From Zero to Scale: How to Pick a Market, Find the People and Build the Systems

Aydin Mirzaee (Fellow.app)  00:30

Dave, welcome to the show.

Dave McJannet (HashiCorp)  04:15

Thanks for having me.

Aydin Mirzaee (Fellow.app)  04:16

Yeah, this is quite a pleasure for me. You’ve been a mentor for a few years now. And so now I get to share the wisdom and knowledge that you’ve been sharing with me with the world. So this is a exciting time for me.

Dave McJannet (HashiCorp)  04:28

And thanks for the opportunity to do it. You know, it’s always funny because we live in these small like these tunnels that we operate in day to day and that I think we realize there’s actually a lot of applicability for the things that we’re going through and that other people are going through. Perhaps it’s at a slightly later stage. So it’s it’s been fun to have the opportunity.

Aydin Mirzaee (Fellow.app)  04:44

Yeah. And so I mean, you you’ve had quite the extensive background, lots of different companies that you’ve been involved in, you ran marketing at GitHub, you were at Hortonworks 20 years of a variety of different startups. You joined hashey Corp when they were only 30 employees. Please. And now they’re you know, it’s a publicly traded company, you’re the CEO. It’s been quite the journey. And where we usually like to start with is to dial back actually to the very early days. I want to ask you, do you remember when you first started to manage or lead a team? And what were some of those mistakes that you made back then?

Dave McJannet (HashiCorp)  05:20

So you know, Eisley, I plenty of summer experiences, and during college where I was running small businesses, and so I learned a bunch of lessons out of that. But in the corporate sense, I think I was probably like a lot of people, I was very impatient to be given a management role and could never quite understand why wasn’t given them. And so it was not until I was actually at Microsoft, and as in materially in my 30s, that I had the opportunity for the first time to lead organizations and like a lot of managers, I was, you know, very keen to show my value proposition and my value creation. And I think that experience actually was pretty informative. For me, the big thing that I said, at the time, I was maybe managing a team of maybe six or seven people, those that maybe the first group, I was given the opportunity to lead. So for like, first line managers, I would say, number one, being a first line manager is the hardest job in management, that was a very, very clear realization, it’s kind of like being an infantry kept, or infantry lieutenant in the army, like they have a lot of responsibility, they’re doing a player coach role is a really difficult role. I think your tendency is to actually to be much more controlling than you need to perhaps the short version, the tendency is, obviously, you feel like your team’s work is reflective of you. And so you want to make sure it’s being represented well. And you know, that also, the natural tendency for early managers is to meddle, I think the big lesson I learned was really, that good management has two foundations. Number one, it’s about inspiring a shared vision. And number two, it’s about being authentic. And I think if you stick to those two truths, you kind of can’t go wrong. And I think that wording is very precise, and very specific, inspire a shared vision, as opposed to direct people what to do, because it turns out, people are pretty clever and generally cleverer than you, what makes high performing teams work is if everyone’s really clear what you’re trying to achieve, not how to achieve it. So I think that was maybe the sort of the single biggest lesson. The second one is around authenticity, just accepting that you’re my particular style of communication, particularly the things that I care about are things that people pick up in verbal and nonverbal cues. And if I try to fake my style to be like someone else’s, it’s going to be perceived as than authentic. And so you should accept that your leadership style is going to be your own and have your communication cues come from that. And I think those are the two things probably the biggest learnings from that first time.

Aydin Mirzaee (Fellow.app)  07:43

That’s very interesting. And it’s the first time I’ve heard that it potentially, are you saying that it might get easier as you as you get more started the organization? Does it really, I feel like maybe you just get better at it. And so, but yeah, the first time maybe it’s even more compounded by the fact that it’s it is a change of role. So it’s not only you have to be the player coach, you have to do all those things. But also, it’s completely different. So that stuff, probably,

Dave McJannet (HashiCorp)  08:11

I think it’s largely, I don’t want to give too much credit to getting better at it. I think being a first-line manager is the hardest role. There’s no debate, because it’s the player-coach bit. When you become a manager of managers, that’s actually just, it’s actually a different skill set. I think it’s worth just acknowledging that being a manager, and then being a manager of managers actually requires different skills, and different capabilities. And I think just being acutely aware that your style has to be different with your manager of managers is actually an important recognition. And number two, having enormous empathy for the first line managers is probably the most important because that’s the hardest job.

