Leading high performers

In my #ifiwereafounder tweets, I had a few comments related to hiring high performers and team building, not only for finding a co-founder, but also more generally.  What I did not cover, as the CEO of one of my portfolio companies recently so correctly pointed out, is what it takes to manage and lead a team of high performers.  This post will attempt to shed some light on this topic.

Developing, managing, retaining and leading high performing team members, whether they are right out of school or seasoned executives, is obviously critical to the success of any start-up venture.  But these folks, by the nature of their intelligence, curiosity and drive, can also at times be a handful to manage.  They also know they are great and have plenty of other opportunities, so keeping them engaged, focused and happy is important.

In my experience, and from observing many successful CEOs over the years, the following are critical points to focus on in leading a team of high performers:

  1. Create a sense of ownership and identity by connecting what they are working on with with the broader goals of the organization.  This is critical across the board, but with A players there is a constant need to feel like their ample skills are being applied to issues that move the needle for the company.  Sometime this is obvious (i.e. closing a key account from a sales perspective), but when it is not, make sure you have clearly articulated short and long terms goals and connect the dots for people.
  2. Ensure the goals are expressed in terms of ambition, not just dollars.  As you connect the specific activities and tasks to broader goals, ensure these goals have meaning beyond just numbers.  Yes, growing revenues, hitting budget and creating shareholder value are important, but high performers are motivated by feeling like they are part of something truly important that will create an impact on the world.
  3. Delegate and provide autonomy, but take an active interest in what they are doing.  With a clear linkage between their team's focus and broader goals, strong leaders know that the best approach is to step out of the way and let their high performers execute fairly autonomously. That said, this should not be translated into a perception that you don't care about how they are doing what they are doing as high performers will be proud of the approach they have taken. If you take the time to understand this, they will reward you with further creativity.  
  4. Find the right scope for their activities with a balance between stretching them, but not stretching them so much they feel like they are set up to fail.  In a resource constrained early-stage company this is hard, as there is a tendency to keep putting more and more onto the plate of your high performers.  This is great, but know their limitations, listen carefully to when they feel like they are getting stuck and intervene before this becomes demoralizing.  
  5. Look for opportunities to let them stretch their wings outside of their core domain.  If you have a high performer in a specific domain, seek out opportunities to get them exposure to other parts of the organization.  This helps align their interests with that of the company more broadly, allows them to keep learning and facilitates cross functional cooperation across your team.  Special projects, critical sales situations or thorny customer service issues can often be good situations to involve others in developing creative solutions.
  6. Recognize success and achievement.  This is perhaps obvious, but as one of my CEOs observed, high performers all have a little diva in them.  Acknowledge this diva publicly and privately, but also in a demandingly honestly way as false praise for easy accomplishments is seen through pretty quickly.  
  7. Take pride in their development.  Our best CEOs view their job as grooming the next generation of leaders, and they revel in the success when people step up.  If seeing these unexpected accomplishments and this growth and development does not get you jazzed, it maybe you are not in the right role.
  8. Take an active interest in their life outside of work. Early stage companies can be all consuming and it is easy to lose sight of the fact that your high performers will have a life outside of the office.  Recognize this, know what is important to them and understand if there are extenuating circumstances outside of work that may impact their abilities inside work. 

I am sure I have missed some points, so let me know what works well for you!  I would also like to give a special thanks to several CEOs of Flybridge portfolio companies who provided invaluable advice on this post.  They are the real rock stars, and I would like to publicly acknowledge their inner divas.

On Being Scared Shitless

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Of all my #ifiwereafounder tweets, this comment resonated with the most people.  Profanity aside, as that always sells, this is because I acknowledged what every founder feels and almost never publicly admits: the day to day building of a company from scratch is scary.  These fears range from those that are inwardly focused (I am doing things every day I have no experience doing), team focused (how on earth did I become responsible for the livelihood and development of all these people), customer focused (we are at risk of screwing up our largest account), market based (will enough people buy what we are selling or if there are, will our large competitor react quickly enough to crush us ) to financial concerns (we run out of money in 8 weeks and I have no idea where the next slug of cash is coming from).  

