December 15, 2015 – Dheeraj Pandey is the co-founder and CEO of Nutanix, one of the private billion-dollar unicorns of Silicon Valley. In this episode, which closes out this first season of Chat with Champions, Dheeraj talks about his start in the technology business and about founding Nutanix, choosing an initial market, the importance of company culture, letting go as a leader, and leaving a legacy.
The full transcript is below.
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Dheeraj on building a company:
I think it was that important to me that to build a business that was about people. Because at the end of the day, a software company is not about factories and certifications and inventories and things like that. It really is about people and to me, the way that I look at people is employees first, customers next, partners next. And then everything else takes care of itself. Investors, Wall Street, all that is a second order benefit. Our shareholders will actually love the return investment if we keep our employees very happy, customers very happy and partners very happy. So, that’s the way we really built it and there’s tons of lessons around how you really go and build a company.
Dheeraj on leadership:
There’s probably two or three things that I think good leaders have to do. One is to know when to let go. Obviously letting go of a company, even as parents you’ve got to let go of children someday because they’ve got to make their own goals and you realize over time that they’ve turned out just as fine as they would have been and probably even better when they had independence to think about their own lives and careers and choices of their partners in life and so on. So, I think similarly, I believe that a company needs to have leaders who know when to let go because every leader that you hire in your organization needs to have that freedom, that right brain accomplishment that says, “I am moving the needle and I’m the leader of this organization as well.”
Dheeraj on building a company that mixes execution and care for people:
I’m actually going to say something which is going to be dreamy-eyed, but it is something that if we could do would be an awesome end result for this company. So, mixing the passion and the results of Amazon, which is around execution, with the culture of more bottoms-up, grass roots companies like Google and Facebook, would be one thing that I would love for this company to have where people really want to work here, but they also are passionate about results and moving mountains. And no one company has done it right. I mean, Amazon is great at execution, but probably not as good in terms of keeping people around for too long. Google is great at caring for people. Obviously they have a money minting machine in their search business. But they’re not considered to be the best execution beyond the search product itself or ads themselves. So, being able to meld the two, which is probably asking for too much, but that would be awesome.
Navin: Welcome back to Chat with Champions. My guest today is Dheeraj Pandey, founder and CEO of Nutanix, one of the hottest infrastructure companies today in the hyperconverged infrastructure space. He’s a graduate of Indian Institute of Technology and has worked for companies such as Oracle and Aster Data in the past. Dheeraj, welcome to the podcast.
Dheeraj: Thank you, Navin. I appreciate the opportunity.
Navin: Great. So, let’s start with your journey from IT and your time in Silicon Valley. Any learnings that you would like to share with entrepreneurs?
Dheeraj: Yeah. In fact, the experiences before I started Nutanix really enriched me, all the way starting from Kanpur. I was a graduate of Computer Science, but I was really interested in courses not just in system software, but also in math, which really helped me boost up my analytical skills like linear algebra, set theory, Boolean algebra. These are some of my favorite courses there as well. So, those were an important fork in the road when I was graduating from IIT Kanpur. I could’ve joined a very good university to do my PhD. I could’ve joined a job in India or I could’ve joined Deloitte in the U.S. And I worked really hard with some of my mentors back then, one of whom was Gokul Rajaram [SP]. We had a very similar fork in the road, a decision to make, when he was graduating two years before me from Kanpur. And he really helped shape my decision to join UT Austin. And there was a direct admission to a PhD program that I really liked to pursue.
So I came to Austin. My first flight in my life. I never had flown on an airplane before. So, my first flight in my life was at an age of 22. And I had $800 in my pocket and I came to the U.S. And ever since I haven’t looked back. I took a chance in the bubble to take a leave of absence from my PhD program and then never returned back to finish my PhD. But I worked at some great companies. There are some failures and some successes, but all in all, it’s been a great experience.
Navin: That’s great. So, what was the vision behind founding Nutanix?
