CP9: Podcast with Steven Anderson from Sendachi about Company Transformations
Welcome to the 9th episode of our podcast!
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Martin: Hi today we are here with Steven from Sendachi. Hi Steven, who are you and what do you do?
Steven: Yes. Hi Martin, well thanks for taking the time to chat with me today. I can give you a little bit of a background of myself. I was born and raised in Seattle, which is where I currently live with my wife and five beautiful children. Well, I guess they are not children anymore most of them are adults now.
But again born and raised here. I have been a programmer my whole life. I started very early on with punch cards, Cobalt, Fortran, and Pascal. At one point in time I was fortunate enough to be a software development engineer at Microsoft. So I was there for a number of years. I shipped quite a few products for them.
I left and started starting companies at that point. So first one that I was involved in was a professional services organization centered around technology for enterprises, large enterprise, but quite a few of them in the financial sector. And that company was sold a little after two years. Then with a coworker from Microsoft I started another company. It was actually the industries first storage virtualization company. Over the course of a couple year period we grew that and were eventually were successful in selling that one as well. I started getting invited in on doing turnarounds on companies. So companies or organizations that were distressed and needed some retooling. I was able to do that a couple of times.
So all told, I’ve been a CEO four or five times now, maybe more, a CTO three times, and a COO three times. Sometimes in larger organizations. More often than not in smaller organizations that are trying to get larger. I still write code pretty much every day. So I’m a technical by nature and would like to remain that way obviously, but I think human aspect of entrepreneurship has also been more appealing to me. The concept of business and how dynamic the problems are and challenges and opportunities are around individuals and how they think about things. How they think about solving problems. That’s a little bit about me. I don’t know if there is anything else I can tell you right after that.
Martin: Maybe let’s start by how did you come up with this name Sendachi?
Steven: Sendachi, so I am half Japanese and my mother was from Tokyo. The name Sendachi is actually a Japanese word that has no direct one to one English correlation, but it is actually a concept that is a combination of several different ideas. It’s a guide, a teacher, and a pioneer. So somebody who kind of goes out in front and leads others from the position helping them obtain their goals. So that is really our business model. We are working with clients here, transforming them, by showing them, not by just telling them, but actually getting in there and working out projects with them on very real problems that they are trying to solve. And by working with them pairing with them we are able to give them some lift. You know, show them how to make a permanent change in their organization. So the concept of the Sendachi is one we exemplify on a day to day basis here.
Martin: What is Sendachi? I mean the company.
Steven: What we do is we are a technology services firm. We help organizations, actually become for effective I guess. Help them do more with less. It is an interesting time in technology right now. There is a lot of new tools that are available for companies that are IT by nature and even those that are not IT by nature. If you are in business you are really a software company in disguise regardless of what you make. Technology empowers everything.
So for us we come in and help organizations work with smaller teams. Actually ship more often. Do that at lower costs at higher degrees of efficiency, I mean higher degrees of quality. Really if you were to sum it up we teach each people to do more with less.
BUSINESS MODEL OF SENDACHI
Martin: Okay cool. So if I am thinking about the business model what type of customers are you serving and is it really some kind of a technical product you are delivering or is really more like a consulting business?
Steven: Well let me back up. The customers that we help are all over the board. So we work with some of the largest and oldest brands in the world. So these are fortune ten organizations that are global. We also work with smaller organizations too. It’s really not a particular size of company that gets value from us or a particular vertical. It’s more like a Padula type of problem that we can help companies with again it is doing more with less.
So we are across the board. We do everything from strategy, you know, how does the company think about themselves? How do they think about their problems? How do they think about solving those problems? All the way down to they need to develop something and they need to develop it with new tools, new technology, new methodologies. We can span everything in-between and again using that model of working alongside them, pairing up with them and showing them how to do it through activity. So that’s us. That’s the client base we are after.
The value proposition is really let us help you get something done you are struggling with. You know a lot of customers will show up and say: “We need six Java developers. Can you do that for us?” The answer is always: “Sure. But what are you trying to have them do? Why are you asking for help in this respect?”, because you can probably hire those people on your own. There is something else that is going on here. There is some root cause here. That is causing you to believe or impacting that in a way that you need six more Java developers, but maybe you don’t. Maybe it’s a change in your methodology or a change in your tools kit that actually can get you to accelerate to the point where you don’t need those six other developers and we can show you how to do that.
So the term consultancy, we tend not to think of ourselves as a consulting company. Now that’s become a bit of a dirty word in an our industry. Consulting, it feels like it doesn’t has any value associated with it. So we are kind of billing ourselves as the anti-consulting consulting company. We are more teachers where we can come in and sure we can help you with the work, but we are going to help you do the work. I think by and large most consultancies fall into one of two camps. They are going to come in and do an assessment and give you a very nice looking Power Point and a set of instructions, and wish you well. Good luck implementing this. Or they are going to be on the opposite end, which is just let us do the work for you and we will kind of hand you this black box when all is said and done.
