We’ve hit a major milestone! The 100th episode of Burkland’s Startup Success podcast is a special one, featuring an inside look at the story of Segment’s journey to a $3.2 billion exit, with insights that can propel other startups to success.
Joining us are two guests with a close connection to Segment’s success: Peter Reinhardt, co-founder and CEO of Segment and now the CEO of Charm Industrial, and Jeff Burkland, founder and CEO of Burkland, who played a pivotal role as Segment’s fractional CFO during its critical growth phase.
Early Struggles and an Unexpected Path to Product-Market Fit
Peter Reinhardt kicked off our conversation by sharing the unvarnished truth about Segment’s early days, recounting a year and a half of failure and uncertainty as they pivoted multiple times in search of product-market fit. The journey began when Peter and his co-founders joined Y Combinator in the summer of 2011, inspired by the idea of starting a company after reading Paul Graham’s essays on startups. Armed with enthusiasm but lacking a clear direction, they initially built a classroom lecture tool, then pivoted to an analytics tool—both of which failed to gain traction despite their best efforts.
It wasn’t until they reluctantly launched a simple open source JavaScript application on Hacker News that they stumbled upon the idea that would change their trajectory. Peter was skeptical, dismissing the concept as “the worst idea ever” since the app was built around 300 lines of code already available for free on GitHub. However, when they posted it on Hacker News, the response was overwhelming. The application shot to the top of the charts, gaining thousands of stars on GitHub and attracting thousands of email signups.
The reaction also made it clear: users didn’t just want an open source version; they wanted a fully hosted solution that allowed them to manage customer data effortlessly. This unexpected feedback became the foundation for Segment’s pivot into a comprehensive customer data platform. In a matter of days, Segment went from a struggling startup with only six months of runway left to a company with undeniable demand, thanks to persistence, open-mindedness, and the ability to listen to potential customers. This pivotal moment marked Segment’s transformation into a company that would go on to revolutionize data infrastructure for businesses worldwide, eventually leading to its $3.2 billion acquisition by Twilio.
In a matter of days, Segment went from a struggling startup with only six months of runway left to a company with undeniable demand, thanks to persistence, open-mindedness, and the ability to listen to potential customers.
Reflecting on their Y Combinator experience, Peter emphasized how the early struggles and relentless search for product-market fit were crucial in shaping Segment’s success. The accelerator provided them not only with initial funding and guidance but also with a community of founders who were navigating similar challenges, reinforcing the idea that perseverance and adaptability are crucial to finding the right path in the startup journey.
Navigating the Challenges of Rapid Growth: The Crucial Role of Financial Strategy
Jeff Burkland, who came on board as Segment’s fractional CFO shortly after the company’s Seed round, helped Peter and his team navigate the complexities of financial strategy during this period of rapid growth. One of Jeff’s early insights was a simple yet powerful model showing how adjusting payment terms to annual prepayment could dramatically reduce burn rate—a move that immediately helped Segment stretch its runway and maintain financial stability.
The conversation also revealed the importance of knowing when to bring in professional financial support. Peter’s initial skepticism about hiring a fractional CFO was met with Jeff’s persuasive explanation: without a strategic financial perspective, the company would be unable to see around corners, potentially missing critical opportunities or being caught unprepared for investor or board questions.
Without a strategic financial perspective, the company would be unable to see around corners, potentially missing critical opportunities or being caught unprepared for investor or board questions.
Lessons in Leadership: Transparency, Adaptability, and Trust
One of the standout moments from our conversation was when Peter discussed a turning point in his leadership approach during a challenging phase at Segment. The company was facing a revenue decline, with growth stagnating around $12 to $13 million ARR, far from their goal of reaching $20 million ARR by year-end. With pressure mounting, Peter was initially hesitant to openly communicate the challenges to the entire team, fearing it would create panic or cause employees to lose confidence.
However, Jeff and another advisor confronted Peter and urged him to embrace transparency. They pointed out that employees already sensed the company was in a tight spot and that withholding information was only making it harder for teams to align and contribute effectively. They pushed Peter to be upfront about the challenges, clearly outline the goals, and empower specific teams to take ownership of the solutions.
