In Campbell (CA), we meet Co-Founder & CEO of Skyhigh Networks, Rajiv Gupta. Rajiv talks about his story how he came up with the idea and founded Skyhigh Networks, how the current business model works, as well as he provides some advice for young entrepreneurs.

INTRODUCTION

Martin: Hi. Today we are in Campbell at Skyhigh. Hi, Rajiv. Who are you and what do you do?

Rajiv Gupta: Hi, Martin. I am an entrepreneur by choice, technology by training. I am formally the CEO of Skyhigh but more interestingly, I am one of the team members at Skyhigh.

Martin: That’s great. Awesome.

Martin: What did you do before Skyhigh and what made you come up with a business idea?

Rajiv Gupta: Prior to Skyhigh, I was running a business unit at Cisco. As I mentioned, I am an entrepreneur by choice. I was at Cisco because it acquired my previous company. That’s how I was at Cisco, running a business unit, BBGM.

The idea for Skyhigh actually is very old and I thought of it myself. As a fresh PhD in 1991, I had just graduated from Caltech and joined HP labs. My day job was to design HP – Intel microprocessor –  but I had an epiphany, an idea, that all computing, storage, applications, network would one day be available as a utility. You plug in the wall, you dial NSA and a broker would make it available to you. Remember the time? You cannot remember it because you were too young in 1991. The common technology constriction was a client server. You have a client and you have servers. However, I said no. It is going to be utility. I did not call it a cloud but the same idea that you plug into something and then computing happens somewhere, storage happens somewhere. Networking happens somewhere. All you get is the byproduct / the end product that you need, what I had thought of in 1991. Again, I was 25 years too early but that is the genesis of what we’re doing today at Skyhigh.

BUSINESS MODEL OF SKYHIGH NETWORKS

Martin: What is Skyhigh?

Rajiv Gupta: The intent of Skyhigh is to take this disruption called cloud or cloud computing, which all analysts called disruptive – in fact, they say it is as disruptive as the PC was 25 years ago – and to take this disruption called cloud, but as with all disruptions they can be good and bad, and make sure that enterprises benefit from the promise of cloud and not get hurt from the perils of the cloud. There are things like, how to make sure that my data is secure, how do I make sure that I can govern the use of cloud, how do I make sure I can map privacy, how can I make sure it is compliant? Because all those things are required for enterprises to be able to leverage cloud. So that is our [Skyhigh’s] focus. In a different sense, again, if you take a step back and put it in perspective, just like the PCs or devices, they created the need for a governance and control point. Symantec and McAfee and others stepped in and they were helping control the data on the device.

In the recent industry connecting devices together, the internet came along and there was the inside of the enterprise and the outside of the enterprise. We then created this kind of layer of controlling, governing the data inside the enterprise as well as outside. Cisco, CheckPoint, Palo Alto Networks, Blue Coat, and others came along and created that control point for the internet.

We think that the same movement is now moving to the cloud where I want my data to be used for collaboration purposes for my employees who are mobile, they are using their own devices, BYOD environment, when they are trying to use their data to get the job done. My partners are connecting with the data I made available to them. My customers are running in a cloud service because it is much more efficient way than trying to run my data service centers. That same movement of liberation, of collaboration requires another control point. That is what we’re trying to create at Skyhigh – it is to create the next generation control point for the data. As Symantec was for the PC, as Cisco was for the network. There is a need for a control point for the data that is moved to the cloud. That is what we are trying to create at Skyhigh.

Martin: Great. Rajiv, once the idea for Skyhigh grew like for more than 20 years, what was actually the point when you started it and what was it like in the first 3 to 6 months? When did you find the first employees? When did you work on the product? When did you raise money?

Rajiv Gupta: It is a very good question. I obviously wanted to work on this, on what I called cloud for many, many years. But when I was working at Cisco, running this business unit, obviously, my day job was doing that. Once my team… I’ve been fortunate, by the way, across everything I’ve done. I’ve been fortunate to work with some very, very good folks. That is why I say, ‘with pride’, as I am a team player. I am one of the team at Skyhigh. That to me is the biggest pride I can have.

Once my team at Cisco, they delivered a product that won the Pioneer Award at Cisco, which is a very coveted award. Essentially only products that are game changing, from a Cisco perspective, win that award and this team won it. Then I decided maybe it was time to go back to my roots into something entrepreneurial again outside of a big company. Even though I thought and had this love affair with what we are calling the cloud for a long time, I did not want to marry the first girl I met. With my two co-founders I said: “Let’s figure out what the industry needs. Let’s come up with five different game-changing ideas, different ones and then let’s choose the best and go with it.” Because I did not want to bias it and just do cloud.

