Building a User-Focused Personal Finance Platform with Steve Gall

In this episode of Innovation and the Digital Enterprise, Patrick and Shelli chat with Steve Gall, CTO of M1 Finance, a personal finance platform. Steve talks about his journey helping scale M1 from a few engineers to a platform managing over $10 billion in client assets. Steve shares insights about the ways that he and M1 have managed risk, navigated compliance in this highly regulated industry, and deftly adjusted technical strategies during rapid growth.

Steve highlights a commitment to centering the user, providing a safe, stable, trustworthy experience even in the midst of a shifting fintech landscape, and while his company was quickly scaling. He shares the challenges, the opportunities, and the strategies involved in growing the M1, stressing the importance of resilience, empathy, and adaptability in leadership. The conversation closes with a chat about Steve’s passion for pinball and a great list of his recommended reads for CTOs.

• (00:00) Welcoming Steve Gall, CTO of M1 Finance
• (01:32) Steve’s Background and Role at M1 Finance
• (04:26) Childhood Investment Interests
• (07:23) The Concept Behind M1 Finance
• (13:16) Regulatory Challenges and Growth
• (16:33) Transition to Self-Clearing Broker Dealer
• (20:33) Achieving Hockey Stick Growth
• (23:09) Navigating Organizational Challenges
• (25:24) Scaling and Downsizing
• (28:03) Handling Workforce Reductions with Empathy
• (31:53) Pinball, Personal Insights and Recommended Reads
• (38:08) Closing Thoughts

About Our Guest

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Full Show Transcript 

Patrick Emmons: Hello fellow innovators. This is Patrick Emmons.

Shelli Nelson: And this is Shelli Nelson.

Patrick Emmons: Welcome to the Innovation and the Digital Enterprise Podcast, where we interview successful visionaries and leaders and give you insight into how they drive and support innovation within their organizations. Today we're excited to sit down with Steve Gall, the founding team CTO behind M1 Finance, the Chicago-born finance super app that now stewards more than $10 billion of client assets and has attracted $333 million in venture backing. Since 2015, Steve has scaled M1's multidisciplinary tech org from a handful of engineers to a platform trusted by hundreds of thousands for automated investing high yield cash and credit.

Under his watch M1 topped Crain's Fast 50 as the Windy City's fastest growing company. Off the trading floor, Steve serves on the board of B2 Bank and works with P33 to widen Chicago's tech talent pipeline. He's a pinball collecting, Star Wars loving, craft beer appreciating, Purdue Boilermaker. Boiler Up. He brings equal passion to code quality, cybersecurity and building inclusive teams, topics we can't wait to explore today. Welcome to the show, Steve.

Shelli Nelson: Welcome to the show.

Steve Gall: Shelli and Patrick, thanks for having me. That was quite the introduction here. Feel blessed to be on the show.

Shelli Nelson: Well, I know that Patrick covered a lot of your background, but Steve, can you share with our listeners a little bit more about your background and your role today?

Steve Gall: Absolutely. I think you heard a little bit about M1 already, but M1 is a modern wealth building platform that helps people manage and grow their money the way they want it. So you heard Patrick talk a little bit about the automated aspect. We combine automated portfolio based investing, borrowing, spending and saving into one integrated experience. Our goal is to make sophisticated wealth building simple by providing financial tools that are accessible to everybody, not just the ultra wealthy.

And then my role as CTO is I lead our engineering team and set the company's technical strategy, so that includes our infrastructure, data security, product and backend engineering teams, and obviously set the direction of each one of those. My focus is to make sure that we're building secure, scalable systems that power great user experiences. And so that means everything from uptime and performance to enabling product innovation, as we have on this show, and then managing risk and compliance at scale, which is incredibly difficult in a firm that's in a highly regulated space.

Patrick Emmons: That's awesome. I know I touched on a little bit of your background, but I think the audience would love to hear a little bit more about your story, your journey from where you began and how you got to where you are.

