October is the two year anniversary of the acquisition of my company, CloudHealth Technologies, by VMware. CloudHealth as a private company was definitely a labor of love for me, starting with the irrational decision to leave my job with two young kids in 2012, and ending with me in front of an audience of 30K+ at VMworld in 2018. While I am still with VMware and driven by the passion of my original vision, my CloudHealth startup days are definitely behind me. This anniversary has been a time of reflection on all the things we did right over those years, and of course, all the things we did wrong. As I look back on my eight years since founding a company, here are some of my personal lessons.
Ideas Are Less Important Than Markets
Over my years in technology I have seen more than my share of “feature companies” being built by entrepreneurs. A feature company is one built on an idea - in some cases a good one - but one that is not sustainable long term as a standalone business. Unfortunately entrepreneurs of “feature companies” rarely know they have limited themselves by their idea-first approach to the business. When I started on the journey to found CloudHealth, I deliberately chose to start with a market instead of an idea. Don’t get me wrong: I had more than my fair share of ideas in IT monitoring, management and security. But I committed myself to focusing on the broader market: the intersection of IT management and the disruptive innovation of cloud computing. That commitment to a market-first approach served me well, and helped me adapt quickly to what the market and customers were telling me.
Timing Is Everything
You’ve all read the stories: an entrepreneur has a great idea, starts company, struggles for a short time, and then achieves fantastic success. For example, the story of Apple starts with Steve Jobs and Steve Wozniac showing their first “computer” at the Homebrew Computer Club, struggling to make a working business, building the first Apple I, and then achieving IPO success and fame. But nowhere in these founding stories is the critical element of timing and luck. For example, what if Steve & Steve had started their company two years earlier? Or two years later? When I started CloudHealth, there were many startups doing something similar to me - e.g. enStratus, CloudVertical, ServiceMesh, Newvem, CloudCheckr, Cloudability, and more. Had I started CloudHealth a year or two earlier or later, the trajectory of my company would likely have been entirely different. A successful startup requires a good idea, great people, great execution... and a whole lot of luck. As with many things in life: timing is everything.
It’s All About People
Contrary to popular opinion, entrepreneurship is a team sport. As much as we like to celebrate a successful entrepreneur, businesses are not really built by one or two or three individuals. Instead they are built by dozens and in some cases hundreds of people. Finding and working with great people in many cases can be the difference between success or failure of a venture. But finding great people requires looking beyond their resume. Some of the most impactful people in my business were ones that would have been easily overlooked by just a resume - e.g. the intern who went on to run our European sales organization, the financial analyst who would run a large technical account management organization, or the inside sales rep who would become the single greatest revenue generator at the company. While there is no single formula for finding these 10X people, there are a few common traits I have seen over the years: commitment, passion, self-motivation, integrity, customer-centricity, and a team-first attitude.
First Customers Are Critical
I was fortunate to convince two early companies to become my customers. I actually did this as a one person business with a very crude Minimum Viable Product (MVP). I epitomized the Reed Hoffman quote: “If you are not embarrassed by the first version of your product, you’ve launched too late.” I admittedly stumbled into my first customers, and I have been forever grateful. Both companies were pioneers of using cloud computing at scale, and both had people who were thought leaders in the industry. Sometimes entrepreneurial brilliance is about finding brilliant customers and really listening to them. Finding the right early customers can ensure you stay on the right path, hold true to your vision, and adapt quickly as the market evolves.
Competition Is Irrelevant
I have talked to many would-be entrepreneurs who don’t commit to their idea due to concern about competition. I remember my founding executive team gathering in a room not long after they started to attend webinars of competitive products. I will admit that I was pretty much irreverent to competition in the early days of my company. I remember one of my early validation calls for an investor was a CTO of a technology company who told me he was amazed by the “hundreds of companies” that seemed to be in cloud management in 2012. He took it as a sign that maybe I was entering a crowded market. I took it as a sign that he didn’t know my market. Everything you need to know about your competition in an early stage startup can be found by talking to customers and prospective customers. Period.
The Journey Is the Destination
I wish someone had given me this advice earlier in CloudHealth: enjoy the ride. I suppose even if they had, I would have disregarded it. There are many reasons entrepreneurs have for starting a company - e.g. solving a problem, achieving professional success, making money, becoming famous. Unfortunately, many startups fail, leaving these goals unaccomplished. Even worse, many fail for reasons not fully in control of the entrepreneur - e.g market timing. I spent six years always feeling one step away from failure, and never fully enjoying the ride. One of my great regrets of CloudHealth was not realizing: the journey is the destination.