Listening, Watching, Reading

“Discipline.”

When asked by a student of the Stanford Graduate School of Business (“the GSB”) “what meant most and why”, that was Sir Alex Ferguson’s answer. It was at the end of an hour-long chat between Sir Michael Moritz, chairman of Sequoia Capital, and Sir Alex Ferguson, until recently the man behind Manchester United’s success over nearly three decades. To elaborate, Sir Alex, added that discipline is what his parents gave him in his education and it has been critical in his life and success. He’s given the same discipline to his children.

Alex and Michael recently released a book called Leading, discussing Alex’s take on leadership. It is a fantastic book with many examples from the English football scene to support Alex’s observations. As I grew up in Israel, I am more familiar with English football than American football, so it is easy for me to relate to. I’m not a huge sports person, so many of the names are not familiar to me, but the rules of the game and the forces behind it are clear to me. I will be spending a few blog posts sharing some tidbits from the book and my thoughts. Sir Alex has roughly 40 years more experience than me in leadership, so keep that in mind when reading these posts.

Listening, Watching, Reading

“Listening, which costs nothing, is the most valuable things you can do.” (Sir Alex, in the book). I’m 32 and have probably heard this several dozen times. So it still amazes me how often I neglect to do it.

In the startup world, lack of listening is sometimes celebrated. For example, a couple of years ago, I was meeting a known investor in Israel in a country club just outside Tel Aviv. I came seeking for advice, and his money. Instead, I got a 30 minutes lecture why my idea was the a complete waste of time and why no one will ever buy it.

Naturally, I’m happy I didn’t listen in that occasion. However, looking back at the last two years, I can also list a very long set of mistakes that, had I listened to others, I would have avoided.

Listening, watching and reading shouldn’t be constrained to just advice, though. There are a lot of things you can learn by doing these three things; things that will help you be more successful. Back in the IDF (Israeli Defence Forces) I served directly under a Major for a while. A short, chubby, amazingly pleasant guy. He would drink five or six cups of Turkish coffee a day (which contains the most caffeine per amount of liquid of all coffees) and in every meeting we had I would also have one. It kept me quite awake, something I’m notoriously bad at.

Watching this Major taught me a lot about how to communicate with people. Many of his demeanors were very different to mine. People loved him, even when he told them they’ll need to do everything all over again, or when he was pulling the plug on a project of theirs. He was capable of communicating negative messages in a way the recipient was capable of receiving it. At that time, I was completely incapable of doing that. If I thought someone did terrible work, I told them flat out. Naturally, my social scores (where others rate you socially) were very low.

So, after watching this Major and listening closely to how he communicated, I have altered my ways. I still deliver messages in tough ways at times, but I usually try not to. I spend the extra effort to make sure the other side receives the message well. The exception to this is when I think that harsh delivery of the message will be beneficial to both the recipient and myself.

 

Still, as I’m reading Sir Alex’s and Sir Michael’s book, I can’t help but think about all the situations where I should have done a better job listening and watching. It is good to be reminded of this while reading, as it is a first step in becoming a better leader.

The Seven Deadly Sins of a Startup

Back in 1996, I was a young boy growing up in Jerusalem. I knew very little of the world outside my school studies (this is before Google). I had a VCR though, and when my brother came in one day with the video cassette of Se7en I was in awe. The movie was incredible, and I watched it again and again. Morgan Freeman and Brad Pitt gave an amazing performance. The story was interesting and the horrible twist at the end broke my spirit every time I watched it. And I watched it repeatedly, as it was one of only three movies I had at the time. The movie introduced me to a concept that doesn’t exist in Judaism and was introduced by the Catholic faith – the seven deadly sins.

Once in awhile, ever since 1996, I find myself thinking about the seven deadly sins (I will be using Wikipedia’s definitions below). How can we make sure we don’t commit those sins? Even if one is not Catholic, or even a complete atheist, I am of the opinion that these sins should still be avoided. In the life of a startup, it is easy to commit these sins, as I have learned. So, once in awhile, a refresher on what not to do, and what to focus on, is useful. So here is my take on the seven deadly sins as they apply to a startup.

