The Exchanges

Q Yeah. What's the structure then behind big? Cause from kind of initial glance, it's kind of a company creator solving the biggest problems, but then also a company investor. Talk to me about the structure and how you're thinking about that.

A Big labs is more about company creation and company building. It's not about investing. Yes, we do. Big labs will invest, but it's, it's the way we look at is we have like doing a list of interesting problems that we want to experiment with. Right. So there's always a running list of problem areas where we are either I have heard from customers of AppDynamics or other companies I'm involved with who tell me like, you know, if this is a pain, this is a problem, or I hear it from other smart, interesting people in the industry or, or somewhere. These are interesting problems that we want to look at. At any point of time, then we start experimenting with like one or two or three of those problems. And we look at like, you know, we will go and prototype the solutions to those. We'll do heavy worn market research. But the most important thing, we'll go and talk to hundreds of customers to validate the problem thesis, the technology thesis, prototypes, and all that. And we will look for, like, is there really a viable path to, to solve this problem in a big way, to create a billion-dollar company, and if we do that, we'll spin it out. And Big Labs will fund all of that experiments. That's the nature of experiments. Many of those experiments won't work. If an experiment works and we spin it out, Big Labs will fund that as well. So, like, the first company, Harness, that came out of Bi…

AI assessment note: “Big labs is more about company creation and company building. It's not about investing.”

Q you've spoken before about a recipe, so to speak, for building the multi-billion dollar business that you did, and you segmented it into three parts, so we're going to break up those parts today, and if we start with the first You've said before that the importance of building for the long term. I'd love to hear, what do you really mean by importance of building for the long term?

A What do I really mean by this is, as an entrepreneur, the first thing that you have to realize is that if you want to make a billion dollar company, you have to commit time to it. Time, passion, energy to it. And sometimes I run into entrepreneurs who think like, you know, building a company is a short term thing. Building anything of value or like building a multi-billion dollar company will take eight to 10 years at least. In most cases, more. So you have to commit to that, and then you have to start thinking about, like, you know, I look at it like it's a long journey with multiple phases, like you have to find product market fit, you have to find, you know, how to sell a product, how to scale it, how to get more efficiencies, all sorts of things that goes through, but you're not thinking about it for the long term, you're only thinking about, you know, you're not committing yourself to the short term. There is no way you can build a company that's going to sustain for long.

AI assessment note: “building a multi-billion dollar company will take eight to 10 years at least.”

Q We mentioned the inside advantage there. Did you always find that easy to sell to VCs? How did the fundraising processes go for you? And were there Tips that you garnered from along the way that really allowed you to be successful and get the incredible investors you did.

A When I started AppDynamics, I did struggle with VCs in the beginning. Like, you know, I pitched for plenty VCs before I got my first offer. And what I did learn in that process is that the VCs are looking for three things at the core of it. One is like, you know, can this be a billion dollar company? The whole model is about that you want the companies to go very, very big. And some companies will go big and the rest And that's how the model works. So you, if you can't make a convincing argument that the market is big and you know, it's, it could be a billion dollar company. If everything goes right, I mean, because in most cases, everything doesn't go right, then it's a problem. So that's the first thing. The second thing was, do you have some validation, external validation fraction to prove that? So you have to show it. Your people don't want to hear just from you. People want to hear from your customers, from industry analysts, all sorts of people like that, right? The third really is the inside and one part. Like, you know, once you've convinced someone it's a Opportunity. And then there is, yes, there is proof and validation and traction. Then it's why you, why you or your team is the one that's going to win in this market, right? And that's where you have to go and sell your inside advantage. And inside advantage could be that you have the most knowledge of this particul…

AI assessment note: “When I started AppDynamics, I did struggle with VCs in the beginning.”

Q I'd love to start, though, today, with your roots. Most people have an idea and start a company, but you had to wait seven years to start AppDynamics, so tell me, what was your start in the world of entrepreneurship with the creation of AppDynamics?