Neither of those really generate the value that they should or the client that real change that getting them past that inflection point about getting them to think about their problems differently. So that’s where we step in. We kind of sit in that middle space in-between to two and approach it from more of a holistic view, but also a very value centric view. We don’t do time and materials. So don’t do billable hours like other consultancies do, because we believe that’s a wrong based financial metric. It is centering on the wrong things. Right, so I am getting compensated for the time spending with you not the value that I am creating for you. So it is a bit inverted. We get paid for the value we create.
Martin: If I am thinking of you as a business teacher, how are you working with those teachers? Are they employed by you or are you working with freelancers?
Steven: We hire only full time employees here. So our staff is all W2 or salary employees. They are not freelancers. We have a very high bar that need to be met in order for people to come in. So absolutely everybody in the organization is I joked earlier about how I still write code every day. We are all very, very technical. We have all shipped a lot of product. Some of the largest most security systems in the world were designed by people on my team. Designed and delivered by people on my team. They are polyglots in the true sense of the word. Not just technical polyglots, in other words, familiar in other languages. They are familiar with solving multiple types of problems, business problems, strategy problems, architectural problems, technical problems. So that is a rare breed. That type of person is particularly hard to find. They gravitate toward though solving hard problems and that is what we are able to give people here. Our customers hand us the hardest things they have and expect us to fix them and that is what we do.
Martin: Cool, Steven when you started out with Sendachi what type of problems or industry did you focus on in the first place?
Steven: Well, I was invited in to this company. It preexisted me. So the company that it was prior to Sendachi had a different name. It was called Clutch and even prior to that it was called LG Consulting and it was located in here in Seattle. I have known the founders for a long time, fifteen years great guys, but it was really staff augmentation, so it was about answering that call for six Java developers. And honestly that is a tough racket to be in, it is highly commoditized, the margins are getting compressed, the talent is mercenary. So you are in that in that independent contractor mindset where the switching cost is low. You can go anywhere. It is not really a company in the more traditional definition of things. It’s more of a collection of independent agents. It’s hard, it’s hard to create value for your clients that way. So they invited me in to come and do something different with the company.
That’s when we started targeting more of the transformation, this teaching model, more fixed fee, value based pricing for what we did, higher level of skill set, or the talent that we brought to the table. Then we changed it from LG Consulting to Clutch. Then most recently, just a couple of months ago we were part of a merger between us, Clutch, and another company out of London called Contino. I mean it was a combination of those two companies that became Sendachi.
Martin: Understood. Can you walk me through the process of a customer coming to you or you to the customer and then you are setting a point for the value that you are trying to deliver?
Steven: Absolutely, there are really three different entry points for all of our customers.
The first one and a majority of what we see is centered around “we are trying to build something, but we can’t” that can manifest in I need six Ruby developers or I need Java developers or I need six .Net developers.
The second entry point is really around we have done some transformation. “We have begun our journey, but we need to accelerate that. We need added velocity to that transformation.”
The third one is based around what we call the compasable stack. The composable stack is comprised of all this new technology that you have in the world. If you envision this as a multi-layered cake. It’s really got four layers to it.
- At the top layer of the cake is your application.
- Just below that layer there is a new design pattern Microservices Architecture. It’s actually not that new anymore, but it’s becoming more prevalent. Microservices means that everything is unzipped from everything else, very module, and allows you to scale in a very flexible way. So you can change your code without having to knock the whole thing over. You can develop and test in smaller pieces. It is much more effective. So that is the second layer of the cake.
- The third layer of the cake is virtualization and this is now taken on a new identity in the form of containerization. So you have heard about companies like Docker and Mesosphere and Kubernetes who are providing a different form of abstraction there that allows your application to scale horizontally infinitely. So it’s very easy to put an application in to containers and allow then to scale to satisfy the world if you need to. Then scale back down again as well.
- Then below that is the new data center, which is really the cloud.
So we help people when they have questions about any part of that tool chain. So maybe they are trying to deploy Docker. We can help them with that. Maybe they are trying to re-architect their applications into Microservices. We can help them with that as well. Those are kind of the three areas. Trying to build something, trying to accelerate my change, trying to get my arms around the composable stack, and the way we satisfy those entry points is really around four different product offerings. If you want to call them products, they are really services, but we productize them a bit.
