This week’s Entrepreneurial Thought Leaders seminar featured Dominic Orr, CEO and President of Aruba Networks. Aruba’s business is providing wireless networking at the large-scale enterprise level. They have 3,500 customers worldwide, was founded in 2002 and went public in March 2007. Today, they are #2 in market share behind Cisco. Orr received a B.S. in Physics and a M.S./Ph.D in neuroscience from Caltech. He was a manager at HP, and has experience in communication networking from Alteon WebSystems, Bay Networks, and Hughes Aircraft.
I have listened to close to 50 such speakers over the past four years, and this talk with Dominic Orr ranks in my top 3 favorite seminars. I truly enjoyed hearing his advice and found my own beliefs and thoughts aligned the same way. Click here to listen to it — I highly recommend it!
Q: Why go from Chairman of the Board to CEO/President?
Orr was first an angel investor, then board member, then Chairman, and finally CEO/President. Orr said that only a few times in a decade that you get a chance to take advantage of a big technology shift. He saw two major turning points:
- rapid mobilization of the workforce — employees now work anywhere
- flattening of companies around the world
The traditional IT infrastructure of companies assumes fixed locations — the good guys are inside four walls, the bad guys are outside. Not true anymore. Aruba had a winning architecture and it was exciting to be part of that.
Also, I was getting bored planting trees (over 200!) and cooking for the kids. ;)
Q: How did your experience with HP’s culture translate to Aruba being a startup?
There are different kinds of HP. The old HP, the transitional HP, and now the new HP. Orr left in 1994, and to summarize HP’s values, it can be distilled down to one thing: the productivity of your employees can be maximized by giving each of your employees dignity, freedom, and trust and let them run free with their passions. The potential problem though is ‘consensus management’ can occur, in which decision making is slowed. Thus, there was a shift to dictatorial management, i.e, increased in speed. Now it has changed back.
In a startup, it is doubly important to give each employee dignity and trust. The people attracted to a startup are motivated and respond well to that value.
Q: Aruba has decided to go head-to-head against giants like Cisco. How do you have the confidence and strategy to go after that?
Day-to-day, from a product level, we have two competitors: Cisco and Motorola. You can’t think of those giants as your competitors — you must treat it like an environment in which you must excel. Every product you build has to fit into this ecosystem that your competitors also live in. You have to fix problems they can’t.
It all comes down to one thing: speed. Speed of execution and speed of innovation.
An advantage of big companies is that they have inertia — the disadvantage is that they have inertia. They have a legacy of products, they have expectations from Wall St., etc. They often cannot afford to rapidly execute a vision because it would cause their expectations to tank. There was a saying when Orr entered the industry: God needed just six days to create the Earth because he didn’t have an install-base.
Let’s not fool ourselves — Cisco and Motorola have some great engineers that are just as good as our engineers. Aruba has been around for just over 5 years; the cumulative R&D spending by Aruba in that timeframe is the same as what Cisco spends for R&D in a week.
Q: How has going public changed your ability to take risks?
Orr commented on the difference of going public with Alteon in 1999 and going public with Aruba in 2007. Back in 1999, you go on your IPO road-show, the black limos are everywhere, the portfolio manager hasn’t even read your statement and just wants the photo-op. Now, they are reading everything, they’ve marked up the S-1 document, looked into your core competencies and business model, etc. There is smarter investing going on now.
For Aruba, going public was not so much about raising money (though $100M is nice), but it was more about branding. When you’re competing against giants, credibility is very important. Why would Microsoft choose you instead of the established Cisco? By going public, you get coverage in BusinessWeek, Bloomberg, etc. and you get an exposure to the CEO and CIO. Then, when their IT department goes to them they don’t say “Aruba who?”
It’s true you are more constrained by SOX, gap accounting, etc. But the branding process is important. Going public gave Aruba validation and credibility. One of Orr’s key objective was to establish Aruba as the clear alternative — break away from the herd of other solutions. By June 2007 they had achieved this by taking the #2 spot from Motorola.
Q: Where do you go for advice and help?
I have a great board. I picked two of my former bosses, even though people said I was crazy. I like going into the boardroom feeling challenged though. I also have been using psychology consulting. There is no lack of talent in Silicon Valley — but if you put all A+ players into a room, will they work effectively as a team? That’s what makes or breaks a startup; confidence in the executive leadership.
What is something that has surprised me? That people who are passionate take a lot of effort to change. This brings me to my management style.
If you want to go for speed — thoughtful speed — then you have to trade a lot of discussion and analysis and go with your gut. I have a phrase for what we use: brutal intellectual honesty. There are too many decisions to make and not enough time. Get all the information and facts available on the table, get a real debate and discussion going, and make a decision. To do this, you need the right people. People can get bogged down though in emotions or politics. If people put their passion 9which is good) with their ego (which is dangerous). When this happens, people put themselves in a corner and must spend time in politics or favors. This wastes time — which is your only competitive resource you have in your hand. Don’t invest your ego — let your intellectual honesty decide.