Dheeraj: You know, I think the biggest takeaway from all of us, the three founders, we tried to meld all our experiences together. Obviously, I personally had built disparate systems in pretty much every job that I had after Trilogy. I worked at Zambeel and Oracle and Aster Data and there was a common theme of building distributed systems. Now one thing I was always passionate about was user experience and design. So here we had a chance to go and build distributed systems for enterprises trying to meld all the learnings of the last ten or fifteen years before that. But also to reduce friction: go and figure out what it meant to deliver technology that was delightful for the end user. So Nutanix really spans the boundary of computer science and design. We’re not just a distributed systems company like the way you look at most systems companies, and we’re not just a consumer company where everybody talks about user experience and design. We’re really at the cusp of both.
And that’s what we really set out to build. We said, “Look, if you can look at what’s happening with Hadoop in the enterprise with web scale properties like Facebook and Google and Amazon and others, they’re not using any kind of special purpose hardware to really build data centers. And there was another phenomenon around the smart phone, which was around convergence, where everything was becoming pure software. So we looked around in our personal lives; we looked around in the data centers of the next generation and there was one thing in common: the idea that everything would run on racks and racks of x86 servers with pure software on top.
There it was: Nutanix was born. Now our challenge was, how do you really bridge the legacy with the future? And that’s when we really honed in on applications, to understand the workloads of the enterprise and really take a lot of these legacy applications into a future architecture, which people have come to call hyperconverged.
Navin: So one of the things we always advise startups is to find their product market fit early. So were there any learnings as you talked about workloads to pick, which one you go after first, and to just nail it? And how did you go about the process?
Dheeraj: I think it’s a great question. You look at any large enterprise; they always picked the right workload first. If you go back to NetApp, they picked R&D and test and dev. If you look at Microsoft, they actually went with a mid-market customer for operating systems or a mid-market customer for databases. So whether it was Windows NT or SQL Server or even Active Directory, they actually went with the ease-of-use strength of Microsoft, but melded with the mid-market requirements and then over time, they became 40% of the data center. VMware was like that. They took test and dev and did a really good job of test and dev. And Amazon is doing a really good job of test and dev right now. So it is very important for us not to boil the ocean. And this is where we took a very contrarian view on what our first workload should be. And everybody said, “You guys are just going against the wind. It’s going to be a disaster.” We actually picked a workload which was actually almost a failure in the enterprise and it was Virtual Desktops.
But we connected the dots. We said, “Look, iOS is here. Android is here. So, if iOS and Android basically come to the edge, in the hands of an end user, what happens to Windows? It’s not just vanishing overnight. So, why don’t we just build our first workload around a cloud, which is a cloud of Windows Operating System, which people call Virtual Desktops?” Now it was a very unforgiving use case because it was risky. You think about front office being down because they don’t have access to a browser to do anything, access the Internet, access SaaS applications. So, it was a very high-risk application, but at the same time it built in a very honest company. Because most startups have the luxury of not taking the most mission-critical application upfront. We picked one that was almost dead and we said we’ll make it really big because we look at these dots and we connect the dots, realize that Windows must go into the cloud as opposed to be underneath the desk as a desktop.
And it build a very honest product which is reliability and serviceability and robustness in mind, performance as well. And then support had to be really good as well. So, we built the institutional gut of this company around a very high risk and yet very repeatable workload like Virtual Desktops. Now in the last 18 months we have diversified quite a bit. Now close to 70% of our revenue is not Virtual Desktops. But at the same time it’s a great foot-in-the-door strategy in many enterprises today.
Navin: It makes complete sense, right. And it’s good to not follow where the wind is going. It’s always good to have your own conviction and define your own world. So, let’s switch gears. One of the things I believe is to create a built-to-last company, which you guys are doing a great job at Nutanix. Not only do you need to have a very strong vision and mission, but you also need to set the company culture early on. So, what was the importance of company culture right at the beginning and how has that sustained over the lifespan of the company?
Dheeraj: This is actually probably the most important and my most favorite subject in company building. I think to us, what was really important was to build the grass-root strength of Nutanix because in some sense, founders eventually have to really let go of the company to everybody else who’s going to go on and really help build this. Remember there is a big difference between what the founders take away and what the employees take away, even the 10th employee or the 50th employee and so on. There’s a big disparity in terms of ownership of the company. So what’s really important in the long haul is to build a company where the grass roots run certain and ideation is actually bottoms up as opposed to top down. There’s no place for dictators. There’s no place for divas and prima donnas.
