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Eggs 451: The Fine Art of Growing a Business with Russ Hawkins · EGGS! The Podcast

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Now back to the show. Today's special guest is Russ
1:40
Hawkins. He's CEO over Agilent.
1:42
How are you, Russ? I'm doing great.
1:44
I'm, I'm shoveling out here in Massachusetts, where we got
1:47
about 18 inches of snow as we watched the Patriots win last
1:51
night. But so I'm I'm, I'm elated, but
1:54
I'm also a little tired from shoveling snow.
1:57
Yeah, nobody. Don't blame me.
1:58
Well, it's funny. We're out in Salt Lake City.
2:00
My kid is the world's biggest Seahawks fan, so he's a big
2:03
happy kid last night And but we have like no snow at all.
2:07
Like we're known world famous for our snow out here in Salt
2:10
Lake City and we've got nothing. Really.
2:12
So even up on the resorts. Yeah.
2:14
They've got a little bit up there, but not it's not, I
2:16
wouldn't think anybody would characterize it as a good year.
2:18
So at least not yet. Now East Coast is getting.
2:21
Snow until June, but you know. Right, right, right, right.
2:24
The East Coast is getting hammered.
2:25
We're going up to Vermont here in a couple of weeks to ski and
2:29
they've had to having one of the best seasons ever so.
2:31
Oh wow, that's. Amazing for the.
2:32
Last couple years we had crazies now so maybe this is our year
2:35
off, I don't know. Yeah, sounds like it.
2:38
Well, cool, Russell, let's talk a little bit about who you are
2:40
and what you do. Obviously, you're an
2:42
entrepreneur, you CEO over at Agilent.
2:44
So let's talk about the company, what you do at the company, but
2:47
let's also talk a little about your journey and how you got to
2:49
where you are. Well, I started as an
2:51
entrepreneur instead of an entrepreneur.
2:53
And what by that I mean working inside a larger company, but
2:57
doing kind of frontline cutting edge stuff.
3:01
And my, my original background is actually in the telecom
3:05
business. And I'm, I'm old enough, as you
3:07
can tell by my Gray hair that I go back to the pre breakup of
3:12
the, of the Bell system And the, I lived through, I had a front
3:16
row seat as the, the old, the old AT&T got broken up in and
3:23
reconstituted in, in a bunch of regional companies.
3:27
And you know, the long distance business changed dramatically
3:30
and the data communications business changed dramatically.
3:33
And at the time, I ended up essentially getting a reputation
3:38
for innovating inside of a large company.
3:42
And so I did that for, for close to 15 years, Most of it was on
3:49
selling and marketing kinds of innovations.
3:52
There was a time when AT&T tried to enter the data business by
3:56
acquiring for a short period of time NCR and I was tapped to run
4:04
a data or or a data processing focus branch, which was a
4:09
disaster. And I ended up telling telling
4:11
my bosses that unless they unless they reoriented
4:15
themselves pretty dramatically, they were not going to be very
4:17
successful. And that turned to be turned out
4:19
to be prescient and we ended up divesting NCR or spinning it
4:24
back out to a private company again.
4:27
And and so I've had this experience.
4:30
I, I helped AT&T and the international markets where
4:34
where we weren't really very focused for many years.
4:39
And you know, I've done a lot of a lot of interesting things
4:41
there, but always kind of intrapreneurial as I, as I call
4:45
it. So, so unlike a lot of people
4:48
that, you know, work in big companies for a long period of
4:52
time in, in their careers, I, I never kind of drank the kool-aid
4:55
and I was always pushing my bosses to try new and different
4:59
things. And then that served me well in
5:01
the late 90s when, when I decided that I had watched too
5:05
many people get rich by leaving AT&T and going out into the,
5:09
into the run up to Y2K, that I could do that too.
5:13
And so I left the company and, and started in a small spin up
5:19
spin out out of General Datacom, a Connecticut based company that
5:22
was in the data communications equipment business.
5:24
And I went in there as a sales and marketing VP.
5:28
Completely changed the focus of the company.
5:31
And within a year I became the CEO of that company and ended up
5:37
growing it from from about $1,000,000 to about 20 million /
5:41
a period of few years and ultimately sold it.
5:44
It was a venture I had raised. I learned how to raise venture
5:46
capital. I, I did, did a whole bunch of
5:49
things around that from, from ground start.
5:53
I mean, I had never, never raised capital before.
5:56
So changed the strategy, went out, raised some money, executed
6:00
on the strategy, grew the company to the low 20s in in
6:04
revenue and then sold it to a public company that's based in
6:09
Colorado at the time called Carrier Access.
6:13
So that was kind of my first, my first entrepreneurial gig.
6:17
I guess I would decide something entrepreneurial and then
6:20
entrepreneurial. And then as a result of that and
6:23
having gotten them my first CEO chops, I was recruited to run
6:30
another company. This was in a high performance
6:32
computing business. So this is right after Y2K when
6:37
there was a technology called InfiniBand that had been kind of
6:41
touted and put forth as a replacement for Ethernet.
6:45
And the, you know, the, the, the, the trails of technology
6:48
are littered with the bodies of companies that tried to put
6:51
Ethernet out of business. And, and that was kind of the
6:55
same. There were 14 companies that
6:56
were funded. I ended up being the CEO of the
6:58
worst of all of the 14. I was absolutely last of
7:02
everybody, but I was able to change the go to market focus of
7:07
that company. Instead of focusing on
7:09
government and and university based high performance
7:12
computing, I focused on things like financial industry, film
7:16
rendering, oil and gas exploration and those kinds of
7:20
things. And, and you know, it was
7:22
constantly trying new things, new ways that we could build
7:26
value propositions and use cases that would lead to, you know,
7:30
quicker revenues. And, and ultimately that worked.
7:34
And we were able to, to grow the company pretty significantly,
7:39
not, not, not hundreds of 1,000,000, but again into the,
7:43
the twenty $25 million range. At which point we were
7:46
interesting enough to the industry to get acquired by.
7:50
At the time it was a fiber channel company called Q Logic
7:53
based out of California that they have turned both of these
7:56
companies that bought us eventually in turn got bought by
7:58
somebody else. And, but, you know, I got a
8:01
great, great experience in those first two companies.
8:04
And then one of the venture capitalists that had been an
8:07
investor in, in the, the company was a rich was a it ended up
8:14
becoming called Silverstorm Technologies because it was
8:17
previously called, it was based on the InfiniBand and
8:22
InfiniBand. Nobody ever knew what it was.
8:26
So I changed the name to Silverstorm Technologies and
8:29
eventually was able to sell it. And, and, and this investor
8:35
asked me to take a look at some of his portfolio companies that
8:38
needed new, new leadership, essentially needed, as I like to
8:42
say, needed adult, adult supervision.
8:45
And I ended up starting with Agile.
8:48
It's now, it's been a lot longer than I had ever expected at
8:50
Agile. It's I've been here for 18 years
8:52
now. We went through the first five
8:55
years, ended up having what ended up being a pretty flawed
8:59
business model with a product that was hardware based.
9:05
And even though the value was all the software was a hardware
9:07
based product. And so we kind of reinvented the
9:11
business. I reinvented the business in
9:12
2013. That's why I think of myself as
9:14
the, as the founder, but I'm not technically the founder of the
9:18
company. And but what we are now is we're
9:22
data analytics company and we, we, we focus on broadly
9:27
speaking, operational analytics for retailers, restaurant
9:31
chains, convenience stores, drug stores, hospitals, hotels rather
9:38
not hospitals. The hospitals are in the future
9:40
perhaps. But and basically what we do is
9:43
we make sense out of the data that these companies have.
