Fireside Chat: Dialogue Between Two Mission Accomplished CEOs of Cyber Security Industry - Howie Xu, Lane Bess | SVIEF
6:32PM Sep 30, 2018
palo alto networks
So I've been very fortunate to have a great friend and advisor and also my angel investor of my previous startup for a while. And,
and I feel it's kind of going to be very useful for lane Bess to share a lot of his perspective about entrepreneurship and the Silicon Valley. I've been in the cybersecurity industry for a while. And I think in the last 10 years or so there are two companies I have tremendous respect in
breaking out and become and have become multibillion dollar company when is Palo Alto Networks. And the other one is the scanner $20 billion company. And that $5 billion company and an ambassador is actually the guy who actually took the company from very early stage to, you know, the IPO stage ready for the IPO. So he must have some secret sauce. And
let's, let's just get to it. And thank you and learn to come here.
It's my pleasure. And thank you for attending today. I'm very passionate about sharing pieces of my journey. You know, I'll start by saying the successes that how he mentioned, we're not my first attempts done to prior startups before that, neither of which became something of size of Palo Alto Networks and z scalar. But both acted is very important learning experience.
The most important thing that I learned in the earlier ones was had a spot the really significant opportunity and create something the size of a Palo Alto Networks and z scalar. Of course, the same applies in any particular technology sector. But it This was specific to the security technology sector, so that the methodology, the path is the same. And, and really, the thing was identifying a significant change that was taking place in most cases before others had. And in a lot of cases before the big companies could really understand it. Innovation, I would contend, doesn't really take place in the big companies.
So on this one, let's just cut to the chase of it, you joined Palo Alto network, and as the scanner very early stage when they were no name companies, what did you see that others didn't see, or, you know,
if I can be specific in Palo Alto Networks, you know,
again, I had some experience in the security industry for a few years. And the pattern we saw was that the changing use of the Internet was happening right then. And this was in 2007, when social media was becoming more and more of the way of communicating and in many cases beginning to make its way into doing business. But the traditional security technologies didn't have a way for identifying users and the applications they were using. So traditional technologies, in this case, firewalls were somewhat arcane, there was no innovation there for 10 years, the founder in this case near Zook recognize this and there became the basis of the next generation firewall. And then certainly, of course, there's the aspect of selling the story, the same held true at z scalar. In fact, some of the seeds in my mind for z scalar began while I was still at Palo Alto Networks. And then there was the big change in so many of the applications people are using being in the cloud and the push it started with Salesforce workday. But more importantly, with the focus by Google, Microsoft Zoomer
as well as
Amazon, you know,
this move to the cloud suggested there was another change, and it's seeing these opportunities first, but more importantly, knowing how to take the technology and execute on them. Because that's where a lot of startups fail.
So sounds like, you know, you're seeing, you're seeing some of the big changes coming, and you need a very different technology to handle that kind of big changes. But still, in the early stage startup, one of the difficult thing is how to convince people to even try to your stuff, a lot of the things you told me in the past is about setting the story, can you just share with the audience about your advice on that?
Yeah, that's a, that's a good a good tee up, you know, I'm a sales and marketing executive, by trade, your product and technologist by trade. So two of us might have different views on this, but the selling the story is most significant, more and more customers, whether the consumers or I'll speak specifically to enterprise customers, they're not interested in an incremental story, they're interested in something that is really transformational. So for example, and I'll be specific to the security technology space, there are hundreds of great technology companies, but the technology story they're telling is somewhat incremental. And in the end, the customer buyer, the decision maker is really evaluating your story on how much of an impact difference it makes for his company. And in some cases, his job and the operation he has to run. So I figured out as we got the Palo Alto Networks,
and as we did z scalar, that the transformational story is the most powerful one, and we'll get you the attention from the analysts from the customers. And there's many exciting ways to do that. We could probably spend an entire afternoon talking about the selling thing, but actually, I'd like to turn it back to you, you know,
from the from the technologists and product standpoint, you know, you know,
how did you see selling the story, for example, in the trust path?
