Most startups are going to fail. Very, very few of them succeed. The chances that you're going to succeed aren't very high. This stark reality check comes from someone who's beaten the odds.
Jim Rose, CEO of CircleCI, has built his continuous integration platform into a $100+ million revenue business with 300+ employees globally. From serving startups to enterprise clients like the US government, CircleCI has become the manufacturing system for software that millions of developers rely on daily.
In this candid conversation, Rose and CTO Rob Zuber share the unvarnished truth about startup survival: how to find product-market fit before running out of money, why co-founder relationships make or break companies, and the counterintuitive strategies that separate the 1% who succeed from the 99% who fail.
Watch the full interview now on EO's YouTube channel! Below is the complete transcription of the interview. Minor edits have been made for clarity and readability.
Key Highlights:
"Most startups are going to fail. Very, very few of them succeed. The chances that you're going to succeed aren't very high."
"When you find product-market fit, you will feel it. You won't know why it happened, but you'll feel the market pull."
"What you want to do, depending on how much money you have, is you want to give yourself as many chances to find product market fit as possible."
"Oftentimes the thing that you build that's going to be meaningful is going to be seen as a toy by everyone else."
"Your best partnerships are gonna be people that you enjoy as people - you really want to not just find people who have the skills that you believe that you need, but you need to find people that are socially compatible with you."
"When you find product-market fit, you will feel it. You won't know why it happened, but you'll feel the market pull."
"What you want to do, depending on how much money you have, is you want to give yourself as many chances to find product market fit as possible."
"Oftentimes the thing that you build that's going to be meaningful is going to be seen as a toy by everyone else."
"Your best partnerships are gonna be people that you enjoy as people - you really want to not just find people who have the skills that you believe that you need, but you need to find people that are socially compatible with you."
Building a $100M+ Business in a Cyclical Market
What does it take to build and scale CircleCI to over $100 million in revenue?
Jim Rose: My name's Jim Rose. I'm the CEO of CircleCI. CircleCI is a continuous integration and continuous delivery platform. Think of it - we're the manufacturing system for software. So when developers make a change to an application, you want to be able to build, test, and validate that that change is good before you put it into the hands of your downstream consumers.
We're at a pretty decent scale, so we're more than 100 million in revenue. We're about 300+ folks distributed globally. We work with organizations of all sizes, including folks like Hugging Face and Weights and Bias, including the US government.
Well, it's been an interesting market over the last 10 years. I think the first thing is you always want to recognize that the market is cyclical. There's going to be ups, there's going to be downs. As an entrepreneur and as a startup, your job is to not get too high, at the same token, not getting too low. You want to make sure that you're charting a path and staying stable and making sure that you're doing the best thing you can. But if you're building a good business and you're building something that's valuable and that your customers enjoy, you're gonna be fine.
There are very, very, very few overnight successes, but usually if you look at most great companies they've been at it and working hard and growing over the course of 5, 7, 10, 15 years.
We're at a pretty decent scale, so we're more than 100 million in revenue. We're about 300+ folks distributed globally. We work with organizations of all sizes, including folks like Hugging Face and Weights and Bias, including the US government.
Well, it's been an interesting market over the last 10 years. I think the first thing is you always want to recognize that the market is cyclical. There's going to be ups, there's going to be downs. As an entrepreneur and as a startup, your job is to not get too high, at the same token, not getting too low. You want to make sure that you're charting a path and staying stable and making sure that you're doing the best thing you can. But if you're building a good business and you're building something that's valuable and that your customers enjoy, you're gonna be fine.
There are very, very, very few overnight successes, but usually if you look at most great companies they've been at it and working hard and growing over the course of 5, 7, 10, 15 years.
The Two Essential Traits Every Entrepreneur Needs
What are the core qualities needed to succeed as an entrepreneur?
Jim Rose: What I have found is that you need two things to be successful as an entrepreneur. One is you need to be inherently very curious. You have to always be trying to figure out what makes things tick, what's curious, what's interesting right now, what kind of problems are you running into?
