How Kong Was Born: APIs, Hustle, and the Future of AI Infrastructure

Augusto Marietti 0:00 He opens a closet, and there's, like, all the bananas falling off because it was one guy's all eating huge bananas. He open other closet, there's another mattress with another guy sleeping in the second closet. [laughs] I say, "Okay, this, th- this is real." We had no money. We, we, we, we just take 600 bucks last left to go to a United flight, and we had 90 days to just, uh, make it or break it. We knew that if we couldn't raise, so we would go back, uh, to Italy broke, and that was it.

Martin Casado 0:24 I think a lot of people don't know or maybe don't appreciate how fast Kong grew when it actually happened. So there was seven years of starvation, right? I mean, it was just basically wasn't working.

Augusto Marietti 0:35 Every year we do the Founders Award. Uh, the Founders Award is 2,555 stock to the best employee of the company.

Martin Casado 0:43 Yeah.

Augusto Marietti 0:43 Why that? It's 255 days of struggle. It's just symbolic.

Martin Casado 0:48 Yeah.

Augusto Marietti 0:48 But to remember seven years of struggle, every year is a ritual. [instrumental music]

Martin Casado 0:55 So Aghi is the founder and CEO of Kong, which was previously Mashape, and we're covering his background from a garage in Milan, uh, to now being the CEO of a at scale company with, I dare say, IPO ambitions at some point.

Augusto Marietti 1:13 Long way. Well, long way to go, but that's one of the steps along the way.

Martin Casado 1:17 Ambitions. All right. So, so you're doing this kind of API thing. You come to the U.S. on a s- tourist visa?

Augusto Marietti 1:27 Tourist visa, yeah.

Martin Casado 1:28 And the idea was to raise-

Augusto Marietti 1:29 90 days

Martin Casado 1:30 ... was the idea to raise funding?

Augusto Marietti 1:31 Yeah. We had no money. We, we, we, we just take 600 bucks last left to go to a United flight through Cincinnati. We went through secondary room. Uh-

Martin Casado 1:41 [laughs]

Augusto Marietti 1:41 ... we landed up, and we landed up through... Sorry, Atlanta first time. Cincinnati was second, secondary room. And then we went right to San Francisco, and, um, and we had 90 days to just, uh, make it or break it. We knew that if we couldn't raise, so we would go back, uh, to Italy broke, and that was it.

Martin Casado 1:56 So did you raise in those-

Augusto Marietti 1:57 Yeah, we raised two weeks before departure, uh, from-

Martin Casado 1:59 You ra- you ra- you raised in those-

Augusto Marietti 2:01 Angel rounds. Uh, it was around, you know, that... We're talking about a decade ago, right?

Martin Casado 2:05 Yeah.

Augusto Marietti 2:05 Small checks. It was 50K angel round from a friend.

Martin Casado 2:07 Who was it from?

Augusto Marietti 2:07 Was the founding YouTube teams.

Martin Casado 2:10 Oh, really?

Augusto Marietti 2:10 There we go. And h- here's the funny story like-

Martin Casado 2:11 How did you get introduced to them?

Augusto Marietti 2:13 Uh, okay. That's, that's, um... So there's two interesting thing that you say, can you redo it again? I won't be able to redo it again.

Martin Casado 2:18 Yeah.

Augusto Marietti 2:18 So number one is we went to the Stanford Entrepreneurship Week. At that time, Stanford was doing the Stanford Entrepreneurship Week in February, and it was cool. You meet all entrepreneurs, all the VC were coming there, and, um, there was this entrepreneurship mixer, big party. We arrived, we left late. There was a, there was a big, uh... At that point, it was all paper with all the email and the registration. We steal-

Martin Casado 2:38 [laughs]

Augusto Marietti 2:38 ... the things with all the email and the registration, and we walk home with that. And that night till 5:00 AM, I write s- all the 400 emails-

Martin Casado 2:47 Wow

Augusto Marietti 2:47 ... about, "Hey, you need to know about Mashape. We didn't have time to catch up at the mixer, but I'm happy to give you a pitch tomorrow."

Martin Casado 2:53 Wow.

Augusto Marietti 2:53 I think-

Martin Casado 2:54 300?

Augusto Marietti 2:55 ... 470 didn't reply,

Augusto Marietti 2:57 uh, 30 reply, and 10 were kind of interested. At the end, five or six went to meet us.

Martin Casado 3:02 Wow.

Augusto Marietti 3:02 And then this one person, called Kevin Donahu, who was the f- the, the VP, one of the VP or founding team of YouTube, came to our-

Martin Casado 3:09 What's his name?

Augusto Marietti 3:10 Kevin Donahu.

Martin Casado 3:11 Kevin Donahu.

Augusto Marietti 3:12 And then he start a company for baby books.

Martin Casado 3:14 Yep, yep.

Augusto Marietti 3:14 He sold it. But he, he said, "Look, I, I think this is something." So he wrote a $17,000 check on an air mattress.

Martin Casado 3:20 17?

Augusto Marietti 3:21 Thousands, yeah. And for us, 17,000 was life-

Martin Casado 3:24 Yeah

Augusto Marietti 3:24 ... versus debt.

Martin Casado 3:25 Yeah.

Augusto Marietti 3:25 'Cause we came from 600 bucks and few hundred bucks. And so then he brought two other founding team to write out a six... He said... He actually it was 16,000, 16,000, 16,000. We got 15,000. The problem with 15,000 divided three was six, six, six, six, six, six. There was too many sixes. He's like, "No, we don't, we don't want too many six in the captive." So we, we rounded up 17, 17, 17.

Martin Casado 3:42 [laughs]

Augusto Marietti 3:42 And we got 51,000 check. Now, the funny, the second funny part is we negotiated and closed the deal at Travis Kalanick house.

Martin Casado 3:51 Travis Kalanick’s House. I remember there was an article about you sleeping on his couch-

Augusto Marietti 3:55 Yeah

Martin Casado 3:55 ... or something.

Augusto Marietti 3:55 Yes, and Airbnb guys as well. But what, what happened during the negotiation with these guys, we're negotiating, and they didn't want... So, uh, uh, Travis, uh, had the, at that time, was this house up in Castro called the Jam Pad, where everybody would goes. Aaron Lev would go, and, uh, Drew from Dropbox was there. We're all going there on the weekends. And I didn't have a place to stay, so actually, Travis give me his place to stay a few, a few weeks, as long as I would cook carbonara for his better half once a week.