The path through these fears is the second part of the tweet: be action-oriented around things you can control.  Don't fret about things outside of your control.  For example from the list above, what you do today has very little to do with whether your large competitor decides to try to crush you.  Every cycle you spend on things you can not impact distracts and bogs you down.  Instead, focus relentlessly on what you can do to keep pushing forward every day.  Break down big scary tasks down into manageable and achievable chunks.  Celebrate small successes and develop a culture of getting shit done.  Figure out quick data driven approaches to research your concerns and react accordingly.  Recognize you don't and can't know everything and reach out for input on your path forward from your team or advisors when you are outside of your comfort zone.  If you are confronted with a WFIO moment, read Scott Weiss's excellent post on leading from the front, getting the best brains around the table and realizing it is never as bad as it seems.  Speed, desire and unique insights are why start-ups win.

In a subsequent tweet I said "I would have one person to share my deepest fears and worries with" and this too is critical.  Generally I am a fan of leaders that are more open with their team than not, but I also recognize you can not share everything broadly.  But internalizing all these fears is also counter-productive and will lead to even more sleepless nights, and there are enough as it is.  So have someone you can be completely honest with as talking through your concerns, issues and worries makes them easier to address and overcome.  Ideally this person is your co-founder, but could also be a key mentor, other CEOs in a group you regularly meet with, your significant other or, heaven forbid, an investor you trust.  If you can find that unique combination of 100% supportive married with honest objectivity you will have found the right mix.

Finally, if the reactions I had to the tweet are any indication, recognize you are not alone.  This in and of itself is helpful.

Getting the Co-Founder Decision Right

In my recent list of #ifiwereafounder tweets, I started with the assertion that "I would aggressively seek out one, but no more than one, co-founder to complement my deficiencies".  This generated a number of questions from founders about the ideal composition of a founding team.  This post will expand on what I was thinking with the original tweet in a way that can not be captured in 140 characters.  

At face value, the first question is why have a co-founder, and if you do, why only one?  First, it is worth recognizing that founders form the soul of any start-up.  It is their conviction, passion and unrelenting desire to succeed that powers the company forward and through all the tough spots.  It is hard to hire this skill set, so starting a company with a co-founder means that this does not rest solely on the shoulders of one person.  Further, start-ups are all about developing hypothesis, testing these assumptions and moving forward in an unrelenting manner.  This is more effective if you have someone to run these ideas by in a high-bandwidth manner and to parallel process on tasks, especially in the early days.  Finally, no one founder has all the requisite skills to execute on their vision and bringing in a co-founder that complements areas of relative weakness and potential blind-spots results in a far stronger team operating right out of the gates.

So if these statements are true, wouldn't more co-founders be better than fewer?  In my experience, unless the founding team has all worked together before, the answer is no. The worked together comment is a big caveat as our founding teams with more than 2 co-founders that have worked together before are performing quite well, in large part because the issues discussed below are less applicable for teams that have learned over the years how to work together.  I believe there are three reasons for two co-founders being the magic number.  First, if you think of all the requisite characteristics of a co-founder – a shared vision, complementary personalities, similar work ethics, aligned goals – it is incredibly hard to find the right co-founder.  Looking for a third or fourth such person exponentially increases the time and difficulty of this task as you not only need to find additional people that fit you, they also need to fit each other.  More often that not this results in making compromises and sub-optimal choices.  Second, while having one co-founder results in faster and better execution as two people can be incredibly aligned and efficient, more than two cooks in the kitchen tends to slow decision making down as consensus is sought and the trade-off of perhaps better decisions by having a third or fourth opinion does not compensate for all the advantages start-ups get by executing faster than incumbents or their competitors.  (A related note is that some critical decisions really do require multiple viewpoints and differing perspectives and this can be an ideal role for your outside advisors and supporters).  A final point is economics: founding equity is incredibly valuable and if you are dividing the initial pie by 3 or 4 and the incremental 3rd or 4th co-founder is higher risk and likely to slow things down, you own less of a less productive and potentially more contentious company.  Not a good trade.

