Preserving Culture & Success In a Hyper Growth Environment…

February 22nd, 2017 No comments

After my departure from Cylance, one of the biggest topics that I’ve been asked about, and given extensive consideration to, has been that of culture and how you preserve the success factors that were part of the early stages. Cylance was started with some key cultural goals in mind, which were primarily based on the disdain and avoidance of silos and politics. We had all experienced it at larger companies. The early efforts and decisions were all focused on the building of a product that would change an industry…nothing else mattered and everyone was committed to that vision.

As we had shared with investors, analysts, and media, it took us the better part of 3 years to reach 115 employees. There was a focus on our burn and regulating our spend in a prudent…and almost surgical manner. It then took another year to grow our employee base to 450. Even this number, while certainly aggressive, did not give us an undue amount of concern. Yes, we did tap the brakes a few times to make sure our billings were continuing to trend as they were…multiples above our original plan. However, as I’ve discussed in prior posts, we were also focused on making sure the underlying metrics of billings and revenues per employee were also continuing to trend upward, as well as ensuring that our cash burn was in the confines of the original plan. Some might take the view that a tripling our headcount was an unhealthy growth, but we were cognizant of the number increase and actively discussing the potential risks with our key investors. We wanted to learn from their other portfolio companies and couldn’t afford the distraction of having to correct course under the trajectory we were on.

Let’s take that tripling of headcount and why that wasn’t necessarily an unhealthy number. When you look at the hiring of 335 over the course of a year that equates to 6.5 people per week that are hired in across every functional area…Sales, Marketing, Engineering, Research, etc. While the new hires might be coming in with some of the “corporate baggage” from the larger companies, there was a significantly larger number of incumbents that are able to offset that influence, properly onboard the new employees, and successfully indoctrinate them into the culture that had been the foundation of our success. Even in the latter part of the year, when you’re bringing in the other 165 hires, you still have a fairly large & established group that can help in the absorption and molding of new employees. Will you make some mistakes in hiring? Absolutely. But you also need to take the necessary steps to course correct early on. I also believe, but wasn’t successful in enforcing, was the need to have hiring managers outline the roles & responsibilities for their newly requested hires, which would later play into assessing the quality of their delivery, and ultimately, qualifying their work relative to bonus payouts. This was an extreme challenge as we were also confronted with a trajectory that was multiples of our original plan, which meant that we also were having to manage headcount growth that was nowhere near the original plan, or the first revision…or the second or third revisions. You get the picture…hyper growth demands quick reaction.

The biggest question though is where does the process actually break? What is the percentage of “tenured” incumbents that need to be present relative to hyper hiring…and is this even a valid statistic? This becomes the key question when you find yourself in a Quarter where headcount grows by 50% and there is a push to increase an incremental 30% the following Quarter…or effectively doubling your headcount growth in two Quarters. When you start hiring at the rate of not 6.5 new hires per week, but 18 per week…and then mix new hires with an equally new group of individuals who have not fully adopted the success elements of the existing culture. New hires, who when combined with undefined roles & responsibilities and a lack of guidance, are treading water at best and not sure how to direct their efforts in the rapidly expanding environment they just got tossed into. Combine the cultural challenge with the financial challenge where the majority of the cash flow is affected by headcount and how the Company is then performing relative to the billings and revenues per employee…and the cash burn metrics that have been committed to the Board. It’s all about keeping an engineered and discipline approach, but balanced with the unplanned needs of the business. There is no textbook approach in hyper growth and you can’t look to your past experiences to guide you through this scenario because in all likelihood…you haven’t been there. Ultimately, the success will be predicated on keeping successful communications going with the team, healthy collaborations, and knowing the pulse of the business…PERIOD. In the absence of these your destined for performance mediocrity, or worse yet, course corrections that will affect morale and momentum.

Thanks for reading…

Jeffrey Ishmael

Direct Sports Network: Defining the post-Cylance Chapter…

February 8th, 2017 No comments

One of the more difficult decisions I’ve had to make was my decision to resign from Cylance last November. A decision that had me leaving a company I was fortunate enough to help build and help guide through multiple phases of growth that originated on fold-up tables. A company that raised $162M in three rounds, had grown to over 600 employees, operations across ten countries, & cumulative revenues of over $150M. A company where I was fortunate enough to call the “employees” of the company more friends & families than the former. A company where I was able to refer to vendors as mostly friends as I built relationships that were not only in the best interests of the company, but were based on working with people that had deep wells of integrity with work ethics that were as relentless as mine. A company where I spent almost 4.5yrs of my life and didn’t leave, in my constant cycling analogies, anything on the road when I crossed the line. I had given everything I had. The company wasn’t sold or IPO before I left, but I knew my work as a “super domestique” was done and the team was going to take the win.