Aydin Mirzaee (Fellow.app)  08:45

Got it? And so what are some of the differences that happen once you become a manager of managers? Like what are the skills that maybe you need to be a little bit better at when doing that? Well, I think it’s

Dave McJannet (HashiCorp)  08:57

you’re trying to coach people on how to be better managers, as opposed to how to do their jobs better, is a big part of it becomes much more about ensuring that the function or the competency of management is being adhered to by those people in your purview. You know, are they doing performance management? are they holding people accountable? Are they caring about their career progressions? Are they having those conversations? What’s the rhythms of goal setting, and accountability and check in all those kinds of things become really, really important. And number two, it actually becomes much more about your assessment of the competency of that manager in their domain, because you’re trusting them to build a portion of your systems. And if they are not the people that can build the systems for the current phase and the next phase, like you have a problem. So actually becomes much more about analyzing the competency of those managers, both as a manager and then number two, with further competency in that domain, to close that system for you. I mean, that is a slightly different thing than sort of getting your hands in the wall, your fingers in the wall yourself to try and stop the flowing water out of the parts where your team is not necessarily delivering the way If they should be, that’s just a different skill set.

Aydin Mirzaee (Fellow.app)  10:01

Yeah, that’s super interesting. So it sounds like at Microsoft is the first time that you started in a corporate setting to lead a team. You know, hashey Corp is a publicly traded company. How many people were two and a half 1002 and a half 1000 people? So quite a few people that work there today. So I guess the question is like, what lessons would you say that you brought from Microsoft? Like, are there any things from the scale that you experienced there that you brought to hashey Corp over the years,

Dave McJannet (HashiCorp)  10:32

I think the magic of business building is this notion of phases that we go through. And it requires an acute acknowledgement and appreciation for the fact that the phase is different, you know, when you’re doing zero to 10 million versus when you’re doing, you know, 30 to 50 million, those are different phases. And what these big companies show you is what it looks like, at scale, you’re like, Okay, got it, I can see what it looks like, at scale. This is what an org structure looks like, at scale. This is what people need to do at scale, my job is to administer them. And that’s a very, very different from what it requires to build from zero to 10. So I think the balance between them is actually really important. I think the benefit of those bigger company experiences is you know, what it looks like at scale. But then you acknowledge that that’s not going to work at this current scale that you’re at. But knowing what it looks like at the end is actually very helpful. As you architect for the different phases. You go, I know what’s gonna look like at the end. But, you know, I know I’m not that the answer, you’re always making that subjective trade-off in terms of structures in terms of like, priorities, in terms of like people that are balancing the needs of today versus what I know is kind of look like in the future. Like, in the business building game, we’re on very, very long arcs. Like we don’t build businesses to make a buck we make them we build businesses because we think that like the world needs us to exist, we think there’s a business opportunity to do so then once you start taking people’s money, you need to have a long time horizon, for how you’re going to continue to deliver for those people who are trusting you. So you have this very long-term time horizon view of how it’s going to play out and you just really working your way towards that mature state. I think that’s the beauty of bigger company experiences actually really enjoyed my time at bigger companies. I don’t know that I would necessarily do that again. But I think it was really interesting as a way to get a view as to what scale looks like,

Aydin Mirzaee (Fellow.app)  12:14

yeah, that’s a really good articulation. It’s almost like like you said, you see what the end state is, and you know, what it can look like when it’s at that scale, and then you must dial back and see what stage appropriate. You know, this is a very interesting thing. You know, in the startup world, one of the things that, you know, we often talk about is bringing in the right leaders at the right time, and, you know, finding someone who’s too senior might not be a good idea for too early stage or company. One of the questions I have is, you know, you joined HashiCorp, when there were only 30 people. And so, and you’ve had your very senior executive at many, many companies seen, you know, scale at huge levels. What was it that got you to join the company when it was only 30 people?

Dave McJannet (HashiCorp)  13:00

So, it always makes me laugh, because I got a lot of jobs in my life. And you could count back to the number of employers I’ve had, you know, for lots of different reasons, I think I’ve had like 11 or 12 employers, and over the course of time, which is a lot some of them I only worked for for a few months. Some of it you know, i There were lots of things that interested me, I spent time in South America, I spend time in other places, and my girlfriend and my wife, her job caused me to move a bunch of times, and I didn’t worry about it too much. So I’d actually, yes, I’d worked at some big companies. But I’d actually done a couple of startups like the Hortonworks. We did from zero through an IPO with the company before that we took from zero again, also it also went public. So we sort of seen these, these scale moments before. So I’d find myself as acutely interested in this in the business building bit. What struck me when I engaged with Amin, Mitchel is actually had no interest in doing it. Again, it’s very difficult to be an entrepreneur. And yes, there’s repeatability to it. But there’s a toll that it takes on your body and your life to commit to what it takes to doing it. And most people don’t want to do it. I was just really, really struck. I think we always look through the lens of market model and team. That’s how we think about opportunities. You know, when I looked at the market, these guys were scratching around and cloud automation, they just I’m an infrastructure nerd. I like that domain. I like knowing that when I swipe my credit card, I know how that process is, it’s cool that that goes through stuff that we envisioned, like that’s just satisfying to me. And so the market is super interesting to me, the model of how we could build a large business was pretty clear to me and but the team was really the reason I looked at those guys. And, you know, like, the raw humility of these two guys, was just really, really impressive to me. And I sort of said, like, if I’m gonna spend my time in an environment in doing business building, which I’m gonna do, the team thing was really important to me, and it was sort of like, it was just a real match. Culturally for like, what I care about and what those guys happen to care about. Never young. I mean, they were gone when I was 22 years old when I met him, Mitchell was maybe 23. But like, if something around like the electric curiosity but humility, the competitive drive that they had out of the gate to like, create something valuable just sort of caught my attention. And so eventually I was convinced to do it. And, you know, I think it’s been a really, really interesting ride, I think I wasn’t wrong about the people side of it. And as they would say, it took them six months to convince me to do it. And I think I really wasn’t interested in doing it. But that was really what got me over, I think we always looked through your market model and team, that’s the framework. And it was just a really, really good match what I was interested in. Now you never know how these things are gonna go. And I think is one of my mentors, once told me is like, at some point, you got to take off your clothes and jump in the pool once again, and just trust that you’ll be able to figure it out. And I think the lens is the all of us look at it. There’s like, if not you, then who? I think that’s actually a good phraseology, when we look at business-building ventures, like, if not you, then who? You know, I think we can figure it out together with the right market modeling team. Yeah,