Martin Casado 4:19 [laughs]

Augusto Marietti 4:20 And I did that. And then, and then we need a help. He say, "Come to my kitchen. We negotiate." So we sit on the table. It was myself and Travis Kalanick, and there were the three YouTube investors negotiated this convertible notes are, like, 50% discount, something crazy. We were desperate. And so I say, "Okay. Well, I don't wanna take this deal. Like, you know, screw that." I say, "Okay, okay, we're gonna leave." I say... And I was very naive, 20 years old. "Okay, okay, we will come back." And Travis come to me, put the hands and say, "If this guy leave, you're never gonna see them again and nor the money."

Martin Casado 4:48 Wow.

Augusto Marietti 4:48 "So let me do something

Augusto Marietti 4:49 else."

Martin Casado 4:49 Wow.

Augusto Marietti 4:49 "So you guys stay here and figure it out, the, the counteroffer. Aghi and I go to the bathroom. We close this salary, and we come back in 10 minutes." So Travis brought me to the bathroom, locked the door of the house so these guys don't leave. [laughs]

Martin Casado 5:02 [laughs]

Augusto Marietti 5:03 Went to the bathroom, and we sit there 10 minutes, go back, another round of negotiation, back to the bathroom. So three, four time. At the end, we handshake on the deal-

Martin Casado 5:11 And what was it?

Augusto Marietti 5:12 ... just tiny bit better.

Martin Casado 5:12 What was it?

Augusto Marietti 5:12 Like, 42% convertible instead of 50.

Martin Casado 5:15 Wow.

Augusto Marietti 5:16 And the no... And it was a higher cap, and that's it. And then we shake the hand, and, and that was it.

Martin Casado 5:21 That's crazy. So I re- I remember you had the, um, you had the Quora, like, the top Quora post for living on, like, 14,000 a year in San Francisco. You'd raised 51,000.

Augusto Marietti 5:35 Yeah.

Martin Casado 5:36 And now you had to make that last as long as possible.

Augusto Marietti 5:38 As long as possible.

Martin Casado 5:38 So maybe talk about the, the next-

Augusto Marietti 5:40 Yeah

Martin Casado 5:41 ... stretch.

Augusto Marietti 5:43 What happened is obviously we got to 50,000. We gotta go back. We are illegal in two weeks. So we went back to Italy, um, and we, we, we, we come back with a B1, which you could be there, we can be here six months. But how? We have no Social Security number. We have no credit score, nobody... So you have into this American system very different than Italy system. You, you, you, you had to enter into a new system, and we had zero anything. So we couldn't pay our salary 'cause we didn't have SSN. We didn't have a legal visa to pay ourself, all that. So the company-

Martin Casado 6:12 Did you have employees at this point?

Augusto Marietti 6:14 No

Martin Casado 6:14 It's just you two

Augusto Marietti 6:15 It was, uh, three of us. It was, uh, Michele was the third co- co-founder back then. But, um, we did 1,000 and about 1,100 monthly promissory note that the company would give us, and we would have to live in three with $1,000 a month. That would be for living

Martin Casado 6:31 So you were liv- you were living off of $1,000 a month?

Augusto Marietti 6:34 In three. 'Cause it's-

Martin Casado 6:35 Three, three people were living off of $1,000 a month-

Augusto Marietti 6:37 Yeah. Yeah, 14,000

Martin Casado 6:38 ... in San Francisco?

Augusto Marietti 6:39 Yeah.

Martin Casado 6:39 How do you do that?

Augusto Marietti 6:40 It was cheaper, right?

Martin Casado 6:41 Now, what year was this?

Augusto Marietti 6:41 Uh, 2009, 2010.

Martin Casado 6:44 Even then-

Augusto Marietti 6:45 2010. 2010

Martin Casado 6:45 ... even then, it

Martin Casado 6:46 is impossible. $1,000 a month for three people?

Augusto Marietti 6:48 I tell you how we did it.

Martin Casado 6:49 Tell me.

Augusto Marietti 6:49 So we live it in, uh, on Airbnb somewhere else at, like, 100 bucks, and all in the same mattress. Um-

Martin Casado 6:57 Wow

Augusto Marietti 6:58 ... and, uh, we were going to Valencia. I don't know if you do some Valencia-

Martin Casado 7:02 Did, did you have an office?

Augusto Marietti 7:04 No. We were working out of Starbucks. And-

Martin Casado 7:07 That's incredible

Augusto Marietti 7:07 ... we were living in Valencia, and we were buying rice, beans, and tuna, and pasta. And the reason is that we had to find the right amount of carbs and protein at the cheapest way possible.

Martin Casado 7:18 [laughs]

Augusto Marietti 7:18 And that was the combination of, I guess, amount of carbs and protein at the cheapest way possible. And that's how we made it. Like, we, we never eat out, we never buy anything. We did everything in the house. We cooked in the, in the kitchen Airbnb, rice, beans, or tuna pasta. In fact, we ate so much tuna pasta with tomato that Marco and I, when we see now tuna pasta, we almost throw up because we're just running on tuna pasta every single day.

Martin Casado 7:39 So how... Wait, so how, how long did this-

Augusto Marietti 7:43 Uh

Martin Casado 7:43 ... last?

Augusto Marietti 7:44 That last, uh, so March 2000, April 2010, uh, a year. A, a year and a few months.

Martin Casado 7:51 Wow. And what were you doing this time? I can... I know what Marco was doing this time. He was writing code. What were you doing?

Augusto Marietti 7:55 I was, I was writing blog, building the website, uh, calling, uh, pro- uh, the, the sign up, talking with all every sign up on the website that was talking to us and try it for hours. With mix of B- B devs, HTML, H- CSS slicer, um, talking with investor too as you start to build the seed rounds.

Martin Casado 8:12 Yeah.

Augusto Marietti 8:13 Um, trying to do some recruiting, that never worked because nobody wanted to work for illegal Italians that will disappears.

Martin Casado 8:19 [laughs]

Augusto Marietti 8:20 [laughs] So lot of, lot of mistakes and this, uh, yeah, figured things out.

Martin Casado 8:25 All right. All right, so take us to the seed round. So somebody decided to give you a proper round at some point?