The last three months was a bit of an “off season” for me and there was certainly going to be some uncertainty as I decided to leave a championship team. However, it was also going to be a first time opportunity to truly recharge before the next team. What was important though was to take some time & recognize what the crucial success factors were that contributed to the success of Cylance and to make sure I didn’t just jump into a “job” for the next chapter. Over the last three months I’ve shared three of the critical success factors that I took from Cylance. In the most boiled down summary, it came down to the following three. First, a highly skilled team that had the right pedigree for the mission, a unified commitment to the mission, & a disdain for politics and silos. Second, an offering that would truly differentiate the company and wouldn’t be merely a “me too” or some weak twist on an existing offering. Third was the ability to truly have the ability to disrupt a significant market that was dominated by outdated approaches, but had not changed due to a lack of new alternative in place. That was Cylance in July of 2012 weeks before I joined the company. That’s what I see right now with Direct Sports Network and their DeskSite offering…

While I was hoping to extend my “summer vacation” through at least mid-2017 you certainly can’t control when opportunities are going to present themselves. It’s never that simple. I also knew that for me to come off the sidelines it was going to have to be a pretty compelling case. An opportunity that had all the key success factors present…not just two, but all three. Three success factors that were as strong as what our team had at Cylance. Why should I compromise? As I met with my potential team a number of times, in various conditions & situations, I knew they were as committed to winning as I was. Sitting alone as individuals we will all accomplish success, but as this team sits, we are poised to accomplish some amazing results. With the recent historic Patriots win, it likely wouldn’t have happened without a Belichick, Brady, Edelman, Amandola, or a Patricia. It was about the TEAM and the strengths that each one of them brought to the playing field. No one person on that team can claim the credit for that victory. It’s one of my favorite expressions from my DC Shoes days, but it was just a relentless progression of that team in the 4th Quarter & Overtime that brought the win home. Belichick’s focus, amazing catches by Edelman & Amandola, and defensive calls by Patricia. It was the team both on and off the field that resulted in an amazing and historic victory. It was every team at Cylance that helped the company achieve a $1.1B valuation in the Series-D round last July. It will be the Direct Sports Network team that will be equally focused…period.

In nothing but the most appreciative and joking tone do I say I’m having to end my “summer vacation” early. It’s the call of a unified and committed team, an amazing product that still has so many generations of expansion ahead of it, and a team that is committed to disrupting an industry. As I had always discussed with colleagues & vendors, I always viewed Cylance as a disruptive force. A force you usually only get to read about in a Harvard Business Review in B-school and don’t think you’ll actually get to work with one. An experience I cherished at Cylance and I doubted would be repeated…ever. I’m biting my tongue for now as Direct Sports Network has the ability to be that next disruptive force…

Thanks for reading…

Jeffrey Ishmael

You Didn’t Have To Provide A Plan To The Board?

January 20th, 2017 No comments

BUDGETOne of the benefits and enjoyments I get from updating my blog are the questions that I typically received from people asking for certain clarifications. This comes as no surprise since the original intent of my blog was to bring a little more transparency into how the Finance department operates relative to every other functional area in the company and what might be driving the actions or decisions of the Finance department.
With that said, I received a follow-up yesterday on the update I wrote on planning within a hyper growth environment. One of the main messages in yesterday’s post was that you really can’t plan, or at least effectively, in a hyper growth environment. With that message I was asked how the Board would accept that an operating plan wouldn’t be presented to them for the year. I have to say I was a bit amused at the question, but completely understood why it was asked. Not to mention, the Board would never allow such a hall pass from any team. There is ALWAYS an operating plan that is highly thought out, detail oriented, and usually has a number of additional scenarios that will convey what the impacts will be to cash and profitability if targets are missed or exceeded. For ballpark references, you might have the base scenario, as well as a +20% and a (20%) view. For a more mature company these ranges will obviously be tightened up when you have a higher degree of predicability and more history to base the plan off of. When you’re really just a handful of Quarters into a trajectory, which you are anticipating to double, and the trajectory starts looking like a 6-8x, then you have an entirely different beast to deal with.
So how do you plan for such a scenario? Again, as I mentioned yesterday, you really don’t “plan” for it, but you react to it and adjust the allocation of resources to support that new growth trajectory. As with any business, you have key indicators you look to gauge the health of the business and whether you are tracking to achieve the commitment made to the Board. The elements below are certainly not all inclusive, but are merely a sampling of the items that could be watched when encounter a growth rate that is entirely unplanned.
Billings & Revenues: While this is the key driver on which all spending decisions are made, the total number is not the overriding driver. There’s further review that should be done on the quality of that revenue, what the concentration is, and whether there are any key areas that are potentially missing against Plan. In the case of Cylance, we were constantly watching what our price per endpoint (PPN) was at every level. What that PPN was at a macro level, a channel level, a vertical level, as well as what they were for the duration of a deal. Looking to this number would indicate what the true health of the business was. Was there a single customer that accounted for a disproportionate share of the Quarter business, which in turn, might prompt a tapping of the brakes to ensure that hiring and spend weren’t getting ahead of themselves relative to the Plan and a normalized trajectory. Prudence should always reign supreme.
Gross Margin. Definitely a key indicator, but it also depends on what the structure of the billings are and how the terms being written may be influencing GAAP-based reporting. For a situation where multi-year deals are being done, it might be best to look at early results on a non-GAAP basis if a disproportionate amount of the activity is headed for the balance sheet as deferred income.
Headcount. For me, this was one of the key indicators as it related to our burn and this is certainly not just a single macro number, but a more complex element to dive into. First, what is the overall cost per head and what is the trend line on that figure? Are you’re costs per head staying constant or are you seeing an increase in that number, which might be tied to incentive plans that aren’t aligned with results, increasing benefit costs, or all of the above? Second, what are the average billings and revenues per employee? While the overall headcount might be increasing, this number should also be increasing with the results that are being achieved in excess of plan. It’s not a problem increasing headcount over the Plan, so long are you are seeing the achievement or increase in this planned metric. Third, what is the distribution of the headcount by functional area? Did the original Plan call for 12% within the Marketing area and now the revised number puts Marketing at 18% of the headcount? Is there a disproportionate growth in any one area because that functional area has successfully lobbied for additional staff that is not consistent with industry norms?
Facilities. This area is obviously heavily influenced by the increased headcount that is occurring to accommodate the unplanned growth. If historically Rent expense has been 2% of your operating expenses then this is the approximate metric that needs to be followed in order to stay consistent with the Plan. If you’re exceeding Plan and need more staff then this number, while increasing on a constant dollar basis, should still remain at approximately 2%. As an example, you’re planning a $25M year, which would allow for approximately $500k in rent expense. If the new trajectory is now $100M, then theoretically you would have $2M to spend on rent to accommodate the additional headcount needed to support that growth. Ideally you also start achieving economies of scale where you can actually see that number go down as a percentage of spend. If you fail to miss you billings number, hire all the folks, commit to even more rent expense…then you’re going to find yourself in a bit of bind. It’s akin to “I’m going to get a big raise next year so I’m going to buy my second home and a new car for my wife and I…”. And when it doesn’t happen?
Systems. This is another area that needs to be heavily strategized and managed in a hyper growth environment. There will be unplanned upgrades that will necessitate spending in the $500k-$1M range that, while necessary for growth, were previously balked at due to their cost and the original trajectory you thought you would be on. You might have thought you had another year…or two…to bring them online, but now seeing a 6x freight train coming at you there is no other choice than to starting throwing a ton more coal on that fire and get up to speed.
Culture. We’ll discuss this in another post…or posts.
This barely scratches the surface of “planning” in a hyper growth environment. It’s more about regulating the health of the patient, making sure the vital signs are remaining healthy, keeping your finger on the pulse and knowing how to respond. It’s the doctor that has decades of experience, treats every patient the same, only to realize he has misdiagnosed the patient and either administered the wrong medications…or too many. It’s about collaborating with the broader team in making key assessments, discussing with the team their needs, and ensuring that the resources (MONEY) are properly allocated and within the range of the original Plan that was discussed.
Thanks for reading…

