startup business is like driving a motorcycle at 100 miles an hour in complete darkness.
What's one thing you wish you could go back and tell yourself?
Product market fit is dead.
So you have to repeat zero to one every six months.
It's not a one-time process and a scale.
All the decisions I made based on my gut turned out to be the right decision.
All the decisions I made based on the influence of other people.
Those were all wrong decisions there.
Things that you're particularly excited about there'll be a trillion dollar cyber security company within the next five years.
All right people, thanks for doing this.
So excited to be here.
I heard you say on a podcast that 90 of vcs don't know what they're doing uh, which you, I think is probably fair in a lot of different ways.
But I'm curious, what did you mean by that?
And how has that influenced your fundraising journey when you started a company with Rubrik?
I had this fundamental thesis that you need high concentration and people who are in your business.
They have a skin in the game, so they need to own certain percentage of your company for them to be able to spend time with your company.
And then the second thing was I don't like VCs when I meet with them and then they introduce me to this expert that I need to go explain my idea, and then they translate that to the VCs.
And what I saw in my VC career as well as as an entrepreneur on the other side of the table that a lot of VCs were using experts.
And if you don't have a native sense of what this business is about and why they are unique in the marketplace, then when the things don't work well and things will not work well for some period of time, it goes up and down then the people who don't have the native feel they lose faith.
And that's the most dangerous time for a startup.
And you were a VC for how long?
For seven, eight years.
What was the hardest part about transitioning from that into being a founder?
VCs live in the world of pessimism because they have to meet 100 companies and they say 99 will not work.
I want to pick one where I want to invest.
Whereas entrepreneurs have like portfolio of one.
So there is this two states of human being, a state of intellect and a state of will.
VCs work in the state of intellect where they plan and they're pessimistic and they think what could go wrong.
And entrepreneurs work in this state of will where they say, I have portfolio of one.
Whatever it takes, I'll make it successful.
And that switch from the state of intellect to a state of will was the biggest change, because now you have to see positive in every aspect of your execution.
Did you set out to found a company and look for an idea, or did this idea for Rubrik just gnaw at you and you felt like you had to go start it?
This idea that I wanted to go and really put all my force to go start this business.
And what appealed to you about the idea in such a meaningful way?
This idea appealed to me because I didn't want to start a company where cool kids were going.
Because, if you look at the history of Silicon Valley, the great companies are created because they have big moats, and moats are created because not everybody is believing in that thesis.
And I saw the backup and recovery space being like the the backwater of technology.
Nobody was paying attention to it.
Existing incumbents were just seeking rents from the users of the platform, and no real innovation in 15, 20 years.
So I said what could be a better space where there is a one place where all enterprise data goes?
It is mission critical.
It's a large market and not served well.
I heard you say something interesting about human beings and the nature of learning and how we draw on past experiences to extrapolate forward in some ways.
But within business, so many things are new.
Can you, I guess, for people that haven't heard that, can you elaborate on that point?
And how do you internalize that and operationalize it into the business today.
As human beings, we've always faced two kinds of situations certain situation and uncertain situation.
So if you are going, driving to work from home, that is a very certain activity.
There's very small chances of failure.
But if somebody asks you to go start a restaurant in San Francisco or New York City and make it successful, there's no blueprint or playbook for it.
And so in the certain world, I call it known world, your knowledge works.
In the uncertain world, I call it unknown world, is where your intuition plays.
If you apply your knowledge, your past knowledge, past history, past expertise, it'll never work, because the future is very uncertain and doesn't reflect the past.
But we as human being, we take comfort in this knowledge and the pattern recognition.
And we are always looking for a pattern in the future, but no pattern exists in the future.
So you have to be in this discomfort, dissatisfied state of knowing that you don't know.
And then you are trying things to figure a path out.
The way I think about building business, particularly a startup business, is like driving a motorcycle at 100 miles an hour in complete darkness.
What would you care about?
What happens in the past or what is ahead of you, like 20 miles?
No, you would care about what is 10 feet ahead of you.
And then how do you survive and make sure that you make the best decision, given the circumstances, and move forward based on your intuition?
When you come to a decision and you're trying to decide the path to take, then how do you go about doing that?
Do you end up just trusting your intuition, given the situation, or do you still pull on all the intellectual frameworks around past experience and experts and all of that?
My biggest worry in business always is what am I missing?
Is there some variable that I don't know about?
So my modus operandi is I bring all my team and have them express all of their feelings about a given situation, so that I have all the brain in the game and I at least know all the angles that I could possibly know.