Steve Gall: Yeah, just talking about this, but for those that don't know me, so I started off my career in Chicago and I like to call myself a reformed consultant. And so started with a smaller, more boutique consultancy based out of Chicago called Acquity Group, and then eventually we went public and that lasted all about eight months before Accenture acquired us. So did the whole small company, big company thing, and that was very enlightening, got a lot of exposure to various companies and industries around the nation.

And then through that experience I was able to get connected to our former CEO at Acquity Group, Chris Dalton, who we were able to start up another company called Avionos. And through him, I actually met my founder and CEO, Brian Barnes, and at the time he pitched me the idea of M1, and I can kind of go into that at a little later point, but pitched me the idea of M1 and that was my Babe Ruth moment, right? My call to outfield and I said, "That's going to be a billion dollar idea and that's going to be a billion dollar company."

And so told my former successful founder, CEO, Chris Dalton, I'm like, Hey, this was my calling. This is something I always envisioned as a kid, as somebody that was investing starting at fourth grade and reading annual reports from Disney and McDonald's and something I'm very passionate about, very interested in. I need to go do this." And jumped ship. Built out our product and engineering teams here. You've talked about the fundraising and the like, but a decade later, we're now $1.45 billion company, one of the few Chicago unicorns here.

Shelli Nelson: Amazing. So really in fourth grade you were looking at annual reports?

Steve Gall: I will say my level of sophistication and financial literacy was not as it is today. A lot of it had to do... My investments were Disney because I love Disney theme parks and movies. Intel, because I was obviously a computer nerd growing up. My dad was big into computers and even having octal computers around. And so got my early start. He believed that GUIs were a waste of resources, so I had to monkey around in DOS in order to launch my games and the like. So Intel and then McDonald's because being a middle-class family, we'd go for quarter burger night on Wednesdays to McDonald's. So invest in what you know, value-based investing.

Shelli Nelson: Yeah.

Steve Gall: And I love the Disney annual reports that would come out. They were packed full of what they're spending their resources on, and this is before... Now they're very boring and they don't have that same flair, but they were, "Hey, here's what we're doing with the theme parks, here's what the movies that are going to be coming out, here's where we're deploying dollars." And reading all that was super exciting as a kid and being able to tell my friends like, "Hey, this movie is coming out." This is prior, before you could ask Alexa or look on Reddit as to some leaked articles be like, "Hey, I know this movie's coming out." "How did you find that out?" "Well, they put it in the annual report."

Patrick Emmons: Did you go to the library to get this stuff? I mean, forgive me. I think we're different age groups. When I was that age, the internet was not really there.

Shelli Nelson: Nonexistent.

Patrick Emmons: Yeah, I would explain to the kids that you got jobs through the newspaper and their response is what's a newspaper?

Steve Gall: So mine was physical paper. And so as a shareholder and back at that time you were buying round lots, so for those in the audience that aren't familiar what a round lot is, at the time you could only buy shares in the increments of 100. Anything else was called an odd lot. So say you wanted to buy one share. So it was a very capital intensive purchase, and so you'd only make a few bets or have high conviction picks at that point in time. And so as a shareholder, you're entitled to investor materials and these were some of the materials that they would send out to every shareholder. And so part of that was Disney was sending me these things.

I'd get so excited, one, as a kid, receiving mail with your name on it is one of those things where you're like, "Oh my God, oh my goodness, let me open it up," and really sink my teeth into it. And then the second thing is being able to feel like you're knowledgeable about a thing that you're passionate about, right? So for me, you could clearly tell that I like computers, right? So Intel, and I was like, "What are the new chips coming out?" That was back when you had Pentium 1, Pentium 2, and then, "Oh my god, they're talking about this latest generation Pentium, Pentium 3, Pentium 4."

Now, I know that they've been through some turmoil and part of the things you're seeing here actually is the lack of innovation over the last few years and that complacency and that day two mentality that has somewhat bit them recently with other chip manufacturers catching up, especially with AI and GPUs being a primary driver of a lot of investment lately.

Patrick Emmons: And you mentioned in your opening about something you saw that made you believe that M1 and this was the move, the thing to do. So what was the problem? What was that opportunity? What did you see that convinced you that you could solve this better than anyone else, that your idea had legs?

