Palo Alto Networks CEO Nikesh Arora on the Virtues of Being an Outsider

So many founders get trapped in this idea that I should get customers as fast as I can. I should ask them what they want. I think it's worthwhile. The best founders should actually spend some time, build a product based on their own vision, show an end-to-end point of view, and solve a real problem. For everyone who's listening, every CEO or founder, is in the early part, swing big. Swing big. You fail big.

If you're a new CEO.

Why not? Swing as hard as you can, right? Take 3 swings. Who cares? At the end of the day, if it works out, it's going to work out spectacularly. If it doesn't work out, pack your bags and move.

If you want to hear a masterclass on how to be a CEO, listen to this pod with Nikesh Arora, the CEO of Palo Alto Networks. We go behind the scenes on Nikesh the man. His remarkable career, the lessons he learned from Larry Page, Eric Schmidt, and Masa-san, how he became a CEO, how he actually does the job, and how he earns hundreds of millions a year doing it. We go deep into one of my favorite topics, second acts, and how great companies become platforms, which is often the difference between a really nice outcome and a legendary one. And they're pulling the legendary side off. And we go very deep on M&A and we go deep on M&A from his side, the buyer's side, with some really smart acquisition practices. I really like that, but this podcast is much more for the entrepreneur. So when I come back at the end, by the way, I'm going to come back at the end with a bunch of takes on this. But one interesting take I'm going to have is I'm going to flip it around and I'm going to talk about best practices on getting acquired from the entrepreneur's perspective. Based on what we learned on how Nikesh does it. So I'll see you in a bit. Hope you enjoy the podcast. Um, gonna be great. Okay, Nikesh, you bought 27 companies. Um, things I get questions on from startups and we ask ourselves at HubSpot, like we buy a company and sometimes we kind of throw a lot of it away, keep the domain expertise and the talent and rebuild it on our platform because we're a platform company and Kind of our differentiation relative to Salesforce and other companies is we are kind of all-in-one. Do you ever kind of throw out a lot of it and rebuild it, or do you kind of keep it all and just keep pushing it in the market?

Look, if you think about acquisitions, they take on different forms. Now, cybersecurity is so fragmented that there are actually 4 or 5 swim lanes. So you could actually build a platform in every swim lane. For example, you can build an endpoint platform, you can build a SOC platform, you can build a network platform. These don't talk to each other as much.

Okay.

You can move data from one to the other. But yeah, you shouldn't build an endpoint stack with 5 different technologies. You shouldn't build a network stack with 5 different technologies. So there it matters if you're rewriting on your stack or not. Now, if you think about what inspires you to go buy something versus build it yourself, it becomes an essential feature. You believe you can take the innovative lead in doing that. and the process of integration is 3 months or 4 months, and that you're willing to take that hit. Take for example, we were never a player in SASE, which is a form of accessing your infrastructure remotely. We saw that AI is coming. There are certain use cases which are not satisfied. People have third-party contractors and they try and access your systems. You have to give them a laptop and you have to be secure. And we saw the emergence of companies building an agentic, sorry, a secure browser.

Island.

Or Talon, for that matter, right? Yes. And I said to my team, hey guys, this is going to be important. There's a browser coming. There are people building it. I know we've had browser fakes, as in head fakes in the market. People have talked about browsers going to take over the enterprise many times. But I said, this time it feels real. So my team is always like you'd expect from any engineering team, but came in and showed me a plan saying 60 engineers, 9 months, We'll give you a great browser.

Yeah.

And we'll be, you know, we'll get to where these guys are. And I said, what do you expect? These guys just hang out, wait for you to catch up for the next 9 months.

Yeah.

They'll be again 9 months ahead and their team's working. They're going to add more people. So we ended up acquiring Talon. Now we spend some time refactoring it, aligning it with our platform, because remember, the browser has 2 parts. The one part is the browser itself, which is the refactoring of Chromium, etc. The second part is attaching security services for it to be an enterprise browser. Now, what both Talon and their competitors are doing is they're buying third-party security services from whoever would give it to them so they could focus on the browser part. We had the third-party security services.

Yep.

So we have premium third-party security services which we can connect to the browser. So we did that in the case of Talon, and then we combined that with our SASE product. So we were able to go off to the races from the go-to-market perspective saying, listen, we have a comprehensive solution. You can get remote browser isolation, you can get the browser, you can get a VPN client, you can get all of them with one security fabric across the board. That allows us to be differentiated from our competition for a long time. Now, as you can see, perhaps it was the right bet or the market believes the right bet because the competitor is valued so highly that for anybody else in our space to compete, they have to put out $8 to $10 billion to compete with us. So that allows us a leg up now. And I think where it's a comprehensive solution requirement, there's nobody but us. If somebody's willing to take just a browser, then there's another option in the market.

Okay. In that particular case, you buy a very hot company.

Yes. Hot technology. What was not clear, we paid a lot less than what the current value is. We paid like $600 or so.

Okay. In the current market, anyone you're buying, it's expensive and the talent's expensive.

Yes.

One thing we ask ourselves at HubSpot is we buy this company, we want to retain this talent.

Yes.

And they're incredibly valuable outside.

Yes.

And it's incredibly valuable to them to start a new company.

Yes.

Are you doing creative things compensation-wise to the founding teams, the engineering teams, to try to lock them in so they don't jump at the next huge pay package? Yeah.

So, you know, we've had experience now doing this north of 25 times and we have a simple rule and we've learned this over the years. This is not the first time we did it. Like the first time we did it, we were like, you know, fumbling through this. But there are some fundamental principles which I think distinguish ourselves from what people have traditionally done in M&A.

Okay.

One, I have a simple rule. These guys kicked our ass in the market with less resources, moved faster than us.

Yep.

So they must know things better than us. So they have to come in and run this instead of our people. Traditionally, companies say, oh, meet my senior VP of crypto. And if you bought a crypto company, you're going to report to him. Well, the senior VP of crypto should have kicked their ass. We have given them the resource they wanted. So the founders become the bosses of our people as opposed to the other way around, which our people find a little unnerving, to be fair.

I would imagine.

And, but the founders find that rewarding. That's one. 2, we say, how can we help you accelerate your business? Because we are going to have a drag on them for sure. We're a larger company. We will slow them down in some cases, perhaps with our processes, perhaps it's the other way. So the first question is, how do I accelerate your business? Typically it's get me more engineers, right? I want to move faster or let me do this.

Hmm.

Now the third thing we do is we spend the diligence period designing a joint product roadmap.

Okay.

We didn't do that the first 2 times.

Okay.

So when we bought the company, the founder said, dude, thanks for the money and thanks for letting me come here, but I want to build what I want to build. Like, dude, no, I just paid you a lot of money. You're going to build what we agree. Yeah, I'm happy to agree with them.

Okay.

And if you don't agree, good news is you don't have to sell to me.

Okay.

So we design an agreed product roadmap before we sign the final term.

Okay.

And the most importantly, you asked the question on talent, right? Again, I say we're buying half product and most talent because these things are 3 years in, 2.5 years in. I think it takes 4 to 7 years to build a good product in tech. So we still have 2, 3 years to go. I think the shelf life or half-life of founders is about 3 years in a company.

And do you do a 3-year vest or something?

So we do an unvest.

Okay.

We tell the founder, we're buying your company.

Yeah.

You have to unvest half your stock.

Oh, that's brutal.

