iinnovate episode 2: Mark Leslie, founding CEO of Veritas

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Matt: Hi and welcome to iinovate, a new podcast on entrepreneurship and innovation with Julio Vasconcellos and myself, Matt Wyndowe.  In this episode, we interview Silicon Valley icon, Mark Leslie.  Mark was the founding CEO of Veritas Software, a company which he took over and brought from 12 employees and $95 000 in revenues to over 5500 employees and $2 billion in revenues.  In 2004, the company merged with Symantec in a deal valued at $13.5 billion.  In this interview we talk to Mark about leadership, hiring, and strategy, but we focus a lot on sales.  Mark has become a real thought leader in sales management.  Having been an accomplished sales person himself and managed thousands of sales people, Mark has some interesting thoughts on sales and how it fits into a growing organization.  So without further ado, here’s Mark Leslie and thanks again for listening.

Matt: We’re here with Mark Leslie in Portola Valley.  Mark, welcome to the podcast.

Mark: Thank you

Julio: If you’re the CEO of a company and you’re talking to the VP of engineering and they’re saying, “We don’t really need to build up the sales force, our product will just put it out there, people are going to demand it, it will sell itself.”  How do you engage someone in that kind of conversation?

Mark:  That’s a very naïve thing to think.  The idea of, you know, build a better mousetrap and the world would beat a path to your door, is simply not true.  Nobody knows where your door is and nobody knows you’ve got the mousetrap.  So, it is an interesting thing, I mean, you know, you build a company and the engineering department has usually an e-culture, I think we talked a little bit about that but, those guys really want to see this product become commercially successful.  Guys who are developers in, you know, startup companies, kind of measure their accomplishment in terms of the commercial successes thing.  So, I think they want to go and typically do everything.  I rarely have heard now, they oftentimes say, “Well, you know, those guys get paid a lot of money and they wear fancy clothes, and what do they actually do?”  Actually what they do is they go and sell products.  So, there may not be an appreciation of it.  Look, of course, all the sales guys say, you know, the engineers they’re just late and they’ve got excuses all the time.  I mean, so, they kind of a little back and forth between the two.  I think it is a part of leadership going into those constituencies and sensitizing them to what the others do and what the issues are so that they have the ability to work together in a respectful environment.  So, the few times I have heard it, you know, you kind of just sit and talk to them for a while and it just goes away.
 

Julio:As CEO of Veritas, you’ve brought it up from a couple of dozen people to thousands of people.  When you’re personally responsible for making a hiring decision, what are the characteristics you look for to separate the A-player from a B-player who just interviews well?

Mark:  Well that’s hard but even doubly hard in sales where everybody looks like an A-player when you’re interviewing them.  Well I look at issues of character.  I don’t believe when I hire people, or when people work for me, I don’t believe that I have the ability to change character.  I think from my point of view, it’s as immutable as intelligence; so motivation, integrity, the ability to accomplish tasks, the ability to work with others, and things of that nature.  I don’t ever, you know, I don’t believe in improvement programs.  I don’t think they work.  They work temporarily.  Certainly at senior levels, you know I’m used to having the people work for me at very senior levels.  They either do their job or we get someone else to do the job and it’s pretty black and white.  But I look at character and I also, when I interview people, one of the things I almost always do is try to understand where they came from – what their circumstances were in their former years, because I think it is relevant to what their character is today.  I typically ask that in a gentle way and kind of get them to volunteer as much as I can, but I put a lot of weight on that.  Oh, one other thing.  I do a lot of reference checking.  I do a lot of reference checking because I think that no matter how much I get to know someone in interview, whether it’s 5 hours, 10 hours, 20 hours, 30 hours, it pales in comparison to people who have worked with him for five years.  So, look for a track record of, you know, long periods of time where they can actually measure an accomplishment, then I go talk to the people who worked with him, and people are surprisingly open regardless of all the laws and concerns.  You get people engaged in a conversation, they’re surprisingly open.  If they feel like you’re looking for dirt, they’re not, but if they feel like you’re talking about the person they’ll tell you a lot about them.

Matt: Let’s say I’ve got a B to B product idea.  I’ve got a really compelling technology, a positive reaction from health attesters, how soon should I start thinking about my sales strategy?