A Well, I had to wait to start a company, not just AppDynamics. I had some other ideas that I wanted to start a company on, but I was in the U S on a immigrant visa and it's really hard because of the red tape here for an immigrant entrepreneur to start a company. The reason I kind of try to highlight that because so that we can fix the system here and make it easier. But for me, once the immigration part was done, like most companies, companies are started when a founder has this kind of, I call it like the burn, the burn to solve some problem that you, you've seen some problem around you and you just want to solve it because you see like someone has to solve it. If not you, someone else will So why not try it? So that's what became the genesis for AppDynamics for me. Like, you know, there was this problem that everyone was building a lot of complex software, and to me, it was just like, some people need to know if something goes wrong in the software, how are they going to fix it? And I wanted to fix that, and that was, that became AppDynamics.

AI assessment note: “So that's what became the genesis for AppDynamics for me.”

Q Yeah. What's the structure then behind big? Cause from kind of initial glance, it's kind of a company creator solving the biggest problems, but then also a company investor. Talk to me about the structure and how you're thinking about that.

A Big labs is more about company creation and company building. It's not about investing. Yes, we do. Big labs will invest, but it's, it's the way we look at is we have like doing a list of interesting problems that we want to experiment with. Right. So there's always a running list of problem areas where we are either I have heard from customers of AppDynamics or other companies I'm involved with who tell me like, you know, if this is a pain, this is a problem, or I hear it from other smart, interesting people in the industry or, or somewhere. These are interesting problems that we want to look at. At any point of time, then we start experimenting with like one or two or three of those problems. And we look at like, you know, we will go and prototype the solutions to those. We'll do heavy worn market research. But the most important thing, we'll go and talk to hundreds of customers to validate the problem thesis, the technology thesis, prototypes, and all that. And we will look for, like, is there really a viable path to, to solve this problem in a big way, to create a billion-dollar company, and if we do that, we'll spin it out. And Big Labs will fund all of that experiments. That's the nature of experiments. Many of those experiments won't work. If an experiment works and we spin it out, Big Labs will fund that as well. So, like, the first company, Harness, that came out of Bi…

AI assessment note: “Big labs is more about company creation and company building. It's not about investing.”

Q No, it absolutely makes sense. Talking about those kind of advantages, one element where you really excelled is execution. And you said to me before, That you can't compromise on your quality of execution. So tell me, does this go against the thesis of move fast and break things, Jyoti?

A Uh, no, not necessarily. I would say it's the inverse of it. So it's really depends on what is your goal of the execution. So in some cases, the goal of the execution is that you have perfected how to execute on move fast and break things, which really is about you've perfected how you learn and adapt very fast. That you're trying new things and you see like, you know, something works. Double down on it. If something doesn't work, you roll back, and you, like, try something else, right? But to me, execution is about that you have to make sure, like, once you have found something that you want to do, you don't want to do anything, I call it half-assed. There is no point shooting for something small, or you're shooting for something, like, you know, small results, or not the world-class results. The thing that AppDynamics we used to do was, okay, what would be the world-class execution on this, and whatever the this was, like, you know, on solving this problem, or on building, you know, enterprises, Selling at this stage, or having customer support at this stage, and what I would encourage a team is, let's find what would be the definition of world-class execution on this, and let's set that as our goal, and to go get to that goal, we will adopt the thesis of move fast and break things, which is iterate and adapt and get there. To me, what I didn't want to compromise was on the g…

AI assessment note: “Uh, no, not necessarily. I would say it's the inverse of it.”

Q We said about building for the long term with AppDynamics. It did end in a successful sale to Cisco. So one day before the IPO, that was as well, which is pretty unusual. So how did this come to fruition, Jotty?

A For us, it's, we were working for, towards IPO, and our IPO was on Nestec on Thursday, and we had a lot of our employees already in New York to ring the bell. You know, many of our early engineers, they got a custom suit tailored, So that they can go to New York. They normally won't wear a suit and all that. Some companies have a parallel process. Like, you know, you're doing a process for an IPO and you're doing a process for a sale process. We are not doing that for us. It just happened that Cisco came in just a little bit before the IPO and they made an offer. And as shareholders, as board, as management team, you always have to look at, you know, what is the right thing to do for the company, for all the shareholders, right? Because it's your, all your employees. And we looked at the offer and actually we decided to say no to the first offer. They came back with a second offer, which we said no to, and then they came back with a third offer, which at that point, it was the right thing to do for all shareholders involved, for all employees involved, for all stakeholders involved for us to do it, and that's really what had happened. It was quite intense, and I would say, like, you know, for that period of, like, maybe four or five days, no one slept for more than a couple of hours, probably.