3 years, but we will top it off between 25% to 40% depending on, you know, the economics that are at play.

I see. Okay.

So we'll give more equity to them.

I see.

That's the only time I can give them tremendous amounts of equity because part of a structured deal.

I see. And what about a frontline engineer who's just really good? Like you've got— you buy a company, it's got 30 engineers. The founder is one thing, but all those engineers are really smart and have domain expertise. Do you do clever things with them? Do you roll them back?

We roll some of them back. Some of them are newer to the company than the founders. So usually they have a year or 2 remaining. We generally try to lock them in for the first 3 years.

3 years?

Yeah.

And then what percent do you think leave after 3 years, roughly?

You know, if you think about founders, some bizarre reason, there's typically more than one in tech. There's usually 2 on average. Uh, usually one of them works harder than the other one.

Okay.

Uh, and you'll find that— look around you, think about, think about all the tech companies which have gone through the process of multiple founders and eventually success, whether it's a Facebook, whether it's, you know, yeah, YouTube, you look around you, all these companies where there were multiple founders, eventually there's one founder front and center and the other founders sort of don't want to do that and they go off and do different things. So typically you'll find that in every stage of a company, you'll find a 4-year-old company where one founder is working hard. Rarely do you find a company where all 2 or 3 founders are working equally hard. But anyway, let's assume that there's one or two, it doesn't matter in this, for this, for these purposes, right? Those founders are the ones we will then find a way to work with, to find the— identify the engineers that are needed. I think at Palo Alto, I want to say the primary founders have almost all lasted the 3 years we've asked them to last, and there are a few who've lasted longer. There's some founders who've made more money being part of Palo Alto than in the 7 years they ran the company.

They've done incredibly well. Yes.

Yeah, but if you get a lot of stock at Palo Alto, we say you can't sell it for 3 years. Sometimes you do a lot better than they would have done if they'd hung on to it.

Yeah. Okay. Related to this, like at HubSpot, we do some version of horizon planning. H1, near term, H2, H3. How do you guys do that? And how do you do it when like shit's changing so fast right now? Like it's really sped up. How do you guys think about that? Where does M&A kind of fit into all that? Or do you not do it at all?

I'm trying to interpret your version of horizon planning in terms of—

Well, like at HubSpot, we look at our, our like, what is HubSpot going to look like in a year? We want 70% of our resources on This is the next year. We want 20% on stuff that's 2, 3 years out. We actually want 10% on stuff that's going to be 5 years out.

Got it.

Got it.

Yeah, we do it because we have now multiple platforms. In each platform, there's a core part of the platform, which is where typically 60% to 70% of resources are deployed because they're constantly adding features, constantly adapting to certain customer requirements. There's 10%, 20% of the people who have to be working on new features to be launched, right? I want to see a 12 to 18 months rolling roadmap saying, what cool thing are you going to show me? Because if you're not working on some cool thing, somebody else is. So there's a team that works on the cool things. And then there's the, the 5% is the hardest part. The 5-year-out problem is the hardest problem because that's where I think is where we end up relying on M&A.

Yeah.

Where there are people out there, thanks to the thriving venture community, you guys are doing such a wonderful job in seeding all these research labs that I still see a few hundred companies a year. And the good news is they're so great. They come and share what they're working on, their ideas, because You know, I share with you, if I was so smart that I could take something from a startup and go build it faster than them, then they shouldn't be in that business anyway.

Fine. Um, a lot of the founders I coach are building apps and are trying to go on to their second app and want to build a platform. And there's this saying kicking around, either you, you are a platform, you get eaten by a platform. I feel like under your watch, Palo Alto became a multi-platform company. Advice to founders thinking about second acts, thinking about going from, you know, a point solution to a platform.

Look, we didn't start as a platform company. We started as a firewall company.

Yeah.

When I came to Palo Alto, you know, the last major innovation that was launched to the markets was 4 years before I arrived. And they hadn't done a lot of launches because they're very happy with the fact that firewalls were selling and we had 4 subscriptions and there was amazing organic growth.

Yeah.

And I said, then what's the next act? What are you going to build?

Yeah.

That's where it becomes important to have some guidelines as to what's useful, what is not useful. So I'll tell you a funny story. I was sitting in the room and I knew nothing about cybersecurity, and I'm sure we'll talk about this.

Yeah.

And I said to the head of product, Lee Klarich, I said, so what are people working on? Like, what's going on? What are people working on? We haven't launched anything for a while. So, well, you know, we have this big release we do every year, which is a software release for all of our firewalls. I'm like, that's great. So what are these people doing? There must be like 500, 600 engineers. So Jesse Ralston, our head of engineering, came in and he brought 2 of his colleagues. He's meeting the new CEO and he's going to tell him what to do. So I said, what are you working on? I was very excited.

Okay.

I'm working on 60 new features for our new software, for our new software upgrade for the firewall. I'm like, that's cool. Is that going to help you sell more firewalls? I don't know. That's kind of like— sounds like a lot of work for 600 people. And I'm like, so am I going to make money? He's like, no, we're going to sell more firewalls. Okay, let's do me a favor. If you're working on it 6 months, like I said, Here's the marker, whiteboard, just write down the 60 features. So they got exhausted after 37.

Okay.

I said, you do realize we've got a problem? They said, what's the problem? I said, I got salespeople out there. They're going to sell this stuff. You're building it. You're smarter. You can't remember past 37. How the hell are my salespeople going to learn 60 new features which are going to be for free?

No way.

This is a problem. And this just tells you how how marginally competent I was. In on that 37 things, there were 7 lines which said DNS on them. That seems to be a bit thematic. Talk to me about DNS security. So they told me about DNS security, told me about Infoblox, told me about all the stuff that was going on. I said, so can we replace a DNS security vendor if we do this? Oh no, we've solved 60% of the problem, but the other 40% is harder and requires a little more work than what we can do in the OS. Like, 60% is not good enough, bud. Like, what am I going to do with the other 40%? So that day, we redirected the rest of the effort for the next 4 months into making the DNS security more robust. That was the first piece of innovation we launched at Palo Alto.

That was your second act.

That was my first—

Your first act, company's second act.

Well, that was the beginning of the company's second act.

Got it.

The reason I tell the story is that was the beginnings of the idea of a platform. Which means if you have a firewall which is being deployed by our customers, they trust us to go in and get inline. They buy 4 subscriptions from us. What other sliver feature industries as part of our ecosystem can we eliminate by giving them a 5th, 6th, 7th, 8th, 9th, and 10th? So actually, over the course of the last 7 years, we launched 6 others. So we have 11 subscriptions now that can be sold on the platform, i.e., you buy the hardware box, And now I can do 11 different things, which are all $11 billion lateral markets that get consolidated on the platform. So that was kind of the beginning of the idea of a platform. But I sat there and said, look, how many cybersecurity products are there? And there were a lot. There were 5 SIEM lanes. There are many products. And I said, we're only in one Magic Quadrant. Looks like this is something important. I was like feeling my way through cybersecurity, through enterprise. Like, why can't we be on more Magic Quadrants? So today we're north of 24 Magic Quadrants.

Okay.

And that was great. So very good, very well done. Lots of point products sold by— produced by Palo Alto. And they said, by the way, the problem is each of these require their own validation, their own specialist, their own convincing the customer. I said, this is not how we're going to do it. Let's make sure now that we have 24 great products, we stitch them, that they work better together.