So what makes for a great co-founding team? Noted above are the first critical points: a shared vision, complementary personalities, similar work ethics, and aligned goals.  In particular, alignment on vision and goals is critical as they are the hardest to reconcile and most likely to lead to major blow-ups.  To find the best fit on the personality front, it helps to understand your own biases, strengths and weaknesses and to find a co-founder to fill in those gaps.  If you are extremely intuitive and high concept, find a co-founder that is analytical and more considered in their actions.  If you are naturally wildly optimistic and a throw caution to the wind type, find a co-founder who considers what can go wrong and how to plan accordingly.  These personality differences, while at times likely to infuriate, will result in better decisions but as you will spend more time with a co-founder than anyone else in your life, make darn sure you enjoy each other's company.  Last, from a functional skills perspective, our best co-founding teams of two tend to have one co-founder who is awesome on product and technology vision and the other who is always thinking about market opportunity, positioning, growth and how to best bring the product vision to the market.  In today's parlance a Product person and a Growth Hacker.  If you look at successful companies across the tech landscape, this pattern emerges over and over again.  

Good luck in finding the right partner with whom to launch your company.  Don't rush to the altar and take the time to get the decision right and it will pay of down the road.

If I were a Founder

Inspired by a tweet stream of consciousness by Danielle Morrill, the Founder of Mattermark, on what she would do if she was a VC, a jotted down a few notes on what I would do if I was a founder.  These first went out as tweets on @chazard, but here is the full list in one place:

  • I would aggressively seek out one, but no more than one, co-founder to complement my deficiencies #ifIwereafounder
  • My early hires would be people right on the fine line between crazy good and crazy crazy #ifiwereafounder
  • I would meet with or speak with more than 100 potential customers in my first 30 days #ifiwereafounder
  • We would design a product experience to surprise and delight customers in unexpected ways #ifiwereafounder cc:@wayne @jeffseibert
  • I would be scared shitless almost every day, but would translate this into being action-oriented around things in our control #ifiwereafounder
  • I would have one person to share my deepest fears and worries with #ifiwereafounder 
  • We would focus on driving adoption before driving revenue #ifiwereafounder
  • I would avoid strategies that rely on other companies or organizations for our success, at least for the first couple of years #ifiwereafounder
  • Our company colors would be a little unusual #ifiwereafounder
  • I would have Friday afternoon happy hours and use them to celebrate successes #ifiwereafounder
  • We would have regular internal hackathons to spur creativity #ifiwereafounder
  • A recruiter would be one of my first hires after raising a Series A #ifiwereafounder
  • I would track 3 key metrics daily and 5 on a weekly basis #ifiwereafounder
  • I would have a vision for world domination, but very achievable first steps #ifiwereafounder
  • I would be wildly optimistic, but not delusional #ifiwereafounder
  • I would take extra time to simplify and shorten key messages #ifiwereafounder
  • I would be able to give my own demos #ifiwereafounder
  • Our company name would not have capital letters in any place other than the first letter #ifiwereafounder 
  • Creating shareholder value would be a by product of building something great, not a primary goal #ifiwereafounder
  • I would seek advice when outside my depth and not feel like I need to know everything #ifiwereafounder
  • If my board pushed back on critical decisions, I would tell them they are at risk of "breaking the bronco" #ifiwereafounder cc:@bijan
  • Bad news would travel as fast as good news and it would be accompanied by a plan to fix, or at least a plan to get to a plan #ifiwereafounder
  • If I disagree with my Board's advice, I would drive the differences to ground rather than pocket vetoing their suggestions #ifiwereafounder
  • i would never let any one person in the company become irreplaceable #ifiwereafounder
  • i would force my board to provide me feedback on my performance and seek out advice on how my role should change as the company grows #ifiwereafounder
  • If a room of smart people don't understand my business, i would consider revising the message instead of assuming they just don't get it #ifiwereafounder
  • I would understand my competitors deeply, but not obsessively.  I would obsess about customers.  #ifiwereafounder
  • i would read Reed Hasting's piece on culture and leadership, but not much else in this category #ifiwereafounder

Based on Retweets, Favorites and offline feedback, the comments that resonated most with people were being scared shitless; seeking advice; obsessing about customers, not competitors; having a few key metrics to track; and dominating the world, one step at a time.