Steve Gall: Sure. So I talked about getting started and it required how we needed to have round lots. Well, that evolved since when I started investing in the fourth grade. And through college you could buy then odd lots, which would mean you could buy a share of something, but even that could be 200 or $300, were in the case of Berkshire Hathaway Class A shares $200,000 at the time and so it's a costly investment. So the pitch was, and at this time reflecting back for the audience, we're in ZERP, so zero interest rate policy, and what that means is cash is a terrible asset to hold.

You're not earning any interest in that cash. So the pitch was what if your dollars could be invested up until the point you want to transact for goods and services? So we were sitting in a coffee shop and we said, "What if I could buy my Starbucks with fractional shares of Starbucks? What if I could actually say up until the moment I need these dollars"-

Patrick Emmons: Put them to work.

Steve Gall: "I could sell $5?" Yeah, exactly. They'd be working for me. My money would be working for me. And to the point I needed fiat currency, I need $5 a Starbucks to pay for my Starbucks, I could do so. But at the time, that was not possible. I would've to sell a full share of Starbucks, right? And so whatever that's trading for, maybe it's $40, maybe it's a couple hundred dollars, but all I really wanted was $5 and I want the rest to be invested. And so I don't have that cash drag over time. And so the way we went about it was like, "Look, we're not trying to speculate on," and you saw from my investing philosophy, I'm not speculating on short-term price movements. I'm benefiting from long horizon securities like value accretion over time from these companies I believe firmly in as a consumer of their products.

And so building a platform that thinks about portfolios, not trading, portfolios. What do you want to hold and what percentages? So we have this concept of a pie, right? And so you say, "Hey, maybe I don't have a lot of financial literacy. I want 90% of my portfolio to be a modern portfolio theory, something you get from registered investment advisor, Betterment, Wealthfront, whomever, right? But 10% I have opinions about the market. I want to hold Apple, I want to hold Google, I want to hold single securities because I like those. And I'll tell you, building that hygiene, that you're continually dollar cost averaging, that you make it super simple for people to invest and be interested in their finances builds and develops that muscle and over time they benefit.

And so for us, we were one of the first ones to launch fractional trading, right? So I could now transact in $5 increments if I wanted. I could transact in 1 cent increments if I wanted to and then making it accessible to all, right? And so continuing to bring down those barriers for everybody else with the subsequent products we launched, right? So margin being only accessible to the ultra wealthy and usually positioned in terms of trading in order to leverage your portfolio, but using it as a form of collateral backed credit, right? So in this case you could get better interest rates and bringing that barrier down to just $5,000 for account holders versus having multiple millions with a lot of other institutions.

So being like that first to market to try to make it accessible to everybody because the barrier is now brought down. There's not that I need to spend however much it costs for me to buy a full round lot, which is 100 shares, large capital intensive increment. And then at the time when I was trading through Morgan Stanley, it was also $100 for each transaction. So when we launched commission-free trading as well, which wasn't synonymous as it is today back in 2015 when we started.

Patrick Emmons: Interesting. So I'm not as big into investing, so help me understand, right? It seems like as opposed to going direct and investing in the security directly and as opposed to going to buy a QQQ or a VOO, you're kind of making your own a little bit, right? So you've got your own investment strategy, you can invest in these in a more fractional way. You don't have to buy the round lots. But say you don't want to follow everything that know SPY's got in there is you want 10, that you 2, is that how most people are using this from an investment strategy?

Steve Gall: Absolutely. And so they can hand select or create their own ETF if they would like it with our platform. Some people kind of call that direct indexing and they use it in that capacity. The other one that they'll use it for like, "Hey, I don't have that strong of an opinion about the market. I want to do something that's managed by somebody else." So our moderate portfolio, they can be completely hands-off and say, "Hey, I just want you to handle this." But then what I see very commonly is that they go, "Hey, 90% of my pie or my portfolio I want you to handle, but I still want to handle 10%." And what I'm going to do is send up a weekly deposit for maybe a couple hundred bucks and it's going to invest and dynamically balanced and everything like that.