Jeffrey Ishmael

Employees, Facilities, & Systems In A Hyper Growth Environment…

January 19th, 2017 No comments

IMG_0219     I’m really enjoying the conversations that I’m having with prospective new teams, as well as the vendors that I partnered with during the hyper growth phases at Cylance. The most predominant question is “how did you guys plan that out and accommodate the growth you did?”. Really, the level of success we achieved was not planned, at least not in the timeline that it was achieved in. From the outset, we had “modest” growth that still had us doubling our billings on an annual basis. We knew early on that we were going to have a relatively aggressive trajectory, but certainly not the hyper growth we were confronted with. While it has its blessings, it also tables an entirely unique set of challenges. Challenges on finding that appropriate balance in planning out employee growth, facility growth, as well as the systems you want to put in place…all with a focus on prudent spend knowing that the wrong decisions will result in unnecessary cash burn.
Employees. While we were extremely surgical in the original hiring, there were also unplanned surprises that increased our headcount, and thus our burn. Take for example the assumptions about our product and what we were anticipating relative to the ongoing support of our customers. Early on, the assumption was that our product would be entirely turnkey, that any deployments would be extremely rapid, and that the product would be easily integrated into any customers native environment. Well…not so fast. We quickly determined that we would indeed need a more robust customer support team, and one that was going to be more than just a few people. It was not a difficult decision to make as we knew this was the best decision for the customer and the best decision in support of our product and future success. We just needed to ensure that we moderated our spend in other others to accommodate the unplanned spend. As with some of our other spend, these were not black & white spreadsheet decisions and we worked through all the shades of grey as a team. Also early on we were aggressive in the buildout of our Sales Engineering team. This team was the technical complement to our Sales team and would be responsible for any pre-sale technical questions, proof of concepts, deployment issues, etc. As we started to close more business it was determined we needed a dedicated team just to handle the proof of concepts with prospective customers. Again, not in the plan, additional headcount, and thus, an increase in our cash burn. More conversation that thad to be addressed by the broader team and ensure that the metrics that we were operating under continued increasing in the face of rapid employee growth.
Facilities. When you start out in a living room on fold up tables you tend to maintain that same prudence planning and moving into new locations. We had early support for an investor with some temporary space. Following that, it was then a big commitment for us to assume a five year lease on a 12k square foot space when we still had barely secured our first Services customer. Even more surprising was outgrowing that space in less than two years. The other three years? We had always negotiated great leases so we had no problems maintaining cash flow neutrality when we subleased that space and moved into a new 16k square foot space, but with the opportunity to expand to additional floors within the same building. Imagine our surprise when we realized that in less than a year we were going to be out of space due to a dramatic increase in bookings after we signed the lease. We then renewed our relationship with The Irvine Company to lease additional space in an adjacent building and could easily expand to additional floors. As with our earlier leases, we always ensured we had negotiated leases that we could sublease if necessary if there were any unplanned corrections to the business that had us with excess capacity. However, it wasn’t excess capacity that was the issue, but a lack of. As I had successfully worked with other companies in a campus type environment, we started leasing vacant space in adjoining buildings to accommodate the rapid growth. There was little cap ex for buildout and we had exceptional flexibility. Even as we started to occupy a significant amount of space in prominent high rise buildings adjacent to the airport, while also securing prominent building top signage, we were able to keep our facility expense to less than two percent of our total operating expenses. Building top signage on two buildings that would essentially create the Cylance corridor near the airport.
Systems. As I was handed a laptop with Quickbooks on my first day i knew that this would not be our platform moving forward and quickly looked at what we might deploy that would carry us out over the next 2-3 years…or more. It was determined that Netsuite would be the platform and we could add additional modules as we grew and our needs changed. Whether commissions, deferred revenue, fixed assets, or multi-currency, Netsuite provided an economical platform that was widely adopted and could scale. I had just completed an SAP implementation and it was clear that we didn’t need to go in the direction of Oracle or SAP, both from a complexity, as well as a cost perspective. There were also some other great platforms that we had looked at early on. As an example, we had looked at Domo as a candidate for our dashboard platform. However, at a full implementation cost approaching six figures it just didn’t make sense early on as we had very little to report on in a pre-revenue capacity. A great platform, but not for the nominal amount of financial data we were compiling. Fast forward to a year of accumulated product bookings, pipeline data, channel data, etc. and we were properly positioned to take advantage of it, which we did. As we also started to push towards employee growth of almost 500 we knew that the HR & Payroll module in Netsuite was not going to be robust enough for what we needed and determined that Workday would be the appropriate platform as the company started scaling towards a headcount in the thousands. A year prior and headcount of barely 120 there was certainly no reason to spend high six figures to license and implement Workday. However, a year later and employee count approaching 500 it became a much easier discussion to have.
So how do you plan for employees, facilities, and systems in a hyper growth trajectory? You really don’t. There is no Board meeting that your going to roll into and legitimately say your going to go from $10M to $100M in the next year…not unless you’re going to sedate them and move quickly through that slide. However, you do put the systems and decisions in place that will give you the most flexibility to continue altering your course without having to look back with the realization that you’ve incurred a significant amount of sunk costs that really didn’t deliver any value or provide you with future flexibility. Decisions have to be made in tandem with the broader team, the key vendors that you’ve established relationships with, as well as the input of the Board and key advisors. It’s a heck of a ride and one your not going to be discussing in B-schoool…although look for a Cylance case study in the future!
Thanks for reading…
Jeffrey Ishmael