Lust

An uncontrolled desire for sex, money, food, fame or power. As you become more successful as a startup, you always want more. There is always this bar you try to surpass. Once you do, you set the bar higher again. It can be seen as aspirational, which is a good thing. However, where does moving the bar up lead you? Will it make you build a better company, or will it lead to wrong doings? Will it result in happier customers, or are you trying to reach the level of power where you can force the market to do what you want?

Gluttony

Overindulgence and overconsumption of anything to the point of waste. It is normally very hard to blame most startups of overconsumption. However, recently, more and more discussions around high cash burn rates, the rate at which a company loses money, have emerged. Startups have successfully raised sums of money the market hasn’t seen since 2001. Some are employing these large sums in a manner that doesn’t necessarily align with what the shareholders, investors or customers want. They are wasting somebody else’s hard earned cash, and that’s a sin.

Greed

A very excessive or rapacious desire and pursuit of material possessions. Sometimes companies realize they are onto something. They’ve convinced the world that their creation is beneficial, and customers are knocking down their doors. At that point, it is easy to consider raising the prices, trying to extract every last dollar from the customer. After all, they’d pay for it as long as you keep it in the right range. Don’t forget, however, that you haven’t created a company in order to squeeze every last dime out of a given market. You’ve created a company in order to change that market and make the people inside of it more successful. While a company must ensure it creates value for its shareholders, I argue the value must be created for the market. Greed stands in the way of that, as it perceives the interaction with the market as a zero-sum game.

Sloth

Laziness. You can’t be lazy at a startup. It is hard work. Very hard. Not only the hours, but the amount of different things you need to do on strapped resources. You want to do payroll? Do it yourself. You need to fly to a customer to improve the relationship with them? Take the red eye if that’s your only option. You need to spend your weekend figuring out how to correctly position something? Buy a six pack and sit at your laptop until it’s done perfectly. Startups are hard work. Achieving what you want in life is hard work, whatever it may be. That’s life, wouldn’t be as much fun if it was easy.

Wrath

Inordinate and uncontrolled feelings of hatred and anger. Emotions rarely have a place in a startup, but surely hatred and anger have no room. It will not help you to hate anyone, or be angry at anyone. Whatever someone has done, they have mostly probably done so because it is in their best interests (or at least so they think). You cannot be angry at them for doing so, even if it contradicts your own needs. They do what they need to in order to survive. In order to feed their families, progress in their career or achieve their goals. Instead of being angry with someone, understand what they have done and why. Malice is rarely a driver and so you should consider how that person benefited from what they’ve done and how, in the future, they can benefit from helping you.

Envy

An insatiable desire. We all know what envy is and how to recognize it. Rarely though, does envy actually get you anywhere. It is easy to be envious of another person’s success – a large funding round, hiring a top executive, closing a big customer or even an exit. However, such envy gets you nowhere really. Healthy competition can help you get further, but pure envy does nothing but result in hatred and anger, as well as some of the other sins. So, next time you feel envious – chillax. Get a drink. Think of what you need to do to be more successful, irrespective of other’s’ success. Then do it.

Pride

Believing that one is essentially better than others; the original and most serious of the seven deadly sins: the source of the others. When someone seems overly proud, or even arrogant, we immediately dislike them. What makes that person feel they are better than us? Or when a company acts in a proud way, we like it far less. We see ourselves as the customers of that company, the reason for its existence. Without us, it is nothing. So what warrants its pride? It is very easy to act in a proud way – after all, look at how far you’ve come. You’ve achieved things no one thought were possible. So you are proud of them. However, act in a humble way. Humility, is actually an extremely important virtue. If you make the mistake of acting in a proud way, take a step back, apologize, and avoid in the future.