Augusto Marietti 8:31 So then a year later, we, we, we re-architect. So we went, we went to Honolulu on the beach, on Mauna Beach, and we, we thought about, okay, all these APIs we're aggregating. I think the world is actually... Actually, we see now, finally now, but, uh, 10, 10, 15 years ago, it wasn't ready. There were to, like, build apps on the fly through APIs with drag and drop. We weren't- we were too far ahead. We're missing pieces. But I say, "Hey, we're, we're wrapping a lot of APIs." Actually, that assembly line visual still hold. We just have to pivot it and build an API marketplace where all the APIs, producer and consumers, they can come together.

Martin Casado 9:03 Yeah.

Augusto Marietti 9:04 And so we pivot that. We relaunch it, uh, with, with, you know, then Crunch, all the stuff.

Martin Casado 9:09 Okay, so, so originally, we're doing this kind of drag and drop-

Augusto Marietti 9:12 Drop, yeah

Martin Casado 9:12 ... composable-

Augusto Marietti 9:13 Apps builder. Yeah

Martin Casado 9:14 ... apps builder thing. It's so funny how many companies go through this, like, exact journey, and then you're

Martin Casado 9:18 like, "Okay-"

Augusto Marietti 9:18 With HTML5.

Martin Casado 9:19 Wow. And then you're like, "Okay, no, we need to build a marketplace."

Augusto Marietti 9:24 Exactly. 'Cause, okay, the, the economy, this API economy will come. It's not just apps, it will be APIs. And we build a marketplace, we launch it, we got little... Decent tractions on long tail.

Martin Casado 9:33 Yeah.

Augusto Marietti 9:33 And that was already the summer of 2011-

Martin Casado 9:36 Yeah

Augusto Marietti 9:37 ... after pivoting a while. So we learned very fast, boom, boom, boom, and, um, and then we raised after a month-

Martin Casado 9:41 Wait, was the, was the Hawaii on the last of the money from-

Augusto Marietti 9:44 No, no, because, uh, San Francisco to Honolulu, I think at that time it was, like, 300 bucks. So we say with our 51K we would, we, we, we... You know, we're living, like, on tuna pasta, rice and beans in Valencia, in Mission, in this, in this historic building, middle of North Mission-

Martin Casado 9:59 And you guys l-

Augusto Marietti 9:59 And, like, was working-

Martin Casado 10:00 Same, same mattress?

Augusto Marietti 10:01 Same mattress and things. It's like-

Martin Casado 10:02 That's unbelievable. I, I didn't know that

Augusto Marietti 10:03 ... at some point I remember, I remember I woke up one morning, "I gotta go. I need, I need to go to Honolulu." We could do our walk on the beach and thinking about our future or no future-

Martin Casado 10:11 Yeah. Yeah

Augusto Marietti 10:11 ... because we knew this was going no future. Our money were starting to drain, and we needed to pivot. And that's where we had the idea, let's go for the pivot. And then we come back. We, we did crazy. I, I, I remember I was building the website. Marco was going crazy. The third co-founder was building all the Java backends and the launch it fast, and then got a little bit of TechCrunch press. At that time was read, write web.

Martin Casado 10:31 Yep.

Augusto Marietti 10:31 This other one was Mashable.

Martin Casado 10:33 Yep. Yep. Yeah.

Augusto Marietti 10:33 And so all the... We- somehow we got covered by all of them, which now like increase. And then, um, and boom, and then we raised, um, a- and then it started seed round, uh, phase.

Martin Casado 10:43 From who?

Augusto Marietti 10:44 So at that time, uh, we went through a lot of, lot of iterations, but w- where we ended up was NEA leading the seed round, and then Index co-leading 20A, and then we, and then we got a bunch, and then-

Martin Casado 10:58 In the seed, so Volpi did

Martin Casado 11:00 the...

Augusto Marietti 11:01 Yeah, so what, what, what happened it is, um, actually the first checks were George Zachar from CRV back then. He didn't, like, lead the round, but he wrote... He was the first 100K commit. And so with that, he say, "We have CRV 100K." At that point they had a seed program, very, very unusual back then. So we went 20A, and he said, "We're gonna lead this round." At that point also they start a seed program, 500K, and then we went through... And then, and then I met Mike Volpi that just moved to San Francisco to launch Index US. It was, like, him and Danny Rimer through there somewhere. I said, "Ah," and they also start out Angel, a, a seed program, and they, they wrote another big checks. And then we got a long tail. It was, was likely Jeff Bezos and Eric Schmidt in-

Martin Casado 11:36 Wow

Augusto Marietti 11:36 ... into the funds. And so we, we got this, this combination.

Martin Casado 11:38 How did you get Bezos and Eric Schmidt?

Augusto Marietti 11:39 So again, that, that is a, a seed in DPD that I don't know we can replicate. So what happened it is Jeff Bezos... So Jeff Bezos, I knew he was special about marketplace as a business, APIs and developers. AWS was just starting to take off. It was this hidden secret. So-

Martin Casado 11:56 This is 2011?

Augusto Marietti 11:57 Yeah. So Amazon was maybe a $50 billion company then, $80 billion company. Um-So what happened is, uh, I, I, I, I hire the lawyer of his family office for Call-

Martin Casado 12:11 Call

Augusto Marietti 12:12 ... for Match Shape. And after we hire for doing the seed round, as the seed round was going along, I say, "By the way, since you're also the, the lawyer of the family office and Bezos Expeditions, can you introduce me, [laughs] can you introduce me to Jeff Bezos?" That's what we do. So it's a PG cold call, and then he was on the road with his brother, going around with his brother on the road in Texas, and, uh, he wa- he, he actually really want to put more and invest. Boom. So that was Jeff Bezos. What do you get from Jeff Bezos? You get the brands, and we got a dinners, uh, a year strategizing of things, but obviously it was the big brand. And then second, uh, Eric Schmidt, we were working this co-working space, and what happened is we were the only startup that stay the latest in the night after this other startup that was doing Expedia for cruise ships. They just raised from NEA and Eric Schmidt. And at the end, they saw us working till 3:00 AM, 4:00 AM, they will leave at 2:00. When... They knew we were fundraising, and they sa- and the investor asked, "Who is the hardest worker than you?" I say, "These guys next to us." And so they introduced us to the Eric Schmidt fund, and that's how Eric Schmidt invest.