I also added a few more to the list, and have included these below:

  • The person I share all my fears with would ideally be my co-founder #ifiwereafounder
  • I would start my company in an area with big macro trends in my favor.  Always easier to sail with the wind at your back #ifiwereafounder
  • I would recognize that no amount of marketing $ spend from our start-up is going to make our market develop significantly more quickly than it wants #ifiwereafounder 
  • My board would have no more than 5 members #ifiwereafounder
  • We would have weekly staff meetings, but they would be short #ifiwereafounder
  • If I was based outside of CA, i would open an office there as quickly as possible with as senior a person to run it as possible #ifiwereafounder 
  • My California office would be the only exception to my rule of having everyone in a single location #ifiwereafounder
  • The response to the first inbound M&A offer would always be NO #ifiwereafounder
  • I would compensate my team more than fairly and accept all resignations from anyone who threatens to quit because they are not paid enough #ifiwereafounder
  • All my financial projections would be conservative, but I would never say that as no one would believe me #ifiwereafounder
  • I would recognize that the first equity I sell is the most expensive equity and I would plan accordingly #ifiwereafounder
  • I would stay up late trying to close the deal and wake up early to figure out how to deliver #ifiwereafounder

  •  

    I would infuse design excellence into everything we do, but struggle to find excellent design talent like everyone else #ifiwereafounder

  • I would drive an '07 Toyota Prius but lust after a '14 Tesla #ifiwereafounder #truestatementevenasaVC

  •  

    Our office would have a branded corn hole game #ifiwereafounder

  • I would not wait for a prospective investor to follow up with me. Otherwise would worry they think I am not a closer #ifiwereafounder
  • After seed round, I would communicate with investors monthly on metrics, accomplishments, forward plans & how they can help #ifiwereafounder
  • If I was building a SaaS business, I would know my Magic Number better than my phone number #ifiwereafounder cc: @joshjames

  •  

    As a smallish private company, I would not count on M&A to fill in product gaps.  Too many variables outside of my control #ifiwereafounder

  • I would publish a rolling 6 month product road map for my customers #ifiwereafounder
  • Annually, I would do a facilitated offsite entirely focused on our management team's ability to communicate and work together #ifiwereafounder

  •  

    I would have at least one quant jock on my team #ifiwereafounder

  • I would hire people who have a proven ability to communicate well in writing #ifiwereafounder
  • i would not let my urgency to fill open positions on our team lead me to lower the bar on quality #ifiwereafounder
  • If I unexpectedly got my ass kicked on an issue in a Board meeting, I would digest for 24 hours and come back to them with a response and plan #ifiwereafounder
  • I may fail, but I would never quit #ifiwereafounder

Let me know what I missed!

SXSW 2014 Takeaways

My ears have stopped ringing, my voice is still hoarse and my thoughts are with the victims of last night's drunk driving tragedy at the Mohawk, so I wanted to share some quick takeaways coming out of several days at SXSW in Austin with 30,000 fellow tech and start-up junkies.  I left encourage by the energy, the diversity of ideas and the abundance creativity.