AI assessment note: “Cisco came in just a little bit before the IPO and they made an offer.”

Q I'd love to start, though, today, with your roots. Most people have an idea and start a company, but you had to wait seven years to start AppDynamics, so tell me, what was your start in the world of entrepreneurship with the creation of AppDynamics?

A Well, I had to wait to start a company, not just AppDynamics. I had some other ideas that I wanted to start a company on, but I was in the U S on a immigrant visa and it's really hard because of the red tape here for an immigrant entrepreneur to start a company. The reason I kind of try to highlight that because so that we can fix the system here and make it easier. But for me, once the immigration part was done, like most companies, companies are started when a founder has this kind of, I call it like the burn, the burn to solve some problem that you, you've seen some problem around you and you just want to solve it because you see like someone has to solve it. If not you, someone else will So why not try it? So that's what became the genesis for AppDynamics for me. Like, you know, there was this problem that everyone was building a lot of complex software, and to me, it was just like, some people need to know if something goes wrong in the software, how are they going to fix it? And I wanted to fix that, and that was, that became AppDynamics.

AI assessment note: “So that's what became the genesis for AppDynamics for me.”

Q you've spoken before about a recipe, so to speak, for building the multi-billion dollar business that you did, and you segmented it into three parts, so we're going to break up those parts today, and if we start with the first You've said before that the importance of building for the long term. I'd love to hear, what do you really mean by importance of building for the long term?

A What do I really mean by this is, as an entrepreneur, the first thing that you have to realize is that if you want to make a billion dollar company, you have to commit time to it. Time, passion, energy to it. And sometimes I run into entrepreneurs who think like, you know, building a company is a short term thing. Building anything of value or like building a multi-billion dollar company will take eight to 10 years at least. In most cases, more. So you have to commit to that, and then you have to start thinking about, like, you know, I look at it like it's a long journey with multiple phases, like you have to find product market fit, you have to find, you know, how to sell a product, how to scale it, how to get more efficiencies, all sorts of things that goes through, but you're not thinking about it for the long term, you're only thinking about, you know, you're not committing yourself to the short term. There is no way you can build a company that's going to sustain for long.

AI assessment note: “if you want to make a billion dollar company, you have to commit time”

Q Another though of the key ingredients that you've said about building these billion dollar business is having an inside advantage. So tell me about this and in what different forms can this inside advantage come in, be it product execution, investor base? What are your thoughts around this?

A I always believe in like, if you want to be a billion dollar business, you have to be in a large market. And if you are in a large market, most large markets, there will be competitors. And if you want to outcompete, you have to have a inside competitor advantage of some kind. At AppDynamics, you know, it was, it was a bit controversial, but I, what I used to tell the teams was like, I would go to the product team. And I'll tell the product team that you've got to assume that our sales team is, is not going to, there will be times when they're not going to perform well at all. That our customer support, you know, is not going to support our customers well at all. That we have to be able to make a product as a competitive inside advantage of its own, that we can win just on the strength of the product. But then I would go to the sales team, and I would tell them exactly the same thing, that there would be times when our product is not doing well at all. There are issues with the product or whatnot. Our customer support team is not supporting our customers well. We got to make our sales execution as a competitive advantage on its own, even when the product and support are not doing well. And I would then go to the support team and do the same thing. And my belief was like the more competitive advantages like that you will, you could build, The more you could sustain and you could…

AI assessment note: “make our sales execution as a competitive advantage on its own”

Q We mentioned the inside advantage there. Did you always find that easy to sell to VCs? How did the fundraising processes go for you? And were there Tips that you garnered from along the way that really allowed you to be successful and get the incredible investors you did.

A When I started AppDynamics, I did struggle with VCs in the beginning. Like, you know, I pitched for plenty VCs before I got my first offer. And what I did learn in that process is that the VCs are looking for three things at the core of it. One is like, you know, can this be a billion dollar company? The whole model is about that you want the companies to go very, very big. And some companies will go big and the rest And that's how the model works. So you, if you can't make a convincing argument that the market is big and you know, it's, it could be a billion dollar company. If everything goes right, I mean, because in most cases, everything doesn't go right, then it's a problem. So that's the first thing. The second thing was, do you have some validation, external validation fraction to prove that? So you have to show it. Your people don't want to hear just from you. People want to hear from your customers, from industry analysts, all sorts of people like that, right? The third really is the inside and one part. Like, you know, once you've convinced someone it's a Opportunity. And then there is, yes, there is proof and validation and traction. Then it's why you, why you or your team is the one that's going to win in this market, right? And that's where you have to go and sell your inside advantage. And inside advantage could be that you have the most knowledge of this particul…

AI assessment note: “When I started AppDynamics, I did struggle with VCs in the beginning.”