9:45
Every company is generating more and more and more data on a
9:49
daily basis. They're adding more
9:51
applications, they're adding more tools and we, we act as a
9:56
kind of a centralized place to bring in feeds from all these
10:00
various parts of the business. And then we provide our
10:04
customers with a way of asking questions of the resulting
10:08
database. Now a lot of what we do is
10:10
around loss prevention. In our, in our first iteration
10:14
was about, it was about loss prevention.
10:16
So you know, who are their employees that are your silent
10:21
partners? Are there processes that are
10:24
being executed that are not being executed properly?
10:27
Is the product being sold at the price that you expected?
10:31
How effective are your loyalty programs?
10:33
How effective are your short term promotions in the
10:35
restaurant business? And so we've kind of evolved
10:38
from this basically loss prevention focus or total retail
10:42
loss to a broader operational effectiveness where we we have
10:48
use cases across three areas. 11 is revenue enhancement, second
10:52
one is cost and expense control, third one is compliance.
10:55
So let me take a breath there and see if I'm, I'm answering
10:58
the question that you wanted me to answer and I can, I can go on
11:02
for hours. And that's one of the dangers
11:03
that you're going to have with me, Ryan, is that once you give
11:05
me a chance to talk, it's hard to stop you.
11:07
Hey, I'll tell you what you know what makes a great podcast guest
11:10
somebody that'll talk to you. That's the that's the maybe the
11:12
number one trait. So I appreciate you man.
11:14
That's. Great.
11:14
Well, thank you so much for sharing that story.
11:16
And I mean, one of the things that I think I'm most excited
11:18
about is, is there's a real theme that started to develop in
11:21
there. And I think maybe I'd like to
11:22
pick your brain about it a little bit.
11:25
One of the things that you did that I think, you know, you, you
11:28
cited as sort of your experience as an entrepreneur, as you put
11:30
it, as somebody working inside a company and providing
11:33
innovation. I think a lot of times,
11:36
especially in those big behemoth companies like your AT and TS
11:38
and stuff like that, it's pretty easy to get kind of stuck just
11:40
doing business as usual. So for somebody to come out and
11:43
be kind of innovative inside the, you know, larger behemoth
11:47
like that probably is a little bit of a rarity.
11:49
And, but it seems like that trend or whatever that skill is,
11:53
that maybe seems kind of like it's in you, is the same set of
11:57
skills that you brought to basically every engagement after
11:59
that, which is come in, assess what's being done, figure out
12:03
how to make that better or more efficient or work towards a
12:05
different goal. But I think what I'm, I'm kind
12:08
of taken back by is your, your just your boldness, your
12:11
willingness to go in and basically turn a company on its
12:13
head. And I think for so many people,
12:15
whether you work in a company or you own 1, you know, it's really
12:19
easy to get caught up just doing stuff the same way all the time
12:22
and never really make those pivots and those changes to, to
12:25
solve some of these problems. So I wonder if you talk just a
12:28
little bit about, I guess sort of where your head's AT and, and
12:31
how you feel like when you come into these companies and you
12:33
really are changing the way they make money, you're changing all
12:36
that stuff like that. I mean, obviously that's a, you
12:39
know, high-powered CEO skill set, but where does that come
12:43
from in you? Like, are you, is that something
12:44
you developed over time or you just a naturally kind of bold
12:47
guy? I mean, you're clearly very
12:48
talkative. So do you just have ideas and
12:50
you chase them or what does that skill set look like?
12:52
I I. I'm not sure that I'm going to
12:54
be the best evaluator of my skills, but I have always been
13:00
entrepreneurial, entrepreneurial starting, you know, when I was a
13:03
kid, I've been working, I've been working, I started, I was a
13:06
caddy, you know, I always, always looking for, for ways to
13:11
improve my earnings by being a better caddy.
13:14
You know, early times. I had a paper route when I was a
13:16
kid during college, I, I actually worked 2 jobs.
13:22
One of them was, it was kind of my first, my first opportunity
13:27
was I ran a, a kind of Avon like business.
13:30
I had friends in the, in as we called it the rag trade, the,
13:34
the clothing business, the women's clothing business.
13:37
And I happen to have six sisters.
13:40
And so I was basically running a business at night where I would,
13:46
I would pay my sisters to host parties and bring in or bring in
13:51
racks and racks of clothes. They would invite 20 or 30
13:54
people. And, and you know, I would, I
13:57
would sell as much as I could and pay my sister 10% of the
14:01
proceeds. Most of the time they would take
14:03
it in gear. So they would take it in, in
14:05
clothing. So I, you know, I've done those
14:08
kinds of things. What, what you know, one thing I
14:09
never, I didn't do, which is kind of a counterpoint, is there
14:12
was a, there used to be an organization called Junior
14:15
Achievement. I don't know if you ever heard
14:16
of it, but it was in high school.
14:18
It was a, it was a thing where, you know, you could do after
14:22
hours and you could quote UN quote, form a company.
14:25
And then somebody would be the president and the vice president
14:28
and somebody would be the product person.
14:29
And usually it was crafty stuff, You know, you were building
14:32
flower pot pots or something along those lines.
14:35
And I remember, and then maybe this tells you a little bit
14:38
about my, my, my personality. I ran for the president of this
14:43
Junior Achievement and, and I didn't, I didn't, I wasn't
14:46
elected. So I resigned.
14:49
I said, OK, well, if I can't be president, I'm out of here.
14:51
I'm going to be gone. And so after that I did the home
14:55
show stuff. And you know, I've always been,
14:57
I, I, I didn't grow up with any money and I've just always
15:00
looked for ways to, to, to, to be successful and to have what I
15:05
didn't have. I come from AI come my, my
15:08
parents are great. My, I come from a long line of
15:11
Boston firemen. My father, grandfather, great
15:14
grandfather, all Boston firemen. My great grandfather was an
15:17
immigrant. And so, you know, and my, my
15:21
father had seven kids and, you know, as a result, we never had
15:25
any money. So I was, I was always looking
15:27
to get money and I was always looking to, to, to not be a
15:30
drain on society. I wanted to be somebody that was
15:33
a contributor, at least a net contributor and certainly wanted
15:36
to take care of myself. And I always had this looking
15:39
for ways to, to make money. And then if I found a way to do
15:42
it, looking for ways to grow it and make a change.
15:43
But you know, these companies that I, that I ran, whether it
15:47
was the big company AT&T or, or others, I was just, I was always
15:50
looking for ways that the business could be improved,
15:54
where revenues could be grown, where, where you assess what,
15:58
what I'd like to do is really have a, a really deep
16:02
understanding of what the products are that the company's
16:06
operating, what their capabilities are in terms of
16:09
evolving and growing those products.
16:10
And whether this is in a large scale at an AT&T or in a small
16:13
scale, it's really the same thing.
16:15
So really know your product, know what you've got, know what
16:18
kind of problems you're going to solve, you're going to be able
16:20
to solve. Talk to as many people as
16:23
possible in in all three of the companies that I've run as ACEO,
16:27
I did the same thing. I wouldn't First thing I come in
16:29
is all I do is I talk to everybody, talk to everybody in
16:31
the business, try to get an understanding of what they think
16:34
the business is and where they think the value is and they
16:36
think the product the use cases are and the value propositions
16:40
are. But I didn't stop there.
16:41
I also went and talked to all the existing customers to the
16:44
extent that they that they were there and tried to corroborate
16:46
and triangulate with them about what the you know, what, what
16:51
kind of value they were getting and did that match up with what
16:53
the company thought that they were delivering in terms of
16:55
value. And then further, I went always
16:58
to my competitors. I would, I would identify the
17:00
top three competitors. I would make an effort, I would
17:03
go out and meet the CEO's of those companies and I would say,
17:06
you know, we're competitive. We got these things, but
17:08
they're, but we're in the same industry.