  • Diversity is increasing and this is good.  The diversity of the attendees on all dimensions  – gender, race, cultural – is increasing.  This is needed in the tech industry and will lead to greater creativity and a broader perspective on opportunities.  There is a still a ways to go, but when I compare to tech conferences from 5 – 10+ years ago, we are moving in a encouraging direction.
  • The world really is increasingly flat.  Not a new observation, but I was really struck by how the start-up and innovation culture has infiltrated all corners of the globe.  As one simple example, I judged the enterprise track of the SXSW Accelerator program and of the 8 companies that presented, we had a Finnish company, an Irish company, a San Francisco based company started by a Frenchman, a Boston based company that recently relocated from Slovenia and another Boston-based company with an Australian founder.  This global phenomena only increases the pool of talent and again the diversity of ideas.
  • APIs will dominate and change how applications are built.  Every company I met with was either producing APIs through which others will interface with their applications or consuming APIs to more rapidly solve the problems they are attacking.  For the application builders, this means far more resources are going to building and solving problems and far less resources to basic plumbing and infrastructure. For the API producers, this means larger market opportunities and easier ways to on-board and serve customers.
  • Bitcoin as a platform is here to stay.  Having survived a rocky few months, I am incredibly encouraged by the opportunities offered up by the Bitcoin platform and how it can be leveraged to solve a range of security and payments issues.  More people are seeing it in this light as compared to some of the early days when it was the realm of illicit activities, libertarians and gold-bugs and this move to the mainstream will spur further adoption.
  • Privacy is not a mainstream consumer issue.  The press loves the topic, but in my conversations I did not find privacy to be a top of mind consumer issue.  It should be, so in this I agree with Edward Snowden's recommendation that application and service providers need to do a better job of embedding security and privacy into their solutions.
  • The Best VCs care deeply about founders, the problems they are solving and how best to support them.  The worst are focused only on finding the next hot deal.  Who is which becomes clear in a two minute conversation, especially if they have had a drink or two.
  • Everyone is starting a seed fund.  Ok, not quite everyone, but I met dozens of people who had started a seed fund in the last 12 months.  A few were super-talented and supremely well connected and should be wildly successful, but most struck me as a little naive and only attracted to the bright lights and perceived glamour of finding the next WhatsApp or Uber.  This will not end well for most.
  • Youth dominates.  We can wring our hands that a new social app is not curing cancer, but the influx of young talent into the innovation world is awesome and I would far prefer to see the best and brightest building things than banking things or consulting on things.  Today's 20 something founder building and a somewhat frivolous app will be tomorrow's founder solving important problems as once you get the start-up bug, it is tough to shake.

if you were there, let me know what I missed!

Stackdriver

Stackdriver vector on dark (3)
Today our portfolio company Stackdriver announced the GA version of its intelligent monitoring solution for cloud-based infrastructure, systems & applications.  They concurrently announced that Flybridge, alongside the company's Series A investor Bain Capital Ventures, led the company's $10M Series B financing and that I will be joining the company's Board.

Flybridge does not commonly lead Series B investments, but Stackdriver is not a common company.  A few things stood out for us as we got to know the team and the company over the last several months.

First, the company hits squarely on two themes – the cloud, in particular the public cloud, is the dominant platform for new application deployments and that building a passionate base of Developers and DevOps professionals is key to driving adoption in this environment.  We previously wrote about the cloud here and developer adoption here.   In particular, Stackdriver has nailed the first two points from the developer post: rapid time to value through a two minute setup process and a fully functioning free version of the product to drive widespread adoption.

Second, this product excellence and value has led to rapid adoption with the company growing to over 400 customers since its beta launch earlier this year.  At Flybridge, we track key adoption metrics for our portfolio and prospective investments closely and Stackdriver is showing month over month growth on all relevant metrics that is in the top echelon of its peers.  Further, customers love the product and are increasing the breadth and depth of its usage well ahead of expectations.  If you are so inclined (blatant plug), the company's product can be found here.

Third, and most importantly, we love the team at Stackdriver.  The company's two co-founder, Izzy Azeri and Dan Belcher, embody entrepreneurial leadership with their smarts, a history of success at companies such as VMWare, EMC, Acronis and Sonian, an ability to surround themselves with talented resources and an unbelievable work ethic (including regularly doing demos with prospective European customers long before the sun rises). 