And then I validate my intuition with those inputs.
But I made the decision make the decision first and then discuss with the team to validate that decision.
That's how I did venture capital.
That's how I did Rubrik.
Did you find that most of your venture capital investments ended up then being that level of intuition, that at the end of the day, it just came down to your gut feeling?
You distilled down all the different intellectual ideas and then it was just that intuition?
What I found was that, all the decisions I made based on my gut, they turned out to be the right decision.
All the decision I made based on the influence of other people and support of other people, where I look for some kind of like a backstop saying oh, my partner agrees to this or my, my business relationship agrees to this.
Those were all wrong decisions.
You said that Rubrik in the early days was like a not cool kid sort of area to be playing in.
But my understanding was it quickly became and there was a lot of market demand for what you were doing and venture capitalists therefore pursued it.
What was about that moment in time that you were able to sort of catch lightning in a bottle from a product market fit standpoint?
So we knew that this is a large market and it's an underserved market.
So idea was, can we beam a futuristic product which is five years out now?
So their reaction is extremely positive.
And that's what we've manifested in our product.
When we put the product in front of our customers, they said, wow, this is amazing.
Is this even possible?
Is this a black box that you have automated the whole thing?
And that was the reaction we wanted, because when you have that reaction from your customers, they are compelled to buy.
And the whole idea was how do you create that point of compulsion for your customers so that when they see this thing then they go back to their usual other products and they say this is not what I just saw.
And how do I go get that?
And that was the moment of inflection for the company.
And you know, in Silicon Valley, once it starts to grow rapidly, then the whole market chases you.
The whole venture capital scene becomes very different for you.
And though we had to turn this non-consensus idea into somewhat consensus idea as we made the progress in building the business.
Do you think Ruber could have been started two years earlier?
Rubrik could have started two years earlier, because all the conditions in the market particularly how the open source movement was going, how commodity hardware was becoming a reality, how large memory cloud all the circumstances that needed for Rubrik to succeed were there.
How has the product and, I guess, the positioning evolved over time?
Look uh, i have a fundamental thesis about how do we build a long-term business and the way the way you build a long-term business is to have to define and redefine, and redefine yourself, because when you enter the market, you set the agenda of the market and if you are successful, then the whole market has to aligned to your agenda.
But as soon as they align to your agenda, your messaging start to become stale.
And then you have to compete on your own turf with everybody else.
Then you need to shift and create a new agenda of the market and new circumstances.
So you have to evolve with the market very, very rapidly.
And what we saw was the biggest use case for backup and recovery was for cyber disaster.
Because human error or natural disaster doesn't happen, don't happen every day.
But cyber disaster is happening 100 times a day because you have an active adversary sitting in Korea and other places North Korea and other places that is attacking you.
And how do you ensure that your business keeps running, even when they are attacked by these adversaries nation state actors and things like that?
So I saw that as an opportunity and we shifted the whole focus on cyber disaster and that's where we started this whole new marketer space called Cyber Resilience.
And so then you see that shift happening.
How much does that change the positioning and how you articulate it to the customers versus the product and product roadmap and what you're building internally?
This is a continuous process.
We started working on the whole cyber resiliency capabilities in 2017 2016, but the market came around in 2019, so we had to wait patiently for the market to start to recognize.
But you have to be ahead of the market and this is where again, you have to have non consensus ideas that how do you bring a unique perspective to a market that people are not working on?
And again, you have to have this conviction that If your idea, if you have an idea and everyone agrees to the idea, that idea has no merit and you can create no value.
So I always believe that if you state an idea and if 80 70 of the people disagree with it and 20-30 of the people are like hardcore supporters, that's when you know that this idea has merit.
And this 76-80% of people who don't agree, that's what gives you the moat.
Because they will not agree for next few years while you are creating the moat and capabilities.
So that when the market comes your way, then you have an advantage of time.
So kind of being deeply appealing to a narrower subset rather than broadly appealing to a wider one.
I guess, how do you actually go about sessing out or trying to figure out which part of it you're falling in?
Because that also could be the path to being incorrect as well.
And so how do you go about determining if that's the right area to be fishing in and if this is truly non-consensus and right over time?
Look, if you're going after a new market, a new idea, there's high chances of it not working.
So you have to assume that not all your ideas will work, because the non consensus ideas, by the very definition of those ideas,
So this is where the art of a startup and art of entering a new market comes in.
That how are you gleaning in between the words that your customers are speaking?