And then I think the other part of it is you have to be able to step back and see problems not just at a small microscopic level. You have to be able to step back a little bit and look for patterns because I think great opportunities and great businesses oftentimes while they start with a very unique point solution or point insight, it's usually the companies that you see succeed over a long period of time have that ability to zoom out a little bit and say, oh, that one point is actually related to the 15 other things. What if we could solve 7 of them?
What you have to avoid as an entrepreneur is you have to avoid getting too swayed by the flavor of the day or the trend of the moment. Trends are trends. One of the things I see happening so much right now is the half-life of trends right now is getting shorter and shorter and shorter, and our attention span is getting shorter and shorter and shorter. You have to figure out how to be aware of that but then ultimately be in a place where you can ride out and understand the value that you're adding for a customer and not get distracted.
And then I think the other part of it is you have to be able to step back and see problems not just at a small microscopic level. You have to be able to step back a little bit and look for patterns because I think great opportunities and great businesses oftentimes while they start with a very unique point solution or point insight, it's usually the companies that you see succeed over a long period of time have that ability to zoom out a little bit and say, oh, that one point is actually related to the 15 other things. What if we could solve 7 of them?
What you have to avoid as an entrepreneur is you have to avoid getting too swayed by the flavor of the day or the trend of the moment. Trends are trends. One of the things I see happening so much right now is the half-life of trends right now is getting shorter and shorter and shorter, and our attention span is getting shorter and shorter and shorter. You have to figure out how to be aware of that but then ultimately be in a place where you can ride out and understand the value that you're adding for a customer and not get distracted.
Why Big Markets Give You Permission to Be Wrong
How do you choose the right market to target as a startup?
Jim Rose: If you're focused on an area where there's a lot of users or a lot of money spent, it just gives you a lot of ability and affordance to be wrong. If you're going after a market and there's only $10 million spent there and only $10 million of potential, you're gonna have to figure out a way to get all 10 of it, whereas if you're going after a market that's $100 billion there's lots of different ways to get to $10 million in revenue. So focusing on very large opportunities in large pools gives you a lot of flexibility to try new things and a lot of different ways to choose your own adventure to get to size and to get to something that's meaningful.
Oftentimes the thing that you build that's going to be meaningful is going to be seen as a toy by everyone else. That's the way that you can establish a way to generate something that's meaningful to 10 users or 100 users. Once you can find that thing that attaches, that becomes meaningful to your customer, that's the spark.
So you want to target markets that are big, but you want to target opportunities that you can get to quickly so that you can better understand, am I on the right track? Am I solving a real problem? Do the customers enjoy the thing that we're building and delivering to them so that you can continue to invest and reinvest and grow.
Oftentimes the thing that you build that's going to be meaningful is going to be seen as a toy by everyone else. That's the way that you can establish a way to generate something that's meaningful to 10 users or 100 users. Once you can find that thing that attaches, that becomes meaningful to your customer, that's the spark.
So you want to target markets that are big, but you want to target opportunities that you can get to quickly so that you can better understand, am I on the right track? Am I solving a real problem? Do the customers enjoy the thing that we're building and delivering to them so that you can continue to invest and reinvest and grow.
The Make-or-Break Reality of Co-Founder Relationships
How did you and your co-founder Rob build such a strong partnership?
Rob Zuber: I'm Rob Zuber, CTO of CircleCI. A co-founder relationship is a very long relationship, and it's very difficult to exit. I met Jim through our third co-founder at Copious, and so Jim and I went for coffee, and he sort of gave me a bunch of insights into the business as someone who had never even worked on it that were really interesting and compelling to me, very insightful, and I thought this is someone who really understands product, really understands the kinds of things that you face in a startup and so I think it would be really interesting to work together.
I'll say many early stage investors spend all of their time trying to understand the dynamics of the team and the relationships between the people because that is the biggest challenge. If I was considering starting a company with someone I would be extremely honest about who I am, what motivates me, how I work, what frustrates me, and would want to hear the same from potential co-founder to know that we're going to work together because otherwise we're going to invest years of our lives in something that's going to collapse.