We are thrilled to be in business with this talented team going after a large and exciting market and look forward to being part of their success.

Firebase

Earlier today Firebase announced that we and Union Square Ventures led a $5.6M Series A investment in the company.  We first led the company's seed round in the middle of 2012 and were thrilled to help fuel the company's continued growth with this financing.

When we committed to the seed we did so for four reasons: 1) we loved the two founders, James Tamplin and Andrew Lee and their vision for their market, 2) we had a hunch that real time features were going to be increasingly important for a broad range of applications, 3) the Firebase platform, which allows developers to implement real time apps with no back-end server code, was going to be an attractive way to do this and 4) the early signs of grassroots developer adoption were quite positive.  

Over the course of the seed investment the company proved out many of these assumptions and in a nut shell, that is why we are leaning into the Series A financing.  The two founders have hired an extremely impressive group of developers, this team has knocked down all the items on their roadmap in a very efficient and rapid manner, developer adoption has exceeded by a large margin all of our expectations and compares very favorably to what we have seen in the early days of other companies with similar business models such as mongoDB and Crashlytics and the company's customers are passionate advocates for the service (including one of my favorite diligence quotes of all time – "it is indistinguishable from magic, I feel like an alchemist").  

We often get asked what causes us to lead a Series A after a Seed investment.  Based on the above I would say the answer is hire well, meet or exceed your goals, add lots of users and make them incredibly happy!  Easier said then done, so hats off to James, Andrew and team on their success to date.

Belief

I had a chance over the weekend to catch up with an old entrepreneur friend from school that I had not seen in while.  He is not in the Flybridge portfolio, but rather someone who is bootstrapping a company he started a few years ago, about the last time I saw him.  When he walked in I was struck by the fact that he looked older – less hair, more grey, a few extra pounds (maybe this is happening to all of us!)- and he looked a little tired.  Most striking, though, was for a guy to whom everything – school, athletics, work success – had come pretty easily, was less of the air of confidence I was used to seeing.

After catching up on old friends and various stories from when we were in school, we turned to discuss his business.  "It has been brutal", he said. He went on to add, "who knew it was going to be so hard."  Taken aback a little by the candor, I asked for more details.  "When we started out we were, in hindsight, too unfocused, trying to do too many things at once.  As a result, we did not serve our initial customers as well as we should have and we lost ground to some of our competitors.  To make things worse, we made a few hiring mistakes, which always takes longer to recover from than you would think.  A little bit back, we took the chance to reflect on all of this and decided to go back to first principles: get our team in order and do more of what we were doing well, and less of what was not working.  Always easy to say, but hard to do.  Things are working much better now, we really have product market fit, our customers are happier and we adding a lot of value, but it has taken longer than I would like." As he described these improvements, the glint in his eye returned, but then he went on to add a few other thoughts.  "I worry about our runway, I am ploughing all my savings into the business and the effort over the last while has taken its toll on all of us, including my wife and family."

As we brainstormed a bit, I suggested that maybe now was the time to look for an exit, peace with honor as they say, and that maybe he should reflect on this over a few days and we should get back together to discuss again.  With this his whole body language changed.  He pushed his beer to side and leaned across the table with a return of the confidence I had been missing earlier and a level of intensity I last saw when we played sports together and he said "No way.  No reflection needed.  We may have made some mistakes and I worry all the time, but we are not going to lose.  We have a team I would match up against anyone out there – they are smart, driven, energetic and competitive and we are working super well together.  If we were playing basketball, we could take the Miami Heat in a game of 5v5.  What we are doing is important, we are changing our part of the world in fundamental ways, and we see this in what we are doing for our customers.  Equally importantly, my wife is behind this 100%, so even if it takes longer, consumes most of our savings and requires sacrifices, we are going to make this happen.  We are going to win."  With that, he leaned back, took a sip of his beer, and said, "And let me tell you what we are going to do."

