A love letter to DHH and others concerned about our recent funding announcement
The overwhelming reaction to our funding announcement last week where we brought Accel onboard as partner and sold them a minority, no-control stake in 1Password has been fantastic.
Many people shared their love on Twitter and reached out to me personally to share their excitement for 1Password and to congratulate us. I even managed to reconnect with some of my IBM friends and colleagues from 20 years ago! ❤️
As with any change there were also concerns and fear that accompanied the news. Fear that we’d lose control, fear about aggressive growth, and fear that our UX would become enterprise-y.
I can totally relate to where people are coming from and I’m thankful that people care enough about 1Password to be worried for us. It means a lot to me and the team knowing we have so many people rooting for us. 🤗
Thankfully we’re gonna be fine. There are a lot of incorrect assumptions that those fears are based on and I’d love to clear them up.
We have full control and won’t let go
The majority of the fear came from the belief we had lost control, sold out, or were walking away. All of these are simply not true. If any of them were indeed true then they would have scared the hell out of me, too! 🙀
Many tweets were built on these false assumptions but by far the most painful one of all was this one from DHH:
I knew full well that DHH wasn’t going to be excited as he’s not a fan of Venture Capital (ok, that’s a slight understatement 🙂). But his words still cut deeper than I expected as I have a huge nerd crush on DHH that goes back 15 years.
DHH created Ruby on Rails, a web framework that was so revolutionary at the time that it prompted Roustem and I to leave our day jobs and start the company that eventually became 1Password. He co-authored Getting Real, which was like a bible to us and mandatory reading for everyone at 1Password for many years. And his Dear Jeff post on Amazon HQ2 was the final piece of encouragement I needed to pull the trigger on opening our support office in my small home town.
Because of the huge amount of respect I have for DHH, his words were like a 🔪 to my heart.
After some reflection I managed to pick myself up off the floor and tried putting myself in DHH’s shoes. With the limited amount of details in the TechCrunch post, it’s understandable that he was concerned. It’s easy to assume some friendly Canadians got duped into giving up control. 🇨🇦🍁
As is often the case, we do things differently. This is the largest Series A round in Accel’s history for a reason. And it’s not based on smoke and mirrors or wishful thinking.
We’ve been profitable for our entire 14 year history. The fact that we’re going into this partnership as a profitable, established, and market leading company allowed us to negotiate the deal from a position of strength.
We had no need for the cash so there was no pressure to agree to bad terms or conditions. Whenever we found something we didn’t like we simply refused to go forward.
There’s a reason it took 6 years of relationship building with Accel before a deal was ever reached. 🙂
We sold a small part of the company to Accel for a minority, non-controlling interest in 1Password with no hidden strings attached. In return we got access to some really smart people and were able to take some money off the table.
We will continue to grow smartly
A lot of the fear we saw was based on the “grow aggressively” statement Jeff and I made in our interview with Ron Miller from TechCrunch. Here’s the part of the quote taken out of context:
we need to grow, and grow aggressively
Whoa! That quote sounds scary sitting there all by itself, doesn’t it? Now to be fair, Ron did a bang up job accurately capturing what we said in our interview. We did say that. Here’s the full quote:
“We have far less experience with things like go-to-market programs, with sales, marketing and finance teams — and things like that. And we need to grow, and grow aggressively, which is not just hiring people, but also getting the right partners, finding the right leaders to help us with that growth,”
That’s better but it still sounds scary, doesn’t it? It was a poor choice of words to be honest as it certainly could be viewed as “grow at all costs” and by extension lead to the “desperate/shitty decisions” that DHH mentioned in his tweet.
I can see that and honestly we could have said it better. If a company grows too fast it can outgrow its culture and lose sight of what made it great to begin with. This is something that we’re well aware of and spend a great deal of time thinking about.
But at the same time, we already are growing very fast. For the last 14 years we’ve gone from 2 to 174 people, so we’ve already been doubling every other year. For most businesses this is already “growing aggressively” and we’ve been doing so for 14 years already and it’s worked quite well. The thing is, even though we’re already growing fast, we need to accelerate the pace just to catch up to today’s tasks, let alone the multitude of other things that we’d like to add to our plate.
The other part of the story is we have so many opportunities and features to explore that it’s quite frankly frustrating that we have zero free time to spend on them (I’d argue we have negative free-time, but that’s a separate story). All great businesses and products have to say “no” frequently so they can stay focused on their core business, but we’re currently saying “no” to things that are part of our core business.
We gotta grow. And yes, when you are as passionate as we are and feel constrained from getting to where you know you can be, words like “grow aggressively” will come out of your mouth.
To help us grow smartly we sold a minority, no-control stake in 1Password to Accel so they could help us get to where we want to be while avoiding mistakes that others have already learned from. That will allow us more time to focus on our values and culture and less time on fire fighting.