Because they're not going to give you exact product definition.
But they are going to describe their problem to you.
They are going to say, this is how our business is changing.
And then, in between those lines and words and discussions that you are hearing, you have to glean certain patterns.
And those patterns start to form in your head.
And what you do is based on the edge of knowledge that you're sitting at.
You extrapolate and you connect these dots.
And this is where I say for startups, you have to go from the world of knowledge into the world of intuition.
And you have to pull the edge of knowledge to yourself to create value.
AI has been a new frontier.
And you guys kind of sit at the nexus of data and cybersecurity, which I think are two of the bigger meta trends that we kind of have going on.
I guess, At what point did this new generation of AI enter your consciousness, as you were sort of thinking about running Rubrik?
And how did you internalize what to do about it?
AI has two aspects to it.
One aspect about AI is productivity.
Everything about AI is all about productivity.
And this is, after a long time, we had a platform transition that was not about distribution.
Internet was a platform transition, but that was about distribution.
Mobile was a platform transition about distribution.
But the AI is purely about productivity and how we extend the productivity so that the human activities, particularly knowledge activities, can be automated by AI.
And then the second part of the AI is the confidence and the security and the responsible AI.
Because if you are interacting with an intelligent app, But if the intelligent app has man in the middle, cyber attack or the data that you are feeding into this intelligent app you're not sure that this data goes into the right hands, then you're not going to use that app.
So the question of digital trust is paramount for AI.
And if you look at where we sit, we have the data and we have the data security.
And if you combine the two, natural thing for us is AI.
And what again?
This is a non-consensus idea that we have.
That rubric is the next generation data lake, because we have all the applications data in one place, with the data security built in.
And when we pitched this idea nine months ago to some of our customers, it took them a long time to even realize that Rubrik can be a data lake.
And this is where again, non-consensus idea comes in, that how do you make this idea that you have a mainstream idea?
That's when you create value.
And that's the process we are in.
Presumably along the way you've tested different ideas that haven't resonated with customers or ultimately they didn't get there.
How do you try to determine at what point it's the right time to stop pitching the same idea to customers if it's not really resonating after some period of time, versus persist?
It sounds like, especially on the cyber platform the data resilience element or cyber resilience element you spend a lot of time building to where the future is going.
Is that ultimately intuition at the end of the day and just the will of founder, or is there mechanisms or decision frameworks you think about?
See, in business, particularly in the uncertain part of business, there's no right or wrong.
Answer is that can you learn to be at the right place?
And so as you interact with the customers, they give you feedback when you give them new ideas.
And what you have to find is there is there a pattern of yes or is there a pattern of no?
And as you learn the pattern of no, you need to figure out why are they saying no and is there consistent no?
And then you need to start to solve that.
Is there a fundamental invariant in the business that you cannot solve for?
So when you find an invariant that you cannot solve for, then you stop.
But if you find pivot points, which is not invariant, but you have to nudge your ideas or shift 10 15, 20 degrees left or right, then you keep shifting till you come across the right ideas.
Again, it is the same metaphor that if you are trying to drive in complete darkness, you have to keep driving in different direction till you find the road.
I'm curious as you were navigating the landscape in the early days of Rubrik and trying to figure out if this was a path you were going to go down, was it ever an idea that you would try to back someone that does this?
And you didn't find anyone that was going to go after it?
How did you ultimately land on... this as something that you actually want to pursue as a founder?
So when I had this idea that there's a market space and there's a product that can be built, so I created a deck for myself, because I was a VC and I wanted to see whether I'm convinced about this idea.
And that I thought that this idea had a lot of merit.
So I called one of my good friends, who is now my co-founder and CTO, who used to be at Oracle, and my colleague.
I said, Nitro, let me pitch you this new idea that I'm working on.
And I didn't tell him that, whether I'm going to do it or how we are going to do it, but I just pitched him this idea.
And I distinctly remember coming out of conference room and he looked at me and he said there is something in this idea that we should pursue.
And that was the again the very important piece from the technology angle that somebody who is a technologist sees that it is feasible to build such a highly complex system that will serve this need.
And that's when I told him that I'll do it with you and we'll figure this out.
Oracle and being a venture capitalist weren't the natural jumping off points to the entrepreneurial journey in my mind.
Was there one of those journeys that you think was more influential in instilling some elements of the founder pursuit that you've ultimately gone on?
Or is that something that's always been innate to you and this was kind of an inevitability?
You would go do something like this.