Martin Casado 13:17 Wow.

Augusto Marietti 13:18 Totally unrelated.

Martin Casado 13:20 All right. So now this brings us to thousand and-

Augusto Marietti 13:21 A lot, a lot of luck in, in-

Martin Casado 13:22 So what was your totals... What was your total seed funding you raised?

Augusto Marietti 13:25 At that time it was very big. Uh, it was 1.5. It's like, wow, a huge seed round.

Martin Casado 13:30 I gotta say-

Augusto Marietti 13:30 In 2010, '11. [laughs]

Martin Casado 13:32 I gotta say, there's a lot of optimism... It's an optimistic retrospective view to be like, there was three of you on [laughs] a mattress for a year-

Augusto Marietti 13:40 Mattress

Martin Casado 13:40 ... and then you say you were lucky.

Augusto Marietti 13:41 Illegally.

Martin Casado 13:42 [laughs] That sounds pretty unlucky.

Augusto Marietti 13:43 Illegally. Going to jail.

Martin Casado 13:45 [laughs] All right, so now you have your seed fund, Match Shape's going.

Augusto Marietti 13:49 So then we raise the seed. Uh, all right, now it's real. We gotta get these visas. [laughs] We gotta... So we went back to Italy, go to the American Embassy, blah, blah, blah, do their letter of recommendations. Actually, Sam Altman was one of the guys that wrote me a letter of recommendation when he was, um, a CEO of Loopt.

Martin Casado 14:06 No kidding.

Augusto Marietti 14:06 Which I met on the... We were going to the NEA retreat, and I sit next to him in the bus, and we went to Pebble Beach to the NEA retreat, and we spent three hours together, and I said, "By the way, I'm illegal here. Can you write me a letter of recommendation for my O-1 visa?"

Martin Casado 14:17 No kidding.

Augusto Marietti 14:18 And he wrote me, so I

Augusto Marietti 14:19 have this big thing of how great I am. [laughs] From Sam Altman.

Martin Casado 14:22 From Sam Altman, that's great. [laughs]

Augusto Marietti 14:22 From Sam Altman, he's like, "Write the recommendation. You gotta get this guy in the country no matter what." So we got these five letters-

Martin Casado 14:29 [laughs]

Augusto Marietti 14:30 ... and, uh, a- and I get this O-1 visa, and finally I got the visa. So finally I can come here, I can get a WeWork space, and we start to hire, and we got seven people, and Marco also get the visa. Marco is also, because of the love book, he never got, uh, to college or nothing, so it was the hardest visa to do. So we, we figured it out, more letter of recommendations for him, and we brought him there. We stay here, blah, blah, blah. We build a year, we grow. That... But, you know, at that time, like, you needed, like, a million, let's say a million revenue to, to take a, a good Series A. For a marketplace, you need a million in gross volume. We were, like, at 50K, so lot of traction, but not a lot of revenue. Um, but we went through a three, four-month Series A raise, and, um, and CRV, uh, led, and then Index co-led the round.

Martin Casado 15:14 Was it, was it, was it Dev. that-

Augusto Marietti 15:15 Yeah

Martin Casado 15:16 ... that-

Augusto Marietti 15:16 Yeah.

Martin Casado 15:16 That-

Augusto Marietti 15:16 Yeah, because, uh-

Martin Casado 15:17 That's right

Augusto Marietti 15:17 ... George Zachary was more a consumer-

Martin Casado 15:19 Right

Augusto Marietti 15:19 ... so he passed the, the thing to Dev that just joined more on the enterprise side. I remember Dev, like, called me, like, a Sunday at 6:00 AM to go for a walk, uh, to decide to invest or not, and he knows I'm a night owl. And, and he just Sunday, 6:00 AM to go to-

Martin Casado 15:34 6:00 AM

Augusto Marietti 15:34 ... go down to Palo Alto, which I had, I had to rent a Zipcar. There, there's, there were the Zipcars.

Martin Casado 15:38 [laughs]

Augusto Marietti 15:38 There was no Uber. And, uh, and go down there, and, and, uh, and then go for a few walks, and I decided to, to invest, 'cause he was, he was always actually a big believer on APIs as assembly line. He could see that.

Martin Casado 15:48 Yeah, yeah.

Augusto Marietti 15:49 It maybe wasn't sure marketplace was the right execution-

Martin Casado 15:52 Yeah

Augusto Marietti 15:52 ... but the theme, he was a big believer. And I think he liked us, like, he came to see us sleeping in the same mattress. He wanted to really see that we're not, like, bullshitting the big drama story. It was really drama.

Martin Casado 16:00 Yeah, yeah.

Augusto Marietti 16:01 Actually, he opens... He came to the Aker house, 'cause we moved to Aker house in, uh, South Park effect at that time, where we're sleeping and working there with the seven team, and he opens a closet, and there's, like, all the bananas falling off-

Martin Casado 16:12 [laughs]

Augusto Marietti 16:12 ... because there was one guy who's only eating huge bananas.

Martin Casado 16:14 Yeah.

Augusto Marietti 16:14 He opened another closet, there's another mattress with another guy sleeping, a second closet. [laughs]

Martin Casado 16:18 Wow.

Augusto Marietti 16:18 It's okay. This, th- this is real.

Martin Casado 16:20 Wow. Uh, how big was your pay?

Augusto Marietti 16:25 6 point, uh, 6.5 million.

Martin Casado 16:27 Oh, so for you, that must be... Must have been a lot of money.

Augusto Marietti 16:31 6.5 million. Yeah, I, I went out with this PowerPoint, let's raise a 10 million Series A. At that point, that was, like, the big thing. We ended up at 6.5, and, uh, I say, "Let's sign this." It was like, when we saw it, it was like, yeah, like, m- maybe we got a shot.

Martin Casado 16:46 So at some, at some point, you decided that the market wasn't working.

Augusto Marietti 16:49 The marketplace wasn't working, and, um, i- i- I think, uh, so we raised this, and we rai- we hired more, we moved to a new office, 25 people. Like, you know, the, the usual post-raise, uh, honeymoon. Um, and I remember this thing, like, six months after, uh, we... The business wasn't really doing anything, so it was one board meeting that we just cooked pasta for the board members at that time, 'cause that was, like, two years before you joined us, and it was,

Augusto Marietti 17:14 there was nothing to talk about from business.

