Editor’s note: In SandHill’s series profiling software leaders, there is much to be learned from Dave Kellogg, who has held leading roles in some of Silicon Valley’s most enduring companies for three decades. He is currently CEO of Host Analytics, which provides cloud-based enterprise performance management (EPM) solutions. He also blogs his thought leadership at Kellblog, commenting on topics such as SaaS, performance management, social technologies, Silicon Valley, venture capital and the software business.
With the big emphasis now on blogging and content marketing, how important do you think it is for a software CEO to also be a thought leader?
Dave Kellogg: Generally, I think it’s important that CEOs be thought leaders and express their views. I’m a big believer in high-value content but not content that is a thinly or thickly veiled advertisement. I learned this on the way up. One time my boss said, “Dave you have two jobs. You’re the CMO, so you run marketing; but your other job is to help me run the company.”
And I think a CEO also has two jobs. Besides running the company, a CEO’s other job is to be a thought leader. It’s so easy to be all-consumed with running the company. It never stops. But if you don’t get good at drawing lines and not letting yourself be all-consumed, you become inward-looking and miss industry trends, customers, the market. I also think it’s good for the CEO to sit on one or two outside boards to not lose touch with the outside world.
You held past roles as SVP/GM of Service Cloud at Salesforce, CEO of MarkLogic and CMO at BusinessObjects – three big leaders in their spaces. What do you think makes these companies great, enduring companies? Is it more than the CEO’s decisions? Is it the way they tackle innovation?
Dave Kellogg: I think they are three great examples, and I think there may be a different reason why each one is an enduring company. At Salesforce, the words that come to my mind about why they are such a strong leader is the pioneering spirit. They are always pioneering, always breaking new ground. They are never complacent. They are always pushing forward hard. And that’s a great testament to Marc.
The other thing I found really special about Salesforce is the quality of the people I worked with was spectacular. One of the things I’ve seen is that as companies get bigger they lose some of their entrepreneurial oomph. But not at Salesforce; they do a great job of getting big company entrepreneurial people.
At MarkLogic, it was all about the technology. It has phenomenal technology, and the people who built it were arguably a decade ahead of everybody else. They were the first to build a database using search engine parts; today, all databases are built this way. But nobody else thought of that at the time MarkLogic was founded.
For BusinessObjects, it was a lack of complacency. The people who ran the company, including me, were very competitive and wanted to win. And that’s powerful. With some startups, people make some money, go public and then lose their oomph. BusinessObjects felt less like a startup as it got bigger, but we never lost that competitive spirit. It was a very driven CEO and management team that wanted to win.
I think those are some of the things that help keep these companies at the top of their game.
How important do you think the corporate culture is in building an enduring company?
Dave Kellogg: Culture is enormously important as a competitive factor. I’m a huge believer that culture and strategy are highly aligned. Therefore, as you define your strategy, you need to think about your culture. These shouldn’t be independent exercises; it should be a single exercise. What is our business strategy, and how can your culture support that?
In my opinion, a lot of people miss that. They fail to get culture’s link to strategy. They kind of compartmentalize it: (a) here’s our strategy, and (b) here’s what kind of culture should we have. And they also mistake perks as culture. Culture isn’t about dogs, yoga and lunch. Those are perks.
My belief has always been we’ll run the standard perks; but if people are only staying because they have free lunch or they can bring their dogs to work, maybe they should work somewhere else. Fundamentally, I want people working at our company who are in line with the mission and culture. People who are here want to work in the world’s best Enterprise Performance Management (EPM) company. They love EPM.
And in our culture at Host Analytics, we’re super customer centric. It’s one of the reasons we’ve been so successful. For us, our strategy is excellence in EPM, taking EPM to the cloud, and we want to create an environment where the best people in EPM want to work. What do they want? How do we get more of them? And how do we focus them on our customer success?
Culture is incredibly important to businesses, and I think it’s often overlooked and often confused.
What is your top leadership advice for an inexperienced company founder?
Dave Kellogg: My advice is to get experienced advisors, ideally as board members. There’s a lot of Silicon Valley that’s not written down. Happily, there are certain blogs, mine included, that show good information that was typically unavailable in the past. I could tell you a dozen things that you could only learn through experience, no matter how many books or blogs you read.
I would also argue there are two types of advisors: parasites versus real advisors who have done real things and can really help. There are a lot of parasites who say they have expertise or advice that they really can’t offer. It’s very easy for a new person to get confused about which is which. I see it all the time. You want strong advisors that are experienced in the business challenges you’ll face and are committed to you.
The good people won’t do it for free, and they won’t do it for some small cash or check per month. Typically, they want nice equity and skin in the game. So, get strong, independent board members, and don’t be afraid to give them a chunk of stock. They will be worth gold.
By the way, BusinessObjects was founded by two young guys from Oracle France who were smart but lacked extensive experience. But it also had a phenomenal lead board member who gave all kinds of awesome advice. I don’t believe that, without Arnold Silverman on the board, BusinessObjects would have been as successful as it was. Arnold did a tremendous job of providing advice to the two young guys building the company.
You state in your blog that you love disruption. What is your top leadership advice for an established company that may be facing disruption?
Dave Kellogg: Figure out a way to not lose your entrepreneurial spirit. Like I said earlier, it’s one of the things that makes Salesforce great.
One of the things I didn’t love about BusinessObjects as it grew toward a billion-dollar company is that we kind of willingly accepted our fate that we were becoming a big company. We accepted the fate of problems and bureaucracy and things that slow down big companies. Rather than fight that, we accepted it. Yes, a successful company will get large, but it doesn’t have to get like a big company. You can keep your entrepreneurial spirit. Great companies fight “big” with all their might.
What do you do for fun?
Dave Kellogg: Fly fish. It’s very peaceful. I have four kids who have kept me busy over the years. But as far as hobbies, first it’s blogging, then fly fishing. And I’m a voracious reader.
Is there anything you would like to change about Silicon Valley, the VC world or the software industry in general?
Dave Kellogg: Yes. It’s the extremes of the cyclicality. All businesses have business cycles; there are always boom and bust periods. But in Silicon Valley, these cycles are exaggerated. In 1999 you could say anything and raise money and go public and be worth a billion dollars. And in 2001 you could have a great business and you couldn’t raise a penny.
To be honest, I’m not sure it’s a fixable problem. As people do well, more money shows up, more money means more investment, and that means more companies; so bad companies get invested in as well. But the thing I’ve seen over the past 30 years is you have these very extreme cycles, which end up making timing very important in terms of the venture cycles and the financial market cycles.
I would love it if that was more stable. If you raise money in year one versus year three, that can have an impact on your outcome. And that really has nothing to do with how good a job you’re doing in serving your customers and building your business. If you look at what’s driving those extremes in the cycle, it is the herd mentality. That’s the root cause. Everybody is looking at everybody else. Maybe if you changed that you could damp some of the extremes out of the cycles.
As Host Analytics CEO, Dave Kellogg is on a mission to “disrupt then transform” the enterprise performance management (EPM) space. Prior to Host Analytics, Dave held roles as SVP and GM at Salesforce.com, CEO of MarkLogic and head of marketing at Business Objects. A recognized thought leader on topics ranging from venture capital and Silicon Valley culture to cloud, big data, and social enterprise technologies, Dave is a highly regarded blogger at www.kellblog.com. Follow him on Twitter.