Security and Identity Was Our Big Opportunity: What’s the Key to Finding Yours - Frederic Kerrest

Good morning. How's everyone doing today? Come on, you got to do better than that. It's hard to be up here with the lights. You can't say anything. Good morning. How's everyone doing today? All right. Thank you. Great. So thanks for taking a few minutes to chat here with me today. My name is Frederick Harris on the co-founder executive vice-chairman Chief Operating Officer of a public enterprise software company called OCTA. We started 11 years ago. So that means that I was you 11 years ago. I'm now I was much taller and better-looking these things happen. That's what happens when

you're working hard. You're creating shareholder value every day. So I thought that it might be helpful to talk about some of the things that we went through some of the things that I think might be practical device that you can use as you think about where you're going. What you doing. What's going to happen to you next time you're going to build a great company, which I know you're all here to do and have big plans for which it which is great. Let's see when we start OCTA 10 years ago. There was two of us today. There's about 2,300 employees, obviously $0 of Revenue. The time today to about

a six hundred billion dollar Revenue business coronavirus 50% year-over-year. We've been public on NASDAQ for about three years market cap is something of north of 15 billion dollars in about 7,500 Enterprise customers. So if you give me all those numbers 10 years ago when we started said that's where you're going to get in 10 years. I would have taken that in a heartbeat obviously, but given kind of what I've seen and where I come from I think the future for a company is very very bright. That being said you don't get here by showing up one day and then 10 11 years later being like,

okay, here's the business. I know what you're all going through you're all going through building a company doing a lot of hard work and as much time as I spend today working with our large Enterprise customers in public markets and all the rest of it. I still get to spend a lot of time like you all as entrepreneurs and I think the jobs that you all have is a great job. I think it's the best job in the world and as our company gets bigger and bigger. I'm always trying to find ways that I can keep that energy up and that I can work with entrepreneurs more closely. I started a venture capital

Arma lock the last year call, dr. Venture's it's about a 50 million dollar fun. We made about 4-5 Investments already out of that fun. And it's largely around startups that are focused on security identity privacy things. Obviously, they're very relevant to October into our customers just so we can see a little bit of some of the things that are happening there in the market but in particular one of those things that it's really been great for me as I get to spend more time with entrepreneurs and founders of small technology companies are trying to grow it gets it gives me the

opportunity to remember where I was and what it was like when it happened to me and you know, I know that it's not always a glorious time but I think it's hard to get very tactical practical advice. The one thing I was trying to do when I have a meeting with an entrepreneur say hey, what are three things you specifically want to find out about it could be about yourself calm plans. It could be about organizational structures. It could be about how you're going to raise your next round of financing how you create the Dynamics that you need to raise money could be any of these things. One

thing. I'm going to talk about today in particular though is team and some of the things that I think are most important in the team in particular as you get going and this is good information hindsight. Like I wish I'd known this 10 years ago, or I wish I could go back in time and tell myself this 10 years ago. So as I was coming here today I said what what's going to be valuable for these folks was coming valuable. Hopefully something I can walk out of the room with some say hey, that's something I you I learned that I can use tomorrow on wherever I am in in my journey. So there was a

great guy named David Morgan Saylor. He was an alarm. We were fellow alarms of a of a university and unfortunately, he passed away a few years ago, but he was one of the folks who started the Venture Capital business in the late 1960s. He started from called morgenthaler ventures in Ohio of all places, but that's where he was from and I got to spend a little bit of time with him in his later years and he taught me a few. Thanks. There was one analogy in particular that I thought was very very relevant and it was about what makes you know heat heat invested over time

and hundreds and hundreds of hundreds of companies. He kind of went back and looked at like what is the good data that shows where he should be the best thing which means for us is entrepreneurs. Like what should we be doing? What should we be focused on because that's kind of the six most successful outcome possible. And so we kind of broke it down into this very simple and sometimes samples the best 70-20-10 approach to lights to 70% of your success is the market you want to be the very big Market. You want to meet a growing Market. It's very hard. If you're going into a large