The first one is a retained development team. So we can come in and we can be that onsite teaching presence for you and help you build something or help you accelerate your transformation, or train you, facilitate the learning around the pieces of the composable stack. And that would happen on a month by month basis for as long as you need it.
The second product that we offer is a project based piece of work. So you are trying to build something explicit and we can build that with you, again not for you, but with you. We are going to use your talent here as well. So we will pair up cause at the end of this we don’t want to hand you like I mentioned earlier the black box. We want to give you something you have the keys too. So you can continue to add value to it and move things forward yourself.
The third product that we offer is training so we can give you training and specific tools in specific design or design patterns, development architect design patterns, methodologies as well.
The fourth is an assessment. So we can start sometimes end with giving you a summation of where you are at right now. So we come in and immerse ourselves. Learn about your organization. Learn about where your current skills are at. Learn about where your culture is currently centered around and then give you a road map. Give you some recommendations of how you can move forward. So three different entry points, four different products to service those entry points.
Martin: Great, Steven! Thanks for all those clarifications.
When I am looking at this consulting business or industry in general I totally see your point of the majority of consulting companies being commoditized. When I am looking at Sendachi what seems to me very similar is that it is based on intellectual capital and on top of that you are trying to enable a company to achieve their goals while the traditional consulting companies are more of the we will finish it specific project for a task for you then hand it over. How do you still then try to remain your competitive advantage and protect yourself from being commoditized, because other consulting companies could basically do the same? Open up a new unit within the same company and then work for the similar client basis?
Steven: I hope they do, actually. I do hope that the rest of the consulting companies out there try and model themselves after us, because what do they say? Imitation is the highest form of flattery, right. So I also believe though that this is something that the world needs. The way that consulting in general has worked for a long time period of time is not to the advantage of the client. It is not generating the type of value it needs to for the customer. So the model that we have undertaken is all again really value based. If we do not create the value for the client we do not charge for it. And I would love for other companies to try to do that as well. I would love for them to do that. I think it’s disruptive. I think it is the most disruptive thing that we do, which is this again a teaching model as opposed to just developing software or developing solutions for clients. It is really enabling them for a future that hopefully at some point does not include us. We are trying to with the taking on with every engagement reach an end point with the client where they no longer require our services. That means that we have done a good job. That we have done what we set out to do.
So if other consulting companies came to the table and started doing that I would be overjoyed. It actually puts the onus back on me or back on us to reinvent ourselves into something new again. So competitive pressure, I don’t know where companies get this mistaken idea that competitive pressure is a bad thing. It is actually a great thing. You should always be evolving. Whether or not what you are doing is remaining vital in the market place. You should constantly be reinventing yourself. If you are not doing it someone else is going to do it for you. So I would love the competition. I would love for people to follow us. You know follow in our footsteps. Change their business models. Start coming after us. I think that would be a good pressure, a good healthy pressure for us.
Martin: Steven, you once said that the top down culture change never works. Can you elaborate on that a little?
Steven: It does. In a I can tell you that going to your organization and saying this is going to be our new culture is completely academic. It is disassociated from the reality of your business. You hear people put out their 10 core values or whatever the case may be. By and large most employees look at that little placard that there and they put it somewhere on their desk where they never look at it again. Culture doesn’t change that way.
Culture changes at the ground level and moves its way up. So you don’t design culture, you nurture culture. It designs itself. So when we come in and we work with our clients, we are dealing directly with most cases. The teams that are actually living these jobs day to day. Not the executives, we are getting permission from the executives, but the real culture change happens when you start showing people how to do it differently and showing them that it works, gets them too proselytize that. It gets them to be evangelists for that.
So when we come in and show them a new way of working we have custom designed for them in most cases. There is no one size fits all here. We will come in and we will create or craft something that is unique to their needs based on where they are at in the world today. Then they can embody that. We can show them how to embody that. Once that spreads virally through the organization your culture is well on its way to being changed. Much more so than a C-level person saying this is what our culture should look like. You know it just doesn’t happen like that.
Martin: Besides having the latest tools and tricks what else is needed in order to create a really great accelerating company?
Steven: We are in a paradigm right now where the separation of roles is starting to break down. So having a discrete QA team for instance, or a separate release management team is not in the best interests of the organization to try and reach velocity. I’m not saying, by the way, that you short governance or compliance, those are security for that matter. Those are just part and parcel. You have to have those things in every one of your development disciplines. But they’re not so much separate disciplines now, as they are indoctrinated, they’re put directly into development efforts as they’re going on, so we’re seeing world where the roles are becoming very, very blended as opposed to siloed, the way that they were before.