Hyper Growth…Do You Know Your Company CTL Level?

December 22nd, 2016 No comments

ctl-chartFor my friends and colleagues that know me, they know that I am fiercely driven both in the office…and on the bike. While I’ve tempered the shoulder and elbow bumping criterium racing these days in favor of career preservation, there is no decreased focus in the pursuit of achieving the best results I can on the bike. In fact, it was a laser focus and a very defined training plan that allowed me to achieve a 2014 title win for the SoCal Time Trial Series, which covered more than a dozen races. Some would think that this is a futile pursuit and an endeavor not worth the investment of time. However, I continue to realize the correlations between what happens on the bike and what happens in a corporate environment. It comes down to disciplines, awareness, proper planning, and executing on the strategy that you put in place. There’s no cutting corners, there’s no accidental or chance success…it’s about appropriate planning and execution. Period.

For me, getting out on a bike ride doesn’t mean just heading out for 3-5 hours, plugging in some music, and getting some good exercise. It’s about have a specific plan for that day. It’s about having specific time execution in specific power zones with specific cadence output…and REST in between those efforts. How does this even relate to corporate execution? We don’t go into the office and hope that the Quarter comes together in the last 5-10 days…although we all know this seems to be the case in just about every industry. HOWEVER, we do head into the Quarter with a blueprint that is typically part of a larger annual plan, that has Quarterly quotas, quotas that are supported by the necessary Sales headcount, as well as a host of other preplanned Marketing and operational support elements. While I commit to a daily training plan and see the immediate measurements of that output, that same realization doesn’t happen in a corporate environment. We continue to put in the “training” on a daily basis, but sometimes the runway to actually see the benefit might take a few months…or possibly a few Quarters on a more significant deal. It’s about having a plan and executing against it. A plan that is achievable. You break that plan down into its core elements and you execute against it. Period.

How does this all relate to hyper growth and corporate performance? Very simply…it’s the ability to maintain a sustainable pace that doesn’t overheat the engine, doesn’t waste resources in an inefficient way, and will allow the individuals, and ultimately the team, to cross the finish line…together. In cycling and the tracking of fitness, there are two lines that are followed during the course of executing a training plan…the CTL and ATL lines. The CTL line, or Chronic Training Load, measures your cumulative output of a trailing 28-day period. The ATL line, or Acute Training Load, measures the short term extreme spikes in training that indication your ability, or inability, to continue putting in sustained efforts. Think of the CTL line as a 200-day moving average for a company stock. You don’t want wild fluctuations in this line, and when there are, it typically isn’t healthy. You may have shorter term efforts that bring your CTL line up…but the ATL line realizes an extreme divergence away from the CTL and starts to indicate potential exhaustion and the need to rest. It’s the same concept at a corporate level, but drawn out over multiple Quarters than multiple weeks. Just like the cyclist, employees can put in a hell of an effort, but continued redlining will lead to that overextended ATL line, an unhealthy and unsustainable spike in the CTL, and eventually a condition of overtraining where either the team gets sick or rest is mandatory.