Martin Casado 17:15 The issue was you, is you couldn't monetize, or there was churn-

Augusto Marietti 17:18 So there's a, there's a lot of-

Martin Casado 17:19 ... there's a graduation problem, like, I mean, some-

Augusto Marietti 17:21 There's... Yes

Martin Casado 17:21 ... these marketplaces are very tough.

Augusto Marietti 17:22 So the, the idea of the marketplace, when I was, uh, staying with Airbnb founders, I learned that the marketplace are, could be the biggest, more powerful business in the world. Like, you don't even have to innovate once you get liquidity. It's just, you can't disrupt it.

Martin Casado 17:35 Yeah, of course. Yeah, yeah.

Augusto Marietti 17:35 Look at eBay. Look at eBay. You can't kill.

Martin Casado 17:37 Yeah.

Augusto Marietti 17:37 So I thought, like, there's all this API, you can build a marketplace liquidity, it'll be like the W- the AWS of market. And so we, we noticed, though, that in our case, it was a developer API marketplace, so to have... To a marketplace to work, you need to have a long tail of low-power people. If you have concentrated in a few high-power, marketplace doesn't work. Like, Airbnb houses, like, millions of people with low power. So that was one. Two, you need to have exclusivity somewhat, like, the door to access that-That marketplace supply has to be through the marketplace. APIs, you could Google and go through the website, you wouldn't go through, go through the marketplace. APIs at that time, power of law for public APIs was on the Twilio, the Stride, or 30 that matters and 3,000 that didn't matter much. So it was also this long tail power. And third thing is, was quality. Like, you couldn't... You were running a cloud marketplace, you couldn't actually maintain the quality of the supply. You would always get blamed for it, and there was no trust. And, and so I think because of that, it got to a million and a half in gross revenue, but it never became this Airbnb or Uber of APIs.

Martin Casado 18:38 What was, what was the net at a million and a half gross?

Augusto Marietti 18:38 Eh, that is like 10%, yeah.

Martin Casado 18:39 Yeah, nothing.

Augusto Marietti 18:39 And it was, it was also losing margin to AWS. So they, I could never make the economics in that model, I could never make the economics works, even if this thing would've scaled. So then we go there, it's like, okay, this is, we're a year, we're burning out, we're running out of money. And so we build this massive API engine behind the marketplace API gateway that was powering 20,000 APIs of this long tail, doing billing, rate limiting, routing, caching, authentication, authorization, logging, all of that. We build it three times, and the third time was the great one. And we say, "Wait a second, every company will become an API company. Why we don't take this, this engine and we give it to the whole world?" And that was the beginning of open source Mongo, and so boom, we, we open source, uh, Kong API gateway.

Martin Casado 19:21 What was your, what was

Martin Casado 19:22 your runway at the time that you open sourced Kong?

Augusto Marietti 19:26 Uh, so we open sourced in April '15. We had to take a bridge of, uh, 2 million to go another year because-

Martin Casado 19:34 Was it, was it an insider bridge?

Augusto Marietti 19:35 Yeah. We, we had to take an, an extensions because we were out of gas.

Martin Casado 19:40 From, from Dhavdhan and Mike?

Augusto Marietti 19:41 Yeah. They gave us an extension on the two millions because we were out of gas. Like, we were, would have died otherwise.

Martin Casado 19:46 Wow. So you, you release K- I remember when Kong released. It was actually a really big deal. When was that? Two thousand...?

Augusto Marietti 19:52 '15.

Martin Casado 19:52 '15.

Augusto Marietti 19:53 Yes. I think it was 2015.

Martin Casado 19:54 That was a, that was a really big deal. I remember-

Augusto Marietti 19:55 It took off, boom.

Martin Casado 19:56 Yeah. So this is when you and I started talking about your raise.

Augusto Marietti 19:59 Yeah.

Martin Casado 19:59 You were raising the B.

Augusto Marietti 20:00 You, you, you came at the right time. So before, like, the, uh, these guys make no sense. Okay, now it starts to make sense. [laughs]

Martin Casado 20:06 [laughs] Well, that was even a tough raise for you, just because the company had been around for seven years.

Augusto Marietti 20:11 Yeah. Yeah, I remember.

Martin Casado 20:11 Like a marketplace, like Kong had just come out, and it was taking off, but, like, it only been a couple of weeks-

Augusto Marietti 20:19 It was tough

Martin Casado 20:19 ... maybe a couple of months. And so honestly, I'll tell you what, what did it for me is, um, you know, we're, we're doing all the work, and, like, the GitHub stars checked out, your story is phenomenal, your command of the business is great, but it just wasn't enough. But then while we were doing the diligence, like, I kept getting these kind of serendipitous, like, somebody had used Kong and loved it. I remember, didn't, like, somebody stay in like your Airbnb-

Augusto Marietti 20:45 Yes. Yeah

Martin Casado 20:45 ... and, like, loved Kong-

Augusto Marietti 20:46 Yeah

Martin Casado 20:46 ... and, like, and then you forwarded that to me.

Augusto Marietti 20:48 Yeah.

Martin Casado 20:48 And so they're just kind of like all of this-

Augusto Marietti 20:50 Signs

Martin Casado 20:51 ... you know, zeitgeist around Kong, and as a result of that, I'm like, "Oh, this is clearly a phenomenon."

Augusto Marietti 20:56 Yeah. I remember I was spamming you with emails of every

Augusto Marietti 20:59 prospect or customer-

Martin Casado 21:00 Everything, yeah

Augusto Marietti 21:00 ... user that were saying.

Martin Casado 21:01 Yeah.

Augusto Marietti 21:01 It was just, you say, "Kong, Kong usage, Kong usage," just nonstop.

Martin Casado 21:05 Yeah. Yeah, yeah.

Augusto Marietti 21:05 Like it was blowing up the inbox.

Martin Casado 21:07 Yeah, yeah, yeah.

Augusto Marietti 21:08 Yeah.

Martin Casado 21:08 So how, how close, how close were you to running out of money [laughs] for the B?

Augusto Marietti 21:12 Uh, so after the bridge, there were, eh, weeks.

Martin Casado 21:16 Jesus.