Your best partnerships are gonna be people that you enjoy as people - you really want to not just find people who have the skills that you believe that you need that you find that might be complementary to what you do, but you need to find people that are socially compatible with you as a team that can work well together even when things aren't working well.
I'll say many early stage investors spend all of their time trying to understand the dynamics of the team and the relationships between the people because that is the biggest challenge. If I was considering starting a company with someone I would be extremely honest about who I am, what motivates me, how I work, what frustrates me, and would want to hear the same from potential co-founder to know that we're going to work together because otherwise we're going to invest years of our lives in something that's going to collapse.
Your best partnerships are gonna be people that you enjoy as people - you really want to not just find people who have the skills that you believe that you need that you find that might be complementary to what you do, but you need to find people that are socially compatible with you as a team that can work well together even when things aren't working well.
What's the key to building great teams beyond just individual skills?
Rob Zuber: They may all be incredibly skilled - it might be like a basketball team. You have somebody who's great at shooting 3 pointers, great at driving to the hoop, and somebody who's really good at getting rebounds, but if the pieces don't fit well together, you're not necessarily going to have a great team. And what you're really trying to do is you're trying to build a great team and not necessarily get too fixated on the independent skills of all the individual players.
I think what gets lost far too often is that most founder blow ups - and I think that's a real struggle for super early stage startups because you can barely find anyone that's willing to take a pay cut, take all the risk, do all these things and join you and you're super excited to have anybody that says they're willing, but the reality is those early hires are the most important ones that you will have and they will work with you to define and structure that culture. So it's really important that those early folks are bought in and that's what helps you amplify and build the culture that you've defined.
I think what gets lost far too often is that most founder blow ups - and I think that's a real struggle for super early stage startups because you can barely find anyone that's willing to take a pay cut, take all the risk, do all these things and join you and you're super excited to have anybody that says they're willing, but the reality is those early hires are the most important ones that you will have and they will work with you to define and structure that culture. So it's really important that those early folks are bought in and that's what helps you amplify and build the culture that you've defined.
The Art of Customer Discovery: Beyond Solutions to Problems
How should entrepreneurs approach understanding their customers?
Jim Rose: You should focus on getting out and talking to as many customers as you can, and inevitably the thing that you gotta go fix, so the thing that you have to really fixate on is what is the problem that we're actually solving for the customer, and the only way you can figure that out is by going and talking to them.
Customers are great at telling you what their solution would be. They're not always so good about articulating what their problem is. And be less concerned about the solution that they're telling you because their solution is inherently going to be directed at their specific instance of the problem.
Oftentimes when you're getting negative feedback, those are actually the most valuable conversations. Too often as an entrepreneur, it can be very raw when you're talking to a customer. Sometimes customers definitely not like what you built and what you delivered. When you're an entrepreneur, the thing that you're building and putting into the hands of the customer is a representation of your time and effort. Oftentimes when you get negative feedback, your natural reaction can be to basically lean back and recoil and sort of protect yourself. You need to be leaning in and just digging in into the why of trying to understand why are we a little bit off the mark? Why are we not actually able to solve it?
Customers are great at telling you what their solution would be. They're not always so good about articulating what their problem is. And be less concerned about the solution that they're telling you because their solution is inherently going to be directed at their specific instance of the problem.
Oftentimes when you're getting negative feedback, those are actually the most valuable conversations. Too often as an entrepreneur, it can be very raw when you're talking to a customer. Sometimes customers definitely not like what you built and what you delivered. When you're an entrepreneur, the thing that you're building and putting into the hands of the customer is a representation of your time and effort. Oftentimes when you get negative feedback, your natural reaction can be to basically lean back and recoil and sort of protect yourself. You need to be leaning in and just digging in into the why of trying to understand why are we a little bit off the mark? Why are we not actually able to solve it?
How does the customer relationship evolve as your company grows?