So what we did was we spoke with 140 different IT executives in the industry, CIOs, CEOs, CISOs (Chief Information Security Officer), infrastructure folks, IT leaders and asked them: “What are some of the issues that you see coming down the pipe that you need addressed?” And they said, storage came up again and again, the cost of storage was going up, mobility came up, security came up and cloud came up a number of times, and then the fifth one kept changing, identity and different things.

So what we did was building, as I mentioned, mini business plans, not full-fledged MBA but market, size of market, route to market, competition, what are the key trends in the industry that we are going to be working with. Based on that analysis, we chose this particular one because we thought that this was the biggest need, fastest growing. None of the existing incumbents were addressing it adequately. That is how we came up with the idea, which was essentially, like I said, the rebirth of an idea which emerged more than 25 years ago. It is today’s version of what we had thought about 25 years ago.

Martin: How long did it take you to validate this idea and choose the right one?

Rajiv Gupta: That process took us a couple of months, maybe three months or so. Then what we did was leaving Cisco, my co-founders and I. We left Cisco on very good terms. Cisco is a customer, partner, our advocates. When we left Cisco, we decided that now we have the idea what we want to do. We wanted to make sure that we map into how to take it to the customers equally well before we wrote any code. So what we did was very much like the Lean Startup outside in approach, we created mock ups, no line of code, and went back to those 140 people. We said: “Hey, we understood the problem. If we addressed it in this particular way, is this what you had in mind?” Some of them said “yes”, some of them said “no”.

Then we iterated on that and when we showed them, they said: “Yes, that is it.” That became my PRD, my product requirements document because essentially I could have my team build this. That is how my customers see, that’s how they wanted it. And that was very effective for us, that worked very well for us.

Because what happens in most startups, the issue they have is they start off with a technology base and especially startups founded by technologists. They say: “This is the technology, where can we apply it?” This is completely different. This was an outside-in approach. We wanted to make sure that the need as the customer saw it was manifested in what we were showing them. That became the PRD as I described. That is why the team built it very quickly, that’s why you have today more than 500 of the world’s largest enterprises and some of the biggest companies in every vertical industry using Skyhigh to help them in their cloud adoption. We had very few of those experiences that startups have when they turn left or turn right… Because in many cases after they create the product is when they get the feedback and that’s when they learn – we did that early on. That was very effective for us.

Back to your question, it took us a couple of months (maybe three months) to get that kind of industry feedback to decide which particular area we want to focus on. It took us about, I would say 4 or 5 months, to do that mock ups and get the feedback and hold it what it wanted to be. Then it became a much easier task in terms of recruiting people because when we recruit engineers we would rather give them a very brief description saying: “This is what we were trying to do.” For a lot of engineers that specificity is also very helpful. That helped us significantly.

Martin: What was the sequence? Did you first build a product and try to sell it to customers, get some cash and then maybe try to bootstrap and only afterwards you raised some money? Or did you raise the money first and then went to customers?

Rajiv Gupta: That is a good question. I think given my experience, the fact that my co-founders and I have been around the block a few times, this is my third startup, we did it slightly differently than what I think a lot of entrepreneurs should do. I will tell you my experience and what I expect entrepreneurs to do.

What we did was when we left Cisco, the three of us left Cisco, we had Greylock ready to fund us the day we left. Asheem Chandna at Greylock was a leading investor at my previous company that Cisco acquired. The relationship with him at Greylock was very, very good, just outstanding. I told him earlier which entrepreneurs typically shouldn’t do, it is not a good idea because it takes away our leverage. I told him that based on how well we worked together, anything I do next you have the first, dibs, the first rights. Just to make sure it is fair. I went to him and said this is what I want to do and he said: “That sounds great. Let me take it to the partnership.” The partnership said go for it. And so it was a very, very short cycle because we paid our dues and we had experience working with Greylock.

For most entrepreneurs, they don’t have that luxury. They don’t have benefits so it might be slightly different. In our case, back to your question, we had funding on day one when we started the company, which makes it easy in some sense, but as I said most entrepreneurs have a different sequence that they would choose to use.

Martin: When I look at entrepreneurs nowadays, they can raise tons of money. They seem to be having problems focusing on being very lean. How did you focus on that?

