Andrew, thank you so much for coming on the show. Really appreciate it. You've built quite the company here, a really interesting company in Density. Tell us why or how, why Density, how did you come up with this idea?
Well, we wanted to know how busy our favorite coffee shop was, and it was really irritating that we couldn't remotely know whether or not there was a line. We were in upstate New York where there's a lot of snow, lake effect snow and so walking several blocks was a bit more of a pain than in California. So, we thought, well, how hard can it be to buy something that counts people? 10 years later, I can tell you, nine years later I can tell you, counting people is one of the hardest problems I'll ever work on. So, that's the background.
The idea is it has a small sensor at the doorway leading into a venue, and it lets that venue know real-time how many people are entering or exiting the business. I mean, that's one application, obviously that's not all of it.
So, the market we serve, the initial market that we serve has evolved over time and so too has the technology. We actually design custom radar sensors, there's actually one here in the booth. It's about this big and looks like a slightly wider Apple TV, a little bit thinner. They get installed in open space inside of large offices or large corporate real estate, large real estate portfolios.
We measure how humans use those buildings. So, we don't really focus on the coffee shop, bar, restaurant, or our origins. We really focus on some of the largest companies in the world who have tens of millions in some cases, hundreds of millions of square feet of space and very little visibility into how it's used.
We deploy the infrastructure, we count people anonymously. We don't know gender, age or ethnicity. In real-time we serve that data back to analytics systems, back to live displays, back to dynamic janitorial, there's a whole bunch of things that come from people count.
Have you noticed companies are super interested in this data? Even more so post-COVID, when they start thinking about the remote work versus in-office work, versus hybrid. Are you having a lot of those types of discussions, where these companies are tracking like, we wanted everybody to come back in the office, half of them actually are? Is that a piece of it as well?
Yeah. So, two things happened as a result of the pandemic. First off, just to give a sense of scale. In the United States there's 10.9 billion square feet of leased or owned and occupied space. So, that's a space that is intended to be used, 10.9 billion square feet of office space, just office space. It's about 15 to 17% of commercial real estate in the United States. 4.4 billion of that, so 41%, is vacant but paid for, meaning occupied, paid for, leased, so forth, but literally not used.
Conference rooms, desks, untouched. It's about $300 billion spent every year on space that nobody uses. Space that gets cleaned many times a day, in some cases five to eight times a day, if you talk to some folks. Those numbers are all pre-pandemic.
So, when the pandemic hit, everybody went home. We had an extraordinary waste of space, nearly half of the space was vacant but paid for pre-pandemic, those numbers only got worse after the pandemic. So, everybody goes home.
The two things that happened were, A) CFOs and C-level teams started looking at their portfolios and saying, "What are we going to do with all this space? Are people coming back?" Real estate teams said, "We're not entirely sure, but we've done some surveys." They said, "Well, out of curiosity, it totally makes sense. We've never had a pandemic before. Out of curiosity, how many people were using the office before the pandemic?" The answer was, "We're not entirely sure. We've been doing some surveys." They said, "You've got to be kidding me. This is a billion dollar asset. How do we not know its performance?"
Essentially scrutiny on this very valuable asset fundamentally shifted as a result of the pandemic, because the buildings emptied out. The second thing is, they've been trying to figure out how to bring people back. A lot of the companies that we work with really are measuring the engagement of people in physical space.
What happens when you turn off a floor and increase the critical mass on other floors? That has a big impact on what it feels like to be in office, and the trust that builds between teams. We work with a lot of groups who are trying to solve the same basic problem.
How do you make sure your technology is used for good? I could see some privacy concerns around the technology.
To begin with, we don't hand wave at privacy. So, the systems we design, even if we were compromised, you can't get personally identifiable information off of our systems. It's physically impossible because of the sensors that we decided to build, which are anonymous at source. Which is very different than a lot of other systems which are actually not anonymous at source, they get anonymized in transit. They call them optical sensors, but what they really are are cameras and they take photographs of whether or not you're at your desk and then they send that data back and they send it back in an anonymized format, but it's ultimately an anonymized image. In our case, we don't know.
So, we actually fly through a lot of the security and liability concerns of large corporations because we value individual privacy so deeply. The rubric for that is, if a person has a reasonable expectation to privacy they ought to have it. That's number one. Number two, we try to give the data back to the people that are in the space.
So, we try not to be just of use to the folks that manage the portfolio or the buildings, but also to the people that are trying to find conference rooms that are available, trying to find desks that are available, trying to find the amenities and assets, and we show them what the sensor sees.
