Building a Future-Proof Business with AI and Human Insight with Jonathan Schneider, CEO of Moderne

Audio Building a Future-Proof Business with AI and Human Insight

Video Building a Future-Proof Business with AI and Human Insight

Chapter-by-Chapter Summary

Following are the sections we covered in this conversation with their summaries, along with the time location in the video and audio to follow along. The timestamps in orange correspond to the chapters in the YouTube version of the podcast episode. This video will display to the lower right as you scroll down. 

00:00:00 Highlights and Introduction

This segment, the "trailer" of the episode, highlights snippets that highlight the key moments of the conversation. 

00:03:04 The Inspiration Behind Moderne and Its Vision

The journey of Moderne began with a deep connection to both history and innovation. The name itself is a nod to modernization, drawing from "Art Moderne," a subset of the Art Deco movement. This style is close to Jonathan Schneider’s heart, as his hometown in West Saint Louis County features buildings from the 1920s in that very style. Thus, Moderne carries a piece of his roots while looking forward to the future.

"The name Modern itself is obviously a nod to modernization as you referred to."

Jonathan’s inspiration for starting Moderne wasn’t a sudden burst of creativity, but rather something that evolved over time. During his time at Netflix, he was part of the engineering tools team and experienced the company's unique "freedom and responsibility" culture. This philosophy meant central teams like his couldn't impose strict rules on product engineers. Instead, they aimed to guide them toward progress without setting hard deadlines.

This environment presented challenges. Jonathan and his team were tasked with keeping the organization up-to-date with new technologies like Java versions or AWS migrations. However, they couldn't enforce these changes directly on product teams.

Despite providing tools like dashboards and metrics, it became clear that what teams really needed was for someone else to handle these updates for them due to their own focus on feature development.

This realization led Jonathan to think about automating these processes, which was partly influenced by Netflix’s culture. It was about finding a way to achieve their goals without direct intervention, allowing engineers the freedom they needed while still moving forward technologically.

00:06:07 Freedom and Responsibility: A Netflix Philosophy

Netflix's "freedom and responsibility" culture is a unique approach that has inspired many, including Jonathan Schneider. This philosophy is about trusting talented individuals to make the best decisions for the company. Instead of micromanaging, Netflix hires top performers and gives them the freedom to act in the best interest of the business.

"The idea was to really... if you're gonna hire the sort of the best of the best, just get out of their way."

The concept is straightforward: hire fewer people but ensure they are highly skilled. Once onboard, these individuals are empowered to make decisions and take responsibility for achieving outcomes. This approach avoids rigid top-down processes that could stifle creativity and innovation.

However, this culture does come with challenges. With decentralization, people make various decisions that can sometimes be inefficient. It's a trade-off between freedom and efficiency.

Jonathan's work with Open Rewrite at Netflix is a testament to this philosophy. It wasn't about enforcing modernization but finding ways to guide engineers naturally in that direction through automation. This was necessary due to the freedom given to engineers, which sometimes left few other options.

In essence, Netflix's philosophy encourages creative problem-solving by trusting employees with both freedom and responsibility.

00:08:19 The Role of Open Rewrite and Code Modernization

In the world of software development, modernization is key. Jonathan Schneider, CEO and Co-Founder of Moderne, shares insights into why updating old code is crucial. Imagine the many lines of code written in older languages like Fortran and COBOL. These need to be brought into the modern era so today's workforce can work with them effectively.

Jonathan explains that while converting legacy systems like COBOL into modern languages such as C# is important, there's more to the picture. Once you're using current languages like Java or JavaScript, the real challenge begins. Software development has become more industrialized and relies heavily on components.

These components can be off-the-shelf, open-source, or third-party. They make building new customer experiences faster because you're not starting from scratch. However, there's a catch: these components evolve at their own pace.

Jonathan points out that while using these components allows for quicker development, it also creates a maintenance challenge. The more modern your application stack is, the more you depend on these evolving parts. It's like building on quicksand where the foundation keeps shifting.

In contrast, older applications written in languages like COBOL can remain unchanged for decades and still function as expected. This highlights a unique problem in today's fast-paced tech landscape where keeping up with changes is a constant necessity.