So in this new world, where everything is a bit more blended, you have to change your organizational structure. You have to change your culture, as we have talked about. You have to start thinking about your job differently. You have to start thinking more about solving your customers’ problems as opposed to just shipping the user story or building the functional speck. You have to worry more about: “Is this going to create the value that our business expected it to?” And that’s key, right. We see every one of our customers move in that direction. And that is a hard change, you know, for a lot of companies that are out there, and that’s what we’re really helping them with, this kind of getting over that difficult part of the change.
Martin: And what does this organizational structural change look like?
Steven: A lot of times, again what you’re seeing is the breaking down of separate QA teams. QA gets folded into the development team. A lot of times you’ll have developers who do slightly different things, and they can even rotate in this. You can have a developer who is more software creation oriented, or you can have a developer who is more QA oriented; they can work very closely together. You can have developers who do their own unit testing, doing all of their own tests, as a matter of fact, as opposed to handing it over to a QA team who then bangs on it.
Release Management is starting to change, at least maybe even potentially disappear, because you’re getting tools that allow for the code that a developer writes to be automated in terms of moving it through the rest of the process all the way out to your production, so it’s not hand carried any more. You’re seeing software packages, Chef, Puppet, Ansible, that are out there, that allow for code to be migrated out into production, pretty effortlessly, pretty seamlessly.
So now it becomes more about strategy and discipline than about activity, which is where it should be. So you’re starting to see development teams taking on more ownership for the entire ecosystem, without having these siloed separate teams that a kind of doing different functions and that’s causing velocity increase, and equality increase quite honestly.
ENTREPRENEURIAL ADVICE FROM STEVEN ANDERSON
Martin: Cool. Steven, let’s talk about your learning’s over the years, so because you have been the founder of a company, you have been CEO’s and CTO’s. What have you learned that you can share with other people thinking about starting a company?
Steven: Well, this is my one bit of advice. You need to do it because it is hard. None of this is easy. You need to love the fact that it is very difficult to do. You need to be passionate about solving the problems that you’re going to be faced with. You can’t see them as burden, you have to see them as opportunity.
Really at the end of it all, you’re trying to learn more about yourself. What are you capable of? What are you able to step up to the plate and take a swing at? What are you able to ascend into, you know, in terms of your accomplishments? So making it easy doesn’t teach you anything about yourself. It might be, kind of enjoyable, but the art of it is making the difficult enjoyable, because you know that it’s changing you and you’re learning more about yourself. So that would be my advice. Don’t do this because you think you’re going to make money. You might, but really the important thing is, do it because you love tackling hard problems cause it’s changing you and teaching you about yourself.
Martin: Great. What have you learned about yourself during that inner journey?
Steven: You know, I’ve learned what my core is really centered around, although I can do the operational functions in the company and I understand finance as well, I really like the visionary part of things. I really like being the disrupter, you know putting together a strategy that has the potential of changing a market, is important to me, and then the people aspect of things. I love being able to create an environment where people are able to see more about themselves, you know, realize another aspect of their personalities or their potential. That’s very-very important to me, so I guess I am a teacher. That’s where maybe the Sendachi thing came from is maybe it started with me. I was a teacher for two years. I loved it. You know I loved being a part of the process of having that light bulb go on for people and I’m still trying to provide that for people in my professional life, both for clients and for the people, the talent that we have here in the company.
Martin: Great. How are you doing this in your own company in terms of enlightening your employees?
Steven: Well, we have a very distributed type of dynamic here. So, you know in terms of building a strategy for the organization, I mean the overall arc of that story sits with me, but in terms of interpreting it for a client all the way down to the engagement level, we are pretty democratic with that. We allow teams to be able to come up with solutions for the pricing of the solutions, for the execution of those solutions. We have a… I wouldn’t call it a commissions plan, but we have a profit sharing plan, that everybody in the company, really with the exception of myself and a couple of other people, are able to take advantage of, and that allows for a feedback. If they’re being successful, and they’re creating some value for the client and the client’s happy, they’re going to get rewarded for that in direct correlation to that. And it doesn’t happen on a once a year type of annual review basis, it happens in real time.
So we have here a lot of very entrepreneurial, I guess, infrastructure, or dynamic put into place for anybody who’s here. I would love nothing more, than for two to three years from now, for everybody who’s currently sitting inside the organization has learned enough and been empowered enough that they can go out and start their own company. I hope they do that. I hope that that’s one of our great stories that we can tell is that we’re sort of an entrepreneurial incubation factory for people to get a taste of what it’s like in a somewhat safe controlled environment and they can go out and do it on their own. Have the courage to go out and do it on their own. I think that would be profound success for us if we were able to do that.
Martin: Great. Thank you so much for your time, Steven.
Steven: Thank you very much. It was a pleasure.
THANKS FOR LISTENING!
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Special thanks to Steven for joining me this week. Until next time!
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