I think it was that important to me that to build a business that was about people. Because at the end of the day, a software company is not about factories and certifications and inventories and things like that. It really is about people and to me, the way that I look at people is employees first, customers next, partners next. And then everything else takes care of itself. Investors, Wall Street, all that is a second order benefit. Our shareholders will actually love the return investment if we keep our employees very happy, customers very happy and partners very happy. So, that’s the way we really built it and there’s tons of lessons around how you really go and build a company. Initially there’s chaos and then there’s order and then there’s more chaos and there’s order. So, it is this yin-yang of chaos and order that you need to maintain, where you don’t start to act like a big company over time because every five years you’ve got to reinvent yourself; otherwise you become a dinosaur.
Navin: I agree completely that culture is critical to the success of a company and my belief is that people make products, products don’t make people. And the second comment you mentioned, I completely echo it, that dinosaurs never survive in the business. And good companies always reinvent themselves.
Navin: So, let’s talk about leadership. Leadership is never easy. It’s not a popularity contest. So, what have been some leadership lessons along the way for you?
Dheeraj: There’s probably two or three things that I think good leaders have to do. One is to know when to let go. Obviously letting go of a company, even as parents you’ve got to let go of children someday because they’ve got to make their own goals and you realize over time that they’ve turned out just as fine as they would have been and probably even better when they had independence to think about their own lives and careers and choices of their partners in life and so on. So, I think similarly, I believe that a company needs to have leaders who know when to let go because every leader that you hire in your organization needs to have that freedom, that right brain accomplishment that says, “I am moving the needle and I’m the leader of this organization as well.”
But I think beyond this “letting go” concept is this notion of what I call subservient leadership. Your job is to serve the people as opposed to the other way round. And in the last 50 years we’ve seen that shift of power away from mahogany tables and boardrooms and just high flying CEOs to grass roots. And in the Valley, it’s never been truer. I think the Valley’s a place that really is egalitarian and gives more and more power. And the more east you go, even in this country, you’ll start to see more top-down execution. But I think being subservient to your people is probably one of the most important things one can actually do, especially in this space of software and high-tech where every five years you could basically be considered a dinosaur.
And no one person can really drive the strategy of the company. It has to come bottoms-up. We did Acropolis, our own hypervisor AHV, in the last two years. And people said two years ago, “Does the world need yet another hypervisor?” And my job was only to tell everybody else, “Just because nobody’s asking for it, it doesn’t mean that we don’t follow the gut of a couple of these engineers who actually feel that there’s a place for a new hypervisor, not as a bottoms-up me too, but as a top-down way of consuming end-to-end enterprise infrastructure.” And these two people, we followed their gut and now we do so much business. And just in the last nine months we’ve done so much business on this hypervisor and my lesson from all of these is that sometimes you just need to let people follow their instincts and great things will happen.
Navin: Got it. That’s very, very insightful and I’m sure our listeners will gain a lot from that insight. So, let’s switch gears and talk about innovation. So, what are some of the key trends disrupting the enterprise data center today and which are the ones you are leveraging at Nutanix?
Dheeraj: The biggest one was around complexity. We started to see a new consumption model with the public cloud coming in the last three, four, five years. And there was a rebellion of the kind that the world had only seen with business software, with SaaS applications where end users were actually bypassing IT and going to Salesforce.com and Workday and ServiceNow and companies like that. There was a similar rebellion happening in infrastructure as well in the last three, four years. And a lot of it was because of complexity and too many people along the way. And when want to provision something new, it takes weeks if not months. We’re going to buy something and procurement takes months to negotiate and create bureaucracy along the way. And a lot of end users started to actually go down the path of the public cloud because even though it was more expensive, in the long haul they said, “It gives me liberty and empowerment to do things at my own speed.” And that is what Nutanix started to leverage a lot in the last three years.