Mark:  It’s an area I’ve thought about a lot, if any of you have taken my sales class then you know we teach about a sales learning curve, which is something that I actually discovered while teaching.  I found out this kind of idea kind of revealed itself to me while teaching, an epiphany actually, it’s quite exciting when that happens.  Basically what it says is that as you go to beta, or if you finish beta, the assumption that you’re now ready to sell that kind of full productivity, your sales person has generally an overly optimistic assumption, and what you really want to do is set aside time to talk to customers, bring this product into the real world, learn about the product’s improvements that are required in functionality, in ecosystem and performance, etc.  Learn about the market positioning; learn about the pricing in the channels and things of that nature; learn about the sales model.  And, as you do all this learning, your productivity per person in the sales organization will go up; so, going to market is something you want to kind of think of post to second development stage.  There is a product development stage and we don’t kind of have it in our model of companies, but there really is a market development stage, you go to market development stage less a different amount of time for different companies but you can’t shortchange it and if you go out and try to buy your way through it, all that happens is you’ve spent a lot of money and you get no results.  

Matt: So as I’m transitioning, let’s say from the prior development stage to the market development stage, as a startup organization often they’re very resource constrained.  How should startup be thinking about bringing on like a senior vice-president of sales versus on bringing on some more junior sales people if there is nobody in the family team who has that sales experience?

Mark:  Well usually if there is no one on the team that has the experience; the people there may not feel confident to actually hire salesmen and you know, go out and work on the customers; however, at the end of the day, nobody’s going to do business with a small company without meeting the people who run it and who built it.  So, in a sense, they are a critical path to the sales environment.  Now, if you’re willing to do it, I’d say hiring, you know, good solid senior sales reps who have startup experience, handing in reports to the CEO is actually the best way because it gets the management team intimately involved with the customer transactions early on, they get to see him and talk to him, and there’s no kind of filter in between.  That VP of sales is someone who you want to hire to go build something substantial and you may not be ready to do that yet.  So, but as I said, there’s oftentimes a feeling on the part of people who don’t have experience in this area, of not being secure and comfortable in doing it.  So I think I would encourage people to be comfortable, not worry about it, just go hire some salesmen, two, three, not more than that, and have them report directly and keep that channel very, very wide open and very short.

Julio: So you’ve obviously been a very successful entrepreneur and a CEO of a large company.  How do you keep your company continuously innovating and being ahead of the curve and being ahead of competitors?

Mark: That’s kind of an easy answer and the deeper answer, the easier is, you know, you kind of set goals and you measure and you motivate and all those things that you kind of learn about doing.  I think the bigger issue and the more important one I believe, is that companies get good at what they are doing and then the world changes in ways that they didn’t predict, and the hallmark of great companies is their ability to transform themselves.  And the transformation of a company says, “I’m going to bet what I have in order to get to do something I have not done before, and if that works out I’m going to win but if it doesn’t work out, I may not win.”  So transformation is risky and it feels frightening when you’re sitting on the front end of it.  However, the alternative of not transforming in the woodworks essentially sentences the company to kind of asymptoting and then a slow painful death.  And you see it all over and over and over again, that companies you know, don’t transform.  I mean, we’re sitting here looking at Sun right now.  Sun’s kind of an extremist, they’ve kind of, you know, they’ve transformed themselves from a workstation company to a server company.  They’ve transformed themselves from a scientific company to a commercial company; magnificent accomplishments, and then they haven’t done anything in that way in the last ten years and the world changed.  The world went open source and the world went to componentry and the world went to standardized operating systems, and it went to standardized processors and things like that.  And Sun’s still flog the old stuff.  Now, I don’t know if they’ve got the time to do a transformation anymore.  Transformation you know, when you wait five years and I’ll say that, use that for an example, you know, this should have been done five years ago at Sun, and you know, they have new leadership now and maybe they’ll do something but it’s tough to do now.  So, the job of leadership is to kind of be at the leading edge of that and to be willing to transform the company and to take those steps.  It’s a very hard thing to do.