Augusto Marietti 21:18 Yeah. But I was very-

Martin Casado 21:19 Nothing, nothing is ever gonna stress you again-

Augusto Marietti 21:21 Very calm

Martin Casado 21:21 ... in your entire life because you've been so close to at least business-

Augusto Marietti 21:26 Two times

Martin Casado 21:26 ... so many times. 'Cause I, I actually remember-

Augusto Marietti 21:29 Yes

Martin Casado 21:29 ... when we went to the office, it felt dead.

Augusto Marietti 21:32 Dead.

Martin Casado 21:32 It felt like basically-

Augusto Marietti 21:33 We, we... No, no, we were dead.

Martin Casado 21:34 Yeah, it was-

Augusto Marietti 21:34 We just didn't know about it yet.

Martin Casado 21:36 You were, like, two weeks from being dead. I mean, it felt-

Augusto Marietti 21:37 We were as, like, bumblebee, you know, that it flies, but it's not supposed to fly, and we keep, we keep going. [laughs]

Martin Casado 21:42 [laughs] No, I remember that very, very well.

Augusto Marietti 21:44 I- I, yeah, and you, and you were like, you're like, "Yeah, these guys been there a while. I think they're gonna, you know, they, whatever, they raise more money, then they're gonna give up." You were... I said, I said... And it was tough. Uh, and I, I think, I think if, if we go

Augusto Marietti 21:55 back and say, I don't know we were able to replicate w- all the sequence that happens, all, all the things that happens. And I remember we went, uh, yeah, and then, uh, then we had that, that, uh, great sushi with, uh, with Marc Andreessen, you and I, and we sealed the deal.

Martin Casado 22:08 Yep.

Augusto Marietti 22:08 And Marco.

Martin Casado 22:09 Yeah. The end of 2016 we closed, and since then, the company's just been remarkable. I mean, there was kind of an announcement recently that it crossed 100 million, which is now actually quite a while back.

Augusto Marietti 22:17 A year and a half ago, yeah.

Martin Casado 22:18 A year and a half ago.

Augusto Marietti 22:19 Yeah.

Martin Casado 22:19 So-

Augusto Marietti 22:20 We, we... Yeah, it was in, in a year and a half, it's 10 years where we were like, when you invested, we were ARR less than a million.

Martin Casado 22:29 Yeah, yeah. Yeah, is it, I mean-

Augusto Marietti 22:30 Less than a million of ARR

Martin Casado 22:32 ... do you remember, do you remember-

Augusto Marietti 22:32 Not even a million ARR.

Martin Casado 22:33 Do you remember-

Augusto Marietti 22:33 500K probably.

Martin Casado 22:34 Do you remember once, I remember, so yeah, so you had a great first year, and then I told you, I said, "Listen, if you [laughs] if, if you hit 10 million or whatever it was, I'll buy you a car." Remember that?

Augusto Marietti 22:44 I did. Oh, actually, I, we have it in the new office now. I need to send you a picture.

Martin Casado 22:47 Well, there's a funny story about this, and so, like, you know, you, um, you do it.

Augusto Marietti 22:52 I did it.

Martin Casado 22:52 So, like, I think you grow, like, 10X that year or eight, 8X.

Augusto Marietti 22:56 So that year we went from 2 million of ARR-

Martin Casado 22:59 Yeah

Augusto Marietti 22:59 ... to 10.

Martin Casado 23:00 That was right.

Augusto Marietti 23:00 And the planning was six or seven.

Martin Casado 23:02 Yeah, yeah, yeah, yeah, yeah. And then I went and I-

Augusto Marietti 23:04 So 5X

Martin Casado 23:04 ... I went and I checked with compliance, and I'm like, "Can I buy Aghi a cheap car?" And they said, "The maximum for a gift is whatever it is." And so I'm like, "Crap." [laughs]

Augusto Marietti 23:13 [laughs]

Martin Casado 23:13 So I ended up buying you the best model car I could find.

Augusto Marietti 23:17 From Japan, I think you-

Martin Casado 23:18 Yeah, yeah, yeah.

Augusto Marietti 23:19 From Japan.

Martin Casado 23:19 I spent a long time actually looking for this model car.

Augusto Marietti 23:21 From Japan. It's the, uh, uh, 280GT.

Martin Casado 23:24 Yeah, yeah, that's right. So great. So, so I would love to shift. So I, I think this is the most remarkable Silicon Valley startup story that I know of that I'm close to, and I kind of having one, so it's been amazing.

Augusto Marietti 23:34 That, that will make a movie one day.

Martin Casado 23:36 They will have to make a movie one day, yeah. Um, I would love to, like, kind of shift

Martin Casado 23:40 towards how you think about product, how you think about markets, and then kind of move towards AI. So you actually have seen a number of shifts now, right? You saw the cloud come, you saw the shift to APIs. So maybe just talk a little bit about how you view this current shift with AI. Is it, is it fundamentally different? Is it the same? Does it change how you think about yourself as a leader? Like, how, how, how is your view at a high level?

Augusto Marietti 24:06 So the, the, the big thing is I, I, I'll start with API first. So obviously we, we, we built, we become this API infrastructure company.

Martin Casado 24:12 Yeah, yeah.Yeah, may-may-maybe we should just describe what Kong is right now-

Augusto Marietti 24:15 Exactly, yeah

Martin Casado 24:15 ... before we actually do that.

Augusto Marietti 24:16 So, so we left with this pivot, and we open sourced, uh, Kong API gateway. It took off, and we become an enterprise company. We became with the brand Kong Inc. Uh, and we start to build all sort of API infrastructure to run, manage and secure your internal or external APIs. So you have software, you have microservices, you have ten, hundred, thousand of APIs. We are kind of this highways, uh, that makes them run. And you have rate limiting. Like, if, if APIs were a cars, you got guardrails, speed bump, speed cameras, gas stations, tolls, bumps, guardrails, everything, and ambulance. And we provide all the infrastructure to make sure that API connectivity runs for small company, big company, all of that. Now, in, in this transition you mentioned, what really drove, I think, this explosion of cloud APIs was the workload moving from on-prem to the cloud. The second transition is breaking down the monolith to microservice. It creates more and more APIs, the big data and all that. It creates event streaming, all that. So this just data in motion is much higher than... I-it's becoming much higher than, like, data rest or data, data in use than before.