Yeah.

Which became sort of the next push behind platformization. So—

When was that?

This was about 3 years ago. And we started stitching them to 3 platforms, our network security platform, our cloud platform, and our Cortex SIEM platform. And then you discovered that when you talked to customers about the platform, it was open season. There was nobody else in the conversation.

Yeah.

Because we were going and saying, listen, we don't want you to buy just a point solution. Look, these things work together. And once you get people convinced of the platform, then they start a journey and moving to Palo Alto, which is great because we have very low churn on our platform sales and their customers are happy. They get deployed and they would never rip out a platform and go back and say, oh, let me go build 6-point products and go replace Palo Alto with those 6-point products. So it kind of worked out, but you can't start there. Yeah, you have to start with an MVP, with something that's innovative, that's going to make you win. And then customers, you get their trust and say, by the way, I also do this. And what I do here is also as good as everybody else, if not better.

Yes. You have to get the table stakes at some level.

That's right. And that's where if you're building the next app, if you have one app, the question is, what is the lateral app? Where, to use the cliché, 1+ 1= 3. If your app and this other app works together, does it create a better outcome? And does it allow me as a customer to replace that?

When you're planning this stuff, how much of Palo Alto is you or your team looking around a corner versus, you know, we're just going to listen to customers about what customers want?

That's a tough one. You want to say we listen to customers, so we do.

Yes.

But my customers are not going to tell me that browser's next.

Yep.

Right? Literally, we had our summit last week in Napa, and we had a bunch of CIOs there. And literally showing them the browser, showing them the value of the browser. And they go, oh my God, this is cool. Can you spin up one for me? Literally spinning up tenants for our customers to try the browser. And they look and say, holy shit, why are we not doing this stuff? So they wouldn't be telling me because they would tell me the 27 reasons why browsers never worked in the enterprise for many years. But now I tell them, really, you don't think in 6 to 12 months from now, you'll have multiple agentic browsers who will want to take over credentials and do tasks for you? And you don't want to find a way to control them? Oh shit, you're right. We better go get our act together and go figure the browser stuff out. So I think many cases end up with customers who either will tell you incremental features. Like I had a customer once, I was sitting there and saying, listen, we'd like you to take this network security platform from us. And by the way, we have telemetry, we have metering, we have observability in the platform, and we have all these cool things in SD-WAN. And he says, where do I manually do traffic steering in your platform? I'm like, you want to do what? So I want to do manual traffic steering. I'm saying, you run a very large network. You actually believe you have the mental capacity in your team to do manual traffic switching? There's no such option. Now the problem is, the risk is sometimes, this one was obvious, but the problem is there are many times the customers ask you for stuff that is something they're used to doing in a different product or a different way. And now you're suddenly working backwards, creating backward compatibility. So you got to watch out for what the right balance is between, between sort of, you know—

Don't listen too hard.

Yeah, you have to adapt to their requirements to some degree so you can make their stuff work. But you got to be careful about getting full feature knowledge about the future because you take the example— the reason, by the way, this is pertinent to cybersecurity. Cybersecurity founders have this strange affliction. They will start building and they want to go out there and talk to customers as quickly as they can. It's like literally 3, 6 months in, they're talking to their buddies, CISOs, they have these customer advisory councils, they bring all these people in, give them some advisory shares, and ask them, what do you think? Now, typically people who have their free time are large enterprise CISOs or CIOs. So they'll hang out with you, they'll come to your offsite, they'll give you advice. Large infrastructure people don't want UI. They want speeds and feeds. So typically they point the founders towards speeds and feeds. Founders feel really happy. Oh my God, I built speed and feeds, and look, this bank is using me because this bank's got 15,000 engineers. They want speeds and feeds because you found some threat vector, and they'll take the speed and feed, put in their system. The problem is that's not a product. That's not a product an enterprise can deploy or work with or use effectively. So many founders get trapped in this idea that I should get customers as fast as I can, I should ask them what they want. I think It's worthwhile. The best founders should actually spend some time, build a product based on their own vision, show an end-to-end point of view, and solve a real problem.

That was the case with HubSpot. We built stuff that, first of all, investors thought we were stupid. The VCs did.

I'm sure they love you now because you did a great outcome for them.

So yeah, we did our Series A.

It's easy to change their mind. Customer, a little harder.

Yes. Then we did our Series A, was 5 on a 6 pre. Give away a lot of the company on Series A.

That sounds like a— Like an angel check right now.

Yeah, totally. As I listen to you and I think about your journey, there's a couple of things I think are great and unusual about you. One is they hired you from the outside and you weren't a security guy and you had to figure it out.

I wasn't an enterprise CEO either.

Right. And so I have a lot of questions along this line, but you figured it out. You're in meetings with your team, with the team, and I'm sure a lot of meetings you didn't know what the hell they were talking about.

I still have that sometimes.

I guess. How do you walk that line? How did you learn? How did you keep— how did you not lose credibility and have them eye roll at you?

I think all of that has happened.

I'm pretty sure.

I'm pretty sure the eye rolling has happened. I'm pretty sure somebody left. It's still happening. Well, you know, a little less now. Because like you said, the stock's done well, the company has done well. So people like to win and they figured that somewhere in my madness there is a way to win. So they go with it and give me the benefit of the doubt because it's worked out so far. But yes, if it doesn't work for a while, they start wondering what the hell is this guy doing again?

So yeah. When you first came in though, like you didn't know a lot about it.

Like what was it? Nothing. Let's be clear. You don't have to be polite. I didn't know anything. Okay. I literally thought cybersecurity was 2 different words. So I didn't know it was one word.

Okay.

Right. And I walked in and I'm talking about like, executive security or whatever. Like, I didn't know what cybersecurity was. And I'm sitting there and talking to our friend Jim Goetz or Ashim Chandra, who were part of the hiring committee. Yeah, I think I got hired because he had risk-taking venture capitalists on the nomination committee, which is a good lesson, by the way, for companies. They should have some people who have a higher risk appetite in their nom gov committees to hire people, because otherwise you fall into the trap of very traditional people who are checking boxes to hire people.

And they don't— I violently agree with that.

Yes, I think so. That's kind of an interesting And of course—

and generally, non-government people are not risk-seeking types of people.

Boards are not, right? Public company board, you're getting paid nothing, right? You have zero appetite to take risk. You can only get into trouble for making a bad decision. You don't get rewarded for making a good decision. So what do you do? You risk manage. And risk management, you know, the most risk-managed portfolio is the S&P 500. It gives you market returns. So your risk management hiring You end up with market returns. That's a good outcome.

We have a section in our board meeting once a year. It's the ERM, Enterprise Risk Management.

Yes.

And my co-founder made a joke. He said, those are your 3 least favorite words in the English language.

I think we have one of those too.

Yeah. You didn't know what you were doing. You joined. How did you— what the hell were you doing? First of all, why did you take the gig?