We're very transparent about what we build, very transparent about who we're trying to serve, which is ultimately the people that are using the building. We've found that people find the system really cool, really fun to work with, and they choose Density because we care so deeply about privacy.
How have you grown the business? How has it grown and evolved since you started it?
When we announced that we built a people counter and an API, we got flooded with inbound. One of the groups, I mean we heard from all sorts of different sectors, but one of the groups that we heard from was corporate offices, workplaces. Their message was, we've been trying to solve this problem for 15 years, 20 years. We've been repurposing retail technology over and over and over again. I've got a locker full of broken devices that don't work.
So, we went out and had some conversations and we learned in the process how massive the problem was. I would say that the early days of how we determined the market was very much going and talking to customers, going talking to prospects, and just trying to be students of the problems that they had.
That really refined our approach. It really refined who we thought of as a customer, and ultimately it shaped a product. Our goal, just to be explicit, and I know we're talking about our particular company and we should probably be talking about eventually the Meta like building companies, but our goal is to measure all built space. Everything ever built, everything to be built. Large corporate office is an excellent place to begin for a whole host of reasons.
One of the things that was important for us was being able to justify how market selection solves the distribution problem. Because every company has the same fundamental question, how are you going to get customers? How do you solve the distribution problem? There are a lot of ways to attack that, but companies that don't solve the distribution problem can have the best product in the world and it doesn't matter.
How have you solved it?
Well, we haven't solved it yet, but we've got lots of hypotheses. We've got lots of hypotheses going on. Ninety-nine percent of the world's buildings are not measured, so we have not solved that distribution problem. But anonymity, so there's a bunch of things that contribute to solving the distribution problem. Anonymity allows you to bypass a lot of the limitations of deploying products into places where there's a reasonable expectation of privacy.
Building an API that people can use so that they can integrate it, people count is really relevant in the context of other data. Building visual systems so that people really trust the system. To be clear, we don't replace an existing utilization system. We're not like the next utilization system. We're usually new infrastructure for a building, so there's a lot of education. Really focusing on customers who can buy once and deploy thousands of times or tens of thousands of times.
Not going after the long tail of customers, because the long tail of customers requires a different product suite, a different support structure. We really focus on this particular market, which is the workplace because it has all the markers of solving the distribution problem. We will have a customer who will buy and they'll sign a million dollar contract, and they will grow by 3X, and we will have only covered five or 6% of their portfolio.
By market selection, solving a distribution problem that's what I mean, is you focus on the things whether it's product or market selection or pricing or whatnot, that are going to make it easier to distribute the product to ever more coverage, at least in our case coverage.
How have you thought about raising capital and what has your strategy been?
Well, the problem with raising capital is that for founders, you only do it once every 18 to 24 months, a little bit longer if you're lucky. So, venture capitalists are experts, they're doing it all the time. But founders, you lose the skill set, the muscle that you built during that intense period of time when you're raising capital.
I remember early on, it took us six months to raise, I think $850,000 as our first round, and I think our last round we raised in 13 days. For what it's worth, the work that went into those 13 days, the prep work that went into those 13 days, was at least two orders of magnitude more than the work that went into those six months, all of those six months.
So, really refining the process, it's taken a lot of years to lay out a playbook of how we do this. But if you're interested, I actually have a doc that outlines how to think about running a fundraising process, an efficient one. It's just because it's a really painful process. You don't enjoy it. It's a distraction, but it's fundamentally necessary to building venture scale businesses.
I think venture is net very good for the world. I think it's an extremely important part of the world, but it can be really painful for founders.
How has your leadership style changed as the company's grown?
Someone gave me a really good piece of advice. So, just to be clear, it's like an ever-evolving thing. So, everything I say should be taken with a giant grain of salt, interpret as you may. But I got this phenomenal piece of advice where they essentially said, "If you are not looking back at your decisions or your opinions three months ago and thinking, man, that was really stupid. That something you said or thought was really stupid, one of two things is happening. Either you're not changing fast enough with your company, you're not growing fast enough and staying ahead of your company. Or two, your company's not growing fast enough, your company's not changing fast enough. In either case you're fired."
It's a little bit of a tongue in cheek thing, but I think it's a phenomenal way of thinking. Run the exercise. Think three months ago, was there something that you thought that you were just like, man, that was really stupid? I have a different approach to how I might do that. It could be small, it could be large. If that's happening, it means you're changing and change is actually the primary objective of a startup.
