Earlier this year I set out a challenge for myself to do a really long swim for my mother, and on Monday that crazy idea grew into something really big for FirstRain and for the Ovarian Cancer Research Fund.
We started doing athletic competitions at FirstRain back in 2008 as a way to build stronger teams inside the company and this Summer I decided to encourage Rainmakers to get involved in a series of events building up to my personal challenge of a 2.4 mile ocean swim off Maui.
And to my delight many of my coworkers have been with me all the way – and into the race! All summer Rainmakers have been training with me in the pool, competing in the Splash and Dash series and yesterday two of them did the Maui ‘Aumakua Swim too. We’ve been doing relays, running, teaching each other how to swim better and generally having fun and becoming friends.
The race yesterday was on a spectacular, perfect Maui day. The water was crystal clear and we were swimming over coral reefs, fish and the occasional turtle. Thomas and Jordy did the 1 mile distance and were both very pleased with their times and I beat my time goal in the 2.4 mile distance.
Jordy, Thomas and me – we were ready!
2.4 miles is a very long way to swim if you don’t compete all the time. It was a huge personal challenge for me but once I set my pace I pushed through, absolutely determined to finish because I was raising money for OCRF, I was on a mission and I was supported by so many coworkers, friends and family.
My mother was diagnosed with stage 4 ovarian cancer 18 months ago. She has been through treatment and is in remission but we know the fight is not over. Unfortunately today there is no effective early detection method for this disease and so the statistics are tough. Over 22,000 women are diagnosed with the disease each year in the US and over 15,000 die from it. My goal was to raise as much money as possible for OCRF to help find a detection method and ultimately a cure.
And the result was donations of more than $31,000! Truly fantastic generosity from many, many people. We put out a FirstRain press release on the news because the achievement is, to a great extent, the result of my coworkers wonderful involvement and support. It’s a privilege to work with such terrific people.
Several Rainmakers have asked me what we are going to do next Summer – any suggestions for what we should do next?
You know the feeling. That moment when it all makes sense, it all clicks, you finally get it. That moment while watching the Usual Suspects when you see the plot twist, when your bio-chemist friend explains some complex project and it finally makes sense to you, when you finally understand what the debt ceiling means to your wallet. There is such a pure sense of satisfaction, excitement, and relief, all rolled into the “Aha” moment. And if that moment can impact both your personal and professional life, well you might just have something great on your hands.
I had one of those moments, in the basement of Grand Central Station of all places. I was eating a rather average pastrami sandwich (should have gone to Katz Deli, but that is another blog post) while catching up with an old friend and former co-worker. He was explaining the technology behind the new company he recently joined, FirstRain. As he was filling me in on the details of the Web Graph, I started to put the pieces together in my head. I asked some questions that began with “does it really…” “do you realize…” and ended with statements that began with “wow…” and “holy…” Then something clicked. I had an “Aha moment!” I realized that I had been introduced to something new and amazing. At that moment I knew that I was about to begin the next phase in my life.
It was a sea change both personally and professionally. From the business side, I realized that FirstRain will impact how companies use and think about information. It would enable many people I know to move their business to the next level. I was convinced that companies needed the right business tool to use the web properly and efficiently. FirstRain is that tool to harness the power of the web.
As we talked, I tried to make sense of how this would be the right fit for me personally. It was a chance to use all the skills I have acquired over the years and help companies move forward. I was excited to begin working with one of the best teams I’d ever come across. I felt like Kramer from Seinfeld, ready to jump on board in exchange for free lattes.
So I was in, all in. I pushed all my chips into the middle of the table and went for it. And a funny thing happened. It got better, and keeps on getting better. I knew I was joining a great company but FirstRain has continued to beat all my expectations. This is the right company, the right technology, the right team, the right strategy, the right place for me to elevate my career.
As a sales professional, I am constantly striving to help my clients understand how FirstRain will impact their company so they will have their own “Aha moments”. With FirstRain, those moments will transform into real business value and a much greater return on their investment.
I’m still riding that “Aha” wave, right out of the basement of Grand Central. Like any “Aha moment”, when you get it, you want to share it. You want others to see what you see, not just because you think it’s cool, but because you know it’s a game changer.
Everyone interacts differently in the office, based on their role and personality, but most people sort into one of two types with respect to their impact on other people: energy sources and energy sinks. The CEO has to be open to all, and to motivate and energize all, and so I become very aware of the net gain or drain of interaction with my coworkers – and everyone at all levels of the company is consciously or unconsciously impacting the energy level of the people around them.