I was home for a year and a half, and you'd be surprised, not many people want an outside CEO from the outside for a substantive business. Usually they're very broken and you sit there and say, why would anybody touch this job? Yeah, so you don't want those. Uh, or they have currently in the current tech environment, usually there's a founder who doesn't like doing certain parts of the job and they want to hire somebody to do that part of the job, but they still want to be around and run the company. And I've been there, done that, tick the box. And then sometimes you find these gems where, which are fully public, there's no controlling shareholder. The founder has never been CEO, doesn't want to be CEO. He wants to be a technologist. And he said, and it's a well-run company, decently run company. It was, you know, Mark McLaughlin, my predecessor, was an amazing guy. He built this on a very high integrity culture. So you had something great to work with from sort of the bones of it. And then you're in a market which is going to be amazing because cybersecurity is a market which is going to keep growing. As tech keeps growing, cybersecurity is going to keep growing. And then the sort of the icing on the cake is like, it's got 1.5% market share, which means this is an industry ripe to consolidate in some way, shape, or form. Why can't there be a 10% or 20% share player in this space, which is traditional for most tech? That was my thesis walking in. So I actually didn't study cybersecurity to understand Palo Alto. I sat there and say, how does enterprise companies work? If you do enterprise math, it kind of falls into 2 very simple places, right? So any founder who's thinking about scaling their company has to think about 2 different scenarios. One scenario is it works in the, I call it product-led growth model, where you build a great product, people adopt it, your cost of sales are de minimis, whether the Atlassians of the world or the Adobe, one part of their business, or the Dropboxes of the world. They're just there. And they usually struggle to do the larger enterprise deals because the product's not designed for that as well. The enterprise guys want way more features, want way more adaptations. So usually end up doing really well in the packaged software, packaged solution business.

Yep.

And it with some sort of little dials, but your UI is pretty because you want to convince customers, you know, almost like a consumer company in a product-led world. That's kind of one part of the business. That's good because if you look at the other side, I have very simple maths, you know. So I'm like looking and saying, look, if you look at the enterprise business, sub-billion dollars, Your cost of sales, marketing, and support is 60 to 80%.

Yeah, it's huge.

That's what it is. The rest of it is only 20 to 30%. And even at scale, that goes down to 18 to 25%. So there's not much spread there. All the profit is made in optimizing that 80%.

How do you do that without crushing growth?

That's a good question.

Thank you.

You don't, you don't crush growth. You need to be of a certain size and scale. So the first thing I did Amongst many things is I took our operating margin down from 20-plus percent to 17%. I actually invested 500 basis points more into growth. So like, we're not investing enough, right? So that, like, that coupled with no knowledge of cybersecurity really made people's eyes roll. It's like, holy shit, this guy just walked in and wants to hire more engineers, buy more companies, use up the company's cash, and reduce their operating margin. That sounds great.

Yeah. Okay. Let's start really popular.

Very popular. And then I'd walk in and I literally just walk into the company and say, what am I doing here? To your point, the first 6 months I didn't know.

Did you feel that way?

I did.

Yeah.

I walked in. But remember, I'll tell you a different story. So this was taught to me by a fund manager. My first job in the United States, well, my first job, which I loved, was I was a buy-side analyst. And I walked in and my job was to analyze stocks in front of, stand in front of very opinionated portfolio managers and tell them why to buy the stock.

Yep.

And it didn't really matter. I mean, come on, you're reading about the stock. There was no ChatGPT to summarize stuff for me. There was no Google search then. You had to go read a bunch of financial reports, put it together, do a spreadsheet, put a model together and tweak some numbers and say, I think we should buy this stock.

Yep.

And you have to do that based on some speeches of the CEO and CFO had made, or you'd met them once for half an hour. That's kind of like pretty out there to go do that stuff. Anyway, we did that. The problem was 2 weeks later, they would do something different than your thesis. Now you had a choice. You could change your opinion based on that and get buffeted by that and grow as a person and say, hey, I was wrong. I changed my opinion. Then 2 weeks later, do something else. Or you could have to deal with all the uncertainty inside and still maintain your thesis in some way, shape, or form. So you had to decide what a long-term thesis was and deal with the uncertainty amongst yourself without making it visible. That's what I learned when I was way younger than today. I said, it's kind of like walking into politics. I felt the same way. I said, I had to keep my insecurities inside me. I had to keep my convictions inside me, sort of be like a duck, you know, like be serene on top but paddle furiously underneath and try and get my shit together, which is what I was trying to do. And I used to call Nir Zook, our founder, either in the morning or in the evening on my way to or from work. I used to call Lee Klarich, the chief product officer, the other time. And I'd spend half an hour, 45 minutes asking them all kinds of questions. And then I'd call Mark McLaughlin sometimes because he was still available as an advisor or board member. I'd call Ashim, I'd call Jim. I'd be calling these people all the time. I don't know how many phone calls I must have made. I saw 300+ cybersecurity startups in the first 6 months I was there because I was just trying to learn, absorb.

Yeah.

So that allowed me to start building a mental framework as to how this thing should work. But I knew we were subscale, less than $2 billion in revenue with SBC north of 15%. We were not set up as a good long-term public company. And watching the, you know, the half cycle of a cybersecurity company is 10 years. In 20 years, they're gone.

Yeah.

So we're already past our halfway mark.

Yeah.

So I'm like, oh my God, this is a known formula. You take a look at the Symantec, the McAfee of the world, a whole bunch of, you know, carcasses in enterprise which didn't cross the $10, $15 billion Rubicon of market cap. So we've got to go get past that. The only way to get past that is to grow our way out of our space in the market. We were one of 7 companies below $20 billion above 10.

Yep.

Like, we got to get past this $20, $30, $40 billion mark because we can— the only way to get there is through revenue growth. Once you get revenue growth, then you can start worrying about optimizing your sales and marketing costs because then you can see how to. So my only focus when I started buying stuff was, listen, when you walk into a customer and you have an expensive salesperson, most expensive resource, and they walk and say, hey, would you like a firewall guy? I said, I just bought one. I was like, oh shit, I can't go back for 7 years to this guy.

Totally.

So your conversion rate is very low. Let's say you don't want a firewall, you want endpoint security. If you don't want that, you want some cloud security. You want that, you want some SD-WAN. I got something to sell you.

Yeah.

It's just, it's higher conversion, amortizes my salespeople a lot easier. So that was a very simple insight I walked in with saying, if I can sell more stuff to the same customer, there's a higher probability I can get through my operating margin dilemma.

Respect to you.

Yes.

It sounded like you have a little, or at least had imposter syndrome, and you hid it pretty well. I have it. I have it right now, actually. I'm a little bit nervous interviewing you.

Oh, you shouldn't be nervous. Look, it's— we all have the fear of what we don't know and fear of making a wrong choice. There is a balance. There are some people you can show your willingness to adapt or uncertainty, if it depends on how you want to call it. Or the respect for their superior knowledge, and then you have to hold it off from the others. So with Nir and Lee, I was very comfortable talking to them, or Mark. I was very comfortable talking to them about what I was learning because they needed to understand. They were aware of it. And by the way, they were they knew when I interviewed the first time when they offered me the job. I said, "Actually, I want another another set of interviews." They're like, "What?" I says, "I want to go back and talk to Nir and Lee and Mark." So actually. When the job was offered to me, I said, hold the offer. I'm going to go back to talk to them because the last time they were interviewing me, this time I want to interview them. So I went back and I said, listen guys, you do understand what you're signing up for. I do not understand cybersecurity. You get it? They're like, yes, we get it. We have 5,000 people who do and we're still trying to make sense of it. I said, okay, that's good. One. I said, 2, remember, this is going to be one company. It's not going to be one sales company and one product company. So I'm not coming to fix sales. I'm going to run the company. So I literally had Lee and Nir commit to the fact that they were signing up for the unknown entity known as Nikesh, who didn't know anything about cybersecurity, and they'd guide me and work with me for me to get to a place where we can make this work. So I was very comfortable sharing with them what I was learning, what I didn't know. And that kind of gave me some comfort and courage. But you can still walk into meetings where you have this distinguished engineer sitting there saying, who is this guy? Just like, why did he show up here? And why does he get the big bucks to go tell people to do this?