Q We said about building for the long term with AppDynamics. It did end in a successful sale to Cisco. So one day before the IPO, that was as well, which is pretty unusual. So how did this come to fruition, Jotty?

A For us, it's, we were working for, towards IPO, and our IPO was on Nestec on Thursday, and we had a lot of our employees already in New York to ring the bell. You know, many of our early engineers, they got a custom suit tailored, So that they can go to New York. They normally won't wear a suit and all that. Some companies have a parallel process. Like, you know, you're doing a process for an IPO and you're doing a process for a sale process. We are not doing that for us. It just happened that Cisco came in just a little bit before the IPO and they made an offer. And as shareholders, as board, as management team, you always have to look at, you know, what is the right thing to do for the company, for all the shareholders, right? Because it's your, all your employees. And we looked at the offer and actually we decided to say no to the first offer. They came back with a second offer, which we said no to, and then they came back with a third offer, which at that point, it was the right thing to do for all shareholders involved, for all employees involved, for all stakeholders involved for us to do it, and that's really what had happened. It was quite intense, and I would say, like, you know, for that period of, like, maybe four or five days, no one slept for more than a couple of hours, probably.

AI assessment note: “Cisco came in just a little bit before the IPO and they made an offer.”

Q You said about kind of the importance of having that really large market. How do you assess elements of market creation? You're also an investor now and a mentor and, you know, startup founder again. How do you assess elements of market creation where the market isn't immediately huge, but the potential is maybe there?

A I look at more of a bottom-up model. I will tell you, like, when I invest in companies or, like, say, from my new startups Studio Big Labs, I, I just announced my first company, Harness, and people ask me, okay, how do you assess the market for Harness, which Harness is in the continuous delivery as a service space, and I look at the market, the way I look at that is, you know, how many companies have this problem potentially, and how much money are they going to pay to solve that problem, and how, what is the business case or the ROI case for how much are they going to pay us? Are they going to pay us 50,000 dollars a year, 100,000 dollars a year, 200,000 dollars a year, And then let's do a potential math of how many companies are those. And then you start looking at like, you know, you can slice in multiple levels. I don't look at the markets just by like, you know, what's the current spending and all that. And a lot of times it's how big the pain is, how much people are going to pay to solve that pain. And can they solve the pain in a way that's much cheaper than what you are talking about? So things like those.

AI assessment note: “I look at more of a bottom-up model.”

Q No, it absolutely makes sense. Talking about those kind of advantages, one element where you really excelled is execution. And you said to me before, That you can't compromise on your quality of execution. So tell me, does this go against the thesis of move fast and break things, Jyoti?

A Uh, no, not necessarily. I would say it's the inverse of it. So it's really depends on what is your goal of the execution. So in some cases, the goal of the execution is that you have perfected how to execute on move fast and break things, which really is about you've perfected how you learn and adapt very fast. That you're trying new things and you see like, you know, something works. Double down on it. If something doesn't work, you roll back, and you, like, try something else, right? But to me, execution is about that you have to make sure, like, once you have found something that you want to do, you don't want to do anything, I call it half-assed. There is no point shooting for something small, or you're shooting for something, like, you know, small results, or not the world-class results. The thing that AppDynamics we used to do was, okay, what would be the world-class execution on this, and whatever the this was, like, you know, on solving this problem, or on building, you know, enterprises, Selling at this stage, or having customer support at this stage, and what I would encourage a team is, let's find what would be the definition of world-class execution on this, and let's set that as our goal, and to go get to that goal, we will adopt the thesis of move fast and break things, which is iterate and adapt and get there. To me, what I didn't want to compromise was on the g…

AI assessment note: “Uh, no, not necessarily. I would say it's the inverse of it.”

Q Another though of the key ingredients that you've said about building these billion dollar business is having an inside advantage. So tell me about this and in what different forms can this inside advantage come in, be it product execution, investor base? What are your thoughts around this?