Aydin Mirzaee (Fellow.app)  15:52

that makes a lot of sense. And so would you say that when you joined was the product at the stage where it was ready to scale? And it was time for the business-building aspects? And so you were ready to get into that phase? Or was it earlier than that?

Dave McJannet (HashiCorp)  16:07

No. So what I’ve done, the revenue was essentially zero. And there were a few projects that were popular in open source. So actually going to talk about this, that’s faster than you and I were talking about, I think there’s repeatability to the business building process. And it’s number one, pick the market number two, build a team. Number three, build the systems. So we actually were essentially ground zero of that, like, so when I when I met with them, so it’s okay, let’s be really, really clear on what market we’re going to pursue. And like, what’s our thesis with respect to how this market is going to evolve? And that is about picking the market? Right? I think there’s this fallacy that we build products, and then we take them to market. And I think my biggest learning is actually you pick a market that you think is interesting, do you think it’s going to evolve, there’s gonna have opportunity, and then you, you wrap a company behind that, and you’re putting up rapid product value proposition behind that. So we started out with a really detailed discussion about like, what market do we want to be and because we’re essentially at zero, we can pick lots of different directions. The thesis at the time was, I think the world is gonna go cloud, there’s an infrastructure transition underway, we can, obviously is pretty obvious. Now in hindsight, in 2012 2013 2014, it wasn’t as obvious that it was going to be as big. And we think multi-cloud will be the steady state. And then against that backdrop, okay, well, someone needs to provide consistency, that seems reasonable. Let’s decompose that into consistency with respect to how people provision, compute, how they secure it, how they network it together about those three, that seems like a reasonable thesis, and then you set out to say, okay, great, let’s now have clarity on that as a mission. Cool, let’s line up a company behind it, like, Let’s go project that we are going to solve that problem, let’s find the people that are going to help us do that. We’re going to sell to enterprises, let’s find those enterprise people. And then number three, let’s build the systems of the company to allow us to execute on that. And you know, there’s like the lead to Cash System about that. That’s a system you have to figure out how to build once you figure it out. So it all starts with that like deep, deep introspective exercise on like, what market do we want to be in. Because if you get that, right, you have the opportunity to build a business. If you get that wrong, no amount of execution is going to help you. And so getting like taking the time to get that market, right is the most important thing. So that’s probably I spent the first five or six months together with those guys just sort of talking through debating sort of came to the second point, which is sort of implicit in your question, but not explicitly asked is I joined a CEO, these are two young guys extraordinarily competent. I always joke that Armand should be president like, because the world would be better served if it were using his talents to do that, like these are deeply impressive people. But I said, I don’t think you can separate the notion of like building products from scaling a company and go into market. So a lot of people’s tendency is to say, bring in a CEO that says, Hey, you’re the go to market person, help us scale, it will build products. And I was like, I just don’t think that’s the way it works. I think you have a thesis, the rapid company behind it, and they’re so intertwined, the product and the go to market, that you need a single point of view that’s in charge of that across product and everything. So actually, I came in as CEO, they moved individual contributor roles immediately. And everybody reported to me, and that was sort of the relationship. I think that that was a difficult thing for them to come to terms with, but actually not that difficult once we started getting into conversation, because they realized, like, I didn’t really care about like, what seat I was in, or you know, who was in charge, but somebody has to be in charge. Otherwise, things don’t work. Because it’s about alignment to that mission. Yeah, long answer to your question. Yeah.

Aydin Mirzaee (Fellow.app)  19:41

You know, what’s super interesting about this? Is that, like you said, not every company starts that way. I would say that most companies maybe don’t start that way of choosing the market. Right. And so it’s very interesting that so you join and even though this company had existed for a while, you took a step back and said, Okay, Like, let’s really pick the market. Because once you do those things, you start to understand what the mission is. And then you can use that to align everybody else in the company. And then you figure out what people you need based on on that mission. And I think like, that’s incredibly purposeful. And it makes sense that company building can be this repeatable process. If you take a look at it in that way, it’s still hard.