17:10
So there must be some ways that we can cooperate for the benefit
17:13
of the entire organ, for the entire industry.
17:15
How do we, how do we work together even though even
17:18
knowing that we're competitive, right?
17:21
So it's it, I found that always to be tremendously valuable.
17:25
So I would take these these data inputs and, and my deal with the
17:30
investors has always been I, I never promised them that I would
17:34
be able to make anything happen. All I promised them was that I
17:37
would give them, I would do an analysis and I would give them
17:40
my best view of how the company should be, should move forward.
17:46
And, and always with the caveat that if I didn't think there was
17:49
a way to move forward, that I would tell them that as well.
17:52
Now, one of my, one of my weaknesses is that I always find
17:56
a way to make it work forward. All right.
17:58
I always find a way to make things happen.
18:00
And, and maybe I'm, I'm a little bit like a junkyard dog in that
18:03
regard that, you know, once I find a bone, I'm never, I don't
18:05
want to give it up. I'm going to, I'm going to
18:07
figure out a way to get value out of that.
18:09
And so, so that's kind of kind of, you know, I don't know if
18:13
it's innate personality or acquired knowledge.
18:16
It certainly is being driven by, by wanting to have, have money
18:21
and a family and, and, and to be able to be a net positor, net
18:25
net positive contributor to the world.
18:29
And, and I, I have fun doing it. I enjoy it.
18:32
And so, you know, it feeds on itself and it, it makes you, it
18:35
makes you, it makes you happy about things.
18:37
And it's, I like to teach people about that.
18:39
I, you know, building companies, I like to say is a lot like
18:42
building a wall, right? You got rocks of all different
18:44
sizes. You know what you want to do?
18:46
You got to build this barrier. It's going to be so high, it's
18:48
so wide. And, you know, how do I fit all
18:50
of these existing people and things together to make the
18:54
strongest and, and, and best, best wall?
18:56
And so that, that these multiple approaches that I'm talking
19:00
about are the things that have worked for me.
19:02
I don't mind telling the, the emperor that they have no
19:06
clothes, whether it's in a big company or not, didn't always
19:09
endear me to the, to the leadership in the, in the big
19:11
companies. But I can tell you that in the,
19:13
in the financial industry, in the, in the private equity and,
19:17
and venture capital industry, it's valued tremendously.
19:20
I've, I've, I've been able to, to establish relationships with
19:24
multiple venture capitalists and multiple private equity firms.
19:27
And you know, the magic that I bring is I tell them straight
19:30
what's going on and what I think and what I think the options are
19:33
and how we should operate. And, you know, if we, if we
19:36
screw up, I tell them, hey, we screwed up and here's how we
19:38
screwed up and here's how we're going to learn from it and what
19:40
we're going to do different. So that served me very well.
19:43
Yeah, no, I love that. Well, and I mean, saying that
19:44
you're the descendant of Boston Fireman, I think is one of the
19:47
things that probably helps drive this.
19:50
So I imagine there's a little bit of, you know, gruff attitude
19:53
and not stand around taking anybody's crap.
19:55
And what I love is that that honesty, because I do think a
19:58
lot of us kind of hide ourselves behind trying to be nice or say
20:01
the right thing, or maybe we feel like we're out of place to
20:04
even offer some kind of interesting insight.
20:06
And so we just don't. And then, you know, maybe a
20:09
company suffers or maybe they end up being one of those, you
20:11
know, large percentage of of companies that fail because they
20:14
didn't have somebody just be honest with them.
20:16
So I wonder though, if you talk a little bit just to dig into
20:19
this a little bit more and talking about just sort of the
20:21
way that you lead. How do you choose what to
20:24
change? So like when you come into a
20:26
company and they do A and you have the realization that they
20:30
do B, how do you start doing, you know, or I guess
20:33
infiltrating these companies and starting to make the change?
20:36
I mean, now maybe you're working with people who are are, you
20:38
know, at some some level of competence where they hear what
20:42
you're saying and they go, OK, you're right, we need to switch
20:43
gears. But if you were, maybe you could
20:45
put yourself in the shoes of maybe a smaller company.
20:47
Maybe you started a business as kind of a passion.
20:50
You've gotten some scale and you're doing OK, but you know,
20:53
it's just not going to grow. It's not going to move past this
20:55
thing. You know?
20:55
How would you come in and fix somebody who's broken if they
20:58
don't know they're broken? Well, first, first thing is the
21:02
thing I already mentioned, which is to get to know the people
21:04
that are the players in the business.
21:06
And it's a lot easier to do in a small company, right?
21:08
And in a, in a large company that's it's hard to figure out.
21:12
You can, you can deal with your own sphere of influence, but you
21:14
may not be, you know, able to affect the CEO or the, you know,
21:18
senior vice president of the C team or whatever it might be.
21:20
But in a smaller company, I think it's easier.
21:22
So, you know, while in, in my initial engagement with these
21:25
companies, a lot of what I'm doing is evaluating the people
21:28
and evaluating what kind of people that, that we have.
21:30
I, I like to say tell people that if they're just agreeing
21:33
with me, then I don't need them. That's, that's not what I want.
21:36
I don't, I don't, I don't want people that are just going to
21:38
agree with me. That doesn't mean you shouldn't
21:39
agree with me when you do, but I want you to be.
21:42
I want you to, I want you to tell me what you think is right
21:45
and wrong. I don't, I don't want you to be
21:46
shy or shrinking violence in, in terms of what we do.
21:49
So, so the first thing is to is to understand the people that
21:53
you've got. I think you have to understand
21:55
what the product is that you're offering and what the value
21:57
proposition is for the customers that you serve.
22:01
Underlying all of this is you have to have a desire for
22:04
growth, right? So growth is the one thing that
22:07
makes everything happen, right? That that is the job of any
22:10
business person. Now there are lifestyle
22:12
companies, you know, founders that have a business, they don't
22:15
really want to work that hard. They want to just collect their
22:17
coupons and keep going. I mean, that's perfectly fine
22:20
that that's not me, but that's perfectly fine.
22:23
What what I what I want is I'm always looking for ways to grow.
22:27
So how do I take the existing product that we have and bring
22:30
it into new markets? How do I go after new markets?
22:32
What kind of people do I need for new markets?
22:35
One of my companies was a data communications company that I
22:38
think I mentioned. So the company when I arrived
22:40
there was providing it was a hardware based solution and this
22:44
is pre Internet so I'm really aging myself here.
22:47
This is in the copper, in the copper telecommunications
22:50
business where you have to set up a piece of wire from one
22:53
point to the other point to have a conversation.
22:56
This company was providing connectivity between bank, bank
23:01
headquarters and branch offices. So they had a network where the
23:05
bank had a headquarters and they had all these branch offices
23:07
around. And because it's a bank, you
23:09
know, there's a lot of data that needs to be aggregated and
23:13
centralized and you need to be able to send stuff out there.
23:15
And so you had a network, it was a copper based network and that
23:18
and that was fine at this particular time.
23:21
This was in the late 90s, there was new technologies were taking
23:24
board, right? The the IPTCPIP was starting to
23:28
come in pretty heavily. Wireless technology was brand
23:32
new. So, you know, I sat down with my
23:34
with my team and the engineers and I said, well, where, where
23:37
else could we take this stuff? What else would be able to do
23:41
what, what are the key characteristics of, of the
23:44
products that we offer? And one of them was that we had
23:48
10 lbs of value in a 5 LB box. Now there was very densely, very
23:53
densely engineered devices for this communication.