I personally don't believe that you have to be from a startup to be able to do a startup.
Being a startup founder is something innate to you and you.
Startup founders are found in all different varieties in all different places.
If you look at my colleagues at at oracle was benua and theory.
They went on to start snowflake.
Dheeraj Pandey was my colleague at Oracle.
He went on to start Nutanix.
So I don't believe that you have to be, again, from certain spaces.
And we believe that people who come from a startup start a startup is because we are living in the past.
And again, trying to find past patterns and projecting that into the future.
Future is not past reflection, but our psychology, our mind wants permanent happiness, wants a certain path in uncertainty.
So it reflects the past. into the future, and there is no time.
Time is psychological.
We create time because we go back in time and think what has happened to us, what have we seen.
And any new situation you see, you try to find patterns from the past, and that's when we go wrong.
And when people talk about think from the first principles, They are essentially saying that do not go back in time.
Do not use your expertise.
Think from the first principles without knowing, having any expertise in this space.
As of now, how will this look?
And it creates a high degree of dissatisfaction and high degree of uncertainty and emotional upheaval.
Because if you can't use patterns, then you are forced to confront the problem.
And when you're forced to confront the problem is when the solution starts.
The derivative lineage of Oracle and all the names you just mentioned.
I mean, there's a bunch more if you sort of spread out the tree from Nutanix as well.
Aster, like all the, it's incredible the um, the tree of talent that kind of has permeated from, i think, you at the, the nexus, not to mention snowflake and all those other folks.
Was there something unique about um the, the time and the culture of all those people and all the derivative things that came out of it?
Or was it ultimately just right place, right time, and all these things are a little more random?
I would say late 90s and early 2000s, Oracle was a place that built very, very complex software.
If you think about it, Oracle built a distributed system on Linux and one of the first large scale company to be able to do that.
And that was a courageous decision that Larry made.
I distinctly remember going from Solaris to Linux as the core platform.
And to be able to build a large-scale distributed system in that time on a Linux as a platform, was a great learning experience for a number of us, and we were right at the heart of it.
So when the new companies started to come into the fore, such as Google and Facebook and Twitter, they found a great talent pool at Oracle to pull from.
So people who created messaging storage and messaging platform, Kannan and Karthik Kannan was from Oracle
People who created Hive at Facebook.
For the largest scale distributed query was Assis Touche from Oracle.
So a lot of core Oracle people went in all these companies and invented or reinvented new things.
And so the talent density matters.
And then talent density also means that you have the built-in network to pull people from.
And that's what helped Rubrik.
That's what helped Nutanix.
That's what helped Snowflake and many other companies.
How many years are you into the Rubrik journey now?
11.
11 years.
What's one thing you wish you could go back and tell yourself when you were founding a lesson learned along the way, through mistakes, or whatever it is.
To not let your intuition be overridden by experience.
If I go back to my journey in the early days of Rubrik, I used to do all my hiring based on intuition.
But as we got more successful and bigger, We had fully formed board and everything else and advisors and they would also always give us advice that go after this person to hire as an executive or I worked with this person for five years and this person is excellent.
And I used to.
At that time, I was thinking that I had just one hour meeting with this person and even if my gut doesn't set well for this person, somebody that is on my board has worked with this person for five years or three years.
They must have like a real experience.
So sometimes you substitute your intuition by experience and other people's judgment.
And what I realized was that all the judgment and all the experience happens in the past, but future is not past and future is different and markedly different.
So how do you connect in the world of unknown, based on the intuition and without taking others' judgment?
And then I created a framework for myself.
So I said, the best practices should be taken from others.
Like, how do you drive from work to home?
You have to get a map, you have to ask people, what is the best way and where is less traffic?
You don't want to reinvent that drive because that's a low ... risk activity, but on a high risk activity such as starting a business, finding a business plan, finding a product market fit, you can't take nobody's judgment.
You have to have your own intuition.
There's a bias to action versus a bias to perfection.
Tension in the early days at any point in a company's journey, I guess, but particularly important in the early days.
How did you think about what areas to make sure?
You measured 23456 times before you cut versus.
Don't let perfect be the enemy of good and a bias to continuing to move forward.
Did you have a framework by which you sort of one way door to a door decisions?
So my fundamental thesis is that if you are going to build a product which affects somebody's job, then you can't give them a shoddy product, because they are betting their job on you to buy this product from you.
And if you give them a bad product, their job will be endangered.
So you have to take appropriate risk and not transfer your risk to your users.