Dave McJannet (HashiCorp)  20:24

It’s hard. And yes, absolutely, companies start based on a product idea. And that was the same thing with these guys, big companies are built around a thesis. And I think that’s the difference. Like, yeah, I think we always we live in this hyper weird world of Silicon Valley, and you go like, yeah, we can get companies to 15 million in revenue, $20 million in revenue, just on the back of a product idea. But we don’t set out to do that. Here we go, like, you know, if I’m going to do it, I want it to get to 2 billion. And so it just requires a slightly different point of view, and a different time horizon and a different level of like conviction, which means you have to be positioned in a market that spends a lot of money. So actually turns out picking the market becomes really important for you to get to a 2 billion in revenue. And you can get a lot of businesses like, you know, I was, I think, like a lot of people, we think about like, you know, if I had to, if I had to if the world changed tomorrow, and things change, like, I’m pretty sure I could figure out how to get a carwash to be profitable and make it work. And I think that because you have the skills on business building, but I couldn’t get a carwash to 2 billion in revenue. So I think this notion of like, you’d always build a business to a certain scale, but given the scale, we’re trying to get to it, it has to be about a market thesis. And, and that is just a slightly different point of view. And I think I accept that that is a bit of a Silicon Valley point of view. And it’s a bit unreasonable, because like, you can be quite happily building a $30 million business, that’s fine, too. But like, I think that’s just the view that we start with, which is much more market oriented.

Aydin Mirzaee (Fellow.app)  21:48

Yeah, yeah, that makes a lot of sense. So let’s talk about the building the team or finding the right team. For this. One of the things that I guess happens in Silicon Valley a lot during the business building processes, you have different people for different stages of the company, when you’re thinking and when you’re starting, and you know, how big the company is going to get? When you thinking about finding the people? What are things that you’ve learned for each stage, you know, the process that you’ve gone through to try and identify the best team for that particular stage of the company?

Dave McJannet (HashiCorp)  22:21

Yeah, I think maybe maybe two separate threads. First is that companies go through phases, and there’s a risk of trying to be too precise, and the people side of it, generally, we say, hey, I want to hire someone that is gonna fit for the next two years, like, that’s really my time horizon, because I love to fight another day, if I can get past two years. So you know, I think like bringing in the big company exec too early is often a challenge, because what I learned at Microsoft didn’t help me when I first joined a company that was at zero, like, you just don’t know how to do it, it’s a different skill set. And you know, converse to that the other way around is true as well, someone from early stage doesn’t know what it looks like to run a billion dollar sales organization. So I think point number one is just having a reasonable time horizon of expectations is sort of the core principle. And it’s a two year view, maybe a three year view, I’ll reassess this after two years. Number two, it’s a recognition that nobody’s perfect, you’re not going to find the perfect person. And then you have to sort of have the view of like, everybody has particular skills, I am good at things, a lot of things I’m not good at. So you have to make sure that when you’re bringing them in your surrounding with people that are complimentary to them. I know that seems obvious, but you have to think about that deeply. Like this person’s skills need to be complemented by somebody else’s in this leadership function in particular. So if you bring in someone, for example, in marketing, a marketing leader, well, you know, you’ll find people that are good at product marketing, and you’ll find good people that are good at like digital marketing, those are generally different people, you still need someone to run marketing. So just accept, if you’re gonna hire someone with strong product marketing, you’re not gonna let them hire someone that’s really good at digital marketing, maybe the more up and comer person, rather than waiting for that perfect profile of person, because you’re not going to find them. And by the time you find them, like, you know, your company might be dead. Point number three. And I guess there were three things not two because I think someone like there’s a framework that I was exposed to a long time ago around people hiring, which I always remember and that is you need to decompose skills, and capabilities, your calling skills and competencies. So what I do, and I actually started this 20 years ago, and I or 15 years ago, when I first started hiring people for a role, I will say, okay, what are the three core categories of skills this person has to have? Right? So category A is skills. And those skills in might be in marketing might be like, you know, positioning and there’s a bunch of details questions I’ll ask about that, you know, might be around demand generation might be around, you know, brand, like maybe those are the three skills my marketing leader needs to have and you know, that I can compare candidates against that rubric. So I actually created an Excel spreadsheet, which scores people from one to nine when I interview them, and I’m just testing for those core skills. So it’s usually like three categories of skills for each job I’m hiring for. And then there’s a second thing, which is competencies, which is the core attributes that we’re looking for. It’s things like humility, it’s things like competitiveness, it’s things like balance. It’s things like intellectual curiosity, which a bit more subjective, the ability to distill simplicity out of complexity. And so I have a separate interview exercise around those attributes. And I think I score those from one to nine, too. So I think that’s that very practical framework has been incredibly powerful. Because it turns out skills can be learned, what what people that are superpower adds to your team bring is actually attributes, those attributes are actually much more important. I think we tend to over pivot on skills and under pivot on testing the attributes we care about. So taking the time upfront to think about what are the skills I’m interested, and what are the attributes I’m looking for is actually the most profoundly important hiring lesson I ever learned. And nine, you know, 10 times out of 10, if it’s a toss up between candidates, the person that scores higher on the attributes is the one I hire, I’ve never been wrong on making that trade up. Hey, there.

