CloudNY 2024: Company-Building Lessons From Early-Stage to IPO & Beyond (Part One)
Every year, CloudNY brings together 150 CEOs from the cloud ecosystem to learn from Founders & CEOs who have built and scaled billion-dollar technology companies from the private and public ecosystem. Last year’s 2023 summit (perhaps unsurprisingly) focused on building through down markets and leading through challenging times, and while we aren’t completely out of those woods yet, it was exciting to see the 2024 summit focus largely on building, hiring, and the work that CEOs can do today to set their companies up for success in the coming years.
Since off-the-record conversations are generally the most valuable, we have kept Chatham House Rules in place for CloudNY and the specific information shared during the summit. That said, we have summarized a few select company-building lessons from CloudNY below, in the hopes that they will be helpful for Founders who could not attend but are looking to learn from those who have been where they are before.
Anticipating and Planning for Company Breakpoints
When you climb a mountain, you don’t go up it in a straight line; you take switchbacks, which means you’re doing an “about face” at various points on your journey. This analogy, shared by Tien Tzuo of Zuora, describes the many points of transformation a company and its CEO must go through on the journey to IPO and beyond. Each switchback is a different breakpoint, and the more prepared you are for it, the more successfully you’ll navigate the next phase of the climb.
One of the key breakpoints Founders run into is around team structure. The way you run an eight-person business is completely different from the way you run a 25-person business. At eight people, one person can manage everyone. At 25 people, you need layers, you need managers, and you need weekly all-hands meetings. Each person can only manage about seven people well (give or take), meaning your company will have predictable breakpoints around 1, 8, 57, 400, and so on.
In addition to evolving your management structure and culture, you as CEO will have personal breakpoints, where you yourself will need to evolve with your company. One of our speakers shared that there were a few critical moments where he felt like he wasn’t the person to take the company where it needed to go, and might be better off stepping down into another role. After consulting with his board, and his family, all of whom reinforced their belief in his ability to lead the company through its next stage, he doubled down on coaching and mentorship. He had an outside facilitator conduct multiple 360 reviews each year, they would identify the things he needed to work on, and then track from review to review if he was getting incrementally better at those things. This continued learning and growth was critical in his long-term success as CEO.
Coaching quickly emerged as a prominent theme at CloudNY this year, with the majority of Founders on stage sharing that they had engaged professional coaches early on to help with everything from navigating people and cutlure challenges to identifying key areas of improvement for themselves as leaders.
“Five Minutes to Joy” & Navigating Product Inflection Points
Lew Cirne, Founder & CEO of New Relic, coined the phrase “five minutes to joy” to describe the product philosophy that shaped the company’s intuitive onboarding experience and fixation on fast time-to-value, explaining “You’ve got five minutes to amaze them, otherwise they’re gone.” This approach was core to enabling New Relic’s incredible success via product-led growth (PLG), though as Lew pointed out, PLG doesn’t last forever.
“Enterprise companies want a PLG motion, and PLG companies want to be able to sell enterprise deals. Eventually, companies have to learn to do both.”
While the transition from PLG to enterprise (or the reverse) is a significant inflection point in a company’s product journey, many key product inflection points happen much earlier. Ramp’s Founder & CEO Eric Glyman shared that they started with message-market fit (“we’re the only spend management platform that helps you spend less, not more.”) before they found product-market fit in 2020, which is when their growth exploded. Glyman emphasized that the company would never have reached that point if they’d given in to early customer requests to integrate directly with incumbent solutions.
The choice not to shift their product vision at this point was a critical inflection point that set Ramp up for long-term success.
Bernadette Nixon, CEO of Algolia, shared a more recent product inflection point they faced, which she described as “going from having AI at the edges, to having AI at every layer of their product,” which was a massive shift for the already-scaled $2B+ company. It required rethinking their entire development lifecycle from being optimized for a product that’s semantic-based and deterministic, to one that is probabilistic, with AI at its core — a shift that required a fundamentally different approach to building, testing, and deployment, to their architecture, to the skill sets needed on their teams, and more. It cannot be overstated how challenging this change is for a company as large and well-established as Algolia to do successfully, but the fact that they made the investment and moved quickly and thoughtfully, has enabled them to emerge on the other side with a strong foundation that will allow them to continue growing as the leader in their market.
Taking a step back, it’s clear that over the lifecycle of a company, you can expect to encounter several product inflection points. Some may come from your vision for the product, your values as a company, or from external factors like the proliferation of a new disruptive technology, like AI. In these moments, it’s clear that the right approach is to take a strong stance to go all in on.
For New Relic, that meant doubling down on PLG with a frictionless customer experience and fast time-to-value.
For Ramp, that meant saying “no” to integrating with the incumbents it aimed to eventually unseat.
And for Algolia, that meant rethinking their entire product from the ground up.
Tactical Culture Hacks for High-Performing Teams
Culture is one of the most widely discussed topics out there, especially as it pertains to building high-performance teams within technology companies. For that reason, we wanted to take a different route to the conversation, and zero in on specific tactics and strategies that top CEOs have found success with. Here are some of our favorites that were shared at CloudNY:
The “Questions” Challenge
As CEO, you likely have a lot of very strong (often correct) opinions, and going into meetings, you know exactly what you want to say. This can lead to what one speaker referred to as a culture of “grandstanding” where everyone comes into each meeting knowing what they want to say, and feels better after they say it. The problem with this culture is that it reduces the actual listening and discussion happening in each meeting — everyone is just waiting for their turn to say their piece. To put a stop to this from happening, one CEO shared that they issued themself a challenge: to only ask questions in meetings for two weeks straight. No answers, just questions. And, while they admit they had a few slip-ups during this challenge, the overall effect was that they became a facilitator of thoughtful debate and discussion, which in turn led to much more collaborative, fruitful meetings for all, and steered their culture away from grandstanding.
Counting the Days
One lesson that Ramp Founder Eric Glyman took with him from his first company, Paribus, was that he needed to find ways to maintain the sense of urgency an early-stage startup has, regardless of the company’s scale. One solution he devised for this was to count the days since Ramp was incorporated (this article was written on day 1886 for Ramp), which they announce at team meetings, and display around their offices. As Eric explained, “Even though things are going well, we still need a sense of urgency. It’s not about seizing the day, it’s about always getting a little bit better over time.”
Rallying the Troops
One of the critical topics that kicked off the day was discussing how a smaller, weaker force (i.e. an early-stage startup) can defeat a larger, stronger force. Whether you’re talking about startups or military victories, the answer is always the same: the smaller force focuses its entire strength on the enemy’s weakest point — and this is where the strategy comes in that will determine the fate of your company. As Marcus Ryu, Co-Founder of Guidewire and Partner at Battery Ventures pointed out, “A company can survive some bad hires and bad decisions, but it can’t survive a bad strategy.” You need to identify your enemy’s weakest point and rally your team to focus all their strength on it. Reflecting on the Guidewire journey, Marcus explained that shared adversity is more powerful than shared success, shared austerity breeds more innovation than shared abundance, and shared purpose is more motivating than shared enjoyment. These insights are at the core of how you rally your troops to a common cause and successfully defeat the larger, stronger force you are up against.