23:57
So it's like, where would be a good place for that?
24:00
And we thought about lots of different options.
24:01
And then we came we came to was that wireless networks were kind
24:06
of the same thing, right? The switching center was kind of
24:08
like the headquarters for the bank.
24:10
And then the cell towers were kind of like branch offices.
24:13
And since we had this, you know, really densely packed stuff,
24:17
well, maybe we could actually put it on a pole out there and
24:20
then connect all of the, the, the, the cell towers back to the
24:24
switching center. What would we have to do to do
24:26
that? Oh, well, we'd have to, we'd
24:28
have to work in a wider temperature range.
24:30
So we may change some components out to make it adaptable.
24:34
But, but it was a result of, of, of really brainstorming with the
24:37
team and the people and being cognizant of what my competitors
24:41
were doing to come up with a couple of different ways that we
24:44
could grow the business. And in this particular company
24:46
that was the one that worked for us, we ended up, we ended up
24:49
becoming the dominant provider of this type of technology to
24:52
AT&T Wireless and to Telcell down in Mexico.
24:55
And then eventually this is before the Bell System got back
24:58
together. So there was was Ameritech,
25:00
which was the Chicago operating unit that had been broken up out
25:06
of the previous Bell System. But then they all kind of
25:08
combined again and you ended up with Verizon.
25:10
So we ended up Verizon, AT&T and Telcell as our company sales
25:15
took off, we, we stopped selling to banks.
25:18
I mean, we just stopped selling. The next thing we had to do was,
25:22
you know, IP was coming along, TCPIP was coming along, that was
25:25
going to put all this copper business out of business.
25:28
So sit down with my brain trust, right?
25:30
And I hired a couple people that I, that I, that I had known and
25:32
that I had respected and, and we sat and we said, well, what,
25:35
what else do we need to do? And, and we talked about this
25:38
transition that was going on where you had all of this copper
25:41
distribution stuff out there. You have IP coming along, you
25:44
have several other protocols. There's a company, there's a
25:46
technology called asynchronous transfer mode called ATM that
25:50
needed to be addressed. By the way, I'm not a, I'm not
25:52
an engineer and I don't really understand all these
25:54
technologies all that much. I'm not, I'm not down there in
25:57
the, in the, in the bits and bytes trying to figure this out.
26:00
I'm, I'm at a higher level kind of thinking about what the
26:02
applications are and, and, and So what we decided to do was to
26:06
build, to build a company called product called Broadway.
26:10
And that was to be able to, to span all of these technologies
26:14
in a single box. I could do copper, I could do
26:16
TCPIPI, could do ATMI, could do big pipes, little pipes, small
26:20
pipes. And, and you know, that ended up
26:23
being one of the reasons why we were acquired is because that
26:26
filled a need for multiple years, this transition that the
26:29
whole industry was going between, between copper and
26:33
ultimately the TCPIP. And we were just, I mean, I like
26:38
to say we make our own luck. I say we were lucky, but we make
26:40
our own luck, right? We tried to think about what we
26:42
do, what do we have for assets, who are our customers, what are
26:45
we trying to deliver to them and then try to build an executable
26:49
plan against that. And that's what's worked for me
26:51
over and over and over again. And it works for me today.
26:53
We're doing the same kind of stuff today with AI.
26:56
Yeah. And so I wonder if you talk
26:57
about that a little bit. And so it seems like, you know,
26:59
I like how you rephrased, you know, that we were lucky to we
27:02
make our own luck because I think that's true.
27:03
And I think it basically everybody can be lucky.
27:06
But some of it does take, you know, noticing these trends and
27:09
seeing these things that are coming down the road.
27:11
You know, obviously you've been through a lot, I mean, having
27:14
been involved in, you know, the sort of the tech world, I guess,
27:17
so to speak, of the communications world anyway.
27:19
You've seen a ton of innovation across that industry over the
27:22
course of your career. And obviously technology is
27:24
still like a rocket ship and and So what are you seeing in terms
27:29
of the trends that are coming down the road now?
27:31
You know, obviously you just mentioned one is AI is a big
27:33
thing that's everywhere right now, you know, but what are you
27:36
seeing in terms of the kinds of trends that are starting to
27:38
evolve that seem like some of that gold rush kind of stuff
27:42
that you were just talking about, these big changes from
27:44
one tech to another? Well, absolutely AI is, is one
27:47
of them. Now, I do think that there's a
27:48
huge hype cycle going on and, and AI has been around for a
27:51
while, right? It's not, it's not like it just
27:53
emerged in the last three years, right?
27:55
It's, it's been 20 years in the, in the making.
27:58
But what, what I see differently today in AI is that they've,
28:01
they've solved essentially the user interface and it's, it's so
28:06
that everyone can use it. And we're seeing it being
28:09
employed in lots of different places.
28:11
So first, we're building it into our products.
28:15
So we have a product that is about data analytics and we want
28:19
to know when, when, when a customer is using our product to
28:22
ask a question of this big database that we've acquired
28:26
that we've built for them. Really what we want to know is,
28:29
well, was that an effective question?
28:31
Did that question actually give you the answer that you wanted
28:34
to? And we're starting to use AI
28:36
techniques to have and, and some of these companies are very
28:39
large, right? Our, our, our biggest customer
28:42
has 15,000 stores. Just to give you some context,
28:45
just we're not dealing by, by and large with mom and pops.
28:48
We're dealing with customers that have multiple stores.
28:52
We have 190 customers on average they have about 650 stores.
28:56
So we run the gamut from 17,000 down to about 40 depending upon
29:01
who the customer has. We do, we do supermarkets, we do
29:06
convenience stores, we do pharmacies, we do restaurants,
29:10
both table service and quick service restaurants and we do
29:13
hotels. And each one of those things
29:16
has, has, has different, you know, different requirements,
29:19
right? And, and, and different needs.
29:21
So the way we're using AI today is by enabling customers to
29:27
essentially automatically evaluate the effectiveness of
29:31
the questions that they're asking about the database.
29:34
Are they getting answers that are actually improving the
29:37
operations of the business? And over time, the AI gets
29:41
smarter and smarter and smarter and, and, and the result of that
29:44
is you reduce the false positives, right?
29:46
So in the, in the loss prevention context, for example,
29:49
you want to know where the boat, the leaks are in the boat,
29:52
right? Every boat has a leak.
29:53
Every, every retailer has leaks. Sometimes it's the people that
29:56
work there, sometimes it's third parties, people coming in from
30:00
externally. Sometimes, as I mentioned
30:01
earlier, it's process oriented or or product oriented itself.
30:06
So you need, you need to understand what, which of those
30:10
things are driving your biggest losses and of the ones that are
30:15
buying the losses are the, are the analytics that you're
30:19
building? Are they in fact giving you the
30:21
answers that you need to improve operations over time?
30:24
And so we're using AI to do those things today on the in, in
30:28
the short future here we're making a migration from a, from
30:32
a kind of algorithmic driven query engine where you have to
30:36
follow a certain format that, that, that the software expects.
30:40
Ours is a mathematical 1 where we, it's kind of, I want to see
30:45
1 + 2 -, 3 where 1-2 and three have like a meaning.
30:50
Like one is 1 is I want to see transactions with refunds that
30:54
weren't followed by another transaction, for example.
30:58
So I want to know whether that question is actually producing
31:01
results. And that's what the AI is, is
31:03
helping do. But we're moving, we're moving
31:05
from this kind of algorithmically thing that you
31:08
need to know how the system wants you to understand 2
31:12
natural language queries. I just want to know whether our,
31:15
our promotions are effective, you know, on the first day, can
31:20
you tell me whether this promotion is meeting the
31:22
criteria that we did? And then eventually, and this is
31:25
in the next, within the next year, it'll be verbal.