That, my friends, is the belief of an entrepreneur.  A belief that what you are doing is important, a belief in your team, a belief in yourself and a plan to make it all happen.  If you have those beliefs, I will have a beer with you anytime.

A return to the clouds

I was at the GigaOm Structure conference last week which provided me with an opportunity to reflect on trends in the cloud computing world and how my thoughts on the market opportunities and trends have changed since I last wrote about this market in depth almost three years ago.

Before looking ahead, it is worth revisiting that old post, which can be found here, as not surprisingly i got some things right and missed some things.  Observations that in hindsight I got right include:

  1. The advent of cloud computing is a fundamental architectural shift that will create numerous opportunities up and down the enterprise IT landscape.  This has, and continues, to come to pass in spades.
  2. Competing as a company in the public Infrastructure as a Service (IaaS) market is a fool's errand.  One only needs to look at the pace of innovation at AWS, which is awe inspiring, and their dominant market share, to realize that this too was correct.
  3. The cloud will be a huge enabler of innovation.  This in hindsight, is the most fundamental impact and has changed how entrepreneurs think about starting and building companies, not to mention how venture capitalists fund them.
  4. Latching on to developer communities, which I also discussed in depth here, has also proven to be a successful go-to-market strategy for many companies.
  5. Some of the specific ideas I discussed such as tools to better manage cloud environments (NewRelic, OpsCode come to mind) and SaaS applications for vertical markets (Jive, SuccessFactors) have also proven to be fruitful market opportunities for talented entrepreneurs.

Observations that, with the benefit of hindsight, I missed include:

  1. Enabling enterprise data centers to be more cloud like has not proven to be as fertile an area as I suspected.  Yes, VMware is seeing success with their software defined data center strategy, but as of yet none of the private cloud  platforms has broken out of the fray with significant revenue momentum.
  2. Bridging the cloud enterprise boundary has also not really developed into a significant market opportunity.
  3. The impact of mobility on cloud adoption.  No use case has driven cloud adoption the way the explosion of mobile devices has, and in hindsight, even three years ago this trend should have been identified more explicitly.
  4. The impact cloud scale data centers would have on networking technologies.  One only needs to looks at the >1,000 people that attended the recent Open Networking Summit to realize that the trend to Software Defined Networking and OpenFlow is gaining steam, although in my defense this was less evident in 2009.

So where does this leave entrepreneurs and investors on a go forward basis as we collectively look for opportunity in the cloud computing market?  A few thoughts:

  1. The public cloud is going to win.  Due to a combination of innovation at large companies such as Amazon, the OpenStack initiative that will enable Amazon's competitors and the fact that the vast majority of young companies developing innovative new solutions will be focused on the public cloud, it is going to be tough for private clouds other than at the largest of companies (JP Morgan and Zynga come to mind, or perhaps some highly regulated industries) to compete with the public cloud on a cost, performance or features basis.  This will, in turn, increasingly drive usage to the public cloud, in turn furthering the pace of innovation and differentiation for the public cloud creating a virtuous cycle.
  2. Driving efficiency will remain critical.  As cloud adoption continues apace, driving the efficiency of these large scale systems will be of paramount importance for cloud operators and their customers.  This means there is significant running room for companies not only that effect the labor side of the equation by driving efficiency in DevOps but also across other operating costs, especially power consumption (both in aggregate and in terms power usage effectiveness, or PUE.  As the CIO of Zynga said at Structure, "we need more innovation on power").
  3. Performance and response time demands from consumers will continue to increase.  The threshold of patience from any consumer of cloud services, whether they be delivered over the web or a mobile device, continues to decline rapidly.  Technologies that offer greater performance, or a path to developing applications with greater performance, to address this trend will see great demand.
  4. Leveraging developers to drive adoption remains critical.  As fundamental infrastructure architectural decisions get delegated into the cloud, developers increasingly will make critical application level decisions, so tools that increase their efficiency and/or offer new functionality that speed application development have the potential to see rapid uptake in the market.
  5. Look for ways to leverage the cloud to bridge data and applications onto mobile devices.  Just as Dropbox did for consumer file access, there are a myriad of applications and use cases that can harness the combined power of mobile and the cloud to provide unique user experiences.