UX will continue to be a cornerstone of 1Password
Others were concerned that our continued focus on the enterprise would damage the user experience that’s made 1Password so successful. Anyone who’s been forced to use software created based on an enterprise checklist has suffered enough to never want to experience it again.
The thing is “enterprise” isn’t as scary as it sounds. We’re not playing a businesses vs. individuals zero sum game. Our relentless focus on the user experience in 1Password is one of the main reasons we have been so successful with 1Password Business.
One of the things that gets me the most excited is 99% of the time employees at businesses are using the exact same features in 1Password that everyone else is using.
The difference in the enterprise is all the tooling that goes around the core experience to provide businesses the features they need. As we improve the user experience for individuals we automatically improve our business offering. It means that we can continue focusing on what’s made us successful.
By selling a minority, non-controlling interest in 1Password to Accel we have access to more smart people who can help us manage the enterprise side of things while allowing the majority of our development and design teams to continue focusing on what made 1Password the most loved password manager.
We choose Accel over Jeff Bezos and others for good reasons
Most of the concerns and worries I’ve seen stem from a deep distrust of VCs. This is understandable. We’re clearly in an investment bubble at the moment and crazy shit happens in bubbles (remember Pets.com?).
We found ourselves needing help while living in a bubble so we sold a small part of the company to Accel for a minority, non-controlling interest in 1Password. In return we got access to some really smart people and were able to take some money off the table.
The parallels to Basecamp’s co-founder Jason Fried’s post in 2016 are numerous (emphasis added):
Jeff [Bezos] bought a small piece of our company. I didn’t take the cash out of some fantastical desire to turn Basecamp into a rocket ship. Instead, his purchasing shares from me and my co-founder took a little risk off the table and gave us direct access to the brain of one of today’s greatest living entrepreneurs.
We followed the nearly identical playbook that Basecamp followed in 2006. For us the last part was the most important bit: we wanted access to the great minds of people who have done this before.
Certainly Jeff Bezos is a smart cookie so maybe we should have followed Basecamp’s lead there? The thought certainly occurred and I toyed with the idea for a while. But as DHH said in his Dear Jeff post, we wouldn’t have found what we were looking for:
Jeff [Bezos] owns a minority, no-control stake in Basecamp (the company that Jason and I co-own). For the first few years after purchasing that, Jason and I would meet or talk to him about once a year. It’s probably been 7–8 years since we spoke with Jeff directly last.
Clearly Bezos is a busy guy and wouldn’t have time to play. Given that expertise and guidance was what we needed the most, partnering with someone like Bezos simply wasn’t a good path forward for us.
Bezos isn’t the only one who’s too busy with their own company to play in our sandbox. Every CEO, founder, and titan of their industry is busy doing exactly that. They’re so busy that we might get some advice once a year if we were lucky.
We need so much more than this. To make any partnership successful we needed people who would not only give us advice but who would join our team and actively pull alongside us.
Sure, given enough time and sweat we could certainly eventually figure things out ourselves. After all, we’ve been pushing 1Password forward for well over a decade now.
The thing is, there’s a lot of momentum built up in this locomotive and over the last year it has started to pull us! Businesses of all sizes have realized that they need an Enterprise Password Manager and have been pounding down our doors to get the best one.
We found ourselves in a similar situation to where Roustem and I were 7.5 years ago when we had an important choice to make: put on the brakes so we could survive or find help to help steer it in the right direction.
Ultimately we decided to take our foot off the brakes and allow 1Password to flourish.
Being more 1Password-y than ever
We love 1Password and have the honour of getting paid to work at our dream job. Our values that we built 1Password on and our supportive users made this possible and we’re never going to lose sight of that. 🤗
While negotiating our agreement these thoughts were at the forefront of our minds. I can’t speak for everyone but as I went through this entire process I had RuPaul in the back of my mind telling me Don’t Fuck It Up.
We haven’t and we won’t.
Our partnership with Accel doesn’t contain any numbers we must hit or bars that we must cross. There are no penalties we incur if we donʼt succeed. As a successful, profitable company we were able to ensure that we would always be in control and were able to say “no” to any terms we didn’t agree with. It must be frustrating for companies who are not in our position, and I feel very fortunate that we are.
By ensuring we have complete control we are able to continue building on the values that got us this far.
We have a strait-laced business model: we sell 1Password. 1Password is the product. You are not. Anything else is just plain wrong, and quite frankly, bad business. We earn more trust and revenue with an above board business model so it just don’t make sense to do anything else.
I understand that the proof will be what we do over the next 14 years, but based on the trust we’ve built over the previous 14 years I hope you’ll give us the benefit of the doubt and take a wait and see attitude.
I’ve said it a thousand times and I’ll say it a thousand times more: we wouldn’t be here without awesome users like you and we’re never going to lose sight of that. 🤗
1Password Founder (and still at the helm 🚂🙂)