When I log in, I'm not looking at the small cap, mid cap, S&P or whatever that you put me in for that portfolio, I'm looking at the 10%. I'm looking at how's my Apple doing? How's Tesla today? Is Google doing well? How about Sonos? And my CYA is this is not investing advice as somebody in the industry. But yeah, they're using it very much, as you said, is that they have an opinion about the market. They're not trying to maximize short-term price movements, but they're trying to dollar cost average because they're kind of following that Boglehead mentality or that Warren Buffett mentality of buy and hold.

Patrick Emmons: You mentioned that M1 now is responsible for more than $9 billion in client assets. Is it regulated like a bank first of all? And then second question is as you went through that growth period and these regulations start to increase, how did that affect your technical strategy when you started out as a handful of folks building something to you hit a tipping point where this is serious business now, especially if you are regulated like a bank and especially after the Silicon Valley stuff from what, 18, 24 months ago? I guess if I could give you a solid question, it's like what are some of those moments that you remember? What are some of the things you had to do differently that you didn't do before?

Steve Gall: Yeah. So we are highly regulated, but our regulatory body is not that of the OCC, the Office of Comptroller of Currency for the banking side of things. That would be B2, which I serve on the board of and is a banking partner of M1's. But M1 is actually regulated by FINRA, which is a self-regulated organization, and the SEC. We do have a shelves RIA, which is M1 Advisors. And when we first started off, we wanted to actually roll everything through like our RIA, but then realized very quickly when we were building the product that we wanted to give people the self-directed experience, not just a portfolio that, "Here you can use this," but have people have some choice and opinion about the assets they're invested in. And that nature then tilted it into the broker dealer space.

And so we're a regulated now self-clearing broker dealer, but when we launched, we're an introducing broker dealer and the delineation there is custody of assets. So when we first started out, we were doing a lot of the trading, but we had a firm behind us called Apex Clearing. For those that are not aware with the FinTech ecosystem and Apex Clearing used to be Apex and PEAK6. We're very Chicago, out of the border of trade. Matt and Jenny are big investors in the Chicago ecosystem and the like. But when they started off us, Robinhood, Betterment, Wealthfront, Acorn, all these household names that you probably know all started off on the clearing Apex, as an introducing broker dealer to Apex Clearing or an RA to Apex Clearing.

So they actually cost the assets. So how did that change our growth trajectory? Well, you have to be mindful of the rules and regulations. There is a common proverb of move fast and break things, that Facebook kind of the spotted and I think for ours is like lose fast and don't break things because you're managing people's money and trust can very quickly be eroded. If somebody sees incorrect data, that can be a huge liability. And so testing becomes ever so important. Observability, metrics, uptime, all those things become not just assets but potential liabilities if they're brittle, right?

And so we benefited early on from having a much larger firm behind us. And then once we had grown to a certain scale, the only way the business model for FinTech works is scale. So you have to achieve or you have to be acquired. You have to hit a minimum threshold of scale or there's no business to be had.

Patrick Emmons: Forgive me, I'm getting it wrong. In essence, Apex was in essence your backend, right?

Steve Gall: Yeah.

Patrick Emmons: So did you have to create your own? Did you have to develop that entirely?

Steve Gall: So essentially we had to create our own view of the world. So Apex was our clearing and books and records. So they call it in the industry as their back office. And so at the end of the day you're transacting through files, so you could have the most modern infrastructure, but it all still boils down to flat files transacted over TPS in COBOL applications, spitting out large files, right? You'd be scared at how the financial system works even when you look at the ACH rail system and how that works when you compare it to those of other countries. But we're evolving, we're getting better. But yes, they were our back office at the time.

And so we still had to create an equivalent view, a mirror view because we didn't have real time APIs from them. So if we made trades, and because of the novel way we were trading where we were aggregating all the trades together and then going to the market once and then fractionalizing all those trades for each of our customers, that wasn't a thing at the time. We were one of the first ones to do that. So we had to maintain the state of what our current liabilities are in the market. And at the end of the day, we would reconcile with Apex. So kind of scary being a young company, but we did have the fallback of... Protection for our customers is that the securities were held in their name and they were custodied at the broker-dealers.