Aydin Mirzaee (Fellow.app)  26:10

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Dave McJannet (HashiCorp)  27:27

yeah, yeah. And I would say yes, skills can be learned. And so it depends on the environment, I think this is particularly when we take bets on people that are earlier in their career, like, they score high on the attributes, even though they may not have score as high as that senior person that are competing against, who is maybe noon, they’ve been doing this for longer now, like they have to have a level of capability on the skills, but they may not be as high. But I would bet 10 times out of 10 on the person with the attributes that I care about more than the skills.

Aydin Mirzaee (Fellow.app)  27:53

That’s awesome. And so when I guess one of the other questions is you also said that you want to make sure that there are people that are complementing each other. So when you’re building, say, an executive team, how much do you think about the interaction that that person is going to have with the other functions and is that a part of the decision-making in hiring?

Dave McJannet (HashiCorp)  28:11

It is, I think companies have this, you know, they’re gonna have talked about this publicly, they’re kind of like four distinct aspects to your organization. There’s the financial side, the people side, the product side and the go-to-market side. But those are the four aspects and, and so it’s a bit more nuanced. Depending on which function you’re speaking about, I would say, you hire executives, to own the systems for each one of those things, you want to financial bleeder to own the finance systems, everything from the financial planning process, to the closing of the books, to the working with investors that are, you know, a few sub pillars to that function, that leader has to own that system and close it. So what I care predominantly, is about the complementary skills inside that system. So if I have a CFO that’s really good at FPN, a, okay, I’m going to make sure they’re complemented by a really good controller, I’ll let them hire a real I probably slightly over pivot on like the equity allocation and the cost equation side, let them hire more senior controller. Alright, just as an example. So I actually mostly care about it with in function, because that’s where 90% of the interaction happens. Yes, there’s the exact same collaboration, but fundamentally, you hire execs to close the system for you. Right? So across the exec team, yeah. 100%, and you need complementary skills, but these, it’s, that’s less important than then within functions. And, you know, I think that the EQ gets exercised by those more senior leaders, and can they appreciate the different styles that are from people in the exec team? Yeah, but that’s some of their job. It’s not the 90%

Aydin Mirzaee (Fellow.app)  29:47

Yeah, that’s super interesting. So and when you say closing a system, do you mean like the architecting of that system from scratch or do you have a point of view of you know, when The founders or CEO, should be the ones that take the first stab at creating those systems or, like, who should build those systems at its core, or is the executive function more about just executing, once the system has already been built?

Dave McJannet (HashiCorp)  30:14

So did pretty much depends on the stage of the company. Like if you come into Microsoft, like that financial system, this is what happens on day four, week one, here’s what happens in day five week one, like that’s already prescribed for you. In the early days, I actually built most of the systems, I mean, even as much as the go-to market, you know, automation systems and the systems architecture for how the data warehousing stuff connects to the lead automation stuff, like you have to be deeply involved in that stuff in the early days, then you bring in like a marketing leader, and you say, like, No, you need to own this system. But what happens is the company progresses through different phases, those systems all need to be re-architected, just for a different scale, like when we had, you know, 1000 people in our database, that was one thing, you know, we had 1000 people a day, probably today, I don’t know what the number is, like, I always joke is like building the customer service system for United Airlines versus Air Canada. Like, it’s just a different scale problem like you would architected differently, if you’re gonna have 10 times as many people coming on it. And that is a good metaphor for what happens with each of these systems. Take the finance system, like your accounts receivable collection process, in the early days, architected one way, but it has to be re architect along the way. So your exec has to both administer the system, number one, and number two, ensure it’s architected for the next phase along next phase along next phase along so your your Exec is generally looking 18 months out, I always talk about like management structures, or implicitly just layered time horizons. My job is 36 months out my leadership teams is probably 18 months out, the sales rep is 90 days out. Okay, that makes sense. So that they are administering the system, but they have to be tasked with ensuring it’s being re architected for the next phase before we hit it. Otherwise, otherwise, we trip. So it’s both in the early days, yeah, it’s probably me, then it gets handed off to someone to like to basically run that model. Operation subsystems?

Aydin Mirzaee (Fellow.app)  32:06

Yeah. So the time horizon concept is very interesting, because one of the questions we often get is you want, the more senior I get what changes in the role. And we talked about first line manager versus manager of managers. But like he said, the other thing that changes is the time horizon. And so it’s really interesting to hear your viewpoint, at the scale of company that you’re operating that 36 months out is, you know, roughly the time horizon that you think about, what does your what does it look like? You know, very practically, when you’re thinking that far out? And how do you like, what does the day to day of that kind of an operating role look like?

