OpenGov CEO Zach Bookman: government software is a $1.8B exit business built on 13 years of painful mistakes

reream waiting room. He's coming into the TDP Ultra Dome. We have Zack Bookman from Open Gov. Let's bring in Zack. How are you doing? What's going on? Johnson. Hey, Jordy. How you doing? What's happening? I'm fantastic. I'm happy to be with you. It's Friday. We're close. We're I feel Monday's right around the corner.

I'm so excited. Yeah, Monday's right around the corner. Can I just get real with you guys for a second? It's it takes a lot of stamina to build a company and to lead and to be a CEO and like what you're doing must take so much stamina too. How do you how do you daily it's a daily marathon? It's the entire get real.

How do you do this hours a day performing? Yeah, we joke anyone is welcome to compete with us. Just be willing to produce 20 hours a week of live content. be willing to spend a meaningful amount of your waking life live on the internet. The internet and and on Diet Coke, which is prominently. Yeah. Yes. Yes. Yes.

We've been rotating them out a little bit, but uh yeah, Diet Coke is the current diet. Yeah. I mean, the real secret Andrew Huberman's Yerba Mate Matina. Oh, that'll jack you up. I drink two of those before the show every day. Yeah. I cruise warms up. I call it podcast in a can. It's a podcast in a can.

It's a podcast in a can. So you're asleep like half the weekend. Oh yes, that's exactly the big that's the big issue. We're on like insane caffeine levels Monday through Friday and then on the weekend our wives will be like what's going on?

Like wake up like you're doing I finally was like the secret is stock energy drinks and then I'm I'm ripping at least 500 milligram Saturday and Sunday. Well, you're getting the most exciting guests too. So it's we have some good adrenaline with no performance even you know. Yeah, it's really cool. Yeah.

Can you kick us off with an introduction on yourself? I uh I I'm familiar with the story of the company, but I'd love to just introduce it to the audience. Sure. I'm Zach Bookman. I'm I'm co-founder and CEO of an it's an enterprise software company called Open Gov. Yeah. It's vertical software.

So, we sell uh we sell software to modernize all of our nation's cities and counties, state agencies. Yeah. This has so I started the company with Joe Lansdale and two amazing young Stanford engineers. 13 years. Can you explain uh who's Joe? Who's Joe? Joe uh who's Joe for those? Yeah. Joe's co-founder. Okay. Okay.

Co-founder of Palunteer, buddy of yours. Um hey, your audience getting so big there's people down the valley here. Okay. So, they've been living under a data center. If they don't know if they don't know, uh 13 years, incredible run.

Uh I I felt like 13year overnight success of course and I feel like the company kind of came out of nowhere. Is that was that intentional? Were you building like behind the scenes or is that just a function of the market? Well, a little bit of both.

Well, and there's a third one which is called the long series of painful mistakes. Um we so those who don't know, we sold the company last year for $1. 8 billion to a very large uh family. [Music] almost tripped over there.

Um, it was it was the largest, I think, private software transaction of the year and maybe one of the largest of the last few years. I just keep going. This is fun. Um, this is great. You're on a roll. You're on a roll.

This is We designed the s the the soundboard for this kind of interview and you're really hit him the horse noise. We um we we we saw all these governments using like green screen software, you know, more than a decade ago. This is after the great recession.

There were three cities that went bankrupt, 12 that were predicted to go bankrupt. And we were like, we're going to pay taxes for the next 50 years. Where's our money going to go? We saw the state uh the state of California using an accounting system that ran on Cobalt. Mh.

and they entered into a hundred million dollar agreement with Oracle and Accenture which ballooned into a billion dollar wow deal that was seven that was seven years let's give it up for the shareholders wealth transfer taxpayers I'm a California taxpayer just write the check to Larry Ellison next time and and we saw that the the city of Palo Alto was running an ERP system that was delivered on 20 discs and had green screens from a German software conglomerate SAP and they paid 10 million bucks for it.