Well, you know, one of the things you told me was CEO, as a CEO, you are the most important salesperson of the company and it probably will be true for a while, you know, you know,
along the stage of the company's growth from you know, it's it's especially true in the cybersecurity world cybersecurity, obviously, it is a very hot industry. But do you know how many companies who re that raised $5 million,
like how many companies that have raised a $5 million VC fund,
there are 1000 the startups there are thousand of them on the planet, how many companies rate how many of those companies actually have a test try out, or a proof of concept at a large bank, like, Citibank, take a guess is a 550 accurate, it's a 500. So there are 500 startups trying otter the technology at a company called a City Bank. So it's a very noisy market. So in order for you to stand out actually takes a lot of the storytelling that's one aspect. The other aspect, I would say, it's not just the selling to customers, you have to sell to VC, you have to sell to your customer, you have to sell to your existing employees, because they need to be motivated, right? They don't have the Google Facebook a free lunch. And why do they want to work for you. And
also the you have to sell to potential future customers, and they have to sell it to your family to make the sacrifice. So there was a lot of the sales work you need to do. So it's not just for salesperson but also for technologist or for anyone in an early stage startup. So speak of that you walked away as you know, some of the greatest entrepreneurs, Palo Alto Networks, the scanner, what do you see Amanda, other great traits or characteristics? What are the most important part because you know, when you decided to work with them, right? Because you know, you're accomplished a person, especially when you join the J, you already have done Palo Alto Networks. What kind of things did you look for when you sort of decide, hey, I want to be a partner?
Yeah, well, thanks. That's a really good question. And in fact, I'd have to be humble enough to say that I've had a privilege to start to work with a lot of entrepreneur and founders and the
idea of the technology was not necessarily my own as much as my coming in to help them build the company and make it something big, but I had the privilege and I'll give you a handful of names here and here's a book was a great example nears, look Jay Chaudhry, the founder of of z scalar, Dr. Raj panty, the founder of new tonics
a wonderful woman, you know,
started Arista networks, Jay Shree, you all with Andy Bechtel Stein, there's a common thread with each of these people. And in their case, they had, these were veterans who had worked in an industry industries for a long time. But there was a burning desire and almost an anger in each of them, you know, you
would hear near Zook use curse words, to talk about his former employer checkpoint and how they just didn't understand it.
You saw Jay Shree law who headed up the switching business at Cisco for many years, seeing innovation that as a large company, Cisco just couldn't execute on. And so there's this burning desire, and there's no fear at all. And I would encourage any of the entrepreneurs here to never have any fear. like myself, the first startup isn't necessarily going to be a home run or a victory. But it certainly is going to be elite, a learning experience that teaches you a lot enforces your courage. And at the end of the day, you know, allows you to step out and take those chances. So, chance takers, risk averse, a burning desire, sometimes even in anger, and it's some level of fearlessness about if it works great. If it doesn't work, I'm talented, I could find a job somewhere else.
I like it as sometimes some anger. And I think that's actually quite important. I would add a one more thing, you know, just, I think a lot of them are very persistent, because, you know, all of them have gone through ups and downs, right. And if you are not persistent, it's very hard for them to be where they are. I actually was just talking to some of the entrepreneurs yesterday about some of the startup journey. And one of the things I told them is, people kept saying, that fail fast for for startups. I personally, I don't even know what that means. Because, you know, as an entrepreneur, you really want to be Stumbling on what what you're believing, right? Because, you know, when you do start up, you, you, you know, something other people do not know, and the way other people telling you that this is doesn't work, you have to be stubborn about it. So, you have to be persistent, you have to just charge ahead. And that's, you know, that's, you know, a lot of things work in the jaded you know, for see scared, why, why don't you share some story on that.