Rajiv Gupta: That is so accurate. That comment you made about being lean and being focused is highly relevant, almost independent of money. What I mean by that is, I believe that startups that don’t succeed don’t succeed not because of starvation. They don’t succeed because of indigestion. They try to eat too much. They try to do too much and they don’t do anything really well. That is absolutely a big concern that any entrepreneur should have.

For us, the way we manage to stay focused is – by the way, we have challenges as well, there are so many things we want to do, the space is so large, the option is so big, our imagination is so wild that there’s so many things we want to do. We have to keep ourselves in check. It is not all roses. Let me grant you that. I think what has helped us is that homework we did earlier where we actually got all the feedback early from the customers, from the prospective customers. Based on that feedback, we defined some very important foundational principles. Those foundational principles have been sort of the bearings for what’s kept us so focused. Those were:

  • Seamless consumption. You are moving to the cloud. The reason why people are in the cloud today is because people can use it today. They do not have to worry about waiting for 9 months for IT to deliver something.
  • Zero friction. In today’s day and age, people don’t have patience and time for friction. You give them too much friction and they go around it.

The last one is because we are appealing to enterprises – in fact, our first three customers at Skyhigh were Cisco, and I don’t know if I publically can name their names or not. One was a Fortune 10 company and the other one was one of the top five banks in the world – we started with some very large customers.

Martin: Not too bad?

Rajiv Gupta: No, not too bad but again not wise either. Because, normally as an entrepreneur you start with something where you can make some mistakes. Choosing those three sort of companies (Cisco is the largest networking and the largest in banking) it was not particularly clever. It worked well, but it is not an advice I would give to anybody else.

Because of our focus on enterprises our third principle is… But since I took a detour, I will remind you: First, seamless consumption, zero friction, the third one was making sure we leverage and extend all the enterprises already have. Because even though in theory ‘rip and replace’ works, in practice it is very difficult. Enterprises, they spend a lot of time and money getting somewhere. They wouldn’t want to just throw out anything and start with you.

Our focus is held by (A) doing homework early on as opposed to get in the market and trying to figure it out. The second (B) is using that homework to come up with those foundational principles.

Those principles have kept us very focused and disciplined. The third one (C) is that we do a pretty good job of taking customer feedback (very customer driven) and apply our own set of imagination of where we think the world is heading. The way we describe that is, and that is may be subtle but, ‘discerning want from need’.

Customers can tell you: “I want this”, but to understand when they say they want A: Do they really need A or do they need A prime? For example, no customer has told Steve Jobs that he wants an iPad or wants an iPhone but Steve Job’s team, discerned there is a need for it. Something between want and need is something that we try to formalize – I would not say formalize but at least we are cognizant of it. We are very good listeners of our customers. They tell us what they want. We make sure we stay back and say: “What is the real need?” and focus on that.

Martin: It seems that you have taken out a lot of risks at the beginning so that you don’t need to pivot that much. You understand pain points and then you can work some kind of flexible solutions. What have been the main challenges and obstacles that you perceived although you took out those risks? How did you react to that?

Rajiv Gupta: We took out some risk. There is never a situation where there is no risk. Then there would be no return either. We took out some risk. We took out the market need risk which is one of the most important risks that people take. We early on addressed the product market fit risk because we had this feedback before we had the first line of code, and once we had that code we were very customer focused, so we reduced that risk somewhat. We reduced the funding risk because we had Greylock and Sequoia, arguably two of the top world’s VCs. We also took the risk out because we wanted to create something game changing, not just a simple extension or something. These two companies have backed such game changing companies as Palo Alto Networks and LinkedIn. So we knew they have a muscle memory to do something big. We have reduced some of that risk as well.

Many other risks that we have experienced and we are experiencing still, one of them ironically, is the risk that we didn’t even realize we were taking, is one of scaling. Even though we had this confidence that the industry needs this product we are creating, it is a game changing, and it is a control point. We were a little bit surprised by how quickly customers have adopted it. There are more than five hundred enterprises for a start up company in the enterprise space. Again, our focus is large enterprises primarily. We have midsized companies as well but my direct sales team is focused on large enterprises. To have that many enterprises at that scale, 400 thousand employees, and 320 thousand employees use – it was a bit of a surprise to us.

Luckily, as I said, we have three of the largest customers who helped define the scale. That is something that could have tripped us badly if we were not careful.

