Viewpoints

Resilience Spotlights: Fireside Chat with HashiCorp CEO Dave McJannet


May 22, 2020 – For many, the shift to working remotely happened overnight and is a first-time experience for both organizations and their employees. However, multi-cloud infrastructure automation unicorn HashiCorp has been a distributed company and remote-centric since day 1. As the conclusion of our Resilience Spotlights series, we heard from HashiCorp CEO Dave McJannet on how companies can best thrive in this digital-first environment, including lessons learned on leading remote teams, building resiliency with stress tests & financial planning, and more – here is a recording of the talk and a few of his key takeaways.

On Leadership

Lead your team by focusing on operating at scale.

A key learning from working with several large companies prior to leading HashiCorp is Dave’s advice to think about running your company at scale when building a remote organization. This means thinking about how to operationalize rituals of information sharing, brainstorming, goal-setting, accountability and more, and practicing to achieve the discipline of large companies. He believes that if you focus on operationalizing these workflow and communication rhythms, you can capture those off-the-cuff, impromptu office moments in a remote setting.

There’s no singular way to work remotely – and remote isn’t always the answer.

Even though HashiCorp is a remote-first company and is culturally very remote-oriented, the team isn’t entirely remote – 85% is distributed. Specifically, the product and engineering teams are completely distributed whereas the GTM (go-to-market) tends to be centralized – and there’s a reason for that. GTM functions, specifically sales and marketing, have shorter cycles, so they work better when they’re in the same place, as opposed to teams with longer cycles like product and engineering. Dave says it’s important to recognize that these different functions have different work style needs, and to be deliberate about the feedback loops that you create.

Create rituals & rhythms of communication with your team.

In order for organizations to operate at scale, there needs to be clarity of expectations and trust – and that clarity comes from consistent communications. First and foremost, leaders need to be deliberate in what they’re solving for; as Dave puts it, “You don’t get anything for free when you’re remote.” For example, take brainstorming, something that is typically considered challenging to recreate in a remote context. If you make it a norm that everybody comes to the brainstorming meeting having already thought about the issue and written down some notes, you can have a productive remote brainstorming session.

You also need to have clarity about your company’s mission, and then go further to communicate how that mission cascades down to each organizational function. This should in turn extend all the way to the most individual level so that every employee is in alignment on the organization’s mission, as well as how their individual work contributes to that goal. HashiCorp has for a long time held weekly all hands meetings with their entire team (which is a little less than a thousand people now) and makes the recording available for those unable to attend in-person. Currently, they’re communicating even more frequently, with Dave sending a weekly email to the entire team in addition to the all hands. HashiCorp additionally has a yearly offsite with all their employees, along with departmental offsites.

On GTM Innovation

Product innovation is not enough – think about GTM and distribution from day one.

You can’t decouple products from their go-to-market strategies. For many founders, the instinct is to build the product and then think about taking it to market – but if you go into your GTM blindly, you’re dooming that product no matter how brilliant it is. The best way to go about product development is to start with an understanding of what’s happening in the market and then establishing a thesis or high-level mission on what you’re going to do in that changing market. After you visualize the market, you can figure out which integrations matter, and couple your product and GTM development, so they work hand-in-hand.

Within GTM innovation, the key is to understand that customer acquisition has gone completely digital, even with large B2B contracts. Because of this, HashiCorp places a heavy emphasis on digital journeys and creating digital engagement with customers. If your startup is in a space competing against large incumbents with tens of thousands of salespeople, you need to be a digitally-native machine or you’re not going to make it. For example, HashiCorp uses open source as a distribution vehicle to drive market standardization, then progresses people digitally through journeys to get them competent in open-source, and finally moves them forward to HashiCorp’s commercial products. This integrated product and GTM development within a digital journey helps acquire and retain customers most effectively.

Build your ecosystem & partner network.

The two singular things that tech decision makers look at when evaluating a product are 1) does it integrate with what they already have and 2) does their team have the skills to use it. Dave believes that you can’t create a product that only works within a vacuum, or it’ll never be widely adopted; you need to have deep integrations within the ecosystem and develop a partner network.

The first step is to identify the key players you will need to deeply integrate with in order to realize your vision authentically. In infrastructure, there are 3-4 big cloud providers that matter, plus 3-4 core application platform technologies. Without these crucial integrations, your product value proposition goes underwater. Enterprise software is all about authenticity and trust, so your company needs to authentically commit to making your customers as successful as possible by deeply integrating with the partners and technologies that matter. Dave believes that startups engaged in logo-chasing that we see so often is a waste of energy and time.