Energy sinks:
- Bring you problems for you to solve. They’ll arrive with a problem, dump it on you and ask what you are going to do about it. Particularly sink-ish when they phone you up with the problem on Friday afternoon and get it off their chest so you can worry about it all weekend.
- Have a negative outlook. Every solution you come up with they shoot it down without chewing on it first, and they drag down other people in the discussion who are trying to find a positive solution. Some people are consistently negative – about movies, about food, about their spouse. It’s exhausting!
- Take cheap shots up. Some people think it’s OK to be positive down their organization, positive to peers and attack up. The logic is something like “well you wanted the job so you just have to take it”. Very negative to other people in the room and, inside, very tiring for the leader. Equally draining are people who are obsequious – also does not move the business forward.
- Are non interactive. They sit silent in a problem solving discussion. Especially frustrating when you know they are smart and have ideas to contribute so you work extra hard to help them participate and overcome whatever inhibition is holding them back.
In contrast energy sources:
- Bring solutions with the problems. Even if they don’t have a good solution to some killer problem you are facing together, they try get the brainstorming going until the team comes up with a reasonable idea.
- Bring smart, out of the box solutions. The people who are willing to listen to an issue, think and then take the risk of an unusual or creative solution are particularly energizing, even if half their ideas are bad ones. They open up the solution space for everyone.
- See issues as bumps in the road, not roadblocks.
- See you a fellow traveler on the road (whatever level of management you are at), working together to move the company forward. They don’t take cheap shots or kiss up.
- Have a positive outlook. Some people know how to look for the silver lining – it’s in their nature – and these people often become leaders of their teams, whether they have an official manager role or not.
- Understand that executives are human. Everyone makes mistakes, everyone gets stumped at times and energy sources know that and detect when to be demanding and when to offer an ear to listen. As CEO you can never expect support from below, you need to be self reliant, but it sure is helpful sometimes when it’s offered no strings attached.
Think about which are you in what circumstances – and is your behavior and impact on your coworkers conscious? And if you behave differently with co-workers who are at or below your level in the org chart than you do with coworkers above you why is that and is it justified or helpful to your company?
The top image is of Centaurus A which is two colliding galaxies around a super massive black hole. The bottom image is our Sun.
The FirstRain office has had a full house this week with members from our East Coast sales team in town for our quarterly sales kick-off. And last night, in the spirit of fun, culture and generally getting over ourselves, the entire sales team and most of the company, headed down south to Cupertino for the final Splash and Dash race of the summer. The race consisted of a one-mile swim in the Stevens Creek Reservoir, followed by a three-mile run. We are lucky to have 13 great (or at least enthusiastic!) athletes that competed in relays – so we had 6.5 teams in the competition. The less brave joined the superb cheerleading team led by Julie and her cowbell.
Splash and Dash race @ Stevens Creek Reservoir
Aaron and Ryan finished first for the team, crediting their win to the support from our star, 5-year old cheerleader Natalie. Natalie earned her prize, keeping the shiny blue pom-poms that she used to cheer on each rainmaker.
Natalie– our star cheerleader
After the race, everyone plus families and friends and headed back to my house for a team cookout – where Thomas, Carolyn and Doug dueled over the grill (I was happy to hand off the tongs, so to speak). It was a beautiful night out, with great food and terrific company. We finished the night by celebrating Rajiv’s birthday (he is visiting us from our Gurgaon office) using our best singing voices to serenade him (in and out of tune!).
all of our FirstRain racers (minus Eugene)
The Splash and Dash race has proven to be a great team building event for FirstRain and I’m very proud of my team. The encouragement and support they show one another builds the kind of relationships that make a company great. Their ability to congratulate each other for a job well done, to help each other, to care about each other independent of their work roles is part of what makes FirstRain such a fun place to be.
Perfect, beautiful Cupertino evening last night. A few of us competed in the July Splash and Dash in the Stevens Creek Reservoir – a 1 mile swim and 3 mile run which is just the right distance to make you feel great! Aaron and Cory did both the swim and the run, Thomas ran in relay to my swim, and Doug completed the swim and decided he’d wait until next time to do the run….
I am a big believer that competing in sporting events is a great way to build teams and it’s something we do well together at FirstRain, especially within the sales team. We started with everyone participating in some way at the Aquabike in 2008 and now we not only compete in a couple of events a year together, we also train together, and eat and drink together!
David, Thomas, Jordy, me, Doug, Carolyn and Cory
Because the reservoir is only a couple of miles from my house we joined up with supporters, spouses and several kids at my house for a bar-be-que. The kids — and one of our dogs — spent the whole time in the pool and I gather everyone under age 10 slept like a log last night!