It just so happens that change therefore is the primary function of a founder, otherwise the company scales past you and really the company becomes more important, and it's always more important. So, you sort of replace the leader. Founder CEOs that last all the way through to scaled public companies are very rare, but they're also extremely effective.
There's lots of examples of this, but change. Really deeply embracing change is important. I can talk about specific things that I've done, but I think that that frames it —
Yeah. What specific things come to mind?
I love product. It's very easy to get lost in the thing you love. But as a company's CEO, you can choose a place to spike, but you can only go as deep on that spike as you have covered your weaknesses, and you cover your weaknesses by hiring for them.
I got this great piece of advice from Dick Costello once. He was like, "Your job, when you don't know, is always the constitution and construction of the team. That's it." There's another guy I love, his name's Steven Miles. His feedback is, "You are in the people business. Andrew, you're in the people business. Do not forget that. That is your job."
So, really maniacally focusing on curating the team continuously, admitting the fact that teams are not families, teams are teams, and teams tend to be designed to solve particular problems. As time passes, those problems change. So, if you're upfront and earnest with your team, that we're a team not a family, it gives you the latitude to have hard conversations.
We've leveled people who were on the executive team who are still at the company. We made decisions that allowed us to speak openly with people and say, "It's not about you not being excellent. It's about where the company is and what the functions are that you require."
So, getting good at that was something that I spent a lot of time on, or try to spend a lot of time on and very much a work in progress. But really making sure you don't forget the team. If you focus too much on the product, you focus too much on sales, you focus too much on one thing, what ends up happening is the company gets built, it just gets built without you.
That's how founders actually tend to rotate out. It's how CEOs tend to rotate out is, they go, they build the one thing and they forget the rest of it and it gets built. It just gets built by other people.
How do you go about your recruiting? What's your process like?
I still interview every candidate, or every final candidate who gets through the process. I've gotten a lot of flack from our recruiting team, who is phenomenal by the way, we have an amazing recruiting team, about being a gate to moving on. But I would say one of the benefits of that is you get a sense, it's actually a two-way street. You get to really talk about, with the person, why the company exists and what its purpose is and what will happen if you don't die. That can be really invigorating and exciting for an individual.
If you don't see that enthusiasm from a person, it can be very telling as to whether or not this is really something they want to do. You can even ask them, "Is this something that you really want to do?" If you ask it in a way that's actually earnest, they'll tell you. They'll be like, "Well, I think what you're doing is cool, but I still have some outstanding questions." Then you go and you answer those questions and if they're still not convinced, then that's okay. It's not a fit.
But there's a lot of value to doing the manual work of focusing on the constitution and construction of the team and having an opinion. I'll often get asked in those last interviews by really thoughtful candidates, "What are your thoughts on the role that I'm being hired for?"
My answer is almost always, except in the spaces where I have some expertise, is almost always, "I really deeply defer to the function and that team's determination of your fit to that role. My focus is on whether values fit a cultural addition." This is actually an important distinction. A lot of people talk about culture fit and maybe this is no longer a new idea, but culture fit is actually not a good idea.
You want cultural additions. Your culture is always changing, so every time you hire a person, it doesn't matter what you want to do, you're going to have a new culture. It's a question of whether or not they contribute to that culture or detract from it. Values however, values fit, values match, you need, that's a must. So, in our case, our values are to be humble, seek feedback, and always solve the fundamental problem.
Maybe I could talk at some point about how we arrived at those values and when you should have them and that kind of thing. But be humble, seek feedback and always solve the fundamental problem. The reason that we have those is because they're functional. It's like, if you're humble, you're more likely to seek feedback.
If you're willing to seek feedback, you're willing to be convinced that you're wrong, which means you're more likely to solve the fundamental problem, which is the only thing that matters in the first place is the fundamental problem. So, in our case, and I think in many startups or most startups, solving the distribution problem is the fundamental problem.
Anyway, long story short, you find folks. When we find folks that are humble, seek feedback and always solve the fundamental problem, we leap at those people. What's so cool is that then they come and they join and they meet a bunch of other folks who value the same things, but are culturally different. Does that distinction make sense?
Yeah, it does. That makes a lot of sense. That's interesting. How did you arrive at the values?
I think a lot of people try to do values on day one, and I actually encourage don't do values for maybe a year or two. Because values, when you write them down or you talk about them, they tend to be best or most useful or stickiest when they are observations of your team when they are at their best. When we as a team are at our best.