31:28
It'll be, I'm just walking along.
31:29
I'm going to pick up my phone and I'm going to talk about, OK,
31:33
I'm in store, you know, 298, I see this problem over here.
31:37
I'd like you to review the data and give me all of the instances
31:41
where there was, you know, a problem in this area or that
31:43
area. So, so AI is, is becoming
31:46
integral to our product, but it's also becoming integral to
31:50
the way that we run the company. I have AI have, I have a, a vice
31:54
president that's responsible for renewals, renewing our
31:58
customers, knowing when the renewal is, knowing what kind of
32:02
notice they would need to give if they didn't want to renew,
32:05
what kind of rights we have. And so they're taking, they've
32:09
taken all of these contracts and fed it into one of these LMS.
32:13
And now we're able to ask questions about our own
32:16
contracts that replace having to go dig out in a file or, you
32:19
know, go and go out and, and find the paragraph which is
32:22
buried on page, you know, 52 of a 80 page.
32:25
Now the AI can, can help us work through that and understand
32:30
where I where that vice president and his team should be
32:34
focusing his attention. So he's getting much more
32:36
productive. We're seeing it in the, in the
32:39
development side, in the, in the, the coding side where, you
32:43
know, we are, we're able now to get significantly more
32:47
productivity out of a coder because they can use, in this
32:52
case, Anthropic to essentially write the initial code.
32:57
And then they're just, you know, debugging it and looking for
33:00
obviously obvious logic errors. And so as a result, that that
33:05
development person is, is becoming significantly more
33:08
productive for me, which is which which, you know, addresses
33:12
one of the major problems that I have in all technology companies
33:15
have every technology company has the same problem problem.
33:18
We have more to do from a development standpoint than we
33:20
have resources to do it. I don't care whether your AT&T
33:25
or a small startup, it doesn't matter.
33:26
You've got a very, very long list of things that you'd like
33:28
to do that you want that you want to do that are hopefully
33:31
related to the previous thing that I was talking about.
33:34
What are my use cases? What are the customers need?
33:36
How can I solve problems, but I can't get to them because I only
33:39
have so many resources. So, so the use of AI in that
33:42
area is, is, you know, just absolutely tremendous.
33:45
So we're using it in all kinds of places.
33:47
I use it every day in, in terms of helping me, you know, get my
33:52
thoughts together. And if I want to research, like
33:55
normally I would, I didn't have time to do it with the eggs
33:58
podcast, but normally I would, I would go in there and go tell me
34:01
about this eggs podcast. What do they do?
34:03
Or they come straight on who's their customer And I'll within 5
34:06
seconds, you know, I'll get a whole, a whole summary of what,
34:08
what it is. So anyway, I think AI is
34:10
probably the, the most dramatic. The other thing that's happening
34:14
that has been happening for a long time is the increasing
34:17
bandwidth that's available, right?
34:18
I talked to you a little bit about the old copper days and
34:21
ATM and then TCPIP. And you know, if you think about
34:27
the story of Netflix, for example, So what was Netflix?
34:29
They were originally mailing little red envelopes back and
34:32
forth, but they knew where they were going.
34:34
They knew that over time, bandwidth was going to become
34:37
more and more ubiquitous and more and more people were going
34:40
to have access to higher bandwidth capabilities.
34:44
And so this idea now of streaming, which didn't exist 10
34:48
years ago, now that they, they, they were visionaries about that
34:52
at Netflix. And they really, they, they,
34:54
they were on the right side of that trade in a big way.
34:56
And, and it's proven well. And I think that's going to
34:59
continue. There's going to be more and
35:00
more bandwidth. There's going to be more and
35:01
more mobile apps. There's going to be less and
35:04
less size to the more the better way of saying it is more and
35:08
more processing capacity in smaller and smaller pieces,
35:11
which is what's a somebody Groves law now?
35:15
What is it the Intel guy that Andy Grove, I think his name
35:20
was. But anyway, you get the drift.
35:21
I think so I think bandwidth, I think AI, I think
35:25
miniaturization of technology. All of these things are are are
35:28
combining and and moving forward and creating more and more and
35:31
more opportunities. Yeah.
35:33
No, I love that. And I think that, you know, it's
35:35
really good points that you raised about AI specifically.
35:37
I mean, I think for your average consumer, I think they believe
35:41
that it is actually smart and it's doing something, you know,
35:44
but if you actually work in data, then you understand it's
35:46
just crunching numbers and it's just doing data and in a way
35:49
that's much more addressable or approachable than it used to be.
35:51
But it's, I think the power that it has to create a lot of things
35:56
like your coding example really resonated with me that, you
35:59
know, in our former marketing agency, you know, now we're
36:02
doing something else. But in our former company, you
36:04
know, we were able to use AI to do prototyping before even
36:08
engaging a development team. We could, you know, just based
36:11
on having some knowledge of web development, things like that,
36:13
be able to build our own prototypes that we could then
36:15
shop to customer and, and do that without even engaging our
36:18
developers. And so then bringing in the
36:20
developers for the final touch, you know.
36:22
And so they're called vibe coding, right?
36:25
Yeah, yeah. So very similar.
36:27
Yeah. And so it, but to your point, I
36:29
mean, it basically just isn't powered everybody to do a lot of
36:31
things. I think there's this kind of
36:33
adversarial view of AI in the news or something where we're
36:36
talking about AI is trying to take over the world and they're
36:38
taking our jobs and all this kind of stuff.
36:40
But I think the point you made is a good one, which is by being
36:44
the people who understand how to use that technology, you can not
36:47
only increase your productivity personally, but you also
36:49
increase your value in the company.
36:51
Now, I don't need to have three developers.
36:53
I can hire one guy that's a rock star and I can pay him more and
36:56
I can do more with all that, you know, So he's increasing his
36:58
value for us. And, and so, and I think
37:01
whatever your business is, you know, leveraging AI for those
37:03
kinds of things is great. I think there's a lot going on
37:06
too, which is this kind of weird consumer based where we're just
37:08
bolting AI on everything and it's not all, all that useful.
37:12
You know, you might be able to ask a question in a natural way,
37:14
but it doesn't give you a good answer back.
37:15
Or there's, you know, there's a lot of bad use cases out there.
37:18
But but it's a it's been interesting to watch how this AI
37:21
cycle is growing, But and. So it's totally hyped.
37:24
I mean, you're absolutely right. People are afraid of it.
37:26
And there are going to be, there are going to be jobs that are
37:28
going to be lost. But I, I, the attitude you have
37:32
to take in my view, which is the way I always operate, is, well,
37:34
how can I use this to advance myself?
37:37
How can I use this to advance my company?
37:39
How can I use this to to be a better customer, a better
37:42
provider of services to my customers?
37:44
If you think about it that way, then you're going to be at the
37:46
front end of the curve. Yeah, Yeah.
37:48
I mean, I I'll go back to, you know, Andrew Carnegie.
37:51
Andrew Carnegie's parents were weavers.
37:55
They were weavers in Europe, Right.
37:57
And with the with the with the advent of weaving machines,
38:04
whole countrysides were put out of business, right?
38:07
People that were weaving by hand, suddenly they have no
38:09
business. His parents move to the US.
38:11
He ended up in Pittsburgh. And, you know, he was forced by
38:15
this dislocation to think about, you know, what did he want to
38:18
do? He ended up in in a lower level
38:20
in a steel industry and then found a way to build steel more
38:24
resilient than the American steel manufacturers.