Market that is not growing. Do you want to go and beat up on Intel and AMD to create a new chip manufacturing when that whole business is going 3% a year and you need to invest billions and billions of dollars in a factory up front to get going that's going to be hard. But if you are in a large Market is growing very fast where the accumbens are having a hard time changing could be, you know, my kids obviously Enterprise software Enterprise cloud computing Enterprise security cloud. That's a great place to be it's a big Market store on fasting Cummins can't move very fast. And that's a

huge job training for you as a as a startup as an entrepreneur with a small team that can move very fast. So that he gave me was he said? Hey, it's like a horse race. No surprise, right? He was from Ohio like a storm. It's like a horse race. You want to play in the biggest Market possible 70% of the market you want to play at the Kentucky Derby you want to have the opportunity to win the biggest horse race possible because even if you come in second or third at the Kentucky Derby is still going to be a very big outcome much better than if you were first at your local racetrack, right? The

second part of it was second part of the success was around product that was 10% product now in his analogy, which I think he's actually pretty good for all of you who are not jockeys in the room. He compare them to the jockeys and he said look, you know, they wear brightly colored outfits. They think they're super important, but the reality of it, is there a little bit interchangeable again, if your jockey I apologize. I'm just telling you that's David Morgan Taylor's approach to life. Now, what is that mean? That means that if you don't get your product exactly right once you get out

there and you do a bunch of product Market fit and you talk to a bunch of customers, you can always put it in a little bit and change a little bit of fact, that's what we did knocked up. Everyone thinks that the Alchemist story was up into the rights and everything's been a homerun and all you read in the Press has helped fantastic. We are on course we are very very fantastic, but there was plenty of changes as well. This is actually a screenshot. Her name is screenshots a mock-up of one of the first products that we were planning to build in 2009 and we built an identity access

management company. So we focus on authentication strong authentication multi-factor authentication. We focus on customer facing properties and focus on internal facing properties. This is a completely different business not completely different from a different and the Insight that we'd had that we saw it would be valuable was Michael Van and I were working at Salesforce., the time 15 years ago. We talked a lot of large customers and they said hey, I want the same insight into how my services are running in the cloud as a So basically give me a bunch of operations management interface is so

I can see the performance of these things. So he said, okay great. So we drew this up then I went out and I talked to you about a hundred prospects. Vp's of IT director of it of managers of ite frankly anyone and I T who talked to me and they said well, that's interesting. But that's like the fourth problem. That's good. What's the first one that said first promise users can't control user can control the system's it's a mess. We have no idea who has access to what do we actually changed from this first product into what became oculator on right so that 10% product if you're paying

very close attention to what's going on with your customers. You can make that change the 20% that I want to talk about which I think is the most relevant here to this group is the team right? And this is your horse to ride. This is a picture of us looking really really sharp on the day that we went public April 7th 2017. And you know, it's all about the team it's all about the folks that we have there, but it's not just the employees that we had his two partners the customers of a Number of our investors. Are there a number of our advisors both legal and tax and everything else? They're

all there because it's the whole team that you put together and that's how you get there in the team is a key part all of you in my business. I spend more than $0.60 an hour down on people. How do I hire a track 14 develop grow the best people in the world and so you really have to focus on people. I don't have any heavy machinery. If I don't have any factories some of you might the most you probably don't know you're in the people business. So you really got to focus on people and when you think about people how do you get that awesome team together? It's a lot about values and I give this

credit to my co-founder who is still slightly taller than I am but not as good looking cuz we all have our things and he really said we need to talk a lot about culture. We need a lot talk alot about values when we get going. We think about we have 10 people 20 people 40 people over today. We have over 2,000 people. We have 25 people join the company every week. So now it's a completely different program while they're not that different cuz you still want to instill the same values but we started Writing down the value and the values are basically the agenda of how you're going to run the