00:10:48 Componentization and Code Refactoring

In software development, refactoring and componentization play crucial roles in keeping systems efficient and easy to maintain. Let's explore what these terms mean and how they impact the world of coding.

Refactoring is about making changes to the code. These changes can range from updating how a component interacts with an API to consolidating or splitting code. It's like shaping a square into a circle, adapting the code to meet new needs or standards.

"Software production has been largely industrialized and componentized."

Componentization refers to using the same software component across many applications. This is both helpful and challenging. If a component changes, hundreds or even thousands of applications might need updates, often in many different places.

Another key aspect of coding is usability or reusability. It's not just about writing code that works; it's about writing it so others can understand and build on it easily. Imagine writing code in C that another C programmer finds hard to follow. Good standardization ensures that code is understandable and maintainable by others.

The goal here is to avoid making too many different product choices that do the same thing within an organization. Whether it's choosing a database or a monitoring system, it's important to aim for a "North Star" architecture -- one clear direction for technology decisions.

Jonathan Schneider of Moderne highlights the importance of consolidating technology stacks into one approach, making it easier to move from one codebase to another without unnecessary complexity.

00:13:45 Moderne's Platform and AI Integration

Moderne's platform is all about making code transformation smooth and efficient, tapping into the power of AI in a unique way. At the heart of Moderne's system are two main components: the data model and the programs, which they call recipes. These recipes work on data to transform it in meaningful ways.

The platform isn't just about handling code text or syntax trees. It digs deeper into everything a language compiler infers about the text. This includes understanding which types come from which packages and figuring out binary dependencies between pieces of code. All this information is captured in what Jonathan Schneider calls a "loss of semantic tree." This tree includes not just the syntax, but everything the compiler knows, plus the original formatting and other metadata.

With this comprehensive data, recipes can make informed decisions to transform code in ways that lead to predictable outcomes. However, Jonathan is cautious about letting AI directly change code due to potential errors or "hallucinations." Instead, AI is used to write new recipes faster by translating release notes into these open rewrite recipes.

Jonathan also explains how this rich information can be supplied to a model to ask questions about an enterprise code base. For example, one might want to know about all feature flagging systems used in a commercial bank division. This requires not just understanding syntax but reaching deeper into what's compiling those systems to see what feature flagging libraries are being used.

"AI could help me write net new recipes."

Moderne's approach combines human insight with AI capabilities, ensuring that their platform can transform code effectively while minimizing risks.

00:20:14 Moderne's Approach to Technical Debt

Dealing with technical debt in software development is a bit like maintaining a car. Imagine buying a new car. It’s perfect at first, but as you drive it, you need to change the oil and filters to keep it running. Similarly, software requires constant updates and maintenance to stay functional.

Jonathan Schneider, CEO of Moderne, explains that modern software development involves layers of old and new code. If you need to change something at the top level, you might have to dig through these layers to find the right spot for updates or fixes. This is like tracing a problem in your car back through its systems.

Jonathan shares an example from a bank they worked with. They asked 250 engineers how long an application would keep working if they couldn’t touch the code. Eighty percent said it would last less than six months without maintenance. This shows how crucial it is to keep up with changing components.

Modern software heavily relies on third-party and open-source components that evolve over time. Unlike older systems built on internal components, today’s apps need constant attention because the "foundation keeps shifting." This creates a big responsibility for engineers who must manage these changes, often without adding new features.

Moderne’s solution is innovative. They recognize that many businesses use the same components repeatedly across various functions. When a component changes, it’s not enough to update it in one place; it has to be updated everywhere it’s used.

To tackle this, Moderne automates these updates across all applications using that component. This approach makes fixing issues consistent and cost-effective across the entire business rather than doing it one application at a time.

00:23:56 Sales Process and Client Engagement

Engaging clients and demonstrating the value of Moderne's solutions requires a clear understanding of the challenges they face. For many engineering executives, the issues with their current tech stack are evident. They often dream of waving a magic wand to effortlessly upgrade from old systems like Oracle to Postgres or Java 8 to 17.

Developers are deeply aware of these problems since they deal with them daily. They often feel overwhelmed by the manual efforts required to modernize codebases, leading them to think these tasks are nearly impossible.

"The problem is really well known by the economic buyer right now."