Another risk and you will be surprised because most of the entrepreneurs, they are worried (correctly so) about market risk, product market fit, funding risk and so on – and maybe that’s why this one comes later because those were the big ones, the long poles in the tent. Another, not risk, but opportunity challenge that we are facing today, and will continue facing, is that technology is changing very rapidly. Initially we did not think about that as much, but now we’ve learned from that – today we have a platform where we anticipate that the underpinnings of the platform whether I’m using EdgeBase or Cloudera, that those can change over time. And I have to get prepared to change my engine once it applies. That kind of introduces risk as well.

Thankfully, those are the kinds of risks – scale or technology risk – are the ones that are within our control in some sense, within the four walls of Skyhigh. That we can decide which one to adopt and which one not to adopt. The biggest risks of any startup are the external risks, the market risk and the product market fit risk. Those are the ones, I think, we have done a pretty good job on. Because we took the time to think through it before we wrote the code or pivot three times as mentioned.

Martin: Rajiv, you briefly touched on the point if technology changes how should I change as my company. When I look at some companies, they started with some very crappy code because it is cheaper and they try to scale and they notice that they have a scaling problem there. How do you address it? Are you putting some kind of resources aside, are you decreasing technical debt, or is it that you are doing some kind of green field approach where you have time for parallel platforms?

Rajiv Gupta: Actually, it is a very insightful question. You’ve done this before because that is a very insightful question and it is not an easy one to answer. Because creating a green field approach in parallel with your existing approach means that your investment has to be, not doubled but obviously significant. Sometimes it also creates a cultural problem of today’s technology vs. tomorrow’s technology and no one wants to be yesterday’s technology. You know what I mean? That creates a cultural problem as well that you have to be very careful about it.

I think, the biggest reason why we have been, in all humility so successful as we have been so far – success isn’t granted, it can change. But at least it looks like we have done reasonably well. We have done it well because of the people. It is the team that we have at Skyhigh, and I say with pride I am privileged to be part of the team, that is the best in the industry, the best in the particular field. And the way we work as a team is I think our strength.

The folks that we have here are the ones who know their domain really well but they also have the mindset to understand that things change. They are all attuned to change. In my field (my big data, my analytics, or my high bandwidth frequency network, or whatever it is) they themselves have the mindset of what is the latest, what is changing that they can adopt.

I have never felt a need that this is my team that is doing today’s technology. They may not be aware. They may not be comfortable with tomorrow’s technology, or to have a separate team for tomorrow’s technology – we don’t do that because I think it has a lot of challenges (investment challenge). Investment is fine because we have a reasonable amount of money. But back to your point. Sometimes too much money can create problems as well because you do the wrong things.

We have been careful to make sure we don’t use that fact that we have very strong VCs to take approaches which we think could be a cultural mistake. I think it is often a cultural mistake to have yesterday’s team and tomorrow’s team. It creates ‘us’ opposed to ‘them’ mentality. By the way, I know many big companies that have today what they call internal competition. But I am not sure that is the right thing for us to do.

Martin: Rajiv, when many people talk about the cloud it sounds to me like there is one cloud, let’s take it up. But actually, there are several services, which you can plug in, but I am not aware of one kind of platform or middleware where I can really plug in. Do you see any trend that there might be coming up one or two bigger platforms? When I look at Windows for example or Microsoft in general, they have a trend to go in a cloud sphere as an operating system or platform. Do you perceive some kind of trends?

Rajiv Gupta:  It’s a very good question. Your first point about the cloud that we talk of cloud as one entity, as one homogenous entity, that is not the case at all. It is very heterogeneous and growing heterogeneous by the moment. Today we have more than 16 thousand public cloud services in our registry and are growing about a hundred per week. It is expanding. That entropy is not going to go away. It is easy to create cloud service that people do and they should and they will. So I don’t think that it is going away.

I think what you describe is a shift in the economy of scale. Today you see Amazon, Microsoft, Google, maybe IBM, and maybe one other, two others who have the scale today in creating that infrastructure of a service, platform as a service so that people can build their SaaS cloud services on top of that. I think there is always some sort of scale based consolidation. That is at one level.