A I always believe in like, if you want to be a billion dollar business, you have to be in a large market. And if you are in a large market, most large markets, there will be competitors. And if you want to outcompete, you have to have a inside competitor advantage of some kind. At AppDynamics, you know, it was, it was a bit controversial, but I, what I used to tell the teams was like, I would go to the product team. And I'll tell the product team that you've got to assume that our sales team is, is not going to, there will be times when they're not going to perform well at all. That our customer support, you know, is not going to support our customers well at all. That we have to be able to make a product as a competitive inside advantage of its own, that we can win just on the strength of the product. But then I would go to the sales team, and I would tell them exactly the same thing, that there would be times when our product is not doing well at all. There are issues with the product or whatnot. Our customer support team is not supporting our customers well. We got to make our sales execution as a competitive advantage on its own, even when the product and support are not doing well. And I would then go to the support team and do the same thing. And my belief was like the more competitive advantages like that you will, you could build, The more you could sustain and you could…

AI assessment note: “make a product as a competitive inside advantage of its own”

Q You said about kind of the importance of having that really large market. How do you assess elements of market creation? You're also an investor now and a mentor and, you know, startup founder again. How do you assess elements of market creation where the market isn't immediately huge, but the potential is maybe there?

A I look at more of a bottom-up model. I will tell you, like, when I invest in companies or, like, say, from my new startups Studio Big Labs, I, I just announced my first company, Harness, and people ask me, okay, how do you assess the market for Harness, which Harness is in the continuous delivery as a service space, and I look at the market, the way I look at that is, you know, how many companies have this problem potentially, and how much money are they going to pay to solve that problem, and how, what is the business case or the ROI case for how much are they going to pay us? Are they going to pay us 50,000 dollars a year, 100,000 dollars a year, 200,000 dollars a year, And then let's do a potential math of how many companies are those. And then you start looking at like, you know, you can slice in multiple levels. I don't look at the markets just by like, you know, what's the current spending and all that. And a lot of times it's how big the pain is, how much people are going to pay to solve that pain. And can they solve the pain in a way that's much cheaper than what you are talking about? So things like those.

AI assessment note: “I look at more of a bottom-up model.”

Q In terms of that, Goal setting. One that always comes to mind with goal setting for me is accountability. How do you think about inserting accountability, but also a culture where it doesn't necessarily result in fear?

A Yeah, that's a very good question. You have to have accountability towards that people are pushing towards getting to those goals, right? And there's a lot of transparency in how people are doing things. So the culture of fear happens when the transparency goes out of the system. When people don't know, like, you know, why you are making decisions, there, there will be things where, like, someone made an attempt to shoot for something for a big goal, and they didn't get there, but the fact that they, the shot for that goal was the right thing to do, you don't want to punish them for that, but as long as there is transparency that we shot, we, we set a goal that was kind of a stretch goal, and we didn't get there because of these reasons, it wasn't because of lack of effort or whatnot, and we, once you figure out something not work, didn't work, we did course correct, and tried to course correct, Everything works out from there. The, you know, culture of fear is the worst thing you ever want. You do want a culture of collaboration and transparency as you build towards these goals, and accountability also becomes a shared accountability in that case.

AI assessment note: “So the culture of fear happens when the transparency goes out of the system.”

Q In terms of that, Goal setting. One that always comes to mind with goal setting for me is accountability. How do you think about inserting accountability, but also a culture where it doesn't necessarily result in fear?

A Yeah, that's a very good question. You have to have accountability towards that people are pushing towards getting to those goals, right? And there's a lot of transparency in how people are doing things. So the culture of fear happens when the transparency goes out of the system. When people don't know, like, you know, why you are making decisions, there, there will be things where, like, someone made an attempt to shoot for something for a big goal, and they didn't get there, but the fact that they, the shot for that goal was the right thing to do, you don't want to punish them for that, but as long as there is transparency that we shot, we, we set a goal that was kind of a stretch goal, and we didn't get there because of these reasons, it wasn't because of lack of effort or whatnot, and we, once you figure out something not work, didn't work, we did course correct, and tried to course correct, Everything works out from there. The, you know, culture of fear is the worst thing you ever want. You do want a culture of collaboration and transparency as you build towards these goals, and accountability also becomes a shared accountability in that case.

AI assessment note: “culture of fear happens when the transparency goes out of the system”