Knowing how to pace yourself and your team is critical to maintaining a path and a cadence that can continue driving a level of hyper growth. It’s taken multiple lessons for me to learn from others that it’s necessary to know and understand all the inputs that help maintain the pace. I don’t know how many times I was told to slow down and get some rest in the training by my coach. REST?!?!? Are you joking?!?!? “I’m feeling great and I don’t need to rest…”. Follow that with either getting sick or starting to see a drop in the performance level. “What do you mean rest…this isn’t the first time I’ve ridden a bike and I’ll know when I need to rest.” is what I might convey to my coach dismissing his feedback and experiences. I’ve since come to appreciate his valuable feedback and it was his feedback that was a major factor in securing a regional title.

Coming back to a corporate environment and the link to cycling…it’s all about the plan and managing all the necessary inputs to achieve that plan.

Revenue.    Corporate…what’s the Quarterly and Annual Plan? Cycling…what are the major event goals and the power level necessary to achieve the result?
Cost of Goods.    Corporate…what are all the elements necessary to produce? Cycling…what are the dietary needs to stay properly fueled, recover, and continue building on the achieved results?
Operating Expenses.    Corporate…what is the necessary cost structure to support the Plan & the resources available to achieve the plan? Cycling…what is the cost of nutritional supplements, tires, tubes, equipment, travel, etc.?
Net Income.    Corporate…with consideration to all the inputs, is the company achieving it’s planned result? Cycling…are you making progress towards achieving the wattage goals and distance goals? If not, is there a tweak to the inputs that can be made that may result in the same outcome?
It might be a bit simplistic of an analogy, but you can see the correlation between the two. While some might see my quantitative view on cycling as a bit unfortunate, it’s what makes me tick and it’s what I love about my career. For the same reason that I can’t just show up in the office and put in 8-9 hours and collect a check…nor can I get on my bike and just go for a ride…at least not with any frequency. I’m completely driven by performance and performance doesn’t happen without a strict plan in place, a set of metrics to track the plan, and the commitment to deliver. Period. In a situation of hyper growth, you need to be keenly aware of the elements and their impact on, and contribution to, delivering performance. You also need to realize that an excessive use of resources, which may ultimately be waste, will not necessarily deliver the desired results. There is no set formula…but it’s all about having the experience to know how to balance the inputs, drive a sustainable cadence, and deliver on what you promise. Changes to the plan? They happen, but don’t introduce a new race to the calendar next week, load up at the buffet with a ton of carbs, and hope that is going to get you through with a successful result…

Thanks for reading…

Jeffrey Ishmael

Off To The Races & Billion Dollar Valuations…

December 13th, 2016 No comments

With the original Cylance team established in July of 2012, the orchestra came together and at that time there as a unified vision to transform the security market and change the way that corporations were thinking about their security infrastructure. We were less than a dozen people working in the living room and bedrooms with a goal of security transformation, and in the eyes of our founder, achieving a billion dollar valuation inside of 4-5 years. When you’re starting on fold-up tables there is no blue print to getting there…only a bit of a dream. However, that’s exactly what the team was doing in those early weeks and few months…creating the blueprint on white boards and oversized post-it notes. The team was sparring on a daily basis on what approach would achieve the best commercial results. It was all about specifically identifying the value proposition behind the vision of the tech that had been decided. While we were not trying to build a new company in a high growth sector, we knew the security sector was dominated by dinosaurs and there was billions in revenue that were ripe for disruption. Cylance was going to be the disrupting force in the equation and that exactly what the team was focused and unified on accomplishing.
We also knew that we could accomplish the goal while being very surgical in our spend and that our success would be based on a breakthrough tech and not spending tens of millions on advertising campaigns, spending ridiculous amount early on trade shows, non-value add events, as well as keeping our hiring cadence under strict control. The company cash burn was extremely minimal in the early stages and it was nearly 18-months before the company received its second round of investment in February of 2014. As we continued to bolster our headcount, invest in the Services team, and gradually moved into new offices, the original $15M investment lasted that first 18-months. Again, we were extremely surgical in our spend and spent every dollar like it was our last dollar. A philosophy that managed to last the better part of almost 4-years…
While the Research team was focused on developing the product there were a host of other operational issues to address as we started to grow as a company and would need a foundation for the first few years. First on the list was to find commercial space as we would definitely need to move out of the house. While a remodel was imminent, we were also working in a space where there were water leaks, open beams with exposed nails, and all the other fun elements of a home start-up! You can imagine the response received when you’re trying to meet with The Irvine Company on a commercial lease, as a new company, no revenue, and you want to sign a 5-year lease and then have them pick up all the buildout and incorporate into the lease rate so as to minimize any immediate cash burn. On top of that…and as a start-up…you’re also asking them to have certain restrictions on competitors worked into the lease as well. Suffice to say that we had a pretty weak position and it took more than a few meetings to get them to buy into our vision and the growth we were looking at achieving. At that stage, it was a huge accomplishment to get our lease signed with The Irvine Company, in a premier location, with building top signage on both sides….and all with a minimal security deposit. Score one for Cylance!
Even with our new lease, we kept our spend to prudent levels that were consistent with our philosophy. Rather than spend six-figure amounts on furniture, we committed to a new entry level offering from Steelcase that could easily be added to as we grew…but not before staying on fold up tables for many months before getting into our new space. We all tended to joke that fold-up tables had become part of the Cylance DNA.
Next on the list was our corporate insurance portfolio. Rewind to the start-up that had no revenues, still had less than a few dozen employees, had actually been turned down by Marsh for being “too small”, but seeking coverage in the low 7-figures. I looked to a prior relationship and again found a partner that believed in our vision as well. Fast forward a few months later and securing our first few customers and we were already going back to ask for additional increases in coverage to the mid-seven figure range. This drill continued on almost a quarterly basis until a final larger customer pushed the coverage limit again…to a point that exceeded our billings on even a cumulative basis. Again, transparency and strength in our relationship got the coverage in place. While there was certainly some raised eyebrows, they believed in Cylance and continue to realize the benefits of the relationship, which now extends on a global basis. Again, it came down to relationships, communication, and a mutual respect on both sides to manage the expectations on such a hyper growth path.
Marketing? The first few shows were an absolute kick to plan being the new kid on the block. Our burn was primarily aimed at headcount support, but we also knew we needed to start getting the Cylance name out there. For the first few RSA and Blackhat shows we had the luxury of being an unknown and used it to our full advantage as the team rolled out a full guerrilla assault on the show. With everything from custom napkins dropped in bars, to rented suites to meet with potential customers, to other similar means, we made a huge impact in those early days and clearly got the Cylance name out there. Not immediately recognized post-show, but we established the open ended question of “Cylance?”. We were clearly on the radar at that point…and already starting to create discomfort with our competitors.
At this point, there was still a unified team, all engaged in the same direction, and we knew the end play we were headed for. We knew we were going to be able to achieve our objectives without putting excessive spend in place. What I appreciated at this point, which was similar to the philosophy we had in place at DC, was that we were operating in a brand first capacity. There were no decisions made in the best interests of a person, department, or other agenda…it was all about Cylance. With this philosophy politics were still being avoided and there were no silos in place. We all bled green. Along with this approach was the continued prudence in spend throughout every level in the organization. We were pacing well, the product was coming along, and all indications was that once product was commercialized in 2014 we were going to start eating our competitors lunch. What our competitors didn’t hear was the increasing sound of the Cylance war drums and their sunset turning a bright shade of green…
Thanks for reading.
Jeffrey Ishmael