38:27
And he ended up dominating and becoming, you know, becoming,
38:30
you know, becoming Carnegie. Carnegie Exactly, exactly.
38:35
But I, I think, you know, I tell my kids, I have 4 kids to
38:39
thankfully all off the payroll. For the most part, they're all
38:42
happily, happily working for themselves or working in their
38:46
own businesses and something that they're not all necessarily
38:49
running their own businesses, but they're working inside of
38:50
it. But my point to them is you got
38:52
to embrace this stuff. You can't hide from it and you
38:55
can't be afraid of it. You got to find out, learn about
38:57
it, learn what it can do and what it can't do.
38:58
To your point, it's not accurate.
39:01
It's not accurate. You cannot expect it to be the
39:04
truth. You can expect it to help you do
39:07
research. You can expect it to help you
39:09
take repetitive tasks or tasks that are, you know, easily and
39:13
often repeated in other, in other contexts.
39:15
You can have it help you do that, but then you got to check
39:18
it, you got to guide it. You've got to, you've got to be
39:19
the one that's that's providing the, the human intellectual
39:24
guidance to these things. And if you do that, you're going
39:26
to be on the right edge of it and.
39:28
So I wonder, so you sort of touched on something earlier too
39:31
that we were talking about, which is, you know, you need to
39:34
know your product is is key. But you also mentioned that, you
39:37
know, you're not an engineer and you were running these telecom
39:39
businesses, but you were doing it from the perspective of CEO.
39:42
So yes, you understand your product, but you're at a
39:44
different level, right, right. So I wanted to talk to you
39:46
about, you know, in terms of hiring and making decisions on
39:49
staffing and people like that. What does the CEO need to know
39:52
in your view versus what can ACEO hire or should hire for?
39:56
So, and the reason I ask is in part related to AI, which is,
39:59
you know, now people who could do things can do more things,
40:02
you know, and so, but at what point is that diminishing
40:05
returns? Does it not make sense for the
40:06
CEO to try and become the engineer?
40:09
Well, this is a challenge, right, With a lot of startup
40:11
companies. And, and you've noted, I mean, I
40:14
said that I, that I feel like the founder of this company, but
40:16
I wasn't the actual founder of this company.
40:18
And I haven't been the founder of any companies.
40:20
I've, I've run three companies and it's, it's, it's always,
40:23
I've had to deal with the founders and the founders
40:25
that'll bring the founders of the smart guys.
40:27
They're the ones that understand the, the bits and bytes and how
40:30
they're applying it. And they're the ones that have
40:32
the initial vision of the product, but often they have,
40:37
they're married to that. They're married to their
40:38
preconceived notions about what that product is.
40:40
And so my job as far as founders go, is to try to get them to
40:45
broaden their horizons and to and to think more holistically
40:48
about the opportunity that they might have and educate them on
40:52
ways that they can kind of rethink.
40:54
I always, I always, I talk about reverse thinking, right?
40:58
So reverse thinking is think back from where you are, start
41:02
you're here, but think back of how you got here and how, how
41:05
the product got here and why it was, why you even thought of
41:08
building it. And then think about how you can
41:11
potentially make different decisions along that historical
41:14
trail to bring you into different places.
41:16
So that that's working with founders.
41:18
For the most part, it's work. I've I've generally gotten along
41:21
well with the founders that have been in the business.
41:24
But this really as ACEO, there's three things that I do.
41:26
There's only three things that I do layout the strategic
41:29
direction of the company and, and, and that is not something I
41:33
do by myself. I am just the, I am, I'm just
41:35
the documenter of what I'm learning by talking to
41:39
competitors and talking to customers and talking to
41:41
employees and understanding what the product does.
41:44
Not at the again, not down on the weeds, not, not down on the,
41:46
but at the, at the application level, at the use case level, at
41:50
the, at the benefit. So what's in it for me?
41:52
What, what's in it? You want to ask that question
41:55
from the customer's perspective, What is in it for me?
41:57
If I'm the customer, Why? Why do I, I know that.
42:00
So with, with all of those things, you can, you can
42:04
identify a strategy. Strategy by definition is more
42:07
than one year and you can identify tactics by definition
42:09
less than one year. So one of the things I should be
42:11
doing now in this short period of time to achieve that longer
42:15
term goal. And you have to be willing to
42:17
change your strategies and change your tactics.
42:19
If you if the, if the hypothetical medical direction
42:22
you're going is contradicted by the facts you experience along
42:25
the way. So if the facts you experience
42:27
along the way contradict your theory, then you got to adjust
42:30
your theory. So, so that's the first thing is
42:32
strategic direction of the company.
42:34
Second thing is allocating capital.
42:37
What am I going to spend money on?
42:38
Am I going to spend money on people?
42:39
Am I going to spend money on partners?
42:41
Am I going to spend money on product?
42:43
How am I going to use and, and I have to live within the
42:46
constraints that I have, right? If I'm a venture backed company,
42:49
there's certain there's certain milestones you're trying to get
42:52
right. If you're, if you're pre
42:53
product, you got to get the product.
42:55
If you've got product, you got to get the customer, you got to
42:57
get customers, you got to get the cash flow break even.
42:59
So there's there's these milestones that you have to go
43:01
through and you got to be, you got to be very, very cognizant
43:04
of of what those are. So at each one of these
43:07
milestones, you've got to decide how are you going to allocate
43:09
capital? It's one of the things I'm into
43:11
right now. You know, we're, we're, we're
43:13
generating a significant amount of cash now.
43:15
And you know, the question is how do we use that cash?
43:17
Do we use that to put ourselves out of business by building a
43:22
new AI first, mobile first AI first version of our product on
43:27
the side while we continue to drive the bus forward?
43:30
Do we use it to expand our geographic reach?
43:32
How do we how do we take the the capital that we have available
43:36
to us and how do we allocate it? And then the third thing that I
43:38
do, and this is related very much to the to the capital part
43:41
of it is hiring the right people.
43:44
So it's not easy to do. It's very, very, very much not
43:47
easy to do. You can, you do the best job you
43:50
can do. And then you, you fire early, I
43:53
guess is what I would say, especially on the sales side,
43:55
right. On the sales side, the one thing
43:57
that sales people know how to do and I'm, I'm one myself.
43:59
So I know that this is true and that is I can sell myself better
44:03
than I can sell anything else. If I'm a good salesperson, the
44:05
first thing I can sell is me. And then maybe I know what I'm
44:08
talking about when I'm trying to sell this product that you have
44:11
to somebody else. And I as the sale, as the CEO,
44:15
have to be be tuned into how the sales team is performing and
44:20
whether in fact they're making the right decisions.
44:22
And I have the right people in those jobs.
44:23
But it applies across the board. If, if somebody isn't getting
44:27
the job done, then do everybody a favor and you know, find a,
44:33
find a I'd a way to make that change.
44:37
And not in a bad way. I mean, one of the frequent
44:41
speeches I have, I've had over the years is that telling people
44:45
that this, this job isn't for you, you're not very good at
44:48
this, right? And, and for you to, for you to
44:51
stay here, it's, it's not going to make you happy.
44:53
It's not going to make us happy. So I want you to be, I want my,
44:56
I want people to, to look back on their time with our company
45:00
as a very positive experience. And so I'm not going to throw
45:03
you out to the curb, but I'm telling you that I don't think
45:06
you're going to make it. And I think we should work
45:08
together to find find you another pathway.
45:11
We can look internally, but you should also be looking at
45:15
externally. We're not going to rush out the
45:16
door. We'll give you a little bit of
45:18
time to, to do the things you need to do.
45:19
And you know, unless something changes dramatically, I just
45:23
don't see how this is going to work.