And so you have to always keep that in mind.
So what we did was we are not going after perfection, but we also didn't want to give them a product that they would be embarrassed about.
So we worked with some of our early users and iterated with them to give their early feedback and made sure that the product didn't embarrass them.
Sometime in Silicon Valley we think that if you're not embarrassed with your product, then you're shipped too late.
Those are things, again, from the past patterns.
Patterns are not a great indicator of future.
You have to see in this current moment, in this current situation, what is the most appropriate thing to do, without regard to the past.
When I asked about things you could go back and tell yourself it sounds like that was um.
That was mostly a um, a decisioning related um thing.
I'm curious are there?
Is there a skill or an ability that you feel like you've developed over the course of the 11 years on the rubric journey that you wished you maybe had in the early days?
One lesson that I learned about leadership that now I have and probably I didn't have a starting rubric was I was looking for myself in everybody that I hired.
And what happens is that when you look for yourself in everybody you hire, then you are not hiring for diverse skill set and diverse thinking, because you are trying to see I am driven this way, I want people to be driven the same way.
But what I realized was that you have to meet people where they are.
You can't look for yourself so that you have a perfectly centered person from your perspective.
And there is a significant power in meeting people where they are, so that then you can have a conversation and you can motivate them in a way that will be compatible for them.
And that was my biggest learning, that don't look for yourself in others.
See others as they are, meet them where they are and enable them where they are for this tremendous success that they can have in their own journey.
Because again, it's the same state.
When you look for people like you, means that you are also prisoners of your own past.
You still need to maintain a consistent culture and make sure that there's the traits in those people that you want to permeate the organization.
Was there a list of things that were just non-negotiables and people had to have?
And then you meet people where they are on everything else.
Or how did you think about the balance between that having the diverse perspectives within the workplace but also having commonalities of culture that built the organization?
We created our cultural principles before I hired even the first person in Rubrik.
And our cultural principle was rivet.
R of the rivet was relentlessness, I of the rivet was integrity, V of the rivet was velocity, E of the rivet was excellence and T of the rivet was transparency.
And we ran open board meetings in the first seven, eight years of the company till because of the IPO and other activity that we had to start, we had to shut it down.
But that was the cultural context.
But culture is about how people interact with each other and how people operate when the founders are not in the room.
Culture is less about what kind of people you hire per se.
You want people to reflect the cultural principles and adhere to the cultural guidance.
But you can't have extremely relentless people in all situations.
What does open board meeting actually mean?
Open board meeting was my way to tell the organization that there are no sacred cows.
There are no information control.
And if we are telling you where the company is going and how much money it has and where we are not doing a good job, then your manager if you ask a question of your manager, he has to, or she has to, respond to you and give you the total information.
And it was a way to build trust in the organization, because I thought, If somebody like Bipul comes to me and I'm like 30 years old or 35 years old in prime of my time to come join a startup, and I have no idea if this startup is working, not working, making money, losing money, how much money in the bank why would I ever work for a startup like that?
So my principle was why not open everything to everybody in the company, so that we all know where we stand, where we are going?
There is no communication or misalignment issues.
And everybody can demand answers.
And when people demand answers, then people also become very responsible.
They take it very personally.
And I would say that the velocity that we created in our business was a direct result of this alignment.
I'll give you some data points.
It's not well known we were selling it on the tcv basis.
Uh first, uh six months of selling rubric, we sold uh five million.
First full year of selling rubric, we sold 47 million of tcv of tcv.
Next year, we sold 168 million of tcv.
The following year, we sold 350 million of TCV.
Even if you cut the TCV by a third, which is roughly three year deals we were selling, we could be one of the fastest, if not the fastest, enterprise.
B2B business.
And it is a direct result of this idea of transparency that really created alignment and velocity.
Everybody knew where we are going and what needed to be done.
At a tactical level, how did you structure it?
Was the actual board meetings zoomed in?
We put the board meeting in a large conference room and we let people sit on the ground if needed, and then we have to zoom enabled.
And people could ask questions.
It was not a webinar style.
It was a true Zoom call.
And we have had situations where people actually asked hard questions in the middle of the board meeting.
Did you receive pushback from VCs or other executives about doing it this way?
It was a little non-intuitive for them initially, because when you have like 600 800 people listening to the discussion, sometimes you don't realize that how many people are on the call.
And we would have discussion about an individual sometime.
So I'll give you an example.
There was one situation where we had something that we were working on, a new product where the quality was very important, and the quality leader was on the call and one board member asked is this person going to cut it?