Exceptional Value Is In The Sum Of The Parts…

December 2nd, 2016 No comments

The original goal when I started my blog was to bring an insight into financial strategies and operational disciplines that often drive the actions of the Finance team and why they often wanted to be involved in so many other parts of the organization. More involvement than just reporting what was happening in the other functional areas we work with. Quite simply, exceptional value is almost always created and driven by the entire sum of the parts and not just the actions of a single individual, department, product concept, or operating division. It’s all about the sum of the parts…the team that has been assembled to execute on a commitment made to the Board, Executive team…or a commitment to employees.
My point of view isn’t just based on a single company or a single experience of corporate success, but the pattern I’ve seen played out over a number of companies. Whether it’s been most recently at Cylance, strong financial and brand performance at DC Shoes, or aggressive EBIT initiatives during my time with a division of Schneider Electric, the exceptional results could not have been accomplished without the strength and commitment of a competent team. It always started with defining the mission and breaking down that mission into a set of directives that would shared across the functional areas. It was NEVER about closed door initiatives, secret meetings, or selective transparency on key topics. It has to be about clear communication, transparency, and honesty with the team on the direction that everyone is moving and the expected outcome. Measured, achievable, and sustainable changes to the business. There’s no room for short term thinking or decision making that alienates key team members.
In the case of MGE UPS Systems (Schneider Electric division), we were moving into some key periods for the company and were starting to see compression in our margins, our operating metrics, and ultimately the results we were reporting to corporate in France. All this while we were seeing massive fluctuations in just about all of our raw material prices, which at that time were primarily copper, lead, and steel. As a larger Executive team, and under the direction of our Chairman, we identified approximately 15-20 initiatives that ranged from increasing Services utilization rates, to improving battery pricing, to improving revenues in underperforming segments, as well as headcount related metrics and expenses. Additional initiatives included balance sheet management for the improvement of A/P terms, improving DSO metrics, and bad debt expense. None of these in any sense were a smoking gun, but as a collective and through the commitments of all the teams involved, we’d be able to make some very material improvements to our EBIT results. This overall initiative spanned the course of approximately 9-months and we met on a monthly basis, with our Chairman in attendance, and reviewed the progress being made on all initiatives. The reviews were not done on a 1:1 basis, but as a collective in a larger conference room. It was the purest form of group accountability. While a significant grind during that period, it was amazing to see that the team not only achieved the originally targeted results, but exceeded the commitment made. Still an amazing accomplishment by that team in what was a very mature / static company that was not experiencing anything close to hyper growth. It was about absolute efficiency in execution.
Fast forward to DC Shoes and this was about a huge amount of uncertainty. I walked into a situation where there was a heavily entrenched culture that was operating under the Quiksilver corporate umbrella, but operating completely independently and in a different location than the rest of the organization. A truly independent team and company. The goal going in was to partner with the new President for DC, as well as the likely relocation of the company to Quik HQ since the DC lease was expiring. At this time, barring some selective improvements, DC was a high performing brand, had tremendous additional potential, and was highly accretive to the overall corporate results. Corporate results that were driven primarily by the Quiksilver brand, DC Shoes, Quiksilver Retail, Roxy, as well as a host of smaller brands. DC’s continued results were so strong that it was a near impossibility to sell the brand due to the deleveraging it would create in the corporate P&L for what would remain and the subsequent results that would be reported moving forward. There was also the development of a full 5-yr Plan that had the DC brand growing to almost $500M, which in the few years after the brand was moved to HQ, would have exceeded the market cap of the entire company. The unfortunate part for DC is that while the brand was performing exceptionally well and aggressively growing market share, the sum of the corporate parts were anything but a synchronized and collaborative team. There was infighting between brands, selective support from corporate oversight teams, key executives making decisions they weren’t qualified to make for other brands, and ultimately, a complete scarcity of financial resources after extended periods of poor spending decisions and declining results. We know the unfortunate position that Quiksilver found itself in.
Cylance…a completely clean slate. No baggage. A complete blue ocean scenario to chart a path as a team and to start executing. We had a CEO & Founder who had an incredible security vision after decades of being told it wasn’t possible. We had a Chief Scientist that is probably one of the most brilliant folks that could have been chosen to head up our Research team. We had a CTO that was a CISO for a top telecom and moved his family from Australia for the crazy dream. An SVP of Product that was laser focused on building out the entire product team, while also building the product! We had a CMO that had a strong pedigree in security and did whatever it took to get the Cylance name out there…and in brilliant fashion. An SVP of Business Development that delivered on whatever was asked…including the collaborative and successful closing of the Dell OEM agreement. We had a VP of Professional Services that started generating revenue in our first Quarter. We had a VP of Legal that kept us out of the courtroom and played a key role in our corporate foundation. We had an SVP of Global Sales that partnered with everyone on the team to deliver the first $1M order…$10M order…crazy sales growth every Quarter, domestic team expansion, and international expansion. We finally got our first CPO that in just one short year oversaw employee growth of over 500 employees. I can’t imagine Cylance experiencing the level of success we did without the team and their amazing contributions. I can’t imagine that the team would have been able to share in the extreme success we did absent any of these individuals. Would there have been success, absolutely…but at what moderated level? Truly exceptional team results…and in the case of Cylance, exceptional value was in the sum of the parts.
Thanks for reading…
Jeffrey Ishmael