Okay, so you showed it to a small circle, but to the company, you didn't show that imposter syndrome.

No.

You showed some face of just somewhat confident.

I was learning. Look, we— I joined in April. September, we had an analyst day and put out a target saying we're going to do $1 billion of next-generation security ARR, which we didn't have a next-generation product. We didn't have anything. We didn't have salespeople. We're going to build a billion-dollar ARR business in 3 years. We built a larger-than-billion-dollar business in 3 years. So sometimes, you know, you— I think, look, my rule is very simple. I did this before. I used to work at T-Mobile. I took a job at Google. I took a pay cut and I didn't know how to sell advertising. I didn't know how advertising was sold. I ran Google Europe. We also sold advertising. I had to figure it out. And my view for everyone who's listening, every CEO or founder, is in the early part, swing big. Swing big. You fail big.

If you're a new CEO.

Why not? Swing as hard as you can, right? Take 3 swings. Who cares? At the end of the day, if it works out, it's going to work out spectacularly. If it doesn't work out, pack your bags and move.

Okay, let me ask a related— I have like a million more questions, but related to that, when we would hire people at HubSpot, yes, and we had this thesis like give them a lot of time, let them interview and slowly come up to speed. But actually the current CEO of HubSpot joined like the week before COVID and she got thrown into it and she did great. What is your sort of philosophy on that kind of thing? Like you got thrown in.

Yeah.

And you went after it. You're, you're, you've got an amazing exec team there. You bring someone in from the outside. Kind of slow roll them or you throw them in the fire?

Look, it's very hard to fly a plane by sitting next to the person flying the plane.

Yeah.

So if you are going to fly the plane, if you're competent, you know how to fly it, you got to go sit in the pilot's seat. So you can't like slow roll a CEO into the role. And now look, when I took the job at Google for 3 months, I didn't—

Decide anything.

I just said, you guys keep doing what you're doing. Look, most companies will run for 2, 3 months without interfering. anyone interfering. Like, the biggest decision I had to make when I walked in was, oh my God, it's performance season. We have this money left on our equity budget. We'd like to give it like an interest. I said, sure, go right ahead. And then I had to go fight SBC after. So, you know, I got— I had to pay for my bad decisions. But the point is, I didn't have to make any important decisions for the first 3 months. Things were working. People want to do their jobs, and it ran in a very non-interfering way.

Love that.

So I think most companies should be able to run 3 to 6 months on autopilot within reason. But after 3 to 6 months, the lack of strong decision-making in those periods starts to show up. It starts having impact, right? So hopefully your predecessor set it up in a way that it's still rolling on good decisions that were made before. Now you got to go jump in and see which decisions do I need to make. So I think there is some time that people can take to figure stuff out.

Just kind of back on you personally, you strike me as— I don't know you super well, but you strike me as being Very calm, and you don't seem stressed out. And I coach tons of CEOs, like all Sequoia CEOs. They're stressed.

Um, stressed for what?

They're just stressed, like existential levels of stress. Like, am I correct? You're— you don't— you strike me as a pretty cool customer.

My, my work doesn't stress me.

Has it ever, or did it at the beginning and now you kind of got your legs under you?

No, my work's not stressed me. And, you know, even my wife wonders, like, where do you get the conviction from?

Like, where do you get it?

I had no belief in myself.

Where did that come from?

Maybe growing up.

Mom, Dad?

It's, it's kind of like I was that kid. I was that kid who'd get home on time, get my homework done, not worry about my parents telling me to do it, you know, make my bed, be the good kid and get shit done. And it's kind of like, you know, in a way, sometimes your parents actively encourage you. Sometimes they don't interfere and they let you do your thing because they believe. But, you know, they have your back.

Hmm.

So I think knowing that somebody has my back and I'm well protected, well covered, is usually what's made me do better. And at Palo Alto, the best part is I have an amazing board and I know my board has my back. And I think that's kind of important in any management lesson, whether it's a board, whether it's a CEO or their colleagues, or whether it's whoever you're a manager. Your people need to know you have their back. Because if it's kind of like, think about it, like if you're hanging out of a plane and, you know, if you're like doing something and somebody else is holding a rope, you got to believe this person is going to pull me back in when things get rough. If I trust that person is going to pull me back in and protect me, I will go flail and do whatever I need to do. So I've always felt that when somebody's had my back, I can do well. What's the worst that could happen?

Got it. You kind of— you a bit— a lot of your career you're running sales organizations, funny enough, or go-to-market orgs.

Well, let's see. I was in—

You ran Google Europe. That was sort of go-to-market.

But it's kind of interesting. I did run Google Europe.

Yeah.

But when I inherited Google Europe, we were 20% of the company's revenue.

Yeah.

When I left, we were the largest business of Google, which is very rare for an American company to have a larger European business than a US business.

Yeah.

So I had to come back here and increase the growth rate here in the US. So, but you don't do that by being just a go-to-market person. You have to run a cross-functional play because it's kind of like if marketing is not doing well, it's impacting my business. How do I get marketing? So as the only guy, go-to-market guy at Google who marketing reported to ever. Before me, marketing reported directly to my boss. And after me, marketing reported to the CEO. When I was at Google, both marketing and sales reported to me. So you have to be able to run a cross-functional playbook if you want to be successful.

OK, but I guess my question to you is, like, I look across the industry, there's not a lot of kind of people who grew up in go-to-market as CEOs.

Well, I don't know if I'm grown up yet, but let's go back. Started my life—

Eddie Hoff.

Yes.

Bill McDermott at ServiceNow. I kind of throw you-ish in that bucket. There's very few. Why do you think that is?

Yeah, but I see— I don't see myself as a go-to-market person.

Okay.

I can do go-to-market. I'm not a go-to-market person.

Okay.

I am—

You're an athlete.

I spend 50% of my time in product.

But you grew up running big go-to-market orgs. You did a lot of stuff.

I did all kinds of stuff. I was an analyst. I was the chief marketing officer. I was a product guy at T-Mobile. I did IT. I wrote code when I started at Fidelity. So I kind of like did a whole bunch of things badly. And then eventually they decided I wasn't good at one thing. I got to do everything.

I'm a VP at XYZ company right now.

Yes.

And I want to be CEO of a scaled company. I don't want to found a company. What advice do you have for me?

Get lucky. I think I'm luckier than good in some of these scenarios. But like on a more serious note, in Silicon Valley, most companies which lose sight of a product focus over time die.

Yeah.

So that's why I'm fighting you in characterizing me as a go-to-market person because I don't see myself as a go-to-market person versus other people who've named. I have a lot of respect for Bill and Marc. They're probably the 2, the best sort of sales leaders in the world for the enterprise business. But I'm not them. I'm not as good as them at doing what they do. But I think I balance product and go-to-market well enough that allows us to run as a cohesive company. I build product half the time. The acquisitions are done by me and a bunch of people. I don't have an acquisitions team. It's me.

Oh, wow.

I sit down with the CEOs. I look at the tech. I look at all the tech.