Dave McJannet (HashiCorp)  32:47

So I’m kind of obsessed with frameworks. And I think I’ll go back to the first one, which is, it’s about pick the market, find the people build the systems. So when I’m thinking about 36 months out, those are the three categories. I’m thinking about it. So again, just very practically, I look at okay, well, how so you and I were just joking when we came on, I think I was in seven countries, and in two week period, the launch is crazy. Two weeks, because that’s what it takes. Yeah, I think this is this is a good lesson for folks like, that’s what it takes to be in the market data flow. Right? The only way I can make sure we’re picking the right market, the right people, the right system, and build the right systems is if I’m constantly in the market data flow, so I’m obsessive about being in the market data flow. Because as I, where I started, the most important thing I can do as a CEO is to make sure I’m picking the right markets, right. If you’re in the right market, it makes it a lot easier. So you know, I had 34 customer meetings in a 10 day period in six different countries. And then I was in Vegas this week, doing another dozen or so I have a pretty good sense for what the markets telling me in terms of what markets we should be in. So that’s step one, right? What markets do I want to be in? And what that means is how am I positioning my company, right now a vision of a company that says like, No, our mission is to do this, and 36 months from now, that will put us in the sweet spot of where the markets moving. Number two, it’s about assessing the people over the next 36 months, we’ll have the right people in place at the leadership level, do I have enough people coming up that we’re investing in for leadership development, they’re gonna have to take the roles that are gonna become available as we add another 1000 people, another 1000 people. And then number three, it’s about systems architecture. So we actually run deep systems review, Hey, what is how’s the current systems or lead to cash system working? Great. And then do I have confidence that this executive that’s running this function is 18 months ahead? 18 months ahead, 18 months ahead, because if they’re not, we’re gonna have a problem. So it’s actually through that same lens of market. People and systems is actually how I spend a lot of my time. And unfortunately, the market that is the most important,

Aydin Mirzaee (Fellow.app)  34:50

yeah, yeah, so that makes a lot of sense. So you spend a lot of time there, and that’s very interesting. And I liked the phrasing used to be in the market data flow and and why it’s so important to always build in context that way, because, you know, if you’re going to make decisions, you have to know, you have to have as much context as you can get. So this is

Dave McJannet (HashiCorp)  35:10

a really good like sidebar, you know, one of the most interesting jobs ever did actually ran the investor relations for the biggest bank in southern Chile years ago. And, and I was super nervous about it, because I was a young dude. And all these, like, really Harvard trained Goldman Sachs employees would come and meet with me and tell me what’s happening in the world. And I was like, Well, who am I to know, like, what’s happening in the Chilean economy and how it’s going to progress over the next 12 months, and what interest rates implications will be and what the central bank is going to do. Like this is deeply complicated stuff. And what got unveiled to me is actually, most people, when faced with the same data make the same decision. So they sounded really smart, but it just was because they were in the data flow, once I got in that same data flow by knew exactly what they knew, I think that lesson has stuck with me is, you know, they may have gone to Harvard, I did not. But once faced with the same data, I would say the same thing they did. And you shouldn’t have a lightbulb moment to go, okay, got it, I’m gonna remember that lesson as a startup entrepreneur, is being in the data flow is the most important things, because it’s actually not that hard. Once you’re in the making information flow, to figure out what to do. Generally speaking, if you’re in an update of nothing, you have to prioritize that. Actually, there’s a fortune 500 CEO, I spend time with monthly. And he revealed to me he does five to six customer calls per day. Wow. That’s how he fills his day. Why? This is the reason I think there’s a lesson there. There’s a lesson there. So I do want to just set this aside, my core point was, it’s, you know, we all have sort of like, you know, impostor syndrome to some degree of like, am, am I the right person to be running this? And I think that experience just unveiled for me like, yeah, you’re just as smart as the next person. The trick is getting them in the data flow? And if not you, then who?

Aydin Mirzaee (Fellow.app)  36:50

Yeah, wow, lots of great tactical tips there. So okay, so let’s quickly talk about the system. So the people side, how do you know if someone is ready for the next 18 months? And what are some symptoms? Like if someone is, you know, has a leadership team? And they’re thinking like, how do I evaluate if my team is the right team, for the next part of the journey? Are there things that you look for signs that might tell you that it might be time to bring on and have a layering activity of that sort,