“I Have This Idea I Want to Share…”

November 18th, 2016 No comments

While I am still only a few weeks detached after deciding to leave my position with Cylance, I’ve been getting an endless flood of inquiries about the trajectory we had been on as a team, how the company had achieved some of the major milestones it had, as well as whether there were any lessons that I was taking with me and would carry with me into the next chapter. It’s true that the pace had been insane from the very beginning and that the success we had achieved as a team may never be replicated…at least not without the synergies the team had realized early on. I also know that Cylance will not be easily replaced as the experience has been nothing short of amazing. It’s not about finding a job. It’s about reflecting on what has been a life changing 4.5yrs and the desire to reflect on that experience and share with those that have been asking. I’m not sure how many “chapters” there might be, but this is certainly my attempt to kick it off..
While Stuart and I had known each other for a handful of years prior to Cylance, we never knew the depth of each others professional capabilities. I knew he was involved in Security and he know my background was in Finance….end there. What we did know about each other was the relentless nature in our personalities and the ability to suffer for extended periods of time on a bike…think more than 12 hours. Think dehydration, severe cramping, horrible weather conditions, and perhaps all at once. Situations that truly test your personality and whether you have the vision and commitment to see it through. With that said, Stuart shared his idea of a new generation of security and one that he had a team committed to solving. This new initiative was not just about the tech, but about changing the way people thought of security. Fortunately, I had a mentor of almost two decades that came from the security space and he quickly validated Stuart’s knowledge of the space and where he was headed. Combine that with two investors who had prior interactions with Stuart and I know that this was not going to be any ordinary start-up.
Start-up. That characterization that seems daunting to some and terrifying to others. You’re not coming in and inheriting a team…or for that fact, even a company. You have to build it with the team. There’s no other way around it. We had found early on that there were a number of people that were just not capable of surviving in a start-up environment. Whether vision, discipline, experience, inability to build their own client book…or whatever the element might have been, some fell victim to an ongoing exercise in Darwinism. It was truly survival of the fittest. As I had started as employee #7, or for anyone starting in the first 50-100 people, there is no place to hide. You were either getting it done…and getting it done right…or you knew it was time to move on. There was no coddling, no hugs and “it’ll be ok..”…but a relentless push for achieving the results. As I had learned and practiced at so many other prior companies, you delivered on what you promised. Period.
However, at that time in the company, there was also a deliberate avoidance, and an absolute disdain, for politics and silos. We all recognized that if we didn’t have a sense of cohesion in place, a commitment to an end goal, and the support of our respective team members, then we were going to fail. Period. It was in these early days that the support was absolute. Whether someone was getting married, selling a house, establishing new households, moving across the globe…that these conditions were supported…to ensure that we were going to be successful and that everyone was going to be along for the ride. We knew we were going to be on the gas and the pace was going to be relentless. The pace was going to have to be relentless if we wanted to establish a billion dollar company inside of a 3-5 year window. Now keep in mind, while the term “Unicorn” now is common, if not overused, it was not in existence until being coined in 2013. So in 2012 for Stuart to say that in a handful of years he wanted to establish a commercially successful company with a billion dollar valuation…he was dead serious and it wasn’t going to be a walk in the park. His vision, while aggressive, was not part of a herd mentality of wanting to be in some hyped “Unicorn Club”. His view was not about creating a tech that would get sold on the hope of establishing commercial success…NO…he wanted to establish a truly disruptive technology that would turn the security space upside down. He wanted to see the team create a tech that would just eat the lunch of first generation AV vendors. Period.
After having done a number of turnarounds, the thought of a start-up certainly was not intimidating. Considering the quality of the team we had, the wealth of experience that each of them was bringing to the table, as well as the collaborative personalities that each one of them shared, I knew that we had a very high likelihood of success in the launch of this company. The most difficult balance we were going to have to achieve was being fiscally responsible to mitigate burn, continue hiring the right individuals, and ensure we had the resources in place that would allow Stuart and the product teams to stay laser focused on their obsession to disrupt the security space. The team that had been assembled would absolutely be able to do that. There would be a further challenge in determining what the necessary resources were that should be put in place. As an example, I had just finished an SAP implementation at my prior company and clearly that was not going to be our platform of choice, but it certainly wasn’t going to be Quickbooks or some other bottom tier platform. The challenge would be to find the Goldilocks solutions for the first 12-18 months. No reason to buy the F1 race car when you couldn’t afford the pit crew and the track hadn’t been built yet…
After a number of emails, a few phone calls, and finally settling on an offer letter, it didn’t take much convincing to join this new start-up. I saw the vision, I believed in the vision, I believed in the team, and I trusted the team at the table. With that, and a few weeks later, Stuart gave me my laptop, let me know it had Quickbooks on it, and if I could get the payroll done that day. With that, as well as a payroll processed that day, I knew we were off to the races… 🙂
Looking forward to the next chapter..
Jeffrey Ishmael