I see.

This is something I learned at Google. Larry Page had a very clear view. Companies that don't focus on product lose sight of product. And like, you know, the best compliment or the worst sort of compliment Larry ever gave me was, oh, no company in tech failed because of sales. You're running sales. I don't have 2 hours. If I had 2 hours, I could make you do your job better. But I have to go focus on product because that's why companies fail. So he just told me to go away. I think it was a compliment. I think he meant I'm doing my job well.

I think he did.

But he did say that Bill Campbell and Eric Schmidt told me, do your job well, so go do what you're doing and don't waste my time because I'm focusing on product. But he kind of told me to go away. And I believe what he said. Like, if you don't make sure you're obsessive, paranoid about your product, you're going to fail in the medium term.

Exactly.

And you get complacent. And look, I've been there for 7 years. I'm still chomping at the bit. I'm still looking at companies. I'm still meeting— I met 3 today. Right? Just to understand what they're working on, what's interesting. I go back and process in my head, is that going to be big? Is that interesting? Is that a feature? Is that a platform of the future? Is that going to be big? And it's kind of interesting, there are many examples out there, even in cybersecurity, which people have generated, you know, billions of dollars of private valuations that have gone back to nothing in some cases. I think there's a few out there, but I'm constantly evaluating them, trying to analyze, will they get there? Will they not be able to get there? And I think I have reasonably good hit rate in my brain in terms of what works, what doesn't work.

Just back to my question. I'm, I'm an up-and-comer.

Oh, okay. You want to go talk about the VP? Yes.

Uh, and I need some advice from, you know, I'm a founder. I'm a little bit of a different animal than you, but I, I want it. Let's say I'm an up-and-comer and I want to be you. Like, what, what do you do? You can't— you're 30.

Yeah. Well, you have to have product savvy. If you don't understand product in your industry or product in where you want to be, it's going to be hard in Silicon Valley, right? You don't need to understand product. You have to be able to sell, right? At the end of the day, even my head of product sells. Yeah.

Right?

Because you're trying to solve a customer's problem. You can have great product vision, you can do a whole bunch of stuff, but if you're not able to sell, we don't need you, right? So there's a combination of being able to sell and being able to build product. I think if you're in any other function in a tech company, we shouldn't make you CEO, right? We shouldn't make the finance guy the CEO. We shouldn't make the marketing guy the CEO or gal. We just have to make sure you have— you're a deep technologist and you can go innovate your way out of everything. And we're going to be— people are going to be buying us whether they like us or not because we have the best innovation on the planet.

Yeah.

Or you're able to balance that innovation with good UI, as in you're a good person, you can sell as well.

Yes.

And that's— I think that's the magic formula.

Okay. You brought up Larry. You've worked for some interesting people.

Yes.

You worked for Larry, you worked for Eric.

Yes.

You worked for—

Masa.

Yep.

Sergey Brin.

Yep. Is— what have you taken from them? Is there a common thread that we can share?

The common thread is all of them to some degree have had high standard deviation.

Okay, what do you mean by that?

What I mean by that is that they're not your run-of-the-mill, down-the-middle people. They always have some, some things that they're so focused and so good at that they ignore the other part.

They're obsessive.

Obsessive, or they have focus on one thing which they can ignore the other things, not worry about, and somebody else takes care of it. Larry was very obsessed about product and innovation. And like, literally, you talk to him, you'd be going in there showing him a sales plan, he wants to talk about, you know, Tunnels that we can run on 101 to reduce traffic. Or we were flying to Spain once and he literally came up with the idea of Google Maps on the plane saying, oh, you know, how many miles of roads are there in the United States? Maybe instead of trying to get cartographic maps and being held to ransom by either the mapping authorities of countries, we'll just go ride our own cars around the streets. We'll cover them. And he was doing the math. How many cars and how many drivers he needed, or how many cameras do we need to buy to go— take a photocopy of every book in every library in the world.

How about Eric?

Eric, I think, uh, was spectacular for Google. I think what he did, being able to get the best out of founders and put some structure around them— Eric was the best interface between 2 young founders who had never run a company with people who were used to structure and used to companies. And he was the best kind of foil interface, encourager, mentor, because Eric was very true to what the founders wanted. He always found a way of exposing and capturing and encapsulating what they wanted and translating to the rest of the organization. So he was amazing at— I think he's the one reason, one of the many reasons why Google went from being that small sort of search white paper to being effectively what is now a multi-trillion dollar company. I think his incubating it was amazing, and his ability to sort of take himself out of the equation in a self-effacing way. Even then, he has opinions and he would find a way of, of sort of couching his opinions in a way that it would feel like the founder's idea. So he did a really good job, I think, of translating their wishes and being able to get what they wanted at the same time.

Have you taken a lot from him in Palo Alto?

I think so. Look, we all absorb certain behaviors from different people.

Sounds like you absorbed a bunch of him.

Him, Larry, Masa.

Tell me about Masa. What did you take from him? What can we all learn from Masa?

Look, I told you we should hit hard and hit big in the first—

Early, yes.

Early? There's no earlier than that.

Go big or go home.

We're getting big every day, right? I say that, I've said it before. We bring up our kids and we teach them, we risk manage our kids. Our kids grow up saying, don't cross the street, be careful, look left, look right. Don't jump in the pool without a floaty. We're literally constantly risk managing our children until they grow up and say, oh, good. My kid's a good kid. He comes home and does homework like me and doesn't get into trouble. That's risk management. Masa does not do that. Masa is the opposite. Masa says, OK, we can borrow more money. OK, let's go double down on this asset. Don't worry about this one. Let's go do this one. And he's like a kid in a candy store. He will go bet big every day. And that's kind of how he operates. So his risk appetite is fundamentally different than anybody else I've met in my life. And that's kind of like, it's kind of like that kid who falls and stands up every time, takes another punch in the face because he knows one of these punches is gonna land, not land, he's gonna win.

My Mount Rushmore of CEOs are Steve Jobs, my dad, and Jerry Garcia. Who do you follow? Do you follow, like my gen— I think we're similar ages. Like Steve Jobs was kind of the guy. The younger generation seems to follow Elon. Is there someone— is there a— you know, I think— is there someone now you're learning from or watching?

It's kind of like this. This is an interesting question. Uh, I struggle to encapsulate everything I want to learn into one person.

Okay.

And I think if you look at some of the great CEOs out there, each of them have some amazing set of attributes we can try and look at and say, oh my God, this person's crazy. I mean, look at Elon. Like, you know, he's the most innovative person in the world now. There are certain things I wouldn't want to, yeah, sort of take from him, but his ability to think out of the box, his ability to think big, his ability to go solve a really hard problem. And as he's proving that, look, you solve a really hard problem, you go at it for 5, 7, 8 years, you find the resources, you're— everybody else is 8 years behind.

Yeah.

The question is, can you capitalize on that and monetize that? Look at whether it's a car or whether it's Starlink, whether it's Neuralink, whether— I don't know, you saw a company yesterday that he's launched, which is called MacroHard. It's been interesting. I don't quite know what it does, but it's So his ability to just think so far ahead and try and go after meaty, big problems, very fundamentally different than half the founders show up saying, I've got an app which optimizes your sales flow. Dude, how many more of those do I need? Right? So I think watching him think about trying to be a true entrepreneur, I think is bar none, right? You just named Bill McDermott and Marc Benioff. I think they're the 2 best enterprise sales evangelists in the world.