Yeah, and there's one other point I'll add about successful founders and entrepreneurs. And that is
a humility, an openness to surround themselves who know perhaps things that they don't know the young entrepreneur and I speak to many of them from the university is just graduating who have great thesis or ideas on startups and certainly, they don't know what it's like to build a company. So they reach out, but even in the most mature of founders, and Jay Chaudhry is a good example shortly after handing over the CEO role to mark MacLaughlin to take the company public. I don't necessarily fashion myself as a public company CEO, as well, as a builder.
I met with Jay Chaudhry, and Jay said to me, what are you doing for the next four years? And I said, Well, I know Palo Alto was such a success. I might just sit on a beach for a while. But that really wasn't in my, in my DNA. And, and he and I said, Why you asking? He says, because you know, something that I don't know. I said, What do you mean? He says, Well, I've built three companies. And I've had to sell them because I couldn't get them to scale. Or I might have missed something along the way, and shifts in the market. But on your first shot as a CEO, you built a company for the for an IPO public market. And we sat down, and we talked and we, in a short course of time found out that the two of us working together, he is the founder CEO me alongside him made a great pair to in the boxes, I would always say, and again, it came a lot from complementary skills, and,
and humility. And I've seen the same with most CEOs that have built companies surrounding themselves with other people that can complement their own skills with a lot of humility, and
building a great team spirit together, and going forward and
land you did something smarter when he, you know, decided to partner with Jay. And he said, Hey, I'm willing to partner with you work for this company, by the way, I'm going to pay to work here. And he said, I'm going to buy 5% of the stake of the company to work here. And now it's a $5 billion company. And I think, you know, the paycheck I walked out a little bit better than your otherwise a fat paycheck. But a lot of the people in the audience is not as a not as fortunate as you, you know, already have a lot of money by, you know, sort of deciding to, who to partner with, they are working with, you know, a company, oftentimes a big company today. So, their dilemma is, I'm working with a bigger company, maybe Facebook, Google and
I have a dilemma. Should I start a company? Or should I join an early stage company, because there is so much risk, right? Because, you know, there's no just free lunch, but there carries a lot of the good reputation on your resume. And, and now I'm starting a company, no, no one knows about it. And then or early stage when not, what's your advice to people in the audience about this, that's more More, more, more, more, more real, a real world today,
right? Again, I would just encourage to be fearless. I know other founders, the founder of new tonics, the founder of a company called thought spot, a Jeet Singh. These are guys that worked at VMware. And they stepped out to start companies, again, not wearing whether they were going to have a place to work or could support their families. In my own case, prior to doing Palo Alto Networks. You know, when I came out to Silicon Valley here, and I just had in my mind, I wanted to make enough money to put my kids through college and have something for retirement. And I didn't really I wasn't so much money motivated. And, and I don't think the best of successful entrepreneurs are money motivated. I think they, they have that passion and that bit of fearlessness, and the security in their own self that I've built skills, I've gone to university and in the worst case, I could fold up my tent and go back to the bigger company. But if you have that insight, and that desire, the rewards can be a wonderful I
referenced the outcome for me here in Silicon Valley has been beyond anything. And I think the same holds true for anybody in this room. It only takes that one idea surrounding yourself with the right people thinking about how that story cells and resonates and scaling the business.
Nice. So we have both both done cybersecurity, maybe we should talk about cybersecurity specific for a little bit. any insights into the trend of security cyber security to share with the audience?
Well, I would just reference again, the recent acquisition by z scale of your company,
I think some of the topics that are being talked about here and displayed in the forum here, the artificial intelligence, the machine learning, even the deep learning technologies are bringing a level of
advancements and potential advancement into cyber security that we hadn't seen to this point. And so I'm really excited about that.
Just when you think an industry sector such as security has seen its innovation, it's next generations, it's moved to the cloud, there's something new, that's going to take it in advance. And that's just what makes technology fun.