So if there's ever an issue with us, they had the safety that was guaranteed by Apex Clearing. Now we're a much more mature kind of household name and one that has a lot more capability to manage assets and the like. And so being the self clearing broker-dealer is still risky, but we already have the operational experience having run the business for 10 years. The other thing I'd also acknowledge is I talked about that scale side of things. One of the scariest moments in M1's history is we launched to a live audience in September of 2016, and at that time I think we were charting 35 Vips on AUM. So basis points on AUM, very analogous to that RAA fee structure, mostly rebating back to be free anyway.

And in that first year of operation, we only amassed 5,000 funded accounts. And we're like, "Do we actually have a business here? Did we overestimate how many self-directed investors are out there that would want a platform like this?" And then we started looking the market. Robinhood was free trading and that was one of the... Not the first one to do that, but the one most notable and the one that has hit the highest success were ones before Robinhood, but they were now defunct. And we're like, "Hey, we don't have the big budgets of these big guys, Fidelity, Schwab, what have you, can spend hundreds of millions of dollars and not bat an eye. Obviously we don't have that in seed capital. Is there a way that we can get equivalent value without spending that equivalent notional value?"

And that's when we decided that the future of finance is free. And that's when we removed the barriers and made our platform completely free. And that was a big boon for us to start to see that hockey stick growth in order to remove the barrier, especially since we're asking people to think about trading and investing in a different way than they're used to, right? They're used to going in there, clicking the button and I want to buy five shares, or at this time five shares of Microsoft for 26 bucks, right? That is how they've been trained and ingrained to interact with the financial system where we're saying, "No, what's the allocation you want? Should you want 25% or really should it be a smaller... you shouldn't have that high of a concentration of a security, so maybe it should only represent 2% of your portfolio."

And that's something that people haven't been exposed to. And so giving people an onboarding ramp to try it without penalty was a huge moment for us in our customer acquisition journey. And then after that, obviously we started adding tens of thousands of accounts very quickly and then continued that growth trajectory through 2020, which was a resurgence of retail investing.

Patrick Emmons: Curious, so you start out that first year you've got 5,000 accounts. When did that hockey stick moment happen? Was it 10 months, 12 months, 24 months? Any idea when you remember it really started taking off?

Steve Gall: So we went free, and this was a big point of contention because this was a large revenue stream for us was the monetization off of assets under management. And the thought process was like, "Well, we can't go double free and so we have to be certain that this is the route we're going to take." And we went free in December of 2017, and after that announcement we started to see within the next... So there's always some seasonality in finance. Money is in transit usually Jamie worry in February. People do their New Year's resolutions, they just got done. They're thinking about taxes, they're thinking about their financial health and they're saying, "Hey, does this make sense? Do I want to keep my money here? Have I yielded what I wanted? Do I need to rethink my philosophy?"

And so having gone free right in December, there was some big PR push, we had some notable articles in Business Insider and I think Barron's at the time kind of announcing it. And so we started to see pretty mass uptick in I'd say a few months thereafter where we started to hit that growth stride where instead of adding less than 100 people, it started becoming 1,000 people like a day. And that continued for quite some time. And then we saw a massive uptick during 2020, which if you recall, we have pandemic times, the market is falling, we're hitting circuit breakers. And what that means is we're halting trading at the exchange level because things are falling so rapidly.

But then there was this resurgence from a digital aspect because people realized that you could do all the things you could do in person online and this general interest from the retail consumer to be invested, right? And so you saw Robinhood go gangbusters and most of the incumbents acquire a lot of new digital investors during that time period. And so we were also lucky to catch those tailwinds.

Patrick Emmons: That's awesome. That's awesome. Yeah, there's a great book I think is called Predictable Success, and they talk about the various life cycles of any organization and that early survival phase he's got pinned at. And we've had the author on the podcast somewhere around that 18 to 24 months of like got to stay alive, find a way to stay alive, doesn't really matter. And then you hit more of the fun phase where things are just cooking. And then you get to a point where he calls it whitewater where you now have to start thinking managers and structure and organization and it's now a real working business.

What are some of the things that... Well, first I'm going to assume that you've experienced that, and if you have, what are some of the things that in the last 12, 24 months that you've had to adjust either your own strategy or the organization's strategy or some of the things that you're doing within your team?