Yeah.

I mean, you can learn from them because they know how to go take something, turn to a platform, How to work the system, how to build go-to-market, how to lead their teams to greatness, right? I mean, look at the other side. There are some amazing founders. I was with Ali Ghodsi last week. I think he's amazing. He's doing a phenomenal job at Databricks. He's hard-nosed. He knows what he wants. He's gunning it out and he's building something that's going to— look at Sam Altman. I mean, nobody in their right mind can imagine what he's up to, right? Like about 2 and a half years ago, he just launched ChatGPT. Today we've got $100 billion deals. I mean, These are big deals by any imagination. Like, and you do 3 in a row in a span of 4 weeks or 6 weeks. There's people out there doing big, gutsy, meaningful, meaty stuff. Some of this still remains to be seen where it's going to land, but it's just—

Is there a common thread?

Appetite for risk.

They're all very different. Was when you went go through them, like, they're all very different.

Very different. They're all very different. And I think, uh, that's the beauty of yourself. Everyone else is You know, it's kind of like you're very right in the way you say that if you're not yourself, the risk is you're going to do a shitty job of trying to be somebody else. So you might as well keep doing a good job of being yourself. And if that works out, it's good.

When I was CEO of HubSpot, I had this ratio of the average HubSpot employee was X, and I didn't want to be more than 30x off. Why was I wrong about that?

30x of what?

The average. So if the average HubSpotter was making, uh, you know, $100,000, I didn't want to be more than 30x. You're one of the best-paid CEOs in history. Tell me your philosophy on pay.

Well, actually, you know, funny you should, and I've never talked about this publicly, but I didn't set out to be— yeah, that when I met the board of Palo Alto, I said, listen, You pay your CEO $20 million a year. I plan to be here for 7 years. Just give me 7 years worth of stock now and you can take it away if I leave sooner at any point in time. That's the only thing I said.

It was a 7-year vest.

Yeah, it was a 7-year vest.

I see.

It's $20 million a year, which is what they paid Mark. So I didn't ask for any more than what they were paying Mark.

Okay.

I did add a twist. I said, listen, I don't need money. Why don't you do it all in options? They got cold feet. They gave me half in options. Those half options turned out into You know, tremendous amount of money because of the fact the stock moved up 6 times. But I set out to be exactly what they were paying somebody else relative to the benchmarks in the market.

That's how you did it. Um, you're advising a CEO today, uh, how should they think about comp? Like, should they be doing it like Elon? Like, you really pay a lot for great performance. You don't pay that much for mediocre performance. Should you be heavy on ISOs versus non-quals versus PSUs? Should you have long vests, short vests? Like, I think you're advising a board.

You know, the balanced approach is that you have to have enough on the table that the CEO or the employee, for that matter, doesn't feel like they can leave and go if things don't work out. Yeah, you want enough skin in the game that even in a reasonable scenario, I'm going to make a reasonable amount of money, so I don't feel I need to go somewhere else.

Yeah.

At the same time, there should be adequate reward for hitting a home run. And I think that's the balance boards need to strike. There's lots of models out there in terms of how it's done. There's a combination of RSUs and PSUs that people do. There are 3-year vests people do. There are cumulative vests. There are stock prices. So there's many different tools in the toolkit to make it happen. I think That's not, that's not kind of where it actually matters.

Okay.

I think where it matters is— let's say I've seen this many times because obviously my packages are public and I've had many CEOs call and say, how do you structure this? The CEOs actually have to have a conviction of what they believe the business is capable of, right? Elon just didn't go ask for a package. He actually said, I believe I can do this to the business. He actually achieved that, and then he got in trouble because it wasn't fully done the right way. But He had a conviction. Many of the people who have taken packages like Elon haven't fared as well because—

No.

They didn't get there. So you have to have a very reasonable sense of scenario planning. How can my business get there? I can tell you, High Power Ultra can go from now what is a $140 billion company to half a trillion dollar company in 10 years if certain things work out right. I have a view as to how to get there. I know the math to get there. And the question, can I execute to the math? If you have a math, you can execute to the math, you'll get there. But I've seen CEOs who say, oh, my math is because I'm a thinly traded stock at 5%, I just went public. I think I can triple it from here. Well, but that thing can go down as quickly as it goes up and it's fully 100% public. Go do the math. So I think many people don't do the math of what the feasible set of outcomes is and what the probability associated with them is. Once you do the math, understand the probabilities, then you can go take whatever—

I think the thing that's broken of it is like most public companies, they look at your comps.

Yes.

Similar market size companies. And then every public company says, we're going to the comps and we're going to pay you at the 75th percentile. Yes.

And, but after 5 years, the 75th percentile has moved up because everybody's now, that's 50th percentile.

Absolutely.

Don't tell everybody that.

Yes. Okay. Last question.

Yes, sir.

You've got a very— I don't know you well, but my sense from talking to Jim and others, you have a very vibrant, interesting life outside the spreadsheet. And I'm just going to rattle a few things off that I know about, and I know there's a lot more. You purchased a cricket team.

Yes.

You won the Amex Pro-Am golf tournament pretty recently.

Blind squirrel theory finds an acorn. Yep.

You married what seems like an amazing woman from an amazing family, had an amazing wedding ceremony.

Yes.

And it kind of goes on and on. Most of the CEOs I work with, they're pretty obsessed with work and don't really have much of a vibrant life outside. Particularly now, like, it seems like people are kind of following the Elon playbook and the 996 playbook. Tell me about your life and how you think about it. Give me, give me some advice.

Oh, look, when I turned 40, I invited 40 of my friends for my 40th birthday. I took them away and we had a great time.

How old are you now?

I'm 57. It's public, so there's no harm talking about it.

I'm the same.

Okay. So, and I had— I actually spoke about every one of the 40 people who were there at my 40th birthday. And I found that amazing. And I said, I hope I can do that when I'm 50 and I can do that when I'm 60. And it's kind of like you can't do that if you don't invest in them. So I like to invest in my friendships. I spend time with my friends. I check on them. They check on me. They know I'm there for them. So That takes up a reasonable part of my life. I have 3 amazing kids, making sure they get my attention.

My wife gets attention. I met one of your kids at the airport.

Yes, you did. You did. Yes, you did. And I have 2 others you haven't met, but all 3 of them are amazing and I want to be able to spend time with them. I also promise myself— I try, I try. I can't say I'm 100% on this. I try not to do dinners. I don't do work dinners. Oh, which is hard. Because a lot of people want to do work dinners. But sitting and talking business after having worked the whole day is not my cup of tea. Now, once in a while, I have to do them. Last night, I went and spoke to 12 CEOs over at my wife's restaurant. So I had to go do that. But I asked her to come join me afterwards. I had dinner with her. So I will always try and find a way. And by the way, it's not just there. At Google, it was a rule. If you worked at Google in marketing, every event for customers would have to have spouses so I could bring my spouse to dinner.

Okay.

So I find a way of making sure I'm not without my family at dinners. I try to do that. I kind of have a rule that I try not to work weekends, which is hard, which I still do about 2 or 3 hours a weekend. But I want to work my 60 hours between 7 and 6.

Is that— is it about 60 hours you figure your work is? I think so. I think so.