I am sure another 3 years down the road, some of these insights will also prove to be off base, but let me know what you think or other opportunities I should be adding to the list!

 

Driving developer adoption

One of the investment themes we are pursuing here at Flybridge within our Dynamic Computing (which my partner David Aronoff covered in detail here) is the rise of developer driven business models.

Ten years ago architectural standards in large or mid sized companies were set by the CIO or Architecture review boards and the choices were fairly limited (Solaris, Linux or Windows for the OS; Oracle, DB2 or mySQL for the database; Weblogic, Websphere or jBoss for the app server, Java or .Net for languages, etc).  In today's world, on the other hand, the choices have expanded by a couple of orders of magnitude with the rise of open APIS (what Ross Mason calls the ninja slicing of the application stack) open source, virtualization, cloud computing and dynamic scripting languages.  This has empowered the developer to experiment, prototype and ultimately drive the adoption of new technologies in ways that were not previously practical.

As a result many companies are seeing great success in infiltrating large customers not with a top down approach marked by expensive sales people, but rather on with a bottoms up, developer led approach that demonstrates value on a project by project basis before the CIO even knows what is happening.  So what are the keys to success in driving this grassroots adoption?

The most important point is the simple one: your product needs to work and have a clear value proposition.  In other words the age old better, faster, cheaper still applies.  But assuming that, here are ten concrete suggestions for getting the developer driven business model to work for your company:

  1. Rapid time to value: Developers are always stretched and have more to do than time to do it.  Your product needs to show value fast.  Traditionally this meant less than 30 minutes to be up and running, although today this is compressing even further (one of our companies has a 5 minute register, download, install, integrate and run goal).
  2. Free to start: Have a fully functional, high value, free product that allows experimentation.  If your developer customer needs to pay to do anything useful, they wont adopt.
  3. Superior documentation and support: Related to point one, your documentation needs to be clear, easily searched and any support issues need to be addressed quickly and thoroughly.  Get everyone in your company into your support forums providing high value assistance.
  4. Leverage existing communities of interest: As an early stage company it is hard to create a movement on your own.  Tap into existing communities with momentum and where your potential customers can be found.  NewRelic, which out of the gates latched on to the growing Ruby community, has always struck me as one company that did this well.
  5. Buy your engineers plane tickets (or at least subway passes): Find where your developer customers congregate and get your team into the community to attend meet-ups, show off your product and explain what it does and why it solves real problems.  Overtime, generic meet-ups can become more targeted around your specific solution as we have seen withour portfolio company 10gen, and the highly successful events they put together for the mongoDB community.
  6. Facilitate word of mouth: Get your customers to speak on your behalf, either live or via their own blogs.  Share presentations and use cases via slideshare.  Contribute positively to HackerNews & Stackoverflow.  Work twitter.
  7. Have a CEO that can code: Street cred matters both externally and internally and respect in the community will build if the leader of your company has walked in the shoes of your customers.  If you are a CEO and are not a hard-core developer, fix some bugs, work on the front end code, and resolve support issues. 
  8. Don't market:  Developers are smart and cynical.  Slick marketing wont work.  Speak their language, solve their problems, add value first.  That gives your credibility to expand usage and ultimately get paid.
  9. Have a clear pricing model:  Historically people think developers don't pay for anything.  This is true, but their bosses will.  If you are adding value, people will want to pay (and in fact a company with out clear revenue model may actually see slower uptake as Sean Ellis wrote about here), but they will need to know on what basis they will be charged so they can understand the longer-term implications of working with you.
  10. Help your early adopters sell internally: Once you have some champions at a customer, especially in larger organizations they may need to convince their bosses that what they want to do is the right idea.  Be ready to arm them with information on security, performance, integration points and other similar implementations to make this easy for them.  

This is my top ten list, would love to hear other thoughts on what works, or does not work, for you.