And he was on the call.
And I said, I don't know.
We'll see, we'll know in six months how the product quality comes out.
And then there was a little bit of, everybody was saying that, what did he say in the meeting?
But that person came up to me and said Bipul, I appreciate the candor because I have to deliver to be to have your confidence.
So again, when you are open and transparent with people and have no hidden agenda, people understand that this is where we stand and this is what we have to deliver.
And this is all about confronting the reality.
Most of us don't confront the reality because we go back in time and try to find solace in some pattern.
Did that person make it?
Yes.
He's still with us.
That's good to hear.
Well, I'm glad they were able to execute on that.
That would be a very different story if otherwise.
I'm curious in the journey, maybe in the last five years or so, is there something that was a strong opinion of yours five years, maybe 10 years ago that you feel like you've really changed your mind on?
I change my mind all the time.
Again, what I tell my team is I have a strong point of view, loosely held.
So if you present me with facts that are contradicting, I will back off.
And many, many situations I have backed off.
Many situations.
And they all know that I'll back off.
But the whole idea, my idea is How do we let people confront the situation as situation is not look at from the rose-tinted glass.
So if, suppose, if a particular situation, if it didn't win a deal, We have to confront like why without saying that because of this politics, that politics.
If a particular person leaves the company for whatever reason, we need to confront why.
Not like apply a nice pen to it saying that we wanted him to go or her to go, and that's why this person has left.
I said if you wanted her to go, you should have taken her out.
A while ago, why do we let her make that decision?
So it's all about confronting the reality.
And that's one of my core principles of building business that you confront the reality of the situation as it is, not apply the lens of the past.
You've been exposed to a lot of great founders over the years, either folks that you've worked with alongside Oracle, Rubrik and all the derivative companies we spoke about earlier, as well as VC.
What's the trait that you look for most in entrepreneurs?
Self-awareness and high grit.
How do you assess those?
Because you, when you chat with them and you ask them about their lives and I always ask people about how they grew up, who their parents were, and I ask them, like in every job situation or transition, what did they learn about themselves that they didn't know before?
About themselves, not the subject area, not a particular business, but about themselves.
And people who can't answer that question, which means that they have no self-introspection, there is no self-awareness.
And lacking self-awareness is a huge problem for founders, because if you don't have self-awareness, then you'll not be able to admit your mistake or pivot.
You are just driving in one direction.
If the direction turns out to be right, it's a great thing.
But if it is wrong, then you'll have no recourse.
What about grit?
Again, you understand how they grew up, why they do things in a certain way, whether they have a chip on their shoulders.
What are they trying to prove?
In many cases they had a difficult childhood financially or they want to prove to their daddy that they are a better person or mom.
So different people are motivated by different reasons, but all of these things are their character.
And you can't, like, teach somebody character.
In Rubik, we typically say it's about will and skill.
You can't teach will.
Will comes from who you are.
Is there something you've seen in the news over the course of the last six months, maybe a year, that you think is really important, that people aren't paying enough attention to?
My fundamental thinking right now is that the VC business, as we know, is dead.
And startup business also, as I knew when I started in VC business or when I started.
Rubrik is gone.
Because fundamental change in the market is we are living in an ever accelerating age of technology change.
And now technology acceleration is to a point where product market fit is dead.
If you go back 30 years when you built a new product and found a product market fit, then you could be selling that product for 15, 20 years.
Then when we started Rubrik, if you find a product market fit, you could be selling the product for three, four years before the commoditization or competition happens to you.
But right now, it's six months or less.
So in a cycle when you have only six months before the product becomes like, competition jumps in and things happen, how do you build your business?
How do you even run venture capital?
In my mind, 500 million ARR is the new 100 million ARR.
Because 100 million ARR has no signal of longevity of the business, because every entrepreneurs have to go think zero to one, zero to one, zero to one every six months.
And that's why, when Paul Graham wrote about founder mode, Essentially it is only thinking about the symptom of the problem.
The root cause of the problem is product market fit is dead.
So you have to repeat 0 to 1 every six months.
And who does 0 to 1?
Founders.
So you have to be in the founder mode.
Doesn't mean that you have to be founder, but you have to think like founder so that you can continuously find product market fit.
It's not a one-time process and a scale.
As a result, if you hire an executive who is not thinking about zero to one, by the time they build an organization and create a system and process of a scale.
The product has changed, market has changed.
So that's a big change.
And then in respect to VC, The VC business has changed.