Yeah, I think, you know, the, the, the reference of the AI data, you know, that
big data sort of thing is, was sort of the, one of the reasons that as the scale I decided to buy us, it's funny that, you know, laying and I had a phone call, you know, we were not talking about acquisition of
the scale of the, the, the
trespass, and then we were just having the CO and then he said, Hey, you know, why don't you give a chase and just, you know, talk to the scatter, and he sent up to the senior management of the scheduler and after two hours conversation on a Friday afternoon, and then we basically just made a deal, I want to say, the one thing we saw, and then that
hopefully, that's going to turn out to be something big, much bigger over the time is the company has a tremendous amount of data, tremendous of with that much data, you can do so much AI, I just give you a one stats see scale as a company every day, it sees 50 billion transactions of the enterprise. 50 billion has, of course, is a large number. But just to help you to calibrate how many Google searches a day do you think there are out there just a Google search?
It's 5 billion. So the skill accuracy is 10 times of the transaction than Google search. That's the kind of the scale that that impressed us. And
yeah, well, I have to turn a question back at you, though, which I think is also relevant to a lot of the entrepreneurs here, you started your company started building it, we're making some successful headway, how does a CEO and founder ultimately decide to sell the company, you know, rather than continue to build forward, what were some of the process you went through, and the decisions that led to that,
as you know, we had other choices. And the reason we sort of, you know, cc scared as one, as I said, you know, it's a huge amount of data that's being not being used, not high being used to today. So I went to the scanner, in my first week or two, I did a presentation to the senior management of the scanner, I showed that graph, the graph is actually a gold mine, that the
world's largest coal mine is actually in Africa, Ghana, by the way, it's no is doing anything with it. And that's what we saw as a startup. But we see that as the scale has a gold mine, and they are not doing much with it, and we can help them. So essentially, it's a bigger platform that we can make a, you know, much, much bigger impact with our technology. So that that's what it comes down to, you know,
like you said earlier, a lot of the entrepreneurs, their motivation is less about financial side, and then less money side, it's more about can you make a big impact, right? And then for me, and I see that, you know, whether a startup or a bigger company, what's more important is can you make a bigger impact, if you can have a platform that sort of can trust you and then can leverage your skill set. We are very happy
I guess we just have a few moments. Maybe we have some closing thoughts to share. Yeah,
yeah. What was it so so you over the time land you actually have been, you know, in the Silicon Valley and doing wonderful companies but also traveled around the world? You know, you traveled to China many times and you travel you you looked at other parts of the industry as well beyond the cybersecurity you know,
your thoughts on those? Yeah,
well, again, for a lot of the startups I did, there was a great talent pool that we used to pull from India I've also in the security space found a tremendous amount of talent
in in Israel Tel Aviv but I have to say, it's incredible the amount of talent that's coming into the US from China right now, it really excites me a lot I like to share this I pulled out my phone here because this is a, this is a picture of the skyline and Shen's in it for the recent birthday or anniversary and you take a look at the color and the uniformity and the excitement and progressiveness of Shenzhen these days. And you know, they've been there other cities within China as well. And you just see just such a tremendous amount of focus towards moving forward in advancement and I'm finding the talent pool in Silicon Valley that's coming from China and house particularly exciting and I look for those companies that I might be able to get involved with, to take advantage that talent and I look for that town to in some cases bringing to companies that I'm involved with because there's a lot of it and it's it's quite admirable
thank you land, you know, a lot of the you're sharing today and the over the over the time you shared with me really inspired me as a person that hey, this is Silicon Valley This is all about entrepreneur a lot of that is gaining insights for you know,
sitting where you are is gaining insights and then try to leverage that inside of for the your next endeavor and be sort of passionate about it sometimes be angry about it at the part of the reason sometime you are angry about it because the bigger companies not taking advantage of it right so you are they feel that the world is shot to move this way. So let me make this happen or you know, not everyone is going to help you at the beginning you have to believe yourself but sometimes he and I have great advisor and investor like Lynn is actually going to be fortune and I think the other part is actually just this AI Big Data you know, those technology trend is going on it's a for each one of us here in this conference and outside his conference to take advantage because, you know, the bigger changes here to come. Thank you land for sharing so many great perspectives.
My pleasure, and thank you for having us. Thank you.