Martin Casado 25:23 But, but, but in a way, when you were starting the company, you were drafting on a big transition, right? Which was the breaking down of the monolith-

Augusto Marietti 25:29 Yes

Martin Casado 25:29 ... and the shift to cloud.

Augusto Marietti 25:30 That was the killer.

Martin Casado 25:31 Right. And so-

Augusto Marietti 25:32 That was the key.

Martin Casado 25:32 Yeah.

Augusto Marietti 25:33 I think, I think before there were all these ar-archai legacy solutions in APIs, but they were not built for the transition to the cloud and breaking down the monoliths into microservices and high scale decentralized architecture. I mean, you know from your time at NCR, like, we, we, we kind of invented a control plane, data plane separation at the API management, API control plane level. Nobody was doing it before.

Martin Casado 25:54 I, I gotta say, I, I think a lot of people

Martin Casado 25:57 don't know or maybe don't appreciate how fast Kong grew when it actually happened. So there was seven years of starvation, right? I mean-

Augusto Marietti 26:04 Yeah

Martin Casado 26:04 ... it was just basically wasn't working.

Augusto Marietti 26:06 No. Actually, I find... And you know, and you don't, you know this, but, like, every year we do the Founders Award.

Martin Casado 26:11 Yeah.

Augusto Marietti 26:12 Uh, the Founders Award is two thousand and five hundred and fifty-five stock to the best employee of the company.

Martin Casado 26:17 Yeah.

Augusto Marietti 26:18 Why that? It's two hundred and fifty-five days of struggle to remember-

Martin Casado 26:22 No kidding

Augusto Marietti 26:23 ... every day, which is seven years.

Martin Casado 26:24 That's, that's amazing.

Augusto Marietti 26:24 It's seven years.

Martin Casado 26:25 I didn't, I didn't know that.

Augusto Marietti 26:25 Every year the company has to go, they get two thousand and fifty-five. It's, it's just, it's just symbolic-

Martin Casado 26:30 Yeah, yeah, of course

Augusto Marietti 26:30 ... to remember seven years of struggle every year is a ritual.

Martin Casado 26:34 And there was this crazy diving catch, which, you know, Marco does the greatest Kong. He throws it out on the market and it catches off. But once it did, the company grew incredibly quickly, um-

Augusto Marietti 26:45 And we had forty-five competitors when we started.

Martin Casado 26:47 Oh, I remember that, yeah.

Augusto Marietti 26:48 Now it's probably thirty. [laughing]

Martin Casado 26:51 [laughing] But even then at the ti... Yeah. Well, Kong broke away pretty quickly. So I mean, you know, in, in, in recent years it's just clearly been the leader on this.

Augusto Marietti 26:58 Yeah.

Martin Casado 26:58 And that only happens, I think, if there's just clearly a market need. The market also kind of did you a favor in that, like, MuleSoft got acquired and Apigee got acquired too.

Augusto Marietti 27:07 Yeah.

Martin Casado 27:07 Right? It was like-

Augusto Marietti 27:08 It was right, yeah, '17 MuleSoft got acquired. Apigee got acquired in '16.

Martin Casado 27:12 That's right. Yeah. So, like, in a, in a way, kind of like the c- there was consolidation, and you broke out as this leader. So you kind of navigated this transition from, you know, cloud to breaking up the microservices. You know, you built the control plane for APIs. You're considered now, like, the, you know, the, the leader independent for sure. In the API space, Kong is the leader independent. Um, there's no question of that. But now you're facing another market shift, which is kind of this movement to AI. And so do you view this as directly impactful, adjacent, accretive? Like, how are you as CEO viewing this?

Augusto Marietti 27:45 Yeah. I-I think, and again, it's, it's not like it was like any me those things, but the market came at us in AI by creating more APIs. What that means, agents are gonna consume internet in a very different way than how human did. It's not anymore websites, scroll, click, up and down, applications. They, they're gonna be there, but not as relevant as before. Agents are gonna programmatically exchange labor, get tasks done through programming interface, whether it's classic APRS, MCP protocols, which is like Duolingo for APIs, makes them speak English, whatever it is the protocol. But machines consuming internet is gonna be very different than human consuming internet. Human consuming internet would be through UI. Machine consuming internet is u- is, is through programming interface. That's the huge shift that we, we are now capturing and powering and making sure the enterprise, um, think about AI connectivity. And at the end of the day, behind the scene, it's all APIs.

Martin Casado 28:45 We, you know, we had that board meeting, what was it, yesterday?

Augusto Marietti 28:48 Yes.

Martin Casado 28:48 And what, you know, what I found actually pretty remarkable is how

Martin Casado 28:52 many more banal use cases there are around AI, right? We can talk about agents, and I think it's worth talking about, and I agree with you, but it also s- feels like there's, like, a lot of just basic stuff like, like key management for... You know, like a lot of the companies are spending a lot of money on these AI models, right? So it's great to be able to have like, you know, monitoring, billing, key rotations, all of that stuff. So are you actually seeing like a non-agentic draft now?

Augusto Marietti 29:21 Yeah. I think, I think... So where I think the, the, the world is a bit of stuck, okay, you have these AI companies like Poor that are just building models, yada, yada. And then, then you have this wrapper company that are trying to solve, you know, HR issue, whatever, through AI.

Martin Casado 29:32 Yeah.

Augusto Marietti 29:33 Then you have these LLMs that have APIs to talks, um, companies like Entropy, a lot of revenue through APIs, all that. What, what is missing is the infrastructure to make those, uh, those AI talks and run, and that's, that's what we do now with the AI Gate and a lot of products. But at the core, the boring problem, like you mentioned, authentication, authorization. You can be AGI as much as you want, but at the end, an agent gets stuck if it has to authenticate. And to authenticate, you gotta get an API key. You need a human in the loop to get the API key authenticate. But if you can provide infrastructure at the beginning, you can provision and auto- and automate key provision and key rotation authentication. So once you're there, you can unleash your LLM, your agents to just roam free.Without getting stuck every time for authentication, authorization, because you're already provisioning all these keys. I think that's where, that's where we want to our customers.