Dave McJannet (HashiCorp)  37:22

I get a lot of advice from the investor community, and in particular, that likes to pattern match. And so you need to bring in the next person for the next phase, next person, the next phase, and actually generally disagree with it. And I’ll tell you why it’s because if I go back to my hiring rubric, skills and competencies, that skill that I prize most is systems thinking, the ability to distill simplicity out of complexity. That’s fundamentally the skill that I test for an interview process, particularly at the leadership level, because it turns out, you go back to that phase, analogy, phase phase space, these days, re architect, re architect re architect, the people that do well, are people that are systems, thinkers, people that can distill simplicity out of complexity, and then produce that into a system. So that’s point number one during the hiring process. That’s where we anchor on that, to your question of when do we know if this person is going to make the next phase or not? I would say generally speaking, the systems thinkers are going to make the next phase. So the trigger for whether it’s not working is if if they’re not ahead of me. If you’re running, marketing, or sales, whatever it is, like, you need to project to me what that system, how that system works, and how it’s evolving for the next phase for the next phase. But the next phase, if I’m the one that’s saying, Hey, dude, you’re gonna run out of runway, I’m gonna do my system review with you. And it’s clear to me that things are the things you know, you’re not 18 months ahead, that’s the flag to me. These people should be leading you, not you leading them. Obviously, that is a luxury at my scale, where we have deeply seasoned leaders. But I think that’s the thing. It’s like a trust that the systems thinkers will actually figure out how to reorient the systems. Number two, the canary in the coal mine is when they get behind in an oval runs, then, yeah, I think people will surprise you is maybe a short version is, you know, people with that sort of, with the attributes that you skill that you screen for will surprise you more often than not.

Aydin Mirzaee (Fellow.app)  39:13

Yeah, so I love this. So let’s get super tactical here. So you say you test for systems thinking, what’s an example of how one could do this in an interview process?

Dave McJannet (HashiCorp)  39:23

So my favorite Wall Street Journal article I read like maybe 15 years ago, it was one called Can You Pass a CEO Test?, and it was it was one of the corner officers, things adding up I mentioned to you guys before, in the basic point is you can test for this stuff. It’s hard to teach, but you can see it when it’s product. What I ask is like, Hey, I don’t know a lot about your current business. Number one, describe it to me, sort of the open-ended question number two is okay, if I were to give you so to talk about your current business where you currently are like, if I were to give you you know, 100 bucks and say I want you to increase revenue by 50% Next year, what would you do? Where are you invested? And you get you actually get one of two answers out of that it’s kind of interesting you get you get like, Okay, well, there’s a lot of things we could do, we could do this, we do this, or you get some of the goals, you know, what, they’re kind of three levers to this business. It’s like sales capacity. It’s the product, lead growth motion. Or it’s, you know, you know, acquisitions that we would do for the swing, like, the basic levers of the business are just obvious to them. It’s like staring at like, those old digital pictures from years ago, where you stare at them long enough to sort of reveal themselves in terms of what the shape is behind it. And some people can see it, but it’s harder for other people to see it. I think that’s what you’re trying to get to. But those kinds of questions, sort of like the open-ended questions around, like, what would you do? And I’m not trying to test you on my business, I’m just trying to see like, if you see the patterns that exist in, in your business, and there are lots of variations of that, that you can test for. Some companies got really, really specific about this. So Microsoft, actually years ago had an interviewing technique where you could ask these competency-oriented questions, and you could trim assess their answers. And you could grade their answers. Is it a level one is a level twos level threes, all four of this competency? And that’s a bit overly nerdery. A little bit McKinsey s, but the principle is right. Like someone’s either really good at it, or they’re not that good at it. And I think that matters, you know, some of the best hiring decisions we’ve made are like 24-year-olds, that when you test that, you go, wow, this person has got some talent. And I think you should trust it. But that’s a tactical mechanism, read the article.

Aydin Mirzaee (Fellow.app)  41:30

Yeah, no, I will definitely read it, we will put it in the show notes. And that was a masterclass on how to test for systems thinking. So that is super awesome. And then just very quickly on the processes, you know, just because me you describe the four areas, the four systems, like larger systems within a company, but let’s think about this just on a, you know, more practical level, if the company is not scaling rapidly, right? And we’re, you know, that you know, every 24 months, you need a brand new process, because it’s a different level of scale, are the processes as important? Like, let’s say you’re growing, but it’s just like not at that scale, where it’s going to 10x in three years? Is there a different lens of how you would think about the importance of the processor? Is the process like pretty core to any company?