Now, in this accelerating world, anytime you have this level of change and acceleration, the mid collapses.
So my thesis is that when the stock market comes back up and ipos restart, you will see very few under 10 billion ipo.
You will see 20 30 billion ipo or lot of mnas under 500 million, because what would happen is that every market, when market becomes real, you will have a lot of startups jumping in, because there's a lot of money to fund these startups.
And one of them in a given space will create consolidation.
Have the escape velocity to go from 500 to 10 billion and the rest of them will get consolidated at 500 million.
So you have one huge pool of outcomes at under 500 million and then you have very few larger scale outcomes, which is 10 20 30 40, 100 billion.
And so, in this market structure, how do you create your venture capital pool to be able to find success?
I want to talk about the venture capital point in a second, but curious on the founder mode and the product market fit dissipating or the rate of decay being far faster than it's been in the past.
I guess, as you internalize that and think about the structures, the organizational design, that you have to make sure that you're continuing to iterate.
Are there things that you've done differently or that you recommend for other founders, as they sort of see this rate of decay maybe happening at a faster rate?
So every founder has to have two parallel organizations.
One I call it forward motion and one I call lateral motion.
So forward motion is the things that are working, how do you scale those things?
And lateral motion is what are the portfolio of risks that you are taking to create something new, zero to one that will be relevant three to five years from today?
And you have to pay attention as a founder CEO on both sides of the equation that how do you continuously do lateral movement?
And in lateral movement, you have to cheer 25K, 50K deals.
Whereas in the forward motion, you have to cheer $500 or $1 million or $2 million deals.
And you have to cheer both of them with equal intensity and equal encouragement to have this process in the company.
Ultimately, you want to do three things.
The things that are working, I call it at a scale.
You have to make it super scale.
So hundreds of millions of dollars business you have, how do you take it to several billion?
Then a middle one I call, sub-scale to scale.
So things that are 50 million, 30 million, the early signals of early progress, how do you make it like hundreds of millions of scale?
So sub-scale to scale.
And finally, zero to sub-scale.
How do you create portfolio of activities that create few sub-scale opportunities.
And if you have all three scale to super scale, sub-scale to scale and zero to sub-scale three motion going in parallel by two teams forward team and lateral team then you have a chance of building a generational company that will last longer than your own lifetime.
How do you think about how many of those lateral scale projects any company can have going on at one point in time?
Depends upon the bandwidth of the team and depends upon the team's maturity.
But I would say if you are under 500 million ARR business, you should not have more than two.
What's something that people don't fully appreciate about Rubrik, the business?
Again, people are living in the past.
In the past, backup and recovery and cyber recovery things like that were more of like an area that were not critical to day to day top line of the business.
But the way market has evolved and the way data has come into prominence and backup recovery is a single place where all the business data lives unaltered.
It opens up a completely new opportunity for the market.
But again, this is a non-consensus idea and it'll take market some time to realize and we have to make it real.
What about the enterprise IT market at large?
Is there something that you think people aren't paying enough attention to when you zoom out to a more industry level?
I feel that enterprise IT market, and I'm counting security and everything else, all in it.
It is extremely large and AI has opened up a whole new vista. in this market.
And I actually was talking to somebody and I said there'll be a trillion dollar cybersecurity company within the next five years.
And today the biggest cybersecurity company is a hundred billion thereabouts.
Palo Alto.
Palo Alto.
So I believe that there is a 10X of just the cyber peace in the next five years.
And why do you think that's the case?
Because if you look at the human productivity and if you look at world GDP and if the world GDP gets impacted positively by AI and if you improve the productivity by 5 10, something like that.
Just think about the amount of dollars and technology impact that it will create.
And that amount of technology has to be built, has to be integrated, and has to be secured.
So we are again living in an age of exponential.
Because look as human being we grew up.
We have evolved the last thousands of years on an everyday basis.
And our mind is still in the same state as when Jesus Christ was born.
But the technology is accelerating.
So as human mind, since we are linear mind, we can't fathom non-linear phenomena.
Technology acceleration, AI acceleration, business is all nonlinear phenomena.
So we always think that how is it possible that we'll have a trillion dollar company?
But NVIDIA is a close to $3 trillion company.
And so that's what we have to reckon with that.
How do we suspend the belief of the past And look at this phenomena as it is?
Because remember, in venture capital, we didn't fund a company in seed level.
And suddenly, six months later, the valuation is 5x.
And we say, how do I now invest?
Because businesses are nonlinear.
