noisy world and mike, you just got to be willing to take a swing with your messaging and your targeting. And number two, its less about, I think, what I thought would happen, which would be we trial these different channels and then there would just be one that we could just pour money into and we would just double down on that. And I think what Im learning is thats not really the case.
Josh Merrill
It’s more about like how many different ways can a single person hear about you such that they go, oh, I actually am going to take a second look at this, or are they ready to, once they get a recommendation from a friend or colleague, are they ready to actually act on that because they got some validation somewhere else? So those are maybe a couple of the things I’m learning about marketing at Confirm.
Brett
I was looking at the website. I noticed right away the big header, let’s end the performance review nightmare. There’s that 360 all crossed out. This all plays into something that I’ve written about a lot, and I talked a lot about of the importance of having an enemy for your company, and then also this idea of kind of going negative, which I would say you’ve done in the header there. Did you have any pushback from your team, or were you the person who’s pushing back on marketing to say, hey, let’s just focus on the features, let’s focus on the benefits, as opposed to saying performance reviews are a nightmare. Right.
Josh Merrill
I don’t remember exactly how we came to that decision, but I remember everyone being a little uneasy about it, which is good. If you look at any of the competitors in this space, any performance management platforms, what you tend to see are very aspirational. The color schemes are all very light and airy, and the reality is they don’t deliver on that. It’s the performance management is still a nightmare, even if you use lattice or culture. But we felt like it was more of an acknowledgement of the reality of performance reviews today to just come out and say yeah, they are a nightmare. So that was a decision that, yeah, there was a little bit of nervousness around it, for sure. The importance of having an enemy. Absolutely. And I would say performance reviews are an easy target.
Josh Merrill
Believe it or not, when were making a lot of these decisions at Carta, the enemy was law firms. You know, were selling to founders who were afraid of calling their lawyer because they’d be billed in six minute increments. So, yeah, it is a very helpful tactic.
Brett
And when you say that, you know, ending performance reviews, who gets offended by that? Who are the legacy companies or who are the people who are in HR who hear that and say, this Josh guy is out of his mind, I.
Josh Merrill
Think that theres a certain group of people who think of them as a necessary evil and that there is this one way to do performance reviews because theyve always been done that way. When we get into a sales conversation, we have a new methodology that I should just mention. We use a science called organizational network analysis. If youve ever done a performance review, youre probably used to talking a lot about yourself and your accomplishments. If you do a performance review on Confirm, the questions that you’ll answer are things like, who do you go to for help and advice or who around you energizes you? So things like that, it’s a very different you sort of turning the performance review on its head. And it’s very easy for an HR practitioner to hear that and want to poke a lot of holes.
Josh Merrill
They’ll ask questions like, oh, well, what about bias? And they don’t necessarily take the time to ask the same question about the process they’re already using. Well, yeah, what about bias? What about a manager that’s biased and, you know, all of an employee’s future growth and advancement is dependent on that one person’s opinion. Can you see a problem there? There’s not a lot of first principles thinking. So, so, yeah, it does make some people uncomfortable. Absolutely.
Brett
When it comes to Ona, did you invent that technology? Are you licensing that technology or is it a methodology that’s just out there and open source, and then you’ve built on top of that, the latter.
Josh Merrill
So its a methodology thats been used in, certainly in academia for probably 20 years. Its just never made it into the HR toolkit.
Brett
Why do you think that is?
Josh Merrill
There are a lot of things that we don’t make a lot of sense. I would say that theres a lot of inertia around things being done a certain way and being able to plug and play a traditional performance review. But I think there are a couple of things that make this the right time for it. One is, as I mentioned, we work in networks. If you weren’t using Slack or Zoom before the pandemic, you definitely are using it now. Now I’m putting aside tech companies because we are often the first to pick up those tools. But most companies in the world are not as progressive. We’ve gone from working in offices to often working from home or from different locations. We’re using networks.