How Do You Summarize 4.5yrs of Hyper-growth?

November 3rd, 2016 No comments

For my friends & family who have been watching my pace over the last four years, that pace has been relentless, and for the most part, all consuming. The 4+ years that I have spent at Cylance where I started as employee #7 and working on fold up tables in a living room had progressed to over 700 employees. Cylance has grown from an idea our founder shared in a coffee shop to now a multi-national company with operations in 10 countries and billings in excess of 9-figures, while protecting some of the most recognized company names.
As with most chapters, there comes a time to turn the page and start a new one. I’m so incredibly proud of the team I have been able to work with, what has been accomplished, and what they will likely continue to accomplish. The next chapter is not about quickly finding a new opportunity, but reflecting on the incredible experiences & team that I had the privilege of helping to create.

I look look forward to sharing the experiences I collected at Cylance & the insane hypergrowth pace we found ourselves in. From the early stages of transient office spaces, to system decisions, preparation for modest growth levels, financing rounds, vendor relationships, as well as the cultural challenges created in such an extreme growth environment. I leave behind an amazing team and know our paths will likely cross again and will look forward to that possibility.

Thanks for reading…

Jeffrey Ishmael

Who Is Your Go To Mentor When You Don’t Have The Answer?

August 20th, 2016 No comments

One of the staples that I have had in my career has been a mentor. Fortunately for me I was able to meet this individual and strike a good relationship, and friendship, that has lasted the better part of 20-years. He’s been there in my early career transition days where I was moving from Operations and Product Planning into a more Finance-specific track. In fact, it was his prompt that really directed me towards the Finance path I am on today.

While he has been a staple through those years, I’ve also aligned myself with people that I very much enjoyed both working with…and for. Folks that challenged me individually and people that I was able to learn from as well. There were three CFO’s in particular that I was able to work for that really challenged me and gave me all the rope I ever wanted…with the challenge presented that it would only by my actions that would cause my hanging. Fortunately I always kept the rope pretty taut…

However, as you move higher on the climb, the challenges become more pronounced and quite often the experience you bring to the table may not be sufficient to get you through the next challenge. This is when both the strength of your mentor(s), as well as the strength of your network, need to be of sufficient levels to carry you through. Each individual’s challenges will be unique, but still a minefield that needs to be walked and navigated.

In particular at Cylance, there is nobody on our team that has been through the kind of growth that we are currently realizing. From the increase in our billings, to the increase in our headcount, or the international rollout and rapid formation of subsidies. We’ve never seen anything like it, and typically have only come across it in a B-school case study. We’re living the case study right now at Cylance…

  • How do you accurately forecast growth when you continue to blow out your numbers and nobody has seen similar growth in quite some time?
  • How do you ensure that you’re preserving the culture, intimacy, and execution in the coming years that you’ve seen over the last 4-years?
  • What are your key metrics to measure and how often will those metrics evolve as the company continues to mature?
  • What are the key areas of risk that you need to have on the radar and keep a focus on regardless of how well things are going?

For someone that measures every watt, pedal stroke, and heartbeat when I’m on the bike, these are the things that I completely geek out on when measuring the performance and health of the Cylance organization. This organization is an athlete that will be continually be subjected to fine tuning and unplanned shifts. Shifts that will be influenced by our employees, our executive team, our investors, and the mentors that we all should have in place to successfully navigate a race that is ours to lose…

Who is your go to mentor when the race stakes get high?

Thanks for reading…

Jeffrey Ishmael