Dave McJannet (HashiCorp)  42:19

Yeah, I think the thing that makes the startup scaling thing is so acute is the fact that you progress through so many phases through so quickly, because you grow when these markets hit they hit. So that’s what makes it acute for us after we look at them every 18 months. And if your company is only growing at 10% a year, you know, maybe that’s every 48 months, and that’s okay. And like that’s a much more comfortable existence for most people. Like this is madness, while we do you know, like, it’s like, it’s torture is a peculiar, peculiar masochism that we started are drawn to, to, like, keep doing this, because growing through those phases is really, really hard. But I would say, every company is comprised of people and systems. That’s it. It’s like, actually, the architecture of those systems is incredibly important. And so yeah, it is the foundation of your company is the systems. And by this, you know, different words can be used, but like, by systems, I mean, like, let’s talk about your lead to sale system. How do you like, that’s pretty important to you? So what we do is we say, let’s put that on a piece of paper, what is our lead to sale? How do we take a name progress that through a marketing, qualified lead progress that to sales, you know, some of that sales takes progress that through a five stage sales process, you know, onboard them as a general customer, that’s what leads to sale processes is for any company. So knowing what that is, is critically important, because that’s what endures, everything is built around that. And number two, instrumenting it so you’re looking at it regularly, so like, Hey, where’s the blockage? Is it here is here here? That’s how you run a business day to day is the blockage between stage one and stage two of the sales process? Okay, well, let’s figure out what we’re doing tomorrow to try and fix that is the blockage and the names acquisition, oh, let’s figure what we’re doing tomorrow to fix that. Like, that’s how you run a business day to day. So that is this the fundamentals of companies and how they work. The process we design comes upon us when we hit different scale inflection points. So yeah, it’s the foundation of the company. It is how you run a company. You don’t have to re-architect them as quickly if you’re going slower. And you know, that’s much more pleasant than the world that we live in.

Aydin Mirzaee (Fellow.app)  44:17

Yeah. And would you say that, like the better, you know, if your system is not great, you, I mean, you’re gonna have to compensate with it more on the people side, like these two things work well together. If there’s no systems and no processes, you’re relying on someone being able someone that can like figure out everything all the time, without having any sort of guidelines on this is how we do things.

Dave McJannet (HashiCorp)  44:40

Yeah, and maybe this is a maybe this is the inevitable, like, digitization, but that that our world is going through is like yeah, the way that used to do lead to cash perhaps was you had a good really good marketing person and a really good salesperson that kind of kept us all in spreadsheets and move things along and the opportunity afforded to us with automation is just systematize that in. So there’s much more of like a pre dredged River, that someone just flows down and they can hit the banks every once in a while but not get out of the banks. As people come and go, I think yes, otherwise you’re compensating with people. Yes, it is to manual. And, you know, people you’re competing with competing against are going to beat you. Because, you know, what we always say, and put to use the Franks Luqman quote is that markets are fights, and only the government can print money, the rest of us have to take it from somebody else, I think is the right phrase. Which means like, if you are not automating the processes your competitors are, and that’s, you know, that’s what I mean by like, they’re gonna take your candy. So yeah, there’s a lot of pressure to make sure that it’s just not a people game, but rather that’s the systematization is honed and honed, and honed and honed and honed. And yeah, is it going to suck? It’s like going to Silicon Valley obsession. It’s a bit nuts that we live this way. But that’s is how we do the world.

Aydin Mirzaee (Fellow.app)  45:53

Yeah, yeah. No, this is awesome. Dave, we’ve talked about so many different things. We started with inspiring the shared vision and being authentic, being a first line manager, manager of managers company, building all the different systems that exist within companies, and a tactical favorite for me during this, which is how to test for systems thinking, which I thought was really awesome. So one question that we like to always end on is for all the managers and leaders constantly looking to get better at their craft? Are there any tips or tricks or final parting words of wisdom that you would leave them with?

Dave McJannet (HashiCorp)  46:28

It’s probably the ones we started with truthfully, is management is about inspiring our shared vision. Elon Musk has this great quote. And I think, you know, he’s an unusual character. So I won’t generalize with him. But I think his his point is like a company is nothing more than a group of people aligned around a common idea. That’s a truism by a team is nothing more than a group of people around the land around inspired around a shared vision. And I think that’s the magic of this stuff. People are smart, they’re smarter than you. And so they don’t need to be told what to do. They need to be told what we’re trying to do. And I think some of my favorite people in your organization are our salespeople, like, I love hanging out with those people, because they’re smart man. And all you got to do is tell them what you’re trying to accomplish. They are way smarter than I am in trying to figure out how to get there. I think that’s the key lesson is to what’s what’s the altitude at which you communicate that vision, I think it’s the trick. It’s not, hey, we’re gonna go take Mount Kilimanjaro, okay, well, that’s not helpful to me. If it’s, Hey, we’re going to create a base camp, we’re going to skill ourselves and train for the next six months, right, and we’re going to have the provisions, you know, built up to allow us to do that. And then we’re going to crush this thing. That’s the altitude, right. It’s not about the what is not about about below what the end goal is, it has to be decomposed a little bit into the pillars of strategy. So I think that’s the key to management is inspiring, figuring out how to inspire that shared vision. And then number two, it’s about like, just being authentic in your own role and your own voice for how to do that, you know, and trust that, you know, most people when faced with the same data, make the same decision.

Aydin Mirzaee (Fellow.app)  48:00

That’s great advice, and a great place to end it. Dave, thanks so much for doing this.

Dave McJannet (HashiCorp)  48:04

Cool. Thanks for the opportunity. Always happy to chat about some stuff. And it’s a fun topic. So thank you.