And we were like, there's we we have to be able to do good for our communities, our country. It was super mission driven. Our mission is to power more effective and accountable government. And we thought there's pretty good business here.

And it turns out there's a your your investor uh audience would know there's a company called Tyler Technologies. Most ordinary people haven't heard of it. They do about two billion in revenue on software and services for state and local governments.

and they are the I think 10th best performing stock of the last 20 years. They're on the S&P 500. They print like well over a quarter billion dollars of cash a year, probably three 400. And so we got out of the gate, had a little bit of hype. Yours truly made basically every entrepreneurial mistake in the book.

Uh built the wrong products in the wrong order, hired the wrong people, raised too much money, spent too much money, uh had to learn enterprise selling on the job. Uh, and we managed to get some outstanding star-studded investors and board members.

Mark Andre was on the board, John Chambers, obviously Lndale, uh, Katherine August who helped build First Republic, and, you know, folks like Loren uh, Jobs and Scott Cook. So, people were very attracted to the mission.

I used to have hair down to here, so maybe, you know, there's like the long-haired crazy founder thing. And with all these mistakes, it was hard times from like literally probably 2015 to 2019, almost not raising around, you know, Uncle Joe rescued us once or twice. And you know, Mark would joke with me.

He's like, you know, and then it kind of started to work and he'd be like, this is like little engine that could. And this is in, you know, then it turns into like 2021 Zerp. Every company's growing like 80%. And my shareholders are like bored, right?

They like we're just like a good little company and literally right up until I could see they were a little tired and right up until the sale we were people thought we were worth about half of what we were worth. Uh so things had really started to work. Cox was diversifying their 125year-old family business.

They do you know couple dozen billion in revenue uh and are trying to move away from cable automotive and other businesses. and they said, you know, we like government software and we built a relationship over three or four years and and the company's actually accelerating now. So, it's it's getting exciting.

Incredible. What what's like what are some highlevel kind of I don't know contrarian insights or unexpected things that you could share about like lessons from the way the government runs. Maybe everyone thinks it's because of this, but it's actually something deeper.

Just the way people understand the government, they understand it in one way. H how has your perspective changed because you sit in such a unique position? One obvious almost contrarian take is folks like us in particular, we love to sit around and bash the government. Oh yeah. And you know where's our money going?

These idiots the $10,000 toilet. Like many years ago I did this with Calacanis and and he went off on it and I said look I said what's ironic is we are the government. Yeah. He's like what do you mean? And I'm like you can raise your hand and go sit on the town council. Yep. Why don't you?

Y, it's a lot easier to just to complain. And the reality is the people running our nation's state and local governments aren't all idiots. They're not all wasteful, fraudulent, and crooked. Many of them are accountants, lawyers, professional managers. They're actually working really hard day in and day out.

They do it they could get other jobs. They do it because they they want a mission and they want to help and they like being involved. And the problems are very complicated and they're regulated like heck by you and me. Mhm. Every time there's a little scandal, and there's plenty of scandals in companies, we know this.

But every time there's a scandal in the public sector, we put more regulations on them. So, we complain about procurement. We complain about their actions. And yet, we govern them. And they have to follow the rules that we set. And so, what we're actually complaining about is our political culture.

It's not the administrators and bureaucrats that are in our government. So, that's one contrarian take. Another is few people think about how important these entities are. We always we want to talk about federal government or international uh relations or security or what have you.

And the reality is most of your services are done by local and state governments. Literally the road you drive on, the water you drink, you flush the toilet, the flick the light switch on, all of this stuff is typically done by local and state governments.

And we rarely think about who we're going to call in the middle of the night if someone's breaking in and are they well resourced? Are they well trained? Are we interacting with them? Are we governing them correctly? Uh so I don't know if that's another contrarian take, but it's like this is really important stuff.

It's super missiondriven and it's got to be right. And they operate in glass houses and we all get to throw stones at them all day. Could you imagine running a company if you had to uh every little piece of software you wanted to buy, you needed to have it approved by your board?