Having fun together in my back garden on a warm Bay Area night
This was a big week for FirstRain. We released a major software release which the team has been working hard on both in the US and in our Gurgaon office for several months. I am truly delighted with the impact of their work – it’s transformative for our customers – and so I decided we should get out of the office into the fresh air and celebrate together.
We rented the Bay Wolf for the afternoon and fueled with champagne, sandwiches, cookies and fruit we spent a wonderful afternoon on the Bay. I think our summer intern from Berkeley thinks working in high tech is a blast now.
FirstRain crew – in uniform (sort of)
Relaxing and bonding together
Ashutosh at the helm!
Tom K is on fire. He’s winning the call counts almost every day. Diet Coke – check, phone on ear – check, two finger typing – check.
Making his coworkers smile – priceless.
Notes from a talk I gave at Berkeley Haas School of Business, April 4, 2011
I am going to assume that you know the basics of modeling cash flow. How to build a P&L, read a balance sheet and calculate working capital. Given that, if you are running a small, growing company here are my top 4 tips to manage your cash.
First of all – why is it so important? While VCs may be falling all over themselves today to fund new companies that think they are the next Facebook or Zynga that will not always be the case because good times come and go in the venture community, and it will certainly not be the case if you ever hit a bump in the road.
Part of your job as CEO is to keep the company funded with the capital necessary to run the business and grow – whether it’s your personal cash or from Sand Hill Road. Cash is finite, it’s very expensive in your time to raise (not to mention the dilution to your ownership), and you can’t save your way into growth so you need to make sure you have enough. I see many young companies in Silicon Valley forgetting this today because the money is flowing – but their chances are 1 in 10,000 their company is the next big thing; 80% of them will fail but by being imprudent with their cash they increase the odds that they are on the wrong side of the line.
When I was CEO of Simplex in 2000 cash became a crunch issue for us. We were growing fast, profitable and we needed more working capital to fuel our growth (hire sales people, open international offices etc.) but we could not raise cash from new investors and while our current investors were very supportive they were ready for a liquidity event. The investment community and the bankers were fixated on dot coms – eyeballs and click-throughs (as they are today) – and we were a traditional enterprise B2B software product company. And because the dot com bubble had just burst the public markets were closed to pretty much everyone.
We had no choice but to open a line of credit against our receivables, draw it down and manage every penny. $40M+ in revenue, living off a $4M line of credit until we could raise money in the public markets (which we did in 2001). Combine this with my experience managing FirstRain through the recession and I am a little intense about cash flow.
Tip #1: Build your own model
A good finance team will build you models every day and twice on Sunday but there is no substitute for building you own. Build a P&L, collection and cash flow model yourself. It won’t be perfectly correct because you’ll probably not get all the operating costs right, but by building your own you will have a profound understanding of the underlying assumptions you believe apply to your business.
What is the cost of every engineer? What does health insurance cost really? What is your true collection time? What is the monthly productivity of each sales rep and how many months does it take from hiring to positive cash flow for each rep? What ASP and average transaction size are you assuming – is it realistic? What percentage of your sales reps will fail or turn over – it’s a guarantee some will so how many do you assume? Building your own model will force you through the thinking. Send it to a trusted board member and they will then ask you all the assumptions that you had not thought of and by the time you are done you’ll have a strong gut feel for the cash levers in your business.
Tip #2: Cap your own salary
In most young companies the single highest expense, overshadowing all others, is salary. It’s very tough for any executive to argue that they should make more than the CEO (with the exception of the VP sales when you include his/her variable compensation). So if you cap your own salary below market you can better manage the cash outflow from the salaries of the executive team. This requires that you have enough equity in your option pool to strongly motivate your execs and key engineers (an important part of your negotiation with your investors) – and that you can explain with integrity how the leverage of their options exceeds the leverage of cash you might pull out of the business to pay them more in cash.
It’s a delicate balance because your team needs to make enough to live and not worry about their families, but no more, because in the end they’ll make more money from their options when you reach a successful liquidity event. Basic risk/reward. If someone wants too high a salary – exec or employee – their interests are probably not aligned with your team’s and your investor’s so don’t hire them.