45:25
It's not always as pleasant as I'm making it sound here, but
45:28
those are the three things strategy, align on the strategy.
45:31
Be willing to change, allocate capital and find the right
45:35
people and then stay out. Then stay out of their way.
45:37
If they're doing the job, stay the hell out of their way.
45:40
Listen to them. Make them feel valued.
45:42
Make them participate. Have them participate in the
45:45
decision making that you need to do for the business and and let
45:48
them know that they're that they're contributing when they
45:50
are when they are make a move to to improve, you know.
45:54
No, I love that. Well, and maybe it's just
45:56
because I, I live with a, a woman who is very direct also.
46:00
And so this, this method of management would be her style,
46:04
which is just, you know, if it's not working, she'll tell you
46:05
she's not going to sit and joke around you about it, you know,
46:07
and, but I think that that's a really important characteristic,
46:10
especially at leadership levels, because, you know, I mean, first
46:13
of all, it's costing you money to have a bad relationship in
46:15
place. And then, you know, and if
46:17
you're trying to grow the company, I mean that person
46:19
could be doing more damage besides that, you know.
46:21
So I mean, just doing that, that could be bringing down a team
46:24
that could be bringing down and other people could be damaging
46:26
customer relationships. They're not making sales, you
46:28
know, so absolutely. Yeah, it makes them, especially
46:31
on the sales side because it makes them do crazy things.
46:33
If they're not getting the numbers done, then they start
46:35
doing nutty stuff, right. They start giving stuff away or
46:38
making commitments that we can't live up to.
46:40
And you know the customers, you have got to have a partnership
46:46
relationship with customers in my view.
46:48
And, and so all those three things that I talked about,
46:50
strategy, capital allocation of people, it's all in the service
46:53
of customers, right? That's what our job is.
46:56
Our job is to deliver for customers.
46:58
And if we deliver for customers, then they will deliver for us
47:00
and we will be able to grow our revenues because they will refer
47:04
us to other people, they will buy our future products.
47:07
It's, it's got to be that is really the central point in, in
47:11
my view, of where all of this stuff has to has to have as its
47:14
Nexus. Well, I think that's right too,
47:16
because I mean, and I think most founders probably are not this
47:19
way, but I mean, there's been plenty of people in business who
47:21
have been opportunistic and they're chasing something cuz
47:24
they think they can grab a quick bag or whatever it is.
47:26
And so I really like this perspective, this all in service
47:29
of customers, because I think that there's a lot of people
47:32
that start a business for a number of different reasons.
47:34
It might be their passion, it might be a thing they're into.
47:37
So they think they can put that on other people, you know, or
47:39
whatever it is. But a lot of times it takes, you
47:42
know, some maturing to be able to turn that perspective around
47:45
and go, no, no, no, no, no, this is about those people, you know?
47:48
So, yeah, I maybe really liked this widget that I started to
47:51
make, and I thought it was pretty cool for me.
47:53
But you know, eventually that perspective has to flip,
47:56
otherwise you're not going to get too far.
47:57
That's right that and that is a classic problem with founders
48:00
because founders when you say well, maybe somebody elses
48:06
product is better, they don't want to hear that or that maybe
48:09
they should do some of the things they think you're calling
48:10
their baby ugly, right and you don't you don't want to do that.
48:16
But if you can't as a founder, if you cannot make that
48:19
transition from being somewhat objective about about the things
48:23
that you've been passionate about and being willing to
48:25
change it, then your your chance of really building the company
48:30
up I think is is reduced significantly by.
48:32
Well, and that's the thing. And your.
48:33
Role. It's going to change your role.
48:34
Yeah. And if you're that kind of
48:35
person, you know, and somebody like you comes into the company,
48:37
for example, shoots them straight, then that comes off
48:40
as, you know, argumentative or a problem like you're tearing down
48:42
my product. You're not trying to make it
48:44
better, you know, and then people get defensive and
48:46
feelings get hurt and, you know, you sort of detach from what
48:49
should be business. So that's right.
48:50
But to that, and you mentioned talking to founders, you know,
48:53
we're talking about, you know, strategic direction of a company
48:56
and we talked a lot about change or pivoting inside a company.
48:59
Yeah. Do you have any insights like on
49:01
when is time to just cut bait? And you know, I know you said
49:04
that you're kind of a bulldog here and you don't like to let
49:06
things go away. But I have to imagine over the
49:08
course of your career, there's been a couple things that we're
49:10
just like, come on, this is just not working.
49:13
And what criteria would you use for something well?
49:15
If it's not fulfilling those requirements that I talked
49:17
about, having a having a clear path to growth, having a clear
49:21
path to generating cash, then you got to look at it very,
49:25
very, very, very carefully. Yeah, this company, Agilents,
49:28
when, when I started with this company, we were actually
49:31
manufacturing what a thing called an encoder.
49:35
We were manufacturing hardware and, and the original product of
49:38
the company was delivered. It was software based product,
49:41
but it was delivered in a in a workstation.
49:45
And So what it what the hardware didn't have is we needed this
49:49
specialized board to go in the workstation to, to, to, to grow
49:55
it right, to, to be able to support the application that we
49:58
had. So the first thing I did, one of
50:00
the first things I did was stop manufacturing that there were
50:03
other manufacturers out there. I didn't need to do that.
50:06
And and we did that with a very smooth transition.
50:09
We ended up buying, we bet we've got a supplier that supplier
50:12
brought it. I was able to cut this cost out
50:15
of my business and exchange it for a set of standards that I
50:19
was having delivered from the other customer and and we moved
50:23
on. But the entire transition that I
50:24
made, I told you I made a pivot there in, in Friday in 2013.
50:29
Our business prior to that was was very much hardware centric.
50:32
Well, what I tried to do was to take, we had this device, our
50:37
software was what was the valueist.
50:39
We had this device and we had this encoder card.
50:41
And the idea was that we would put these devices out of the
50:44
supermarket, we would connect into the POS system controller
50:48
in the store and we would connect into the existing video
50:51
system. And this was all about resolving
50:54
issues, right? They, they were generating lists
50:57
of suspect, suspect transactions in other ways.
51:01
And then they would have this big long list of things.
51:03
And then what? The way we used our product was
51:07
to provide a synchronization between the video system and the
51:11
POS system. And what was the result of that?
51:14
Well, an analyst looking at looking at these transactions,
51:18
instead of having to download 5 minutes of video and sit there
51:22
and watch it and drink coffee, you could download 50 times as
51:26
many because I knew exactly when the item was was scanned or, or,
51:33
or the keys were depressed or the credit card was swiped.
51:37
OK, all very great. And we, we, we, we had a great
51:39
business. We were able to grow that up,
51:42
but it was a pain in the ass. The hardware required constant
51:47
attention. It had to be upgraded virus
51:49
upgrades. I mean, you know how it is with
51:50
your own, with your own computer, right?
51:52
It's constantly things that have to be done.
51:54
And I tried to do this as AI tried to move this into a
51:56
recurring revenue model. So we were providing, which was
51:59
what I started. That was my first strategic
52:01
decision was to make this business a recurring revenue
52:04
model instead of a get up every morning and sell another box.
52:09
The, the, the, the products needed to be updated.
52:13
There were patents that hadn't been fully defended.
52:17
The competitive landscape with all of the other video companies
52:21
that were out there, they were gaining.
52:22
They were figuring out what we were doing and coming in on us.
52:25
In 2013, I said that's it, we're done.
52:27
We're going to stop that. We cannot compete against these
52:31
other companies in any kind of significant way that'll allow us
52:34
to grow at the rate that we want to grow.
52:36
So it was all a strategic discussion.