 

To conclude my thoughts: it is always important to remember why we do what we do. A team creates a company in order to change something in the world around them and make it better. But even outside of a startup – a person usually finds their meaning in life and attempts to fulfill that meaning. Along the way, it is easy to lose sight of what’s important. You see what happens to other startups, or people, and it may cause you to make mistakes. I have made some that I hope I will never make again. Let’s all remember the seven sins and avoid them.

Monitoring Sucks: My Takeaways From Frank Slootman’s Tape Sucks

Turkish Airlines seriously messed up this time. On a flight from Tel Aviv to Istanbul (my stop-over on the way to the Bay Area, where I live) one of the cockpit’s windows broke and left the pilots breathing 30,000ft air. This forced us to land in Anatalia. This isn’t the screw up though — as these things can happen. The way they handled it, was pure atrocity. So it is with that backdrop that I read Frank Slootman’s Tape Sucks: Inside Data Domain, A Silicon Valley Growth Story. A short and enjoyable book, I managed to finish it before we took off from Anatalia.

Across one hundred pages, Frank dispenses immensely useful advice on the process of building a startup. One of the main points there, is how to treat your customers. I’ve written about this recently here — how we should embed ourselves with our customers, as well as make sure we make their lives better — and believe this is true in all my heart. Turkish Airlines have treated 260 of their customers disgracefully in this occasion and as a result I will never fly with them again.

The goal of this post, though, is not to rant about an airline (Twitter seems to be a great place for doing that). But rather, collect a few snippets out of this fantastic book and add my two cents, in the most humble way I can. After all, Frank was the CEO of the super successful Data Domain, and is now the CEO of the even-more-successful ServiceNow. All I have to my credit is being the CEO & Founder of a far smaller company.

“Data Domain had the good sense to attack a product category that was not much short of loathed”

At indeni, we’ve decided to attack the monitoring product category in full force. It is the result of on-going conversations with would-be customers long before we wrote the first line of code. When we would ask them for their impressions of their existing monitoring tools, they were always lukewarm. They said the tools were nice, but fall short of what they need. The product category is cluttered with dozens of different tools that are hard to differentiate from one another. The pitches for those tools were always the same — avoid the next downtime — and it was hard to know which was better. Once you made the choice with a certain tool, you came to realize it could only really do 5% of what you needed it to and there wasn’t anyone else out there that could help you.

“Many technologies are conceived without a clear, precise notion of the intended use… if you haven’t [figured out the intended use] you are relying on luck.”

For us, it was clear early on what the intended use for indeni is — find complicated problems before they happen and give people specific instructions for how to fix them. I often see companies in Silicon Valley with some amazing technology, but not a very clear understanding of what anyone would do with it. I find it to be a highly risky proposition, considering customers buy value, not just technology.

“We always reverted to our True North, the customer”

Making the customer happy is the #1 goal at indeni. Without our customers we have no existence. We will only be successful if our customer base grows, our existing customers renew their annual subscription with us and that from year to year each customer expands their use of our product. This drives our product decisions and our resource allocation. I often find myself spending a lot of my thinking time on specific customer issues.

“Resellers start getting interested when their bread-and-butter customers begin asking about your product…”

That’s just one of many points Frank makes very well about resellers. If you choose to take a channel-based distribution model (which should never be the default) you need to make sure you keep a direct sales force. I’m very much against competing with your channel (be “100% channel”) but at the same time suggest you don’t rely on them to do the work for you. Find the customers and build the deals yourself, showing potential resellers they would be missing out greatly by not promoting your product themselves. Protect your top resellers, by using mechanisms such as deal registration, and penalize those resellers that ignore you or waste your time by taking business to their competitors and downgrading their margins. Many of indeni’s resellers have seen us implement these exact tactics, sometimes they got pissed off by them. We didn’t invent these tactics, but we’ve seen them work well and so adopted them. As a reseller, you stand to gain a lot more by working with us, and that’s important for our survival.