Steve Gall: Yeah, that's a fantastic question, right? So yeah, there's some external factors that you can't control. In this case, interest rates in ours affecting the global economy. And so for us, that also affects the ability to raise capital in that new funds. So during 2020 to 2021, I'm trying to remember if my date's right, but we raised four capital rounds, which then took us to unicorn status. And so the decree at that time is to go spend the money, right? And success metrics weren't based on business fundamentals like top-line revenue, like gross profit. A lot of it was users like mouths, right? So monthly active users and how big your team has grown.

So the decree from VCs and the like was, "Hey, you got to grow gangbusters, you got to grow your team, you got to add managers." And despite me saying, "Hey, no, we need to grow the team [inaudible 00:25:06] small," you have this power imbalance at the board level where it's like, "Hey, this is what I'm seeing in every one of my portfolio companies and you need to follow suit." So I'm going to go back, you asked me what I had to deal with in the last 6-

Patrick Emmons: 12, 18.

Steve Gall: 12, 18.

Patrick Emmons: Yeah. But if that's not a relevant time structure-

Steve Gall: Well no, it plays into it. And so the reason I was going to go is that we overscaled our team. And so the reality was is that the business did not support the size of team and we expanded too quickly into domains and areas in which we don't have market alpha, we don't have something that's setting us aside from everybody else or we don't need that capability in-house and it's better served through either a SaaS solution or a consultancy, and trying to focus on the things we do incredibly well and outsource the rest, right? Before, it's like you have this land grab of like, "Oh, we're going to do everything in-house. We're going to be better than what's out there." Well, an organization that's only job is to focus on PR is probably going to be better at PR than you.

An organization that's only job is to do email marketing campaigns likely has some learned experience that you may or may not be able to replicate. And so what it meant is that we had to downsize the workforce in order to, one, reach being a late stage company and I talked about ZERP and being capital is tough to come by, it means you need to have a sustainable business. We were lucky to raise so much capital early on that we have huge coffers, north of 100 million still left on our balance sheets, that part of it's tied up in regulatory caps and not all working capital. But what that means is that we need the right size our business, there's not going to be new money coming in, right?

So it's like, "Okay, we need to get profitable and we need to do that yesterday." Which meant we had to make the tough decision to shed resources that were not critical to our current success and our current vision. Even if we have future aspirations, let's make sure that we're building a product that can then continue to invest in our growth rather than lighting money on fire, right? And the tough thing to do is navigating that decision of do I want to spend money now for future success? Is this an investment or is it a lotto ticket? And if it's a lotto ticket, what's the chance of success and how much does that lotto ticket cost?

Patrick Emmons: And I think that's the difference between organizations coming out of 2020, that November of 2023, 2022 where the smells were there, to your point, ZERP's over, kind of a little bit the party's over for some things and there were tough decisions to be made. And listen, I've been through a couple downturns, 2008 dot-com bust. And even when it's the right thing to do for the organization, you know need to do it. To your point on the lottery tickets, people are grasping for not very good lottery tickets and trying to stall making those hard decisions. How did you handle that?

Steve Gall: Not well. I mean, if you talk to anybody that has experience going through a reduction in force, and one first thing I would recommend to anyone that has to perform some one of those situations or is thinking about is to seek mentorship from those that have. There's a lot of learning to have, and I was fortunate enough to have one of my mentors walk me through that a bit. He was a former CTO at JPMorgan Chase, Mark Serdar, and his size and scale was somewhat different than mine. I remember when he was talking about it, he's like, "Oh, first you're going to have to worry about your L-1 support and oh, your phones are going off." I'm like, "Wait, wait, wait. How many people are you talking about?"

He was talking about laying off 10 to 15,000 people. I'm talking about 50. 50 is important. It's a meaningful slug of my workforce, but not quite the same. His first response to that, he goes, "Oh, that's very difficult. That's like family to you." And I go, yes, "I know everyone's names." This is not a number in a spreadsheet. In fact, if you're at a large enough organization, you can easily disassociate the... And I think it's a little easier decision because you can say, "the financial ramifications, I'm not knowledgeable about this exact person. I don't know their situation. I don't know if they just had a kid, if they had cancer, they have whatever." Right? I don't know them on a personal level, they're just a number in my spreadsheet. When you're a small operator, you know these folks. You know their livelihood. And the thing you need to wrestle with is do you save the few for a limited period of time or do you try to save everybody else and you can't do both?