Traditionally, solving these issues meant labor-intensive manual work, akin to forging a car part from scratch in your backyard. This analogy highlights the frustration many feel: they are stuck maintaining aging systems until they eventually break.

The challenge lies in reaching economic buyers and helping them see that there is a better way forward. By identifying key areas in their codebase that need immediate attention, Moderne can offer solutions that simplify these updates, making them less daunting.

Once one problem is solved, new challenges quickly emerge due to the ever-evolving nature of technology. This cycle of continuous change can be overwhelming but recognizing it is the first step toward managing it effectively.

00:30:27 Vision and Growth of Moderne

When Jonathan Schneider co-founded Moderne, he didn't start with a clear-cut vision or a structured plan. Instead, he was "dragged into" the problem space while working at Netflix and Pivotal. At Pivotal, Jonathan met Moderne's co-founder, Olga Koonsich, while working on advanced continuous delivery systems at large enterprises like JPMorgan and Fidelity. They repeatedly encountered the same problem: enterprises struggled to move their code from one state to another efficiently.

This recurring challenge highlighted a universal problem across industries. Instead of starting with the intention to build a company, Jonathan and Olga saw a compelling need for solutions to these code migration issues. This need became the foundation for Moderne.

Focus on Enterprise Solutions

Jonathan's experience working with large enterprises influenced Moderne's focus on solving problems for big companies with vast amounts of code. Initially targeting enterprise-level clients made sense due to the scale of their issues and the critical nature of their infrastructure.

Moderne's solutions cater to both large enterprises and mid-sized companies, though they lean towards larger clients for efficiency. By starting at the top of the market, they ensure their products are robust enough for enterprise demands while still being adaptable for smaller businesses.

Growth Strategy: Fast-Paced and Venture-Backed

Moderne is a fast-growing company fueled by venture capital. Jonathan acknowledges that venture funding comes with expectations for rapid growth, but it also provides invaluable connections in the industry. With support from investors who understand the long timeline required for infrastructure software companies to thrive, Moderne has built relationships that facilitate early market entry.

Jonathan feels they've gained more from venture capital than they've given back due to these connections. This support has been crucial in establishing their brand in a competitive market.

Looking Ahead: A Modular Vision

Looking five or ten years into the future, Jonathan sees data about code as a foundational building block for many applications beyond framework migrations. He envisions applications in areas like cloud cost optimization, impact analysis, dead code elimination, and more.

Moderne's platform is modular by design, allowing them to continuously add new technologies and modules that enhance their core data capabilities. This adaptability positions Moderne as an independent company capable of evolving internally while adding value for shareholders.

"I see this data source about the code, which is really the intellectual property of a lot of businesses, as being a really important foundational building block."

In essence, Jonathan envisions Moderne not only solving current problems but also expanding its impact across various industry needs through its versatile platform.

00:38:03 Cultural and Leadership Insights

Building a strong company culture and effective leadership are essential for success, especially in a tech-driven world. Jonathan Schneider, CEO of Moderne, shares his insights on how these elements shape the company's growth and operations.

A Lean and Skilled Workforce

Jonathan values a lean organization filled with highly skilled individuals. He draws inspiration from Netflix's "freedom and responsibility" culture, where a small number of top-tier engineers manage vast products. This model ensures that everyone in the company is someone you can rely on.

"It's enjoyable to work in that environment," Jonathan notes, emphasizing the joy of collaborating with talented peers. As Moderne matures, they continue to focus on hiring experienced individuals who can contribute significantly to their mission.

Experience Matters

In today's world, where people live longer and accumulate more experience, finding seasoned professionals is more feasible. Jonathan observes that as Moderne has grown more stable, especially after securing Series B funding, attracting experienced talent has become easier.

This shift in recruitment dynamics highlights the importance of company maturity in appealing to skilled professionals who are often cautious about risk-taking.

The Balance of Risk and Stability

Jonathan acknowledges that attracting top talent involves balancing risk with stability. As Moderne has evolved from a Series Seed company to one closing Series B funding rounds, the perception of risk has decreased for potential recruits.

This evolution reflects the importance of company stability in attracting seasoned professionals who bring deep experience to the table. It's about creating an environment where talented individuals want to contribute their expertise.