“The turning point comes when your sales activity is solidly paying for itself”

We always ask ourselves — how fast should we grow? How many people should we add, in what departments and when? It is very challenging — if you grow too fast you’ll burn out and die. If you grow too slowly, you will miss the market. Frank’s point about looking at the sales team and only growing when they are paying for themselves, plus partially paying for the rest of the company, is a good one. Our total sales spending is well below the amount of sales we book every month and hence we pass this “check”. We will be growing our investment in sales and keeping a close eye to ensure we don’t overgrow it. A difficult thing to get right.

“Big company thinking: check it at the door”

I have a long list of mistakes that I’ve made since founding indeni. One of them was not shedding enough of the big company mentality I absorbed in my days at Check Point. There are certain things I’ve done, processes I’ve put in place and people I’ve hired, that were incorrect for the stage we were in. They were so off, they are even ill-fitting for the stage we’re in today! If you start a company, or join a startup, from a large corporate, don’t forget this.

“Once it’s apparent you’ve made a mistake, own up to it”

This sentence opens chapter 10. I see chapters 10, 12 and 13 as related — they are very much around how the CEO behaves and what the rest of the team gets from this behavior. I used to be more mechanical — I would show less emotion (yes, there is a “less” to the amount of emotion I show today), not let people see my true personality & quirks and act like I represent a foreign government. This is one lesson it took me a long time to realize — you must be yourself. You must show your team what kind of person you are. The underlying assumption is that your personality traits are probably mostly positive as far as the company is concerned, otherwise you wouldn’t be in the role you are in. So show your team who you are and admit your weaknesses and mistakes when they happen. Embed that as part of the company culture and that will help build a healthier one.

“Data Domain’s sales organization sometimes acted like a single organism”

That’s why our entire sales team is in one open space. They listen to each other, learn from each other and feel free to ask questions and point out mistakes. One of the biggest difficulties at our stage is to get a repeatable sales model that works well in a consistent fashion. Much like ants keep perfecting their path to food through on-going trial and error and sharing of information, so should the sales team.

There are a lot more great nuggets in Frank’s book and I urge you to hop over to Amazon and order the book. Two hours of your time and I’m sure you’ll learn, reflect, relate and enjoy yourself.

Thank you Frank Slootman for sharing this.

Sequoia Supper 2015

Every year Sequoia Capital arranges a large dinner for its founders, close relationships and the Sequoia Capital team itself. It is a fantastic event where you can find yourself sitting across from Don Valentine (founder of Sequoia Capital), Ron Conoway (who got the Don Valentine jacket this year) and Doug Leone (the current head of Sequoia), listening to stories about the early years of tech.

It is also where you can have open conversions with other founders who share a similar adventure and now run public companies making hundreds of millions, sometimes billions, in revenues every year.

I often get asked by other founders what is the value of taking an investment from Sequoia Capital and what does it mean for your day to day. To me, the two core elements of SC’s value is in how hard they drive you to achieve and the kind of people they bring on as partners.

You see, at Sequoia Capital, making money is a top concern; as a startup you are constantly pushed to make more money. To me, who was raised by socialist parents in a semi socialist country, this has a negative ring to it (“the capitalist pig trying to become richer”). But over time, you slowly learn it is actually a very positive thing:

1. If you want “your baby” to really make an impact on the world it needs to last.
2. If you want to build a company that will last, it needs to make money.
3. A lasting company will generate jobs for many people and make their lives better.
4. Sequoia’s investors are endowment funds, health institutions and similar good-doers (Sequoia’s ethos). When you make Sequoia money, you create more scholarships, give people more free health care and make the world a truly better place.

The other element I mentioned are the partners themselves. I’m fortunate to work with Haim Sadger (take a few seconds to read his page on the SC website). In my experience, everything that is written on that page is true. In Haim I found someone I can trust to work with, someone who has the success of the company and its shareholders at the top of his mind.

And so, even though we personally chose Sequoia, and Sequoia chose us, we should always keep in mind the fact that no partnership is to be taken for granted. It requires on-going investment and work. The event last night was a fantastic one, and I thank Sequoia Capital, and specifically Stacey Gerber who did an amazing job, for inviting me.