52:38
It all ties back to the strategy that you're trying to execute
52:41
on. In this particular case, I came
52:43
to the conclusion that there was no way I was going to do it.
52:45
I talked to the owners, the venture capitalist that owned
52:48
the company and I said, look, there's the way I see it.
52:50
We got to make this transition. It's going to take us probably
52:53
it's going to, it's going to be a little bit rough here for the
52:55
next year or so. But when we're done, we're going
52:58
to be in a pure software business.
53:00
We're going to have none of these headaches, none of these
53:02
hardware problems. We're going to be able then
53:04
build software eats the world, right?
53:06
We're going to be able to build more and more and more
53:08
functionality into this software.
53:09
We're going to be able to cement our relationship with customers.
53:12
And over time, we're going to be able to have a very, very sticky
53:15
business. And so it was, it was tied into,
53:18
into the alignment of does my current business, does my
53:20
current product meet the strategic opportunities that I
53:23
have in the business. And if it doesn't, then you kill
53:25
it. You kill it.
53:27
Well, and I love that too because it's also an example of
53:29
what you're talking about that this is all in service of
53:31
customers, right? I mean, by doing these changes,
53:33
I mean, yes, of course you were saving some money or you could
53:35
be more efficient or you could focus on the things that your
53:38
core skills. But the whole purpose there was
53:42
that now you can actually serve these people, these grocery
53:44
stores or whatever store you're in and you're not dealing with,
53:47
oh, well, you're going to be down tonight because we've got a
53:49
software upgrade or, you know, we've got a, hey, we got to pull
53:51
your workstation. It's out of date now you got to
53:53
buy a new one, you know, or whatever it is.
53:55
And so by eliminating those steps, you know, it, it not only
53:58
saved the company money, but it also was in service of your
54:00
customers. And I think that sort of thing
54:02
is kind of the sweet spot here. And, and sometimes it means, it
54:06
means firing the old customers and, and hiring new ones if it's
54:10
not really obviously not firing them.
54:11
But, and the example I'll give you is in the high performance
54:14
computing example that I had, the business that we had.
54:16
So the, the high performance computing business is largely
54:19
dominated by government and educational organizations that,
54:22
that that is where supercomputers are, right?
54:24
The government runs a lot of the supercomputers and then
54:27
universities run a lot of the supercomputers and they're
54:30
trying to solve often theoretical problems, military
54:33
and defense problems and those kinds of things.
54:35
So one of the big changes that I made when I went in there is I
54:38
said, well, that's great. But how is it selling to these
54:43
people? I mean, what is the process of
54:44
selling to the government? Doesn't that take a long time?
54:47
Don't you have to kiss a lot of babies to get, you know, to get
54:50
up and, and, and, and get, get the things done?
54:53
And what about universities? Don't how do they get funding?
54:55
What, what is, what is their business model?
54:57
How do they, how do they decide they're really going to spend
55:00
10s of millions of dollars on, on a product?
55:03
They're not really very great customers.
55:04
However, you got this whole other group of people, you've
55:07
got oil and gas exploration, which was our first one, which,
55:09
you know, dealing with very complex physics and geology.
55:13
And they need, they need high compute to figure out where the
55:16
oil is, right, film rendering, film rendering, another thing
55:21
that's gone through a tremendous transition, right, with the,
55:23
with CGI and all the other things that have come along.
55:26
They need high processing. And then financial industry, you
55:30
know, we got, we got companies that are building their routers
55:34
closer to the, to the, to the exchange so that they can pick
55:38
up, you know, a nanosecond of time and, and, and therefore
55:42
have this automated training trading happen.
55:44
So I decided in that case to change the customers.
55:47
I want to go to these people that are in business, have
55:50
money, are willing to spend, can get a value out of it.
55:52
And I can do better by doing that and ignore these other
55:54
guys. Just ignore them, you know, and
55:56
and they were pissed a little bit.
55:57
Some of them were pissed that, you know, that we were kind of
56:00
withdrawing from that. But but it was way, way, way
56:03
compensated for by people that were in actual revenue
56:06
generating businesses that could see getting value out of it.
56:09
And, and again, part of this strategic direction that you've
56:12
got to figure out you're not, you're not always going to be
56:14
right either, right? I mean, you make mistakes.
56:15
I've made mistakes, plenty of mistakes.
56:17
But yeah, lose early, right? When you when you made a
56:20
mistake, lose early, move on to something else.
56:22
Yeah, what was they say fail forward, right?
56:24
Fail forward, yeah. I love that.
56:26
Well, hey, Russ, we're starting to get towards the end of the
56:28
hour. Let's take a quick minute, let
56:30
me know or let's just let people know where they can get in touch
56:33
with you, how they could engage either with your company or if
56:35
they'd like to engage with you personally for one reason or
56:37
another. And then maybe leave us if you
56:39
can. Maybe one last piece of advice.
56:41
If you were a young founder and you're just getting started over
56:43
again, you know, and with all the the work that you've done
56:46
over the years and all this great experience, you know, I
56:48
feel like we we may have touched on this bit of advice, but if
56:51
you have any other final thoughts for.
56:52
You. I do.
56:53
I do have one for founders. I have.
56:54
I have a good one for founders. But as far as getting a hold of
56:57
me, it's Agilent's Inc dot com, AGILENCEINC.
57:04
And Agilence is a contraction of agile intelligence.
57:08
That's what it means. So Agilence, Inc and I am R
57:11
Hawkins at agilenceinc.com. I would love to hear from any of
57:15
your listeners and be be be happy to talk with them and and
57:20
give them my advice. Now as far as founders, here's
57:23
what I would tell the founder. Hang on as long as possible
57:27
before you raise capital from third parties.
57:30
The third parties really don't care all that much about your
57:34
business. They have an objective.
57:35
Their objective is to make money for them and for their limited
57:38
partners. They actually don't.
57:43
They're going to tell you how much value they bring, and most
57:46
of the value they bring is in their money.
57:47
And if you're going to avoid getting their money for as long
57:50
as possible, you're going to be in a better position.
57:52
You're going to be able to hold on to the larger part of the
57:55
business that you that, that you the largest part of the business
57:57
that you can. You're not going to end up being
57:59
diluted bootstrap, bootstrap as long as you can.
58:02
That's the advice I would give. Yeah.
58:03
No, I love that. I think that's really great
58:05
advice too. I mean, we've done some over the
58:07
years of head clients that are private equity and, and like we
58:10
would be the central marketing wing or art department for
58:13
their, you know, portfolio companies.
58:16
And it was a real eye opener for me the first couple times we
58:18
started working with those companies where basically
58:20
everything is just kind of built to sell, built to strip.
58:22
How can we make this thing like, you know, and it just, it
58:25
totally changes the vision. So yeah, especially if you're a
58:27
founder that got into something because you love it or whatever,
58:30
you know, things really change when you're messing with other
58:32
people's money. Absolutely.
58:34
And and they are not your friends.
58:36
They're not here to be your friends.
58:37
They're going to be friendly, but they're not your friends.
58:39
They don't. They don't have the same
58:40
objectives as you, generally speaking.
58:42
Sometimes they do, but not always.
58:44
Yep. No, I love that.
58:45
Well, that's great advice for us.
58:46
Well, thank you so much for taking time to do this today.
58:48
I really appreciate you man. Hey, I enjoyed talking.
58:51
As you can tell, I love to talk and I appreciate the
58:55
opportunity. Yep, I love it.
58:56
That's all we could ask of a great podcast guest.
58:59
So thank you so much for doing this and thanks to everybody who
59:01
tunes into the show this week and every week and we'll see you
59:03
guys next time this.