The phrase also applies to you as a person. Be brutal to yourself. If you find intellectually that another idea makes sense, you agree and accept it. You have to encourage people to be be thick-skinned and don’t defend ideas with their ego. Fundamentally though, for people to be thickskinned, they need to be confident. It takes work and counseling and get people to be comfortable with themselves in front of their peers to achieve their brutal intellectual honesty.
Q: Running a company at this speed must be a 26 hours a day job. How do you manage the work-life balance?
Orr amusingly said that he’s not a good example of work-life balance. But Orr pointed out that he feels that “work-life balance” is not the right word to use in Silicon Valley. He is sitting here talking to us — is that work? Is that life? It is hard for people who have passion to define what is work, and what is life. It’s a mixture. Ultimately though, don’t let technology become a distraction. Don’t check that Blackberry every 5 minutes.
In Orr’s case, he gets passionate about things he loses track of time. So a while ago, he hired an assistant to solely keep track of his time. He ceded all authority on time to this lady. Orr provides priorities. Orr describes the amount of time as a bottle and tasks like rocks, pebbles, sand, etc. How do you fill the bottle? They will say to put in the rocks, then the pebbles, then the sand. So in Orr’s staff meeting, they first put in the rocks, then the pebbles, and often don’t have time for the sand. Now, if they are moving so fast we’ve added a new term: boulders!
Q: You have experiences working around the world. What are your observations there?
Orr has moved around a lot. HP Software in Singapore, Hong Kong, a few labs in Japan, HP in France, he had a lab at Nortel at Ottawa, has been in Boston, Bay Area, etc. Orr didn’t want to provide a regimented way of looking at this complex topic, but he sees one consistent different in domestically (ie, Silicon Valley) versus the rest of the world. In the Silicon Valley, probably because of the emphasis on speed, we focus on transactions. In Europe and Asia, they focus on relationships between entities. There are more similarities though. One thing is that people work like crazy; they work incredibly hard whether you’re in France, Singapore, America, etc. He talks to engineers and has realized three common reasons for why they work hard:
- People fundamentally want to make an impact. They want to feel that what they work so hard on makes a difference.
- People have fun. They enjoy work, have good colleagues, have good bosses.
- People want to be rewarded. Not just financially, which is important. But the other part that is less emphasized is that they want to be recognized. Sometimes small, like a pat on the back, or a mention at an award presentation, etc.
Q: What do you wish you knew when you were a student in school?
All throughout school, Orr was a science school. Orr said that academia is a meritocracy where the unit is the individual. Papers published in your names. Though with large projects you need to collaborate and such, but ultimately it comes down to giving people individual credit and merit. In the business world though, individual merit doesn’t necessarily matter. If a product doesn’t work, the customers don’t care who was making the decision. It matters about the team and the entire company — are the products selling or not. Obviously we give individuals recognition, but from day one its ultimately about the team. If the team wins, everyone wins. Orr wishes he had more of that perspective earlier on.
Now audience members got to ask questions.
Q: Is it in general a hopeful case that the big companies are so busy that the small companies can get a crack into the market share?
Orr says that the most important is to define success. Sometimes there is too much focus initial successes, like IPOs are given to maybe 4 or 5 out of 100 companies. Think about it though: When Aruba reported $41.7M last quarter, Cisco reported $9.3 billion? Is it something to celebrate when you can find a $41.7M crack in a $20 billion environment?
Good ideas are not difficult to find. It is execution – operational excellence — to get through productization and marketing and supporting your product. The 4 or 5 winners have the tenacity and operational management skill to execute.
This is no means of assurance to longevity.
In this industry that Aruba is in, Orr says that if you can achieve $400-500 million you’re a major player. When you’re that big though, your big rivals put the crosshairs on you and you need to be ready to withstand that. Orr constantly reminds his employees that now they have gone IPO, they have simply passed the qualifying round and are just now ready to play.
Q: (my question!) In relation to going IPO was about branding, How do you find a champion in a potential client so when you go to the executive team they feel comfortable choosing Aruba?
Orr said that he definitely doesn’t mind the extra cash either. ;) The ultimate thing in people’s mind is that they have more problems in their mind than creating a wireless network. You need to take problems off their plate. You need to understand, from an executive perspective, what their problems are; their pain points. If a CIO’s operational expense is a problem or his mandate it to gain an operational competitiveness, then that is something to build upon.
Q: How do you feel your advanced science degree has helped you in business?
Well, first of all I try not to tell people! If you ask most people, they will say doing the graduate degree helped in their analytical thinking, etc. That is kind of generic there. For Orr, the most beneficial part was working with cutting edge research and always dealing with questions about scope. It gave Orr one major psychological insight.
Working at the edge forces you to have the courage to face uncertainty. Good scientific research ventures into the unknown. “Brutal intellectual honesty” is demanded not only for success, but for survival.