Tip #3: Hire a tight fist in finance
In a small company every dollar counts but you can’t watch every transaction. As CEO, having a persnickety, detail-oriented, negotiating, thick-skinned finance lead at your side is essential. You don’t need a CFO unless you are going public, in fact hiring a CFO too early can hurt you (they tend to need staff), but you do need a controller who can negotiate better pricing with every vendor, manage your DSOs with a strong collections process, push out payables and play chicken with the landlord. Plus the books must be perfect every month, every quarter. You don’t have the time for any mistakes in your accounts.
Tip# 4: Test every decision you make
Every day, for every decision, ask yourself what is the impact on cash flow? For example should you hire more engineers now or 6 months from now, should you hire permanent staff or consultants – how will that change your revenue and collections? Does it drive top line growth? Your engineering team will talk to you in terms of releases and features, you need to translate it in your own mind into sales productivity.
Or when should you hire the next VP? You may be struggling with your own bandwidth but at what point will adding a VP change the revenue growth curve? Or conversely when is waiting hurting the business but you can’t see it because you are buried? Travel policy – everyone in coach of course. Food – build relationships with your local vendors. Office space – go cheap. Interns – yes if you can create a win-win with them. But don’t scrimp on health insurance – personal insecurity kills productivity.
It’s not easy. I have made every mistake there is to make – as you will find most CEOs have if they are honest with you. Growth takes risk, risk means mistakes. And often times I have seen VCs and boards push for growth (and hence cash consumption) too early because they are impatient so you need to keep a clear head on your shoulders. Keep modeling your cash, keep testing every decision against it, and work hard to keep payroll in line and you’ll give yourself the runway you need to prove out your business and give your team the best odds to succeed.
And when the time is right – spend your cash to punch through.
Terrific article in TechCrunch last week by Ben Horowitz – What’s the Most Difficult CEO Skill? Managing your own psychology.
Managing inside my own head is by far the most difficult thing I do as a CEO and I appreciate Ben being so out and candid about what’s going on inside. As he says “Over the years, I’ve spoken to hundreds of CEOs all with the same experience. Nonetheless, very few people talk about it, and I have never read anything on the topic. It’s like the fight club of management: The first rule of the CEO psychological meltdown is don’t talk about the psychological meltdown.”
Ben covers classical psychoses like “If I am doing a good job why do I feel so bad?”, and the cliche (and truism) “It’s a Lonely Job” – especially when you are facing a crisis and you have to make the decision to cut staff which impacts the livelihoods of the very people you are working so hard for and care about.
The piece of advice I liked is “Focus on the road not the wall”. It it so easy to stare at all the things that can kill your company – and at any moment in time, even terrific times, any number of things can wipe out a small company. It is this single difference that makes being a CxO in a large company feel so emotionally different than being a CEO of a small company and I have done both. Large companies have mass and momentum – you have time to recover from mistakes most of the time. (A good example is Cadence Design Systems (CDNS) which crashed and fired it’s entire executive team on one day – it’s coming back because of the resiliency of the installed base and the R&D leadership team’s commitment to great products.)
The aspect Ben writes about that I have had in my head many times in the last 15 years which I can testify never goes away is A Final Word of Advice – Don’t Punk Out and Don’t Quit As CEO, there will be many times when you feel like quitting. I’ll add though that the most effective management tool I have found for this personal challenge is to get in the pool and pound the laps until my head is clear – which can be anywhere between 1 and 2 miles before I am calm.
If you have an ambition to be CEO one day read the article very carefully several times.
It was International Women’s Day yesterday and our Gurgaon team celebrated the day by giving roses to each of our female employees in the Gurgaon office and taking them out to lunch. You can see a picture of most of our our female team members below.
FirstRain is an unusual company in that so many of the leadership are women. Myself (CEO), YY (COO) and Aparna (GM India). We all developed our careers based on deep technical training and hard work – there are no quotas in the technology world – and it is both unusual and worth celebrating to have a deeply technical company with almost 50% of the leadership being women (and one woman board member too). It may be indeed be unique, we don’t know. And it is probably a sign that women continue to improve the opportunities they have in our society.
As Aparna (our GM in India) told her team:
“International Women’s Day (8 March) is a global day celebrating the economic, political and social achievements of women past, present and future.
The new millennium has witnessed a significant change and attitudinal shift in both women’s and society’s thoughts about women. We do have female astronauts and prime ministers, more women in the boardrooms, greater equality in legislative rights, and more importantly women’s visibility as impressive role models in every aspect of life. And so the tone and nature of IWD has, for the past few years, moved from being a reminder about the negatives to a celebration of the positives.
2011 is the Global Centenary Year and let’s take this opportunity to celebrate success of all women and especially the India woman Rainmakers.”
A subset of our Gurgaon female team members:
