Stay Passionate, Stay Paranoid

Date:   Wednesday , February 02, 2011

For any entrepreneur, the hardest part is to crack the first major deal. In my journey as an entrepreneur the first deal was selling the trading floor at Salomon Brothers (now part of Citigroup), I was competing against IBM and other such big companies. They threw all their might on winning the deal. I had a final meeting with Head of Technology, and he asked me, "You are a small company, why should we work with you?" I was expecting this question and I had the answer prepared and I gave him that. I told him the technology was better, double the features, the scalability and he asked me the same questions again, "Why should I work with you?" I thought he did'’t understand, so I repeated the reasons and he looked bored! So I stopped and said, "You know you are right. The reasons I gave you are good but not good enough, and there is only one reason for you to work with me. It is that ‘we have fire in our eyes'. Look at me and my people, you are never going to meet a more committed, passionate group anywhere on the planet, and we are going to make this work for you." So he gave us the $20 million contract and that was a start. That was the defining moment. Our first deal. We became the gold standard, and that's what got it all going.

Staying ahead, staying focused
It may sound bold, but I have always believed and worked based on this belief that in five years 80 percent of my revenue will come from things I haven't yet invented. So, first challenge is 'am I innovating fast enough?', but that has been my history, if I look at my revenues now 70 percent of it is coming from things that I didn't have five years ago, and so I know in five years 70 – 80 percent of company’s revenues will be coming from things that we are starting to invent now. And so, am I moving fast enough? Am I focusing sufficiently on innovation? Am I hiring the kind of people I need to facilitate that innovation? It is like the great hockey player Wayne Gretzky said, "I skate to where the puck is going to be, not where it has been," so I need to do all those things that is going to position me for that. That is probably the number one thought that occupies my mind. The next factor is am I moving fast and have I done enough things, have I been responsive to my customers’ needs not just today but what they will be in the future, and am I moving fast enough. It is important to stay paranoid to these factors to a great extent. Someone in a garage right now could be inventing a product that could be threatening to me.

Making the best and world class products
According to me, for building best and world class products, two things are mandatory. They are hiring the best talent and listening to your customers. We start with hiring the brightest people. We believe in hiring people straight from college who are very smart, I like to give people the opportunity to try. When the mind is fresh, the ideas are fresh too. That doesn't mean success is guaranteed 100 percent. If you don’t succeed that is OK. Our next strategy is to get customers involved early on which is very different from a venture capital approach. So what we do is we innovate, we come up with something new and then get customers to get involved very quickly. As a result we have a very high success rate when we do innovate, because we are not doing it in a vacuum we are doing it with the costumers' participation. Then I have a culture where the people that are the value creators, innovators are the stars of the company, so the people who do that have superstar status in the company. Such a combination of getting the right people, creating the right environment for them, getting them run freely, and getting the costumers involved pretty early.

Thoughts on leadership
I believe that more than being a manager, you have to be a leader. The usual analogy I make is a comparison between two types of enterprises. In enterprise 2.0 model, which I believe typically is the old model is like a 'Sousa Marching Band' where everybody robotically marches to the drummer. My model, the enterprise 3.0 model, is more jazz, so basically I am like the jazz conductor and I have people in the orchestra who are a lot more talented than I am and I have to create an environment where each of them can make their own music and do their own thing and my job as the leader is to make that all come together and make it all sound beautiful. So my leadership model is more 'Jazz' than 'Sousa Marching Band'.

A CEO’s challenge
For me the greatest challenge is that our business is growing rapidly and we are still having difficult time hiring good people globally and in India. So I spend a lot of time thinking about how I can hire the next generation of the brightest people. In terms of most CEO globally, I think, the biggest challenge is that there continues to be economic uncertainty for a lot of people and the reflex reaction to that is to just hold back and cut cost and kind of apply the peanut butter strategy where you just spread out the cost cuts equally everywhere. In fact you cannot do that, you got to become a 21st century business and so balancing out the economic uncertainty with making a grab for the 21st century market, requires trade offs and judgment calls and investment decisions, and that is the issue that is top most in most CEO's mind. Where do I invest? How rapidly do I invest? Which market should I go after? How do I hold on to my existing customers?

The Indian IT scenario
I often tell my friends in the Indian IT industry that they really shouldn't congratulate themselves too quickly, because so far what has really happened is merely cost arbitrage and all the innovation that is taking place is still taking place in silicon valley, it is not happening in Bangalore or Mumbai. All the Indian companies are doing up to this point is cost arbitrage. They are basically doing services at a lower cost. And so what the Indian IT industry needs to prove is that they can indeed innovate, they can create products. The government needs to make it easier for businesses to flourish in India and ease regulations and obviously it is a fact that Indian IT companies have done outstandingly well.

Vivek Ranadivé, 53, is the Chairman, CEO and Founder of TIBCO Software