Josh Merrill
There is this change in the way that we actually work, but the way that we measure that work that hasn’t changed.
Brett
Makes sense. This show is brought to you byFront Lines Media podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io slash podcast. Now back today’s episode. When it comes to the market category that you’re in, how do you think about your market category?
Josh Merrill
We are in the performance management category. There are definitely, I think the younger version of myself would have been much more excited to say that were creating a new category. Sometimes I see pitches and things like that talk about category creation and all this stuff. Nowadays I look at that and I go, my reaction is thats not a good thing. When you create a category, there’s a tremendous amount of education that goes into helping people understand what it is you do because they don’t have a mental model for it. And furthermore, if you’re selling to enterprise, not only do they not have a mental model for it, they don’t have a budget for it. You want to be able to say this is the line item that we slot into. I would definitely say we’re improving a category, but certainly not creating one.
Brett
Yeah, that’s something I see a lot of founders get wrong when it comes to category creation. Is it sounds so cool, it sounds so sexy that I think a lot of founders end up just doing it because it sounds cool, when in reality they would be way better off just taking a challenger position for that established line item and trying to make the case for why they’re better, faster, or cheaper than whatever else is out there in the market. So that makes a lot of sense.
Josh Merrill
Yeah. From one of my favorite lines from Moneyball, the first guy through the wall always gets bloody.
Brett
Such a good line.
Josh Merrill
Yeah.
Brett
Now, how have you seen your messaging and positioning evolve over the last, let’s say, year?
Josh Merrill
So I would say that our messaging has become more confrontational and more challenging. We created our brand identity and a lot of our messaging maybe two years ago, something like that, but weren’t quite as in your face as we are now. So we have no problem, for example, saying that 360s are completely useless. We have no problem saying that manager ratings are mostly biased and their garbage. So I would just say its become more challenging, more confrontational. And that really was a response to the realization that theres just a lot of noise out there and you just, you have to be willing to take a risk to cut through it. We actually talk about it. We refer to like truth bombs. So all of our marketing, all of our messaging is always centered around a truth bomb.
Brett
Did you give us some other examples of truth bombs?
Josh Merrill
Yeah, you know, one of them actually comes from our own data. You’ve probably written, you know, if you’ve ever done a performance review, you’ve probably done a self review at some point where, you know, you’ll answer a question like, hey, how do you want to develop in the next twelve months? Or something like that. And we actually looked at our own data and we said how, when a company asks that question, how much time does the employee spend answering that question? And how much time does the manager spend reading that answer? And what we found was an employee, you ask an open ended question like that, an employee is going to spend about seven and a half minutes answering that question. The manager is going to spend 8 seconds reading it. And obviously that’s a waste of time.
Josh Merrill
And so that’s one of the things that we’ll build a little campaign around that fact and put it on LinkedIn. And some people disagree and other people say, yeah, I get that, I’m in.
Brett
Can you share any numbers that highlight the growth and traction and adoption that you’re seeing?
Josh Merrill
Yeah, well, I would say so. We’re probably going to end this year at about double the revenue of last year. I think we’ll probably do well, probably exceed that in 2024, just looking at the pipeline. And, yeah, what other numbers can I throw out there? I mean, our average in general, we’ve been pushing really hard up market. So a year ago, our average deal size was something like $24,000. Today we’re getting up to about $70,000.
Brett
What have you learned from going up market?
Josh Merrill
Oh, gosh, it’s harder than it looks. So at Carta, for example, I mean, I remember how excited were when we got our first series a customer, and then it was, gosh, at least a couple of years in before we really started to move up market. With Confirm, we started much, much earlier. So our very first customer, this is when it was just me and Dave, my Co-founder. So two of us in the company, and our very first customer was 800 employees. And then since then, its just gotten bigger and bigger. But its hard. I certainly underestimated how hard it would be. I would say theres a security aspect to it. You got to get your soc two, type two, or any other certifications.