Jim Rose: When you start, you're solving the problem for the customer and whatever that problem is, and as you get bigger as an organization, as you accrue expertise, there's some point in there where you become the expert in the problem and you have to go from consuming information from the customer to being in a dialogue with the customer where the customer is gonna keep telling you what their problem is, but what you need to start to do and what you need to be investing in in that relationship is your expertise in that particular problem.
In the world of CircleCI, we've seen the customer problem probably from 18 different ways and facets, more so than the customer has. The customer tells us their problem, we share with them what we've learned over time, and then we can come up with some kind of joint solution. It's a tight balance. You have to figure out how much you listen versus how much you contribute. That balance changes over time.
In the world of CircleCI, we've seen the customer problem probably from 18 different ways and facets, more so than the customer has. The customer tells us their problem, we share with them what we've learned over time, and then we can come up with some kind of joint solution. It's a tight balance. You have to figure out how much you listen versus how much you contribute. That balance changes over time.
The Painful but Profitable Pricing Pivot
How did you approach changing CircleCI's pricing model?
Jim Rose: When I joined in 2014, the pricing model was established. Around that time, as people were getting more and more comfortable with things like Elastic Compute and cloud offerings, they were getting more oriented towards capacity or usage models, meaning use this VM, an EC2 for X number of hours, and I pay exactly for those hours. Even shifting to by the minute pricing, so pricing was becoming much more dynamic based on usage and our customers were asking us why am I paying for this fixed bandwidth on the weekend?
We shifted our entire pricing model to be usage based and that took a long time to transition. I mean introducing new pricing is hard, getting people to shift is hard and then getting the last people - from a tech platform perspective, you don't get to turn off all those parts of your platform until you've gotten the last customer off of them. It's like the first customer is exciting, but then you're doing two different things, so we went through a big transition but that ultimately paid off.
My takeaway and advice from our changes in pricing strategy is that ultimately when customers feel like what they're paying you is directly aligned with the value they're getting, they're much more likely to pay. So in the usage based model for us it's when I'm building software I am paying you to help me build software and when I'm not I'm not paying you. That much better aligns with their perception of the value that they get from us versus a capacity model where even when I'm not using it I'm paying for it. So that transition really allowed us to have a better relationship with our customers around value and them paying for the value that they get from us.
We shifted our entire pricing model to be usage based and that took a long time to transition. I mean introducing new pricing is hard, getting people to shift is hard and then getting the last people - from a tech platform perspective, you don't get to turn off all those parts of your platform until you've gotten the last customer off of them. It's like the first customer is exciting, but then you're doing two different things, so we went through a big transition but that ultimately paid off.
My takeaway and advice from our changes in pricing strategy is that ultimately when customers feel like what they're paying you is directly aligned with the value they're getting, they're much more likely to pay. So in the usage based model for us it's when I'm building software I am paying you to help me build software and when I'm not I'm not paying you. That much better aligns with their perception of the value that they get from us versus a capacity model where even when I'm not using it I'm paying for it. So that transition really allowed us to have a better relationship with our customers around value and them paying for the value that they get from us.
The Race Against Time: Finding Product-Market Fit Before the Money Runs Out
What's the key to finding product-market fit quickly?
Jim Rose: Startups don't die. Startups run out of money. What you want to do, depending on how much money you have, is you want to give yourself as many chances to find product market fit as possible. That means you have to keep your development cycles as short as humanly possible, and you have to keep the feedback cycles as immediate as possible.
So even big, well funded startups that maybe don't succeed or they fail, oftentimes the length of the development cycle is way too long. They're spending months, if not quarters and in some cases years, perfecting a technology that they have no idea if anybody's actually going to use. So what you want to do is you want to be able to build something that's meaningful enough that when you put it into the customer's hands, the customer can actually react in a way that's going to tell you whether you're on the right track.
Especially with your early users, your earliest users are going to expect that first version of the thing that you put into their hands is gonna be rough. It's gonna be jagged. There's gonna be things that don't work, but if you find something that directly addresses the customer need, they'll grab it, even though there are rough edges in the product.