Taking this advice to heart, Peter took a bold step at the next all-hands meeting. He candidly shared the company’s situation and the need to fix the pricing and packaging around a key product within an incredibly short timeframe. This decision to communicate openly about the company’s precarious position and name the team responsible for solving the problem had a surprisingly positive effect. Instead of instilling fear, it rallied the entire team. People felt empowered and motivated, knowing they were trusted to tackle critical challenges.
The result was remarkable. The engineering team tasked with fixing the pricing and packaging issue responded with incredible urgency and dedication, working around the clock to deliver a solution over a single weekend. This swift action addressed the immediate revenue concerns and reinvigorated the company’s growth trajectory. Incredibly, Segment hit their $20 million ARR goal just before the year ended, thanks to a last-minute contract from Asia.
This story underscores the power of transparency and trust in leadership. By shifting from a protective mindset to one that embraced vulnerability and clarity, Peter unlocked the full potential of his team. As he later learned, the team’s favorite memory of their time at Segment was not the exit or the big wins but the moment they were called upon to step up and help save the company. It was a powerful lesson in the value of clear communication, empowering others, and trusting your team to rise to the occasion.
By shifting from a protective mindset to one that embraced vulnerability and clarity, Peter unlocked the full potential of his team.
Peter’s ability to listen to his advisors and make necessary changes was a critical factor in Segment reaching $20 million ARR that year and ultimately achieving its successful exit to Twilio.
Peter’s New Mission: Carbon Removal with Charm Industrial
Now, Peter Reinhardt is channeling his entrepreneurial spirit into a new venture—Charm Industrial. Unlike Segment, Charm is tackling a vastly different challenge: climate change.
Peter’s journey to founding Charm Industrial began with a frustration familiar to many who are passionate about climate action. While leading Segment, he aimed to offset the company’s carbon footprint and found himself navigating a market flooded with ineffective solutions. Peter discovered that roughly 97% of all carbon offsets sold had little to no real impact on removing CO2 from the atmosphere, as revealed by research from institutions like Berkeley. This stark reality—where the vast majority of offsets simply didn’t deliver on their promises—was a wake-up call. Driven by his engineering background and desire to create real, tangible solutions to the climate crisis, Peter saw an opportunity to innovate. He wanted to develop a truly effective method for carbon removal that was measurable, permanent, and could make a genuine difference in tackling climate change. This vision led to the founding of Charm and its groundbreaking approach to capturing and storing carbon.
Charm’s mission is to permanently remove CO2 from the atmosphere by converting biomass into a liquid form and injecting it into old oil wells, where it’s stored safely underground. This innovative approach reduces CO2 levels in the atmosphere and addresses other important environmental issues by repurposing abandoned oil wells, many of which leak methane and other harmful substances.
Charm’s mission is to permanently remove CO2 from the atmosphere by converting biomass into a liquid form and injecting it into old oil wells, where it’s stored safely underground.
Charm Industrial raised $100 million in a Series B round led by General Catalyst in 2023. The company has already removed over 7 tons of CO2 and aims to exceed 100,000 tons by 2030. Major companies like Meta, Stripe, and J.P. Morgan have signed agreements with Charm to support their carbon removal efforts.
As Peter explained, Charm’s solution offers a meaningful way to combat climate change and provides companies with a way to achieve their net-zero goals. The mission-driven nature of Charm and the tangible, real-world impact it aims for reflect Peter’s passion for solving complex problems to directly benefit society.
To learn more about Charm Industrial and their groundbreaking work in carbon removal, visit CharmIndustrial.com.
Celebrating 100 Episodes of Startup Success
As we celebrate our 100th episode of Startup Success, this conversation with Peter Reinhardt and Jeff Burkland reminds us of the resilience, adaptability, and strategic insight required to scale a startup from uncertainty to a multi-billion dollar exit. We’re grateful to have shared this journey with our listeners, and we hope this milestone episode inspires many more entrepreneurs to push through the tough times, trust their instincts, and never stop innovating.
Thank you for being a part of our journey to 100 episodes, and here’s to the next 100!