For HashiCorp's Armon Dadgar, age is a double-edged sword

We talked to Armon to see what's it like to build a billion+ dollar B2B company while in his 20's. Hint: Not easy.

Three years into the company, their VCs came knocking. Enough of this heads-down coding, they said. It’s time to get serious and build a business. In other words, grow up.

Armon Dadgar was 24 years old. His co-founder Mitchell Hashimoto was 26. That’s when they realized they needed help.

The series of decisions they made next were humbling but made their company what it is today. HashiCorp helps major enterprise clients like Barclays and Adobe run their applications in public cloud or mixed environments. Its portfolio of products covers four key constituents in IT: operations, security, networking, and development.

At first, VCs thought they were crazy to build a broad suite of products. Yes, Silicon Valley was founded on these kinds of companies — HP, Microsoft, and Apple are the bedrocks of product integration. But tech has since crowded the consumer market with niche, a la carte tools, apps, and software to the point of parody. Did the world really need Uber for dog poop? No, but concepts like it abound and are just splashy enough (no pun intended) to market big and take public quickly.

“The traditional advice most startups get is: ‘Focus, focus, focus. Pick one thing and do it well,’” says Dadgar.

But he and Hashimoto weren’t interested in that kind of business. They were young and just naive enough to believe they could change the world and build a legacy for the long haul.

“In the very early days of the company, that was always treated as a weakness,” he says. HashiCorp had competitors on every front. Each of its products — Terraform, Vault, Consul, and Nomad — had a market to corner all on its own.

Still, enough VCs believed in their vision and their youthful naivety to grant them $10.2 million in Series A funding in 2014, with the deal they could go heads down for two years and just build.

True to promise, two years later the HashiCorp team came up for air. They had completed the portfolio. It seemed ready for market. Only they had been too busy building to answer one major question: Who is the customer?

“For a long time we didn’t know the answer to that. We were like, ‘Everyone.’ And everyone is kind of the same as saying no one,” says Dadgar. “It was 2016 that we were going through that internal crisis.”

At first, they toyed with the idea of offering their product to small and midsized businesses (SMBs). But when they looked at infrastructure SMB companies, it was “a total graveyard” out there, says Dadgar. Some would argue Amazon represents SMB customers, but half of Amazon’s $10.07 billion net income in 2018 was from its web services arm with its roster of Fortune 2000 clients. It didn’t really count.

All it took was a drive up Highway 101 for inspiration. The valley’s most successful infrastructure companies — Oracle, VMware, etc. — didn’t meddle with small fries. “For us, that was an important moment,” says Dadgar. The enterprise segment was “tried and true.” They had their answer.

Despite their decision, neither Dadgar nor Hashimoto could picture themselves telling major clients like Goldman Sachs how to run their cloud infrastructure. They still felt like kids. That same inexperience that inspired them to create HashiCorp wasn’t credible in the boardroom.

“What was glaringly obvious was we were learning through paper cut,” says Dadgar. “Sure, if you gave me eight years of being CEO maybe I’d get decently okay at it, but I’m going to do it by making a thousand mistakes.”

He remembers sitting down with Hashimoto and asking what mattered most to them. Was it their egos at being in the CEO role, or was it the future of the business? They enthusiastically agreed HashiCorp won out.

In mid-2016 they hired David McJannet as CEO. Previously a HashiCorp advisor and marketing alum of VMware, McJannet helped expand the company beyond the strength of its product. In 2018, HashiCorp’s open-source tools were downloaded 45 million times. The company is now valued at $1.9 billion.

Dadgar and Hashimoto are now co-CTOs, though the former sees himself as a sort of “glue” between the technical side and the business side. He spends time servicing customers, partners, and product.

The title they can never shake, however, is “founder.” It’s both a blessing and a curse. As HashiCorp grew, the company hired more VPs and specialists to own strategic divisions and pipelines, but at the end of the day, all the problems still seem to rest on Dadgar and Hashimoto’s shoulders. “Things still roll uphill to you,” says Dadgar.

The stress associated with such responsibility has meant abandoning some of his youthful optimism. For instance, one of his biggest and hardest lessons was to fire faster. It’s intensely personal, says Dadgar. “You have to be stone-cold to be able to say, ‘Thank you for three years. You’re fired. Your replacement is coming on Monday.’” But startups grow rapidly if they’re lucky, and it’s crucial to have the right person in each seat.

Other times he’ll listen to fellow startup founders put forth grand ideas and catch himself saying, “Here are a million reasons why that’s going to fail.” Now at 28 years old, he wonders how he became so jaded. At the same time, he still feels that same youthful naivety that helped them build a starry-eyed business undeterred. It’s a balancing act.

He comforts himself with the feeling that HashiCorp continues to solve problems that matter. In fact, pragmatism is deeply rooted in the company’s core values. It informs everything they build, who they market to, and how they evolve.

It’s all very practical and no-nonsense. This is growing up in Silicon Valley.

For HashiCorp's Armon Dadgar, age is a double-edged sword