When you find product market fit, you will feel it. You won't know why it happened, but you'll feel the market pull. The only way you can find that out is to ship fast and ship early.
So even big, well funded startups that maybe don't succeed or they fail, oftentimes the length of the development cycle is way too long. They're spending months, if not quarters and in some cases years, perfecting a technology that they have no idea if anybody's actually going to use. So what you want to do is you want to be able to build something that's meaningful enough that when you put it into the customer's hands, the customer can actually react in a way that's going to tell you whether you're on the right track.
Especially with your early users, your earliest users are going to expect that first version of the thing that you put into their hands is gonna be rough. It's gonna be jagged. There's gonna be things that don't work, but if you find something that directly addresses the customer need, they'll grab it, even though there are rough edges in the product.
When you find product market fit, you will feel it. You won't know why it happened, but you'll feel the market pull. The only way you can find that out is to ship fast and ship early.
How do you maintain product-market fit once you've found it?
Jim Rose: Having product market fit and keeping product market fit are not the same thing, so don't assume that now you've nailed it and it's always gonna be the same. Usually you hear the thing that got you here won't get you there, but the paranoia and drive to absolutely understand your customer and their need should stay. The desire to iterate quickly and always be improving and always be experimenting - don't lose that because you suddenly feel like, oh we found it now we do something different.
So it's a question of building on top of your drive for brilliant product, not parking that and doing something else. Now what else do you add on top of that? You're gonna get much higher leverage sort of go to market marketing strategy when you have a product that people love and then, depending on the scale of your customers and the type of your customers, you might also do direct sales.
Direct sales can be an expensive big proposition, so you want to know that you're in a place that that's the kind of customer you have to go after. The more you can do on self serve, product led growth I think the better you're gonna be in the early days and then a lot of it is tweaking - OK, people love the product, but boy is it a lot of energy to get into the product. Maybe the onboarding flow is complex or hard to understand. How can we tighten that? Where are we losing people? So really paying attention to how people are flowing through because pre-product market fit you probably don't have enough numbers going through your product of users to really even understand.
But now you're seeing, OK, lots of people are going through and they all get to this spot and something goes wrong. We lose a bunch of people here. Great, what is that? Can we go talk to customers? Can we look at the data? How do I improve that? So really opening up the funnel to make sure people are converting and then marketing, pour fuel on the fire, drive people in, but pay attention because you'll drift from product market fit and if you lose it now you're pouring money into something that's not working.
So it's a question of building on top of your drive for brilliant product, not parking that and doing something else. Now what else do you add on top of that? You're gonna get much higher leverage sort of go to market marketing strategy when you have a product that people love and then, depending on the scale of your customers and the type of your customers, you might also do direct sales.
Direct sales can be an expensive big proposition, so you want to know that you're in a place that that's the kind of customer you have to go after. The more you can do on self serve, product led growth I think the better you're gonna be in the early days and then a lot of it is tweaking - OK, people love the product, but boy is it a lot of energy to get into the product. Maybe the onboarding flow is complex or hard to understand. How can we tighten that? Where are we losing people? So really paying attention to how people are flowing through because pre-product market fit you probably don't have enough numbers going through your product of users to really even understand.
But now you're seeing, OK, lots of people are going through and they all get to this spot and something goes wrong. We lose a bunch of people here. Great, what is that? Can we go talk to customers? Can we look at the data? How do I improve that? So really opening up the funnel to make sure people are converting and then marketing, pour fuel on the fire, drive people in, but pay attention because you'll drift from product market fit and if you lose it now you're pouring money into something that's not working.
Surviving the AI Revolution: What Entrepreneurs Need to Know
How has the pace of technology change affected your approach to staying relevant?
Jim Rose: Developers and the technologies that people ultimately select oftentimes are selected because somebody else said it was cool. A technology would come and go maybe every 3 to 6 months. Now it's like 5 to 10 days, and in the world of generative AI it's going even faster. You talk to most development teams in generative AI, you plan your world on 6 week cycles because the technology that you started with 6 weeks ago may not even be relevant 6 weeks later.