Keep your community engaged.

When it comes to community building, Dave has a few key principles. First, you need to know who your key communities are and understand the differences between them. In enterprise software, there are two key personas: the practitioner who uses your product, and the tech decision maker who purchases the product. You can’t use the same tactics for these two groups – you need to commit to making them both successful in their unique goals.

Then, to best engage each specific community, map out the journeys you want them to take. It’s important to have both depth and breadth in these journeys – for the practitioner community, HashiCorp has regular user group meetups to provide depth (currently digital meetups, though previously they were in-person), as well as digital machinery to create a breadth of engagement. Community building is a place to invest in deeply – HashiCorp has a 20-person team dedicated solely to fostering their practitioner community, and a separate team for marketing to IT leaders.

On Financial Planning & Measuring Outcomes

Build resiliency with operational planning & stress tests.

Dave is a big proponent of running stress tests and elastic financial planning. At HashiCorp he says they use the Magic Number as their true north, and they focus on having strong unit economics rather than simply chasing revenue. It’s not about just getting more and more customers, it’s about creating a business that will support those customers and make them successful in their goals, ensuring that they never leave.

Dave also says HashiCorp operationalizes company planning as a simple four step process: first comes the financial plan, which drives the people plan in terms of number of hires; the people plan then drives the product plan, which in turn drives the GTM plan. While there is no one set of common objectives that everybody shares across the organization, within these four plans, you can decompose a set of objectives specific to every part of the business in a concrete way that ladders up to the highest-level company objectives.

HashiCorp’s process for operational planning

HashiCorp’s process for operational planning; image provided by HashiCorp.

The HashiCorp team revisits this plan every 6 months – if done more frequently, you run the risk of not giving your plan time to work. Dave also emphasizes that it’s crucial to let your team actually execute on these plans once you agree to them, even though the instinct in times of crisis can be to take control of everything. Empowering people at the endpoints and holding them accountable to their objectives is how you build trust and resiliency at scale. In uncertain times like these, it’s especially important to balance empathy with urgency with your team.

When the current crisis started, HashiCorp ran 6 different stress tests against the financial plan and the implications thereof. Based on these tests they set a financial plan which then cascaded across the organization according to the process outlined above. These stress tests allow you to take a step back and say, in the absolute worst case, we are confident that we are well-funded for 3 years, and will make it to the other side. You need the discipline to be able to understand whether or not your company can continue investing in certain areas, and not go through it blindly. Once you have that foundational understanding of how the company will navigate, you can focus on what it’ll look like coming out of this crisis, and set yourself up for success.

Know which metrics to use in managing your company.

Many like to use product-led metrics to measure and manage companies – but Dave believes instead in using market-led metrics. His top three areas of focus are first, the health of the practitioner community, measured by size of audience, how people interact with HashiCorp’s learning content, and the NPS score of that audience; HashiCorp’s enabling role in the ecosystem, measured by the percentage of workloads on cloud platforms that are driven by HashiCorp users (not customers); and how many companies are currently using HashiCorp products, which gets at revenue.

On Best Practices for Digital Innovation

Enable your customers’ digital transformation journeys.

As our environment becomes increasingly digital-first, it will be even more important for companies to be able to interface with their customers digitally. As a result, we’ve already seen many companies double down on investing in their digital transformation. Dave believes this will only increase even on the other side of this crisis, so finding ways to help your customers in that journey is crucial for your own company’s success. A key to enabling HashiCorp to interact digitally with their customers at scale is through a common systems architecture early on across the entire customer journey, from marketing to sales to customer success.

Leverage the inclusive nature of virtual events.

Like many companies, HashiCorp has pivoted their field marketing and other in-person initiatives to virtual events, and they’ve seen a huge increase in participation. Instead of only being able to fit 300-400 people at an in-person event, now HashiCorp can host thousands of people. This extends beyond marketing across the customer journey, as training and customer success teams are also finding innovative ways to increase reach due to the inclusive nature of virtual events.

Let virtual signals guide your messaging.

The traditional process for coming up with product or company messaging starts with a narrative about the value proposition, which is then rendered digitally. But HashiCorp reversed that – their process is to start with a messaging thesis and then to watch what people are doing digitally, and then make that their message. If you have a thesis that then differs from the digital signals, he advises that you run some micro-campaigns to test the waters and adjust accordingly.

Thanks again to Dave for joining us and sharing his insights as we all adjust to our new collective digital-first normal.

Originally published on LinkedIn