At the level above that, where people are using these platforms to create new cloud services/SaaS services – I don’t see that consolidating at all. Another question is, will a platform provider, let’s say Microsoft, be a platform provider and be a SaaS provider with Office365? Does that give them the right to be the control point for the generic cloud? I think the answer is no. By the way, I have a lot of respect for Microsoft. Sataya is doing a fantastic job there. I think the rule of the game is that if you are a SaaS company you cannot be an honest broker between that SaaS Company and other SaaS companies. It is like almost saying, I want to be the player and the referee at the same time. I think there is going to be this need for the control point, which is going to be independent of any of the SaaS providers or the platform providers because there are many of those. So I feel pretty comfortable that this will not be assumed by any of them. If you go above that stack, I think this economy scale is going to be consolidation that already has five or six pillars in terms of infrastructure. If you go above that, you have people who can create new business logic, new SaaS – that, I don’t think is going to consolidate in time soon. If anything, it is going wider.

ADVICE TO ENTREPRENEURS FROM RAJIV GUPTA

Martin:  You have started three companies. You have learned a lot. What types of learning can you share with other people interested in starting a company?

Rajiv Gupta: Yes. I have learned a lot and I have a lot more to learn. We should talk again in a year and I can tell you what else I have learned. I think if I was to talk to an entrepreneur who is maybe starting out, no matter what age, there are a few things that I would probably advise this person. The first one that a person already knows is that the most important thing is passion as an entrepreneur. You cannot take the role of an entrepreneur, you cannot take risks, you cannot take the ups and downs because as an entrepreneur the high is a high and the low is a low. If you are doing it for any other reason than passion for what you are doing, for that product, that service that you are bringing to that industry… It is also important because what happens is it is not just you. Most startups, most companies are built with many people joining. That passion is what attracts other people. In order to attract the right type of people, a group, a team that is going to make this thing take life, that product to take life, you need to have that passion. You need to use that to get other like-minded passionate people to grow and build that. The other thing I would advise and say is the whole idea of doing it outside in, which is, don’t focus on the technology. Most technologies, as I mentioned earlier, they make a mistake as they have a new technology and they don’t know where to apply it. In my mind, the best way is to focus on: If you were to build this how would it be different? Make sure that you can articulate that carefully, the before and the after. Before and after can never be based on features. It is based on something bigger than that. Focus on that first. Focus on describing what you do in terms of its impact on people, on your users, on your consumers and customers. The other thing I would like to say is the route to market. A lot of entrepreneurs, and I am one of them, make the mistake of saying if I build this, they will come. It will sell. How could anyone miss the wonderful thing that I am building?

Martin: And this is not true?

Rajiv Gupta: Maybe something of it was true. I am telling you my experience. It is challenging. You need to think through how do you know about it, how to take it to the market? Think that through because sometimes that informs what you built and how you built it as well. I go back and say passion first, the second one is focus on the ‘what’ before you are worried about ‘how’, and the third one is focus on the how, not only on how you build it but how you take the market and how people know about it. The whole route to market is really important

Martin: Rajiv, I’ll give you an extra one if you want to, about this Mahatma Gandhi thing.

Rajiv Gupta: There is a quote I really like by Mahatma Gandhi. I end up giving a lot of talks. I’ve tried to find different approaches to give talks because I get bored myself. One approach I have tried is for a talk of half an hour, I had 280 slides. Essentially, it is almost like a movie. It is a slide with five or ten words and you move on. It keeps you engaged. That worked interestingly well. The other thing I try is I give my talk based on interesting quotes to me but typically from famous people. I quote Steve Jobs a lot. He made a comment back that “all I want to do is leave a mark in the cosmos” or something like that. The other one was “do not ask customers, because by the time you build it they will ask for something else.” I am paraphrasing, but it is something like that. I will give you three quotes that I like very much. One is from McLuhan, most people haven’t heard of him. He said that “We don’t know who discovered water, but we know it wasn’t a fish.” The interesting thing is that sometimes you are so close to something and you don’t see it because you have to be far enough to be able to observe it. I like that. The other quote that I like is from Mother Theresa; again, I am paraphrasing. “Not all of us can do big things but all of us can do small things with love.” As an entrepreneur, you want big things. That is the idea but it depends on how you execute it. Make sure everything you do, you do it with passion, care, and love. The Mahatma Gandhi quote that I like is: “Live like you will die tomorrow but learn like you will live forever,” which I think is really interesting. Live your life fully because you never know how long you will live, but take the time to learn because that learning is going to help you for how long you live. I am not saying that I apply the last one in my entrepreneurial world, in my entrepreneurial journey, but I will think about it. I will maybe find a way to apply it.

Martin: Rajiv, thank you so much for sharing your knowledge. If you are currently starting up a company go for or with Mahatma Gandhi – learn the whole way.

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Thanks a lot, Shilpy!