So, we really wanted to build a company where distributed systems was merchant-grade. And what I mean by “merchant-grade” is things that can be bought and sold for $50,000 and be deployed in 15 minutes or less. So, there was a huge emphasis on the usability of clusters. Now that also means the back end cluster has to be extremely reliable and available and scalable because without that, you again have friction in terms of using products. So, we focused a lot on reducing friction at the point of use. And obviously there was a lot going on with virtualization and with flash. In the last 15, 20 years the biggest reason for having storage arrays was you need to have special networks to haul storage traffic between a server and a storage box. But the last five years has seen the advent of 10 gigabit Ethernet which really meant you didn’t need Fibre Channel as a separate network. And of course, flash became relevant in the server. In fact, we became kind of the torchbearers of flash in the server. The world had seen Fusion-io being used at Apple and at Facebook, two of the largest users of Fusion-io cards in the server. But we brought a lot of that stuff into the enterprise, melded it like the solution that was built for workloads that people never thought would actually leverage flash.
Navin: Got it. Got it. Let’s talk about mentorship. So what’s you view on mentorship and how important have mentors been to you along your journey?
Dheeraj: Yeah, it’s a great question and I think I’ve had great confidants and great mentors and great board members. And I would say all three of them really have mattered in the last six years.
BV Jagadeesh was somebody who I really hold dear in terms of bouncing a lot of ideas and controversial topics of how to deal with people and balance execution and then culture. I think he’s been a great help to me, I think, the last four or five years of seeking advice from him. And Mark Leslie, one of the people who has, again, given me a lot of courage to go and take this behemoth head on.
My relationship with Vinod [Khosla] as well I think has been great. I mean, people sometimes think that he’s too strict and is very top down. But he’s extremely egalitarian when it comes to people who know what they want out of that relationship. So, I think all in all I’ve had a great run with this company along the way. I’ve learned a lot from a lot of these people.
Navin: That’s great. That’s great, that you’ve been lucky to leverage all the talent that is available in Silicon Valley from entrepreneurs, advisers, VCs. And I’m glad it has worked out for you. So, let’s get towards, like, every company and every leader is known and remembered for something. So, what do you think you would like yourself and Nutanix to be remembered for? If you look back and we have another interview ten years from now, what do you think you would say that you personally want to be remembered for as a founder, CEO? And what would Nutanix be remembered for?
Dheeraj: I’m actually going to say something which is going to be dreamy-eyed, but it is something that if we could do would be an awesome end result for this company. So, mixing the passion and the results of Amazon, which is around execution, with the culture of more bottoms-up, grass roots companies like Google and Facebook, would be one thing that I would love for this company to have where people really want to work here, but they also are passionate about results and moving mountains. And no one company has done it right. I mean, Amazon is great at execution, but probably not as good in terms of keeping people around for too long. Google is great at caring for people. Obviously they have a money minting machine in their search business. But they’re not considered to be the best execution beyond the search product itself or ads themselves. So, being able to meld the two, which is probably asking for too much, but that would be awesome.
And now on the product side, again if you can be remembered as the company that really built a great back-end culture which is distributed systems and fault-tolerant systems and so on which is what Google does really well in building scalable infrastructure. But melding that with the simplicity of Apple. Again, this is where companies have done one thing well like Apple did, the front end really well, understood user experience really well, but relatively weak at the back end. And Google has done a really good job at the back end, but needs to really take a leaf out of Apple’s book when it came to user experience. So, if you can really meld these kind of somewhat antithetic things together that seem to be at odds in most companies, I think it would build a great company in the future.
Navin: That’s an awesome aspiration and vision to have. So, in parting, any key advice for entrepreneurs?
Dheeraj: Yeah. I mean, I’d go back to one of my favorite topics around product definition and product management. Founders have to be product managers and they cannot delegate product management, the definition of the product, to just a bunch of people that they hired over time. Now obviously you need to have…I mean, as I’ve scaled, as this company has scaled, I think of my real support comes from Sudheesh [Nair] and Sunil [Potti], two of the people that I really learned a lot from. And of course there’s others like Duston [Williams], who I’ve really leaned on, who is our CFO. But I think really knowing what it means to define the product is one of the most important virtues of a good founder, a good entrepreneur because that keeps them paranoid. They’re looking at three years ahead, not just how the business is looking great today. Because Nutanix is looking great today, but if you don’t have the paranoia for three years out, we’ll be dead.
Navin: That’s great. Very, very helpful. So, Dheeraj, I know you are extremely busy. I really appreciate you appearing on the podcast and sharing your insights with us, today.
Dheeraj: Thank you. Thank you for the opportunity, Navin and I look forward to doing more of these.
Navin: Thank you very much.