Josh Merrill
But thats actually almost the easy part because you can go to a provider like thorough pass and you can get a sock, too. The harder part is actually like, God, the go to market. Theres so many more people who have to sign off on a decision or at least not get in the way. Continuing support integrations are almost like the starting point when you sell enterprise software. Its like, what else does this integrate with? And then you build the product. So its a really different motion. Yeah. Altogether, how did you convince that 800.
Brett
Person company to give you a shot and be customer number one?
Josh Merrill
Oh, easy. It was Cardiff. Yeah. They were our very first design partner, and I don’t want to make it sound like it was actually that easy. We were working with people who I actually hadn’t worked with before, but they did definitely take a risk by choosing us.
Brett
What about customer number two?
Josh Merrill
What I would say about a lot of our early customers is they really all came through relationships. It wasn’t like we just spun up this sales machine overnight. It was like posting to the, I think our second customer came from my Co-founder, Dave, posting to one of the alumni groups that were a part of for startups. And that was our second customer, and then they referred our third customer, and that was it. I mean, it really was just like just trying to get this flywheel going. And that’s way before we had messaging, before we really knew what the product was. It was very early. Yeah.
Brett
As I mentioned there in the intro, you’ve raised over 11 million to date. What have you learned about fundraising throughout this journey?
Josh Merrill
Really? Two things. One is certainly the importance of relationships, almost. I would say maybe half of the investors in Confirm are people who I knew in the past and really liked. So, as one example, we have Andrew Parker on our board, who was a partner at Sparrow Ventures. He was at Spark Capital when he led their series A investment into Carta and then ultimately spark led the series b and he joined the board. I had to work with him for years. He was just one of my favorite people. And I always said, friends, boy, if I had the opportunity to work with him again, I would take it. Im very lucky that hes on our board today. I can tell that story about many of our investors. Renan bar Cohen at Resolute, whos fantastic. So I would say, yeah, the power of relationships.
Josh Merrill
And in general, I spend a certain amount of my time today trying to get to know the investors that I want to work with a year from now. And the second thing is really just the power of storytelling. You know, there is this. You can Google, like, you know, startup pitch deck example, and you’ll come up with like, the ten slides that absolutely must be in your startup’s pitch deck. Well, no, that’s not really right. Like, that’s. It’s not about covering every single point that, you know, y combinator or first round or whatever says has. That has to be in your deck.
Josh Merrill
It’s really about telling a story, and a lot of times it starts with the problem that you’re trying to solve and goes into the solution, and then why that solution makes sense and how it takes you into something bigger, et cetera. And I think at the end of the day, investors just. It’s just like, just tell us a good story, you know?
Brett
Is this like the Andy Raskin strategic narrative structure for a story, or how do you structure your story and structure the narrative?
Josh Merrill
Yeah, you know, I’ve heard about that. Like, the world’s best sales deck ever.
Brett
Yeah.
Josh Merrill
And I think that actually came from Zora, if I’m not mistaken. But, you know, there’s no, like, one right way to do it. I do find that starting with the problem is a really good starting point. The things that I usually want to know are, like, what’s the problem? What’s the solution? Why does the solution make sense? How does that take you into something bigger? Like, if everyone in the world is using your product, what’s different about the world? Like, what has changed? So, yeah, there’s no one right way to do it, but it’s whatever the way is, it’s just gotta flow based.
Brett
On your experience with Confirm and, of course, your experience with Carta, what would be the number one piece of go to market advice you’d give to a Founder who’s just bringing their product to market?
Josh Merrill
Oh, gosh. I would say the earlier you get your product in front of a person whos got to make a buy or no buy decision, the faster you will learn. I cant tell you how many startups i’ve seen fail because they just waited too long to have the perfect product or to have the perfect message or for things to be just right. Except that its going to be messy and chaotic. And oftentimes the more chaotic it is, more successful the company becomes. That would probably be my biggest if. Sometimes I have to remind myself of that. It’s just like everything Reid Hoffman said, if you’re not embarrassed by the first version of your product, you’ve launched too late. So yeah, just get that feedback loop going.