Julio: One thing we’ve been doing with our interviews is we’ve been asking interviewees to ask our following interviewee a question.  So Andy Rachleff had a question for you this morning that I’d like to ask you.  And Andy’s question was, “Mark, where could a venture capitalist add value?”

Mark:  Ah, that’s cause Andy and I teach together and we talk about this in our classroom.  Andy has kind of positioned it’s all in the quality of the VC you do business with, and I said it’s only about the money.  And those are two balls of fire – the view from the entrepreneur and the view from the VC, and we have a nice time in class and the class I think enjoys seeing the two very legitimate, very real points of view.  So, I would say after the money is in, cause they know it’s all about the money, cause money in a young company is the difference between life and death, and kind of, you know, when it’s certainly life and death you tend to pay attention.  So, any money is better than no money and it’s 99% of the other guys.  Now having said that, I have had great venture capitalists that I have worked with – they are people who roll up their sleeves, they support management, they get behind the company, they open up their network; they are people with whom you can have very meaningful – they have the context and continuity of the company and they are smart and you can kind of engage them in the ideas that you want to talk about.  So, they’re very valuable.  I had, at Veritas, a great board of directors, you know, a number of guys who were essentially venture capitalists and it was great, and I really enjoyed working with them and I think they added tremendous value to the company, but, only after the money was in.
 

Julio: Next week we are interviewing David Kelley, the founder of IDEO, which is a product design company, and often cited as one of the most innovative companies in the world.  So, if you could sit down with David and ask him one question, what would that question be?

Mark: My first instinct would be to say, “How do you institutionalize creativity?  How do you create a place where the product is the creativity?”  I think it’s a really remarkable thing and you know, it’s a great accomplishment, and I think that would be the most interesting thing to talk about.

Matt: For a young person in the beginning of their career looking to become a successful CEO of a company and grow a company as you did, what are some of the skills that they should look into attempting to master?

Mark:   I think, you know, if they’re going to be in the technology sector, they ought to be, they’ll understand the technology.  If they’re in any sector, they’ll understand the sector they’re in so they would have domain competence.  I think domain competence is important.  I think they have to know how all the functions work.  So you have to know how manufacturing manufactures; how finance finances; how sales sells.  You can’t know all of them as well as you know the one you grow up in, but you need to ultimately end up knowing all of them.  You need to have, not just an understanding of what goes on in finance that you need to run a company, but you need to have an organic model of how money works in a company.  You need to have in your mind, the income statement, the balance sheet and the cash flow in a live spreadsheet such that when someone says something, you understand the impact of that to the company.  It takes a long time of living with that stuff in order to kind of integrate that, but you cannot run a company successfully without that, being able to recognize that financial impact of every non-financial decision that’s being made, so you have to be able to understand that.  You have to learn how to influence individuals and many people, both.  So you have to learn how to deal with small and large groups.  You have to learn as a company becomes large, you have to learn about leadership.  It’s a very long, very murky subject that I have thought a lot about.  Most of leadership is pretty counterintuitive.  Most people who are ambitious and successful are kind of all about me, you know, along the way in their career, and great leaders – it’s all about everybody else.  And how do you transition, how, when you become that leader that you aspire to be all your life, how do you then transition your personality so that all that drive and all that, you know, egocentric work that you’ve done to say, it isn’t about me, it’s about everybody else and about the organization and about the mission, and to actually live that.  It’s a rare thing.  The analogy is, how does a politician become a statesman?  How a manager becomes a leader is the, you know, that’s the analog in my mind.  And it’s not trivial.  It’s not just intellectual, it is a lot to do with transformation of character, which is very difficult to do or at least, for me.

Julio: Mark, thank you for being on the podcast, it’s been a pleasure having you.

Mark: My pleasure.

Matt: Before we go, we wanted to quickly thank everyone who has listened to the podcast, and especially all of those who have taken the time to leave feedback.  We were pretty blown away, first by the number of downloads and also by the quality of comments and suggestions that we got.  We will be implementing a number of those changes and we’ll blog about it at iinovatecast.com.  The most common suggestion was to put transcripts up, so we should be getting into that in the next couple of days.  So thanks again for listening, keep leaving those comments, and we hope you’ll listen again next week when we interview founder of IDEO, David Kelley.