At Density, we are not always humble. We don't always seek feedback and we don't always solve a fundamental problem, but we aspire to those things. When we were at our best, when we are at our best, it's when we are living by them.
That's interesting. Yeah, that's an interesting way to look at it. What do you think about the future of Density? How far ahead are you of your team in your mind? I always think about this as a CEO and leader, it's like you probably already have a vision of the company that doesn't exist yet, so what is that vision?
What is the vision specifically for Density or how do you think about the gap between those things?
Yeah. I'm actually interested in the gap as well. Again, as CEO, you definitely in your mind have a vision of the company that doesn't exist yet. How do you get the team to catch up to that? Maybe we start there.
Yeah. I think I maybe want to maybe make a distinction that I actually don't think the team is behind the CEO, meaning the team doesn't yet have the thing, the vision of what the CEO has. So, the CEO is going to go off and do a bunch of work that is going to be different than the team is aware of.
Then you've got to figure out how to catch them up. I think maybe a more productive way of thinking about it is, your job as a leader in any function, but especially as CEO, is to share context. So, we have this term called teamwork, not we Density, but the world has this thing called teamwork. Really what teamwork is, is better described as context prioritization and sequencing.
So, sequencing is the last thing. Sequencing is like, we do this thing and then we do this thing and then we do that thing. That's very tactical. Prioritization is like your strategy. It's like these are the reasons, these are our priorities and we should have few of them and they should be important, and the sequencing should flow from the prioritization.
But there's a higher level than strategy, which is the context in which you're operating. How much capital you have, the market you serve, the mission you're after, the scope of the problem, the resources you happen to have at your disposal, competitors. That's all context.
What's so cool is that you can very simply recognize breaks in that system, otherwise referred to as teamwork. The whole bundle is called teamwork. When someone's having a sequencing question or a set of debates, when they lack shared agreement on priorities, it's like, "Hey, we need to actually back up and do priorities first."
Then sometimes you find priority disagreements on what's most important, and it's not because the priorities are wrong, it's because they don't have shared context. So, your job as CEO is to think about that context and constantly be talking about the context that you're operating within. Then help hire folks, work with teams. This is totally dependent. All this advice is dependent on the scale of your company.
When you're three people, you do everything. When you're 10 people, you do everything. When you are 20 people, you do almost everything. You're wearing a lot of hats. When you start to get to 100 people, we're on that scale, your job is to figure out how to hire phenomenal people at each of those things, at sequencing, at prioritization, and at context setting within their own disciplines.
Andrew, I can't thank you enough for joining us and talking about everything you're working on at Density. I mean, this has been super fascinating, the way you think about this stuff. We end every interview the same way, with one question. At CEO.com, we believe the chances that are given are just as important as the chances we take.
Who gave you a chance that led to, that helped you in your career or in your life that comes to mind when you hear that?
Yeah, sure. The dean of the iSchool, Liz Liddy, her son, John Liddy, Jonathan Trist, one of our first investors. Jason Calacanis, Mark Suster who led our series A Founders Fund who led our series B. My co-founders, I have five co-founders. We started the company as six co-founders and all six co-founders stayed at the company for six years. Rob Grazioli, Brian Weinreich, Jordan Messina, Steve VonDeak, Ben Redfield. These people are just phenomenal and they very much took a chance on me and on the team.
We have had hundreds of people work at Density over the years, and every one of them has contributed in some form or fashion. One of the things that I think is most rewarding is that at some point you get to start to open doors for other founders and CEOs, and you should do that without asking for anything in return as often as you possibly can.
With so much enthusiasm that it is unequivocal that the person is going to take the meeting that you're doing the introduction to. I remember, the last thing I'll mention is, I get these intros from, there's a couple folks in my network who are early investors in Density who do introductions periodically.
When they do an introduction, they will say in the body of the email, "Whoever the person is, if you don't find time to meet with Andrew in the next three days, I will never introduce you to anyone else. You have got to meet," and they're joking. But what ends up happening is you start on second base with that person, you show up, and there's just this continuity of enthusiasm instead of hedging.
You could say no all you want when someone asks for an intro, but when you do one, do one over the top. Give that person every possible backing you can, because it just echoes into their work with your network.
Andrew, thank you so much. Congrats on everything you're building and we'll continue to follow it and really appreciate you taking the time.
Great. Thank you.