That's an example of a rule we put on our local government. If it's over 25K or 50K, make sure we get to a point. It's hard enough to get your board to look at your board deck.

Marking Gre would would laugh me out of the room if I was like, I need to upgrade Salesforce and uh you know, can I have 80 more K to give me a break? Are you the CEO or not?

But we don't give those authorities to how how have you thought about maintaining this uh maintaining you know the culture of open gov which feels like you know it's Silicon Valley take on on um on the category how how have you thought about maintaining and and kind of uh uh like figuring you know because I because I think you you went in I'm sure early days brighteyed uh into this business being like we're going to fix all this stuff.

it's going to be like we're just going to move fast and and make things and then um I'm sure you were kind of battleh hardened by by the reality of of building and selling into these types of companies but but now post uh postexit you want to maintain that original kind of like spirit. Yeah, there's a couple things.

I mean we started early and there were a few important insights. One, we're apolitical. Our customers can can do the politics. So they got to fight in the arena. We provide technology. So we, you know, we're here to support. We make them the heroes. Number two, we never play victim. It's a very hard business.

It's a it's a get-rich slow scheme, as I sometimes joke. And if we, you know, can't get a sale over the line or something, you know, a wrench is thrown in, it's very easy to be like, "These people are idiots. They're so dumb. They don't get how good we are.

" And we just cut I cut that off at the knees like literally in 2012. We don't play victim. We go back to work. We build a better product. We build a better go to market. We hold ourselves to a higher standard. We're going to win because of the quality of our products and services and so on.

And we've kind of held strong to that. The culture is getting stronger than than ever. By the way, we came back to the office and that's hard for a lot of people. But like I don't know what I was thinking. uh staying remote, virtual, and distributed for so long uh through the COVID crisis. Uh but you recommend it.

You recommend it to your competitors, right? I I I would uh I'll do anything to help my competitors be fully remote, virtual, fully distributed. Fully distributed.

In fact, maybe I should write a handbook on how to make the announcement at your all hands and say, "Move to the beach, move home with your parents, keep your salary, we support you because we're so inclusive. " Um, this is my hot take.

Uh, you got to write a book, the the 20our work week and sell it to as many people as possible. Yeah. Just like 20 hours. That's how to win how to win selling into the government. The 20our work week. Yeah. Just run your whole company on Slack and email. Like you don't have to talk to people.

Y um maybe do it from the putting green, too. So culture- wise, we're very hard charging. Um we we call it like donuts and door busters. We'll like we we show up with donuts and we'll kick down the door in of the local government and sell literally doortodoor. This is very high energy, high evangelism.

We're literally trying to make change among these old line bureaucratic entities drag themselves into modernity and into an AI first future. Well, I want to talk more, but John has to get my plane's leaving in 40 minutes and I have to get to Burbank. So I I have to run. Yeah. I'm going to San Francisco.

You want to hang out a little bit? I'll be there in a couple hours. We'll get a drink. Well, next time you come up, come by Open Gum. I'll give you a tour and we'll hang out. Sounds awesome. Come back on anytime. Really enjoyed this. You're our new local government correspondent and expert. We've been waiting hot, guys.

I'm sure you I'm sure you hear about, you know, all the firms like hovering and VCs are trying to, you know, and Y Combinator trying to figure out how to kill. I don't want I don't want anyone else bringing AI to my local government except Zachary Bookman. Very kind of you.

It It makes me sick to think that other people think they can compete in your category. Competition's good. Yeah. Yeah. It's all good. Although I think a lot of people are in for more pain than they might realize. Yeah. Yeah. Anybody's welcome to compete if they're willing to slo it out for a decade.

Anyway, great hanging. We'll talk to you soon. Great. It's been an honor to see you guys. Good luck. Have a great weekend. Thanks for joining. Bye. And that's our show. Leave us five stars on Apple Podcast and Spotify. And thank you for watching. Get to the airport. Only three days till Monday. Only 3 days till Monday.

Everybody wish good luck getting to his flight. is.