Now, my wife will tell you that probably my brain works way longer than that, 60 hours. And You know, she always sort of questions me why did I join 2 different boards in addition to Palo Alto. I'm on the board of Uber and Richemont. But, you know, it keeps me intellectually honest. I see other businesses.

What's your day like? So tell me about today. What time did you get up?

I woke up at 5:30.

Why?

I go to the gym at 6. I watch CNBC for a little bit. I unwind.

CNBC doesn't unwind me.

Well, I watch it to see what's going on in the world so I can kind of keep track of what's going on. But I usually go to the gym. I'll go Invert myself for 5 or 6 minutes. I'll do a little bit of weights, I'll do a little bit of stretching. I go to the— get myself stretched, steam, etc. Work my way back to my kids at 7. They wake up at around 7. They're young. I'm going to chat with them a little bit.

Yeah.

Then I came to work at 8:30.

Okay.

And I talked to 3 different customers. I talked to 2 startups.

I— In the day, is it you booked every half hour? You have big openings, you have time to think? Do you—

I usually am booked every half hour. Sometimes it's an hour. I usually have a half an hour gap here or there.

Do you get exhausted during the day ever? You're just up.

I can power through the days pretty good. Look, my superpower is context switching and being able to focus.

I think that's a key thing.

Yes.

Yeah.

I'm the best consumer of slides or PowerPoint that you can find.

Okay.

I can absorb 20 in under a minute and tell you what the problem is. Oh, that's a pattern recognition.

That's a superpower.

It's pattern recognition. Yes.

Lots of inputs coming into you, like millions of friggin emails and Slack and texts and phone calls and requests for your time. How do you manage just the hurricane of chaos?

Good news is, unless it's a customer email, you can ignore it.

Okay.

Unless somebody really needs something, you can ignore most of them. Half the inbox is full of junk. Yeah, probably 10-20% is people telling me what's going on and I'll read through them and I kind of get the gist of it. If it's a customer one, I'll respond. I did learn a trick which I do in my personal inbox because my personal email is a lot less, you know, noise in them. Every time I've actioned an email or I don't need it, I'll either archive it or delete it or file it.

Okay.

So my personal inbox is always less than 100 emails.

Your inbox, zero-ish.

100 emails is pretty good. And usually I'll go review it once in a while and then some of them will go away and I'll action them.

Yeah.

Because That I keep pretty well managed. And the work one, I do it right then. If I don't do it right then, there's a risk that it slips.

What advice do you have to the founders who are really committed to 996 and their teams on 996?

What is 996?

996 is, uh, they require of themselves—

It's like a new Porsche or something.

No, no, no. It's they require everyone to work 9 AM to 9 PM, 6 days a week in the office. That's kind of in fashion with the startups now. And it's most of them.

Yeah, I, I think there is tremendous amounts of impatience out there because people somehow believe that every minute that they're not trying to further their objective, they're going to not win. And I think that's a fallacy. I think some amazing businesses have been built because their idea was so different. I don't think people have outcompeted Starlink even if they weren't working nights, even though Elon does for the most part because he's trying to get somewhere. He's got 6 different companies to manage, but I just think working smarter might be better in balance than working harder. You run the risk of burning out. You run the risk of burning people out. Yeah, I, I don't see the value of 996.

I appreciate you coming on the pod. You're kind of the Renaissance CEO. Uh, I just came back from Florence and you're kind of a Renaissance man CEO. I appreciate you coming on.

Thank you for having me.

I appreciate it. Thank you very much. Okay. Hopefully you liked that episode with Nikesh. He's terrific. And you probably noticed we talked a lot about M&A. It was a little self-serving because HubSpot's done a bunch of M&A and I wanted to learn from him. He's done a ton of it and it's largely worked. But what I wanted to do for you guys is to kind of turn it around and use what he said as like, what would I do as a founder thinking about selling my company or getting interest in selling my company? How might I think about that and how might I negotiate? With someone, for example, like Nikesh. Now, first, there's several reasons you might consider selling. One is if you've got a big platform player like Palo Alto or Salesforce or whoever it would be, and they come knocking and you pass on them, there's a decent chance they buy your competitor. And if they don't do that, there's a decent chance they build it themselves. It's going to take them a while, but that big platform player could be hard to deal with down the road. And, you know, one of my things is either you become a platform or you get eaten by a platform, and that could easily happen to you. And so don't underestimate that. The other thing he said on the call that was interesting is if a sales rep's selling his product and it's a platform, there's 10 different products on top of that platform, that 11th product, yours, Palo Alto doesn't need to out-innovate you. It doesn't need to be beyond you in terms of features and functions. It needs to be at table stakes. And the buyer will want to continue to buy from that platform vendor. And so don't underestimate if you pass on it, the trouble that could come down the road. The second obvious reason is you make a ton of money if you sell the company. And if you're young, you can put that money to work and start another company. I'm old. And the third really nice thing about selling your company is you get massive distribution for your invention. You invented this amazing thing, You're working on distribution, you're probably not enjoying that, and you can get huge distribution from the platform better. And that certainly happens with Palo Alto. So those are kind of the reasons to do it. So let's say you're thinking about doing it. I think a mistake a lot of founders make is they overthink the headline number, like we got bought for $5 billion, whatever the number is. And if you look at it from Nikesh's side, there's other things you can negotiate. Other than the headline price. So let's dig into, if I were negotiating with somebody to get acquired, some of the things I might want to do. First thing he said that was interesting is typically when they buy a co-founding team, one wants to stick around and the other doesn't. And I found kind of the same thing when we acquire companies inside of HubSpot. So maybe one thing you negotiate is there's one comp plan for you if you want to stick around, or one comp plan for your, for your co-founder, one vesting schedule. For that one that wants to get out. No matter where you are on that, I think you want different terms. That might be one you want to work on. The other thing he said that's kind of interesting is when he buys a company, he typically rolls back some of your shares and gives you a 3-year vest on them, which is a little harsh, but everyone kind of does it. But what he said on top of that was he typically sticks a bunch of new options on top of you from Palo Alto Network, up to 30%. So that's definitely something you can negotiate. He also said it's very hard to give massive grants to somebody during the normal board cycle. This is the time he can kind of get away with it. So you might think about that if you're getting acquired. You also want to think about the position. Like most companies, when they acquire you, you get knocked a few levels down in that org chart. I like the way he thought about it. Like, hey, we were trying to get into this space. You guys were crushing us. We're going to put you on top of our team. You might try to negotiate that. I think would be a very nice thing to do. And the last thing he said that was brilliant that, that I want to start doing in HubSpot is during the diligence process, you basically envision what the roadmap will look together. So there's no big surprises, but during that you might come up with some really good ideas that make you more excited about it. Those are some of the tricks. So the headline number is important. It's good for your ego, but there's a bunch of other important things that you want to negotiate when you're going through the due diligence with someone. Okay. One of the things I really like about Nikesh is he's, unlike I was, he's very focused on work-life balance. He works Monday through Friday. He tries to work 60 hours a week and he doesn't do business dinners. I think that's a pretty good hack. I do a lot of business dinners that I could, I don't need to. I wonder for myself, and I wonder for you, if you took Nikesh's approach, like Would your company split in 2 and fall apart? Or maybe would the company be better off? Would you give a little room for your brain away from the company and the day-to-day tactics to really think and concentrate? He talked a little bit about luck, and I feel like I've been very lucky, and I want to wish you the best of luck on your CEO journey, and I'll see you on the next edition of The Long Strange Trip.