company, right? It's the principles that are going to govern what you do it is how you going to behave it's not about what you say. It's about what you do to a how you act and as you get going and as you hire more and more folks people are going to say well, how do we behave at your company? How do we act? What do we do? And so what I encourage you to do is think about the values that you actually want to do and write them down. Take out a piece of paper later today when you get home tomorrow next day. I'm right down the values that you want to have. These rocks are values. They changed

a little bit over the years but not that much at first we had seven of them, but then people told me they couldn't remember 7 things which I thought was amazing. So we shortened it to 4 and then I was told it for us. So now we have five and five seems like the right number for us or no, you know your your mileage may vary. So these are the five core values that we have a doctor. They have not changed over the last I called five years. Maybe they're very important. We talk about him all time. We tried to head that way as a leader people going to look to you so you got to lead from the

front. These are mine. Yours might be different. That's okay. But think about what you want them to be and make sure that you're behaving that way make sure that has you hire and you look to hire leaders. You look too high Executives. You look to hire managers you ask them to do that as well. And you should you do always when things aren't going that. Well you want to give take people aside and give him some more. Coffee back that's fine in public when people are doing these kinds of things in espousing the cultural values that you want. You should highlight that you should say. This is

the kind of behavior were looking for congratulations to you. You did exactly what we're trying to do in this kind of situation and why is that that's because as you hiring for managers and as they hire folks and as your company grows more more things going to be done not by you can be done by other people and at least you want a similar operating system where everyone understands what they're doing and how they should be doing it and that you're all reading from the same page. So that's my big takeaway for for all of you. I know there's give me a lot of information going on here through the

day I put together. I know that it's hard to be in your seats. And I know that when I was building OCTA people always used to tell me hey, you know, every time you go to a startup event people say, how's it going to ask someone how's it going? And then everyone is crushing it? They're always crushing it all the time, except you and you go home. Like I'm not crushing it. My product doesn't work. I can't hire anyone running out of money. Crushing it any of the time and it's a it's a little-known secret, but I'm here to let you in on it. So I started getting a lot

of questions from people and I understand why the media works this way to barbell. Do you have to sell information at this tell stories? So they sell either massive success has like Jeff bezo since Steve Jobs or they sell absolute trainwrecks pick your favorite. I don't talk about what happened to the middle which is what happens to most of us most of the time 99% of Munchkin Earth 99% of the time. So I had this idea I started talking to a couple my investors Marc Andreessen Horowitz and I said, hey, will you guys come and talk with me? Just I never intend to be a podcaster. I'm not a

podcaster. I accidentally happen to have a podcast it's done. Well, and I said will you come and talk on this little show with me will record it your biggest train wrecks. This is what happens to most people most of the time and they did and it became a show called 02 IPL. We did season 1 last year. There's 12 episodes. You can go and listen. To a lot of very successful technology entrepreneurs who built large companies that you all admire tell you about the most amazing stories when things were not working they couldn't sell a customer they were running out of money. They their product

wasn't working. They were getting sued. They were going bankrupt. They couldn't go public you name it the stories are amazing and hopefully if you're sitting at home, you'll learn a couple things. We tried to make an educational like he was actually three or four takeaways like those cultural values you can write down but also hopefully it'll let you know. You're not alone. Okay, you all have the best job in the world. It can be a lonely place was a very lonely place for me for a long time. So hopefully this will give you a little perspective. We're coming out with season 2 right now which has

Eric un and Andrew House in a whole bunch of other people talking about the same thing helping him very practical advice on the stories. You have not read about them when they actually went through whatever is happening to you can't close your lease cuz you don't have any money, you know, you're running out of cash, whatever the story is. So if you have it Take a look at love your feedback. Please. Let me know and I'll send it there. I know I'm already over time that big clock is blinking red. I just want to say thank you all very much. Congratulations. I know it's hard you all have the

best job in the world and anything I can do to help please get in touch think you. Have a good day.