Patrick Emmons: Nope.

Steve Gall: And so the only way that I can sleep at night is one, you're like, "All right, I'm still providing jobs for these amount of people. I'm still providing a service to all of my customers. They expect me to do right by them and make sure that our financial health is solid so that we can continue to serve them far into the future." They shouldn't have to have a question of M1 solvency. It's not a question, just be blunt. But they shouldn't have to think about that. And then similarly, my employees shouldn't have that weight bearing over them as well. It does stick a mental toll.

And then the last thing I'd say is as you're thinking about those situations, I'm approaching it with empathy and transparency. And a lot of these folks find themselves in those scenarios through no fault of their own. In fact, if there's any fault, I mean you're going to hear this from a lot of folks, it's like it's my fault for over hiring in that regard. It's my fault for doing the capital outlay at that point in time. It's my fault for the decisions of which products we pursue that didn't pan out. And what you can do is write those personal letters of recommendations. Get on the phone, start dialing. Before I was even thinking about making this decision, I called almost all of our local CTOs and tried to find homes for folks based on what their skills and needs were.

I talked about each one of these folks. Once I talked in generalizations of what I would have and then once I actually did the termination, got their permission to talk to everyone and actually sourced some of these new opportunities for them, whether they choose to presume or not. But it makes it slightly easier if you can find a graceful landing for these individuals.

Shelli Nelson: Yeah.

Patrick Emmons: I was talking to somebody who was at Green Brian & Russell after the dot-com bust, so that was massive. One of the founders, and I said, "How was that?" He's like, "I was just grateful I had a dog." And I'm like, "What?" He's like, "At least there's one thing on this planet that doesn't hate me because I think everybody hated me." These are hard things. So I got a couple of other questions, just some fun stuff. So I did see that you're a big pinball fanatic, is that right?

Steve Gall: That is correct.

Patrick Emmons: So what is your favorite pinball machine in your collection?

Steve Gall: In my collection. That does deviate from my favorite pinball machine, but in my collection would probably be the Data East Jurassic Park. I know there's been a lot of replications with Stern recently in other Jurassic Park pinball. But the original six ball pinball wizard mode on Jurassic Park with the Tyrannosaurus Rex that eats the ball, the coolest machine, a crowd favorite, very easy to play, good ramps. I think it's just a good play field in general. So really enjoyed that pin. It was also one of the first ones I bought myself. I did inherit my family's pinball machines, which is how I got into pinball collecting in the first place. So fixed up a lot of those.

After my father passed away, a lot of these pinball machines just sat in our basement non-functioning and sat like that for probably close to a decade before I made the decision to try my hand at fixing it, re-soldering things and the like. And so those two pinball machines were Freedom, which is a Bally Electromechanical Machine, which if you know anything about pinball machines, they're tough because there's all bunch of leaf switches and a bunch of gears and rotary dials that control the scoring mechanisms and all the various other attributes of the pinball machine. There's no actual computer in it, which makes it more difficult because things slightly adjusting over time change the behavior of the pinball machine.

And so if you actually go to a pinball rig repair guy, a lot of them refuse to fix electromechanicals because they're so difficult to diagnose. For me it was actually, it was a free play machine, but the problem was actually with the coin return mechanism. So you're looking through data sheets and the trying to just diagnose where things happen to flow through the coin machine, which was a problem despite it being a free to play pin, which you wouldn't think that that's causing the issues of not returning a ball. And the second one was Fireball by Bally as well. And people probably know Bally more as the Bally's Total Fitness, but at the time they made or Bally's Casino, it's all actually the same firm. They used to make pinball machines too.

Patrick Emmons: Interesting.

Steve Gall: So Data East Jurassic Park, favorite pin, probably Adam's Family favorite pin overall.