Martin Casado 30:25 So, so maybe just, just assume for this, this, this part of our discussion that whoever's listening is, is pretty familiar with AI, API infrastructure, right? Do you think that the way API infrastructure looks in six months or a year or two years is dramatically different because of AI? Or is it that the infrastructure that we have in place that we understand today evolves to also service agents in ways that are pretty obvious? Like, to what extent do you think this is like transformational in the infrastructure layer versus like more of a transition?

Augusto Marietti 30:57 I think you cannot do AI if you're not API first. It, it's just you don't have the mouth and the ears to a model. Um, and so that's how AI talks. So the way we know about API, API infrastructure, it will evolve, it won't-- it change, but API traffic and AI traffic, they're converging. So the classic API calls, yes, but also when you move tokens, it's an API call. And intelligent, let's say intelligent will be sold through tokens. Every earning release is about tokens. But behind in each tokens, there are calls. The payloads move tokens. So they're kind of converging, and what we are calling our building is a unified API and AI connectivity platform that it helps you navigate this transition as you're managing classic API traffic, as you're managing agent traffic, as you manage MCP traffic, as you manage LLM traffic. I think it will all converge into a unified like broker. And that's how I think intelligence will move, and, uh, based on evolutionary steps in like two, three years. But we already see MCP traffic growing every quarter.

Martin Casado 32:00 I mean, I see even like really basic things like for developers, this is evolving very quickly. So for example, you know, for fun, I develop using Cursor. Um, you know, I used to be a professional developer, you know, in a, in a previous life. Even knowing w-what APIs existed in a company required a ton of reading through docs or some weird search. And it feels like now, especially like if you have something like Kong, which, you know, has all the metadata and has the catalog, and then you can integrate into something like Cursor. And so not only does the agent itself know about the APIs, but you can expose it to you. I mean, it feels like a lot of, like even the development paradigm is shifting now because we can start to surface these, these things to developers.

Augusto Marietti 32:46 Yeah. I think, I think you can, you can think you can-- we can be an enabler to help large companies, small companies to, to get into the hands of more developers or more Cursor. Because it all start with API. We can provide you that infrastructures and, and, and all of that. Uh, we, as you see from yesterday morning, we have a, a very exciting roadmap that is going in all in that direction. Uh, so th-those are all enabled. I think h-here's the big bet. The big bet is i-- what happened in micro-- I, I, because I grew up in Italy, and you don't really study a lot of math, you just study history. But what you learn from history is that it doesn't exactly repeat, but it reads. It's just there's always an analogy. So you, you... So what we see with microservices, what happened? We, we first build rate limiting and authentication ten times, hundred times, fifty times into the Python framework, the JavaScript framework, the TypeScript framework, the Java framework, whatever, PHP, blah, blah, blah. At some point, it didn't make any sense. Let, let's abstract everything to a gateway pattern, and we move all this connectivity logic to the gateway and that dispatch to the right service, no matter what language. The same thing I think is gonna happen in LLMs. At first, you have one enterprise use one big LLMs. Now they're gonna use five, ten, hundred, small LLM, medium, large, whatever. Once you get to, you don't do tokens rate limiting, token authentication in each LLM using the framework, the lang chain, whatever. Eventually, w-- same thing happened in microservice, you will abstract that to a gateway pattern once again. And that's where I think AI gateway will have the, the same analogy and dispatcher to write connectivity logic to the right LLM versus rewriting in each LLM. I think that's the big bet that we make that happens in microservices, happens in how enterprise will run and govern

Augusto Marietti 34:27 hundreds of LLMs.

Martin Casado 34:29 Great. Well, listen, as we wrap this up, I think it'd be great to kind of end with like any sort of recommendations for people that are listening to learn a bit more about how kind of AI is shifting the API landscape or maybe, you know, some advice on-

Augusto Marietti 34:43 Don't start a company. I'm joking. [laughing]

Martin Casado 34:49 [laughing] Maybe advi- advice on kind of like, you know, um, uh, you know, how to start thinking about getting ready for that.

Augusto Marietti 34:57 I think I said, I said before, like there is a lot of focus on model pre-training, tuning, all of that. But a key thing is the connectivity layer, how LLMs, agents, whatever, will talk to each other, how you run. I think a lot of the traffic will be very strategic, and you have to build in the, the startups or the enterprise to manage that AI connectivity into your next apps, your next internal tools, your next customers.

Martin Casado 35:26 And for the, uh, listen, the budding founders that are listening to like the most hardcore Silicon Valley-

Augusto Marietti 35:32 Do not pass go

Martin Casado 35:32 ... struggle story ever, [laughs] what advice do you give to them?

Augusto Marietti 35:37 I think what, what I learned over a decade of life-

Martin Casado 35:39 And do, do you ever think, I j- I just have to, do you ever think that like maybe you should have cut your losses and tried to start it over again? Like do you ever think that that would have been the right thing?

Augusto Marietti 35:47 Never.

Martin Casado 35:48 No.

Augusto Marietti 35:48 Never. Never. The, the reason is I could never visualize myself going back to the airport in Italy and my dad picking me up and say, "How's it going?" And it's just like would fail with my tails and my legs, like I could never-- I would have died here without food. Like I cannot do that.

Martin Casado 36:06 [laughs]

Augusto Marietti 36:06 And so that, that never crossed through, through the head.

Martin Casado 36:09 I had shivers. That was so good.

Augusto Marietti 36:10 But never. Like that's, that's the visual that every time I even start to... I, I had that visual and immediately say, "I'm not going back like that."

Martin Casado 36:18 Wow.

Augusto Marietti 36:19 And so, and then, but the, the thing to advise is it always take longer than what, uh, we thinks. Um, it is good to take a, a trend the last ten years, twenty years because you have time to grow into and do a lot of mistakes and building, and just you have to generally believe it in this trend versus following glitters because it's gonna take longer than what you think. As a leader, as a human, as a market, as a product, as a revenue, it's always gonna take longer. So take something that lasts and just put a hundred and ten percent on it every day, and then it will compound. Uh, keep the burn rate low in the early days.

Martin Casado 36:52 Don't die.

Augusto Marietti 36:53 Is ri-- don't die, like don't quit. Uh, those, those are, um, those, those are I think the things I learned along the way.

Martin Casado 37:01 Aghi, it's been a privilege and an honor working with you these past few years, and thanks so much for coming on the podcast.

Augusto Marietti 37:07 Likewise. Thank you, Martin. [outro music]