So you want to stay as close to, at least in our case, the developer and the user and the practitioner because they're the ones who ultimately best understand the technology that they're using and can give you the greatest feedback because they will continue to use the technology that actually solves their problem and they are very quick to throw away stuff that doesn't actually work.
So you want to stay as close to, at least in our case, the developer and the user and the practitioner because they're the ones who ultimately best understand the technology that they're using and can give you the greatest feedback because they will continue to use the technology that actually solves their problem and they are very quick to throw away stuff that doesn't actually work.
What advice would you give to entrepreneurs looking to build in the AI space?
Jim Rose: As a company or an entrepreneur if I were looking in the AI space, I would wipe the slate clean and try and find things that I thought were inherently unique and just get very, very creative again. It feels very same right now. I think that people that are really going to succeed come up with ideas that today are going to feel very radical, but in 2 or 3 years are going to feel incredibly normal, but what's normal in 3 years is going to feel very different today. I would encourage people to be as creative as possible.
I think the second part of that is I would think very deeply about what can you do that's uniquely valuable to the customer that is defensible over time. I think what you're seeing right now is as people have tried to take similar activities that we did before generative AI and just trying to make them better, a lot of it just gets easily displaced. The big foundational models, the big vendors of today basically look at a unique niche application that somebody might have, and they just do it better and they can do it more cheaply than some of the other providers can. And then you watch entire parts of the market disappear.
I think that's pretty natural, but if you're an entrepreneur, you want to find something that you think is inherently defensible. There's some reason that you as a company doing it and doing it over time accrues more and more value and accrues more and more differentiation that somebody can't come in and basically take it away from you. And that someone who comes in and takes it away from you is probably going to be a Fortune 10 company that has infinitely more money and can do things at a lower cost, so you have to find something that's very unique and valuable.
I think the second part of that is I would think very deeply about what can you do that's uniquely valuable to the customer that is defensible over time. I think what you're seeing right now is as people have tried to take similar activities that we did before generative AI and just trying to make them better, a lot of it just gets easily displaced. The big foundational models, the big vendors of today basically look at a unique niche application that somebody might have, and they just do it better and they can do it more cheaply than some of the other providers can. And then you watch entire parts of the market disappear.
I think that's pretty natural, but if you're an entrepreneur, you want to find something that you think is inherently defensible. There's some reason that you as a company doing it and doing it over time accrues more and more value and accrues more and more differentiation that somebody can't come in and basically take it away from you. And that someone who comes in and takes it away from you is probably going to be a Fortune 10 company that has infinitely more money and can do things at a lower cost, so you have to find something that's very unique and valuable.
The Unencumbered Advantage: Why Starting from Zero is Your Superpower
What's the final advice for entrepreneurs facing the harsh reality of startup failure rates?
Jim Rose: One of the huge benefits of startups and being an entrepreneur is that you're unencumbered. You don't have to worry about the way it was done before. You don't have any customers and you can come up with something entirely new. I think that's how you find success. Find something that's truly unique, something that's truly inspirational, and spend your time there, because most startups are going to fail. Very, very few of them succeed. The chances that you're going to succeed aren't very high, but the way you succeed is by trying to do something meaningful.
If you're doing something that's truly inspirational and meaningful, maybe as a startup with the first thousands or millions of dollars that you invest, you're able to get 20% of the way there and you're able to hand the baton off and go join a larger organization who then helps you get it to the finish line.
But if you're just doing something that's an interesting facet or feature of somebody else's platform that's easily copyable, there's better ways to spend your time.
If you're doing something that's truly inspirational and meaningful, maybe as a startup with the first thousands or millions of dollars that you invest, you're able to get 20% of the way there and you're able to hand the baton off and go join a larger organization who then helps you get it to the finish line.
But if you're just doing something that's an interesting facet or feature of somebody else's platform that's easily copyable, there's better ways to spend your time.
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