In summary, Moderne's cultural philosophy revolves around building a lean organization filled with experienced professionals who thrive under freedom and responsibility. This approach not only enhances team dynamics but also supports their mission of innovating in tech.

00:40:34 Building a Successful Company Culture

Creating a thriving company culture is like embarking on a journey with a diverse team of people. From executives to developers, everyone is on board, contributing to the adventure. So, what makes this journey successful?

One of the first things we did when starting the company was to establish our brand design. This was a bold move, as we committed to it before we even had funding. It was terrifying at the time, but it was essential for giving us a clear identity. Our designer warned us that it might not feel right immediately, but over time, we grew into it.

Alongside this, we made another critical decision: hiring a PEO for outsourced HR services. This allowed us to negotiate better insurance and benefits by pooling risks with other small companies. It also enabled us to offer more competitive compensation packages, which was crucial for attracting experienced professionals.

We were targeting later-career individuals who might have families and different priorities. By reducing the risk profile, we could hire senior talent more easily.

On a cultural level, our inspiration came from an article titled "The Triumph of Humility and Fierce Resolve." We strive to practice humility as individuals and as an organization. This means meeting customers where they are rather than expecting them to change for us.

"We try to be, you know, exercise a lot of humility on an individual level and as a company."

Fierce resolve is about persistence—finding ways to make our products work for our customers no matter the challenge.

Interestingly, we didn't create a culture deck early on because we wanted our culture to evolve naturally rather than setting aspirational goals that might not be genuine. Instead, we observed what made people successful at Moderne and built from there.

Culture comes from both leadership and the people who form the company's core foundation. It's not about forcing everyone into the same mold but finding those who naturally fit into the team dynamic.

In essence, building a successful company culture is about setting clear identities and values early on while allowing room for growth and change.

00:47:33 Overcoming Challenges and Personal Growth

Self-awareness is a key trait in leadership, and Jonathan emphasizes its importance in both personal and professional life. He believes that being aware of how you come across is a rare yet crucial ability. As a leader, maintaining self-awareness helps in navigating the ups and downs of business.

Building a business isn’t always as glamorous as it seems from the outside. While people might admire the success of a company, those on the inside know it’s not always smooth sailing. Challenges are part of the journey, and sometimes they feel overwhelming. Jonathan refers to these times as "dark nights of the soul," where obstacles seem insurmountable.

"You really have to feel compelled, I think, to bring something into being."

Jonathan admits that leadership often involves facing dark moments, where things aren’t working out as planned. In these times, it’s essential to be intentional about celebrating wins when they come. From an outsider's perspective, success might seem effortless, but inside it often feels like a hard-fought victory.

Reflecting on his journey with Moderne, Jonathan acknowledges that what exists today didn’t exist before. This perspective helps him focus on growth rather than getting lost in day-to-day problems.

Self-awareness also plays into how Jonathan sees himself today compared to his past roles at Netflix and when starting Moderne. While his personality hasn't changed much, he now bears more responsibility for decisions. He admits to having a tendency to give too much of himself—a trait that's not always beneficial in business leadership.

Jonathan has learned to balance this tendency with the help of his co-founder and team who keep him grounded. This balance is vital for personal growth and overcoming challenges in entrepreneurship.

00:52:39 The One Thing: The Changeless Beneath the Changing

In the ever-evolving world of business, certain principles stand the test of time. Jonathan Schneider, CEO and Co-Founder of Moderne, believes that one core element remains unchanged amidst all the shifts: a deep, compelling drive to bring something new into existence.

Jonathan shares that the journey of building a business is filled with challenges. To overcome these, you need an inner force that compels you to create. This drive is essential because the natural state of things is often resistance to change. He reflects on a thought-provoking twist on an old phrase he saw on a Miami billboard: "Give me the strength to change the things I cannot accept." This mindset is crucial for anyone looking to start a company.

"Give me the strength to change the things I cannot accept."

Jonathan emphasizes that this compelling instinct is what keeps entrepreneurs moving forward. It's about having something you can't accept and being willing to work hard to change it, despite how difficult it may be.

In essence, while everything around us may change, holding onto this unwavering drive ensures that you can navigate obstacles and bring your vision to life.