Brett
So we’re both here in the Bay Area, and what I like to ask whenever I find founders who are still based here is why San Francisco? Is it dead? Is it dying? There’s obviously a lot of media reports. I have my friend sending me these crazy videos all the time about things they’re seeing in SF. So why are you still here?
Josh Merrill
Yeah, it’s a good question. Funny enough, my Co-founder and I lived, we lived in the south Bay. When we started confirming, when we started the company, we said, you know what, the action is in San Francisco. This is late 2019. So right before the pandemic, we said, like, the action is in San Francisco. And we actually kind of left our South Bay lives behind and we rented a corporate apartment and moved in together to start the company in the city. And then of course, the pandemic happened and everything shut down and we’re both still here, not in the same apartment. We slipped out. But I think that there’s still a lot to love about San Francisco. And I think the tech talent is coming back. I mean, some of it left.
Josh Merrill
I think what’s probably a bigger factor is that work is just happening in a different way now. I mean, it’s just we’re not going into offices in the same way that we used to. What I would say, to answer your question, why are you still here? I would say it’s because I like San Francisco. It’s just a good quality of life. A lot of things I don’t like about the city, but the things that I like, I really like.
Brett
I’m with you and I’m a. I’m a huge fan of San Francisco. I just like to ask that because I get that pushback and I get those questions a lot from founders and just friends in general. But what I always tell them is like, the density of founders, investors and builders from big tech companies. Like, you can’t beat that. You know, just around, like, where I live, like, all of my meetings are a ten minute walk, and when you go to these dinners or you go to have a drink, you’re sitting around and everyone’s talking about building big tech companies. And, like, I think that’s just very hard to beat. And I’ve never seen any other city that’s remotely similar to San Francisco in that way.
Josh Merrill
Oh, totally.
Brett
Yeah.
Josh Merrill
I think some of it has, like, attenuated a little bit, but it’s still a degree that you just won’t get anyplace else in the world.
Brett
Final question for you. Let’s zoom out three to five years into the future. What’s the big picture vision that you’re building?
Josh Merrill
So the mission of the company is to rightly recognize everyone for the difference they make at work. We want to be the best in the world at truly measuring the impact every single employee makes. Where we really see that going is almost toward a credit bureau of employee performance. If you were to think about it, you may have a really long and successful tenure at a company, but when you leave that company and you go out into the job market, youre pretty much on equal footing with everybody else. You are going to explain to the next potential employer and the next potential employer why you really are who you say you are, why you really are exceptional.
Josh Merrill
What we really envision is being able to take that performance data and actually make it portable so that you could actually go to a prospective employer, not just say, no, no, I’m really great, take my word for it. But to be able to say, you know what, 62 people in my previous organization went to me for help and advice, and this is what they asked me about. It was Python, it was whatever, JavaScript. Or to be able to say, yeah, I was a 92nd percentile contributor in my previous organization. Here’s the methodology and here’s the data that shows that. That’s what we get excited about. So I would say in our long term vision, we’re really building this sort of talent bureau of employee performance.
Brett
Amazing. Love the vision. I’ve really loved this conversation. We are up on time, so we’re going to have to wrap here. Before we do, if there’s any founders that are listening in and want to follow along with your journey, where should they go?
Josh Merrill
Go to confirm.com or just reach out to me. Josh@confirm.com.
Brett
Dot awesome, Josh, thanks so much for taking the time. That’s been a lot of fun.
Josh Merrill
Yeah, anytime. Thanks for having me.
Brett
All right, keep in touch. This episode of Category Visionaries is brought to you byFront Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice.
Josh Merrill
Thanks for listening, and we’ll catch you.
Brett
On the next episode.
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