Patrick Emmons: That's amazing. You must've been a pretty interesting kid, I got to tell you. I'm sitting there reading X-Men and you're rocking the pinball machines and-

Shelli Nelson: Annual reports.

Patrick Emmons: Annual reports. What is up with this guy?

Steve Gall: You could say I was a nerd. I'm comfortable with that label.

Patrick Emmons: We're all nerds. So one last, well, two actually, what's one book every first time CTO should read from your perspective?

Steve Gall: That's a good one. I'm going to give you my top one for everybody that's in a leadership even management position. And then I'm going to give you a more specific one that I found super valuable on the more technical side for a CTO. So Extreme Ownership by Jocko Willink, the concept of distributed command. And I think setting a very clear and concise vision and then giving people the autonomy to go and execute against that as conditions change in the ground is super important and one that's necessary for any scaling organization and truthfully any organization in general, but it's more important to scale up because you're going to have less time to oversee what's going on. You can't be the bottleneck making all the decisions.

And so if you tell people, "Oh, we're going to the East Coast." They might be thinking in their mind, "Oh, we're going to Florida." But no, we're going New York. It's fundamentally two different destinations. And so making sure that they have a clear vision as to where we're going so that they can make adjustments in line to make sure that we're going to hit the trajectory towards New York.

And the other thing is that it's always what can you do better? How can you effectuate the situation? It's not somebody else's problem. Oh, this person failed to do that. Because that's very easy and that's a low leverage activity. It's what could I have done differently to effectuate that outcome? And changing that narrative of if you come back to your systems thinking, did I give them enough structured learning or unstructured learning? Have I provided enough clarity in what my expectations are, the role, the vision as I just kind of alluded to? I think that's a super powerful book that's applicable to a lot of leadership positions, not just a CTO.

The other book I'd recommend is Staff Engineer: Leadership Beyond the Management Track by Will Larson. So the main concept there is I think any successful engineering org needs to have two tracks. One, a managerial track, and two, an IC track or independent contributor track. And too often we fall into this world where if you want to progress beyond a certain level, it needs to be in a people leadership role. And I think that's a failure of the organization and it'll set you far behind because you'll attract people that are super passionate, super knowledgeable about a given domain, but likely should not be people managers. And this talks about the various archetypes of the staff plus role.

And it could be the right hand for a non-technical counterpart. It could be the first boots on the ground and then relinquish command. It could be the training archetype where they are elevating all them around by proximity. There's a number of different archetypes that they kind of explain there and how they can be successful and how they can continue to provide leadership capabilities as an independent contributor. And you being knowledgeable about that as a CTO can encourage people to grow on the IC track and provide the direction that you need from an organizational standpoint.

Maybe you are the architect, you don't want other people dabbling in that. You want to have all the technical direction, that's fine. Can you find other people that compliment you? And this talks about those kind of people and what they might look like as you build people either internally or you seek them externally. So I think this is a very important book that I give to all of my senior 2s to read in the book club as they think about staff plus roles because that is a career change in my mind, but it's still an IC track.

Patrick Emmons: Very cool. Steve, thanks so much for taking the time. Really appreciate you sharing your wisdom, your experience. Congratulations on all the success. And yes, M1's the pride and joy of Chicago as one of very few unicorns here in Chicago. So congratulations again and love to have you back on when it makes sense, hear how things are continuing to go.

Shelli Nelson: Yeah. Thank you, Steve.

Steve Gall: Appreciate that. Thank you you so much, Shelli and Patrick. I appreciate being invited to the show and it's been a pleasure. Hopefully the viewership and audience think as well, but-

Patrick Emmons: I'm sure they will.

Steve Gall: Especially now, happy to help where I can, not just on the pod or there's anything else you got going on from the Innovators League, I'm happy to assist.

Patrick Emmons: Awesome. We also want to thank our listeners. We appreciate everyone joining us.

Shelli Nelson: And if you'd like to receive new episodes as they're published, you can subscribe by visiting our website at dragonspears.com/podcast or find us on iTunes, Spotify, or wherever you get your podcasts.

Patrick Emmons: This episode was sponsored by DragonSpears and produced by Dante32.