And human beings are linear.
As AI plays itself out, do you think that more value will, I guess, within let's combine it to enterprise, be accrued by the existing enterprise players that are adding AI to their functional suite?
Or do you think it'll be the first principled businesses that are started to go after these markets from the ground up?
It's hard to say, but there is a way to test it.
The way to test it is, are you AI native?
And the AI native means that if you take AI out of it, your solution becomes irrelevant.
If you are AI native, you will have a great future.
I feel like the mood today for large businesses in enterprise IT space comes does not come from technology.
It comes from distribution.
Because of the years of presence and distribution channels they have built, it is a significant mode.
And when elephants shrink, they don't become rat.
There is a long process of decline.
So my belief is that a lot of AI native companies will become very large very quickly.
But that doesn't mean that the existing player will just go away instantly.
It'll take long time for decline to happen.
And some of them will figure out how to be a native and they will thrive.
AI native.
It sounds like you're talking about like in terms of the product functionality set.
But I'm curious how you have encouraged your employees to become AI native quote unquote, I guess recently, Toby.
Lukey published a post about his thoughts on it.
I'm curious is that something you guys have operationalized, or how have you messaged it to the team?
We definitely have AI adoption in many areas of the company.
Some of the obvious areas are your software development, legal, marketing.
The idea is, again, world is of balance.
You can't go one extreme or the other extreme immediately.
So you have to see where you are and what is the best fit for you.
Because if you go on one extreme and hire a bunch of AI, get a lot of AI tools and AI tools creates whole new risk vector for the business, then the business will jeopardize.
So you need to figure out what is the right fit.
But, but in my mind, Businesses have to move very, very quickly on the user end of the equation because the market is transitioning.
And then operationally, you have to be every day looking at your operation saying that how do I go do things better and better and better?
And that adoption cycle of the technology.
It has to be commensurate with the risk-reward of the technology.
I want to double back to your venture capital evolution point.
So you were in VC for seven years, you said, two firms.
You're at Bloomberg, then Lightspeed.
Can you elaborate on that point in the consideration set that you think about for VCs?
It sounds like you're sort of saying there's going to be a bifurcation of returns, kind of subscale outcomes, and then much, much larger ones.
What do you think the derivative implication is for firms?
Do they follow the same path?
It'll be small and big, or how do you think about it?
So the way the venture firm will bifurcate is that there will be a specialist firm on the very early stage where even at 500 million exit they will have good returns and superior return to SP 500 that they are trying to beat and do much better.
But there will be also an asset based forms that can go span different asset classes and very large investing pool that they could deploy to much larger outcome.
I mean, you look at like OpenAI raised 40 billion or thereabouts 30 billion or something like that.
So that's like an asset class investment.
And so there will be investment in those kinds of companies.
And 30 billion, maybe a little more extreme, call it 5 billion, 3 billion.
But still, it's not a regular venture investment.
So that would be the kind of like a bimodal distribution in terms of the firms.
So there will be a firm that will be asset class all across the board, and then there will be a specialist firm.
Because the thing is that lacking 1 to 10 billion IPO, which means that the mid-size outcomes will be much harder to get,
And so if your fund is organized in the mid-size outcome, you'll not have great outcome and therefore you will disappear.
I guess one of the things to bring that back to this point and I'd be curious how you think about it is you made the point right when we started that, or we talked about 90 of venture capitalists don't know what they need.
And so pick the partner or the people that are very passionate about.
One of the things that I've seen is, as the assets scale, the employee retention within those large asset managers starts to be more difficult.
I think we can talk about how there's more in private equity and a bunch of different service investment banking.
This hollowing out has happened over the course of the last 30 years.
The weird thing with InVenture is there's a lot of people that will go start their own firm or go work at other firms that are a little bit more mid-scale.
So I'm curious as you think about that evolution, do you think that that talent retention part is just?
It's an inevitable thing that's going to happen in our industry, just needs to mature into the world that private equity has sort of gotten to where you have the Apollo's and Blackstone's that are very public and at the end of the day you're an employee of those organizations.
Or how do you think about talent retention as it relates to that asset scaling?
It depends upon where on the spectrum you are.
If you are on the early stage venture side.
Early stage will remain the artisan partnership oriented, high outcome, high degree of bet.
And it will be classic venture capital where every check you write you have a churn in your tummy thinking that I'm taking a real bet.
And you are taking two bets, three bets a year.
And your outcome and your compensation will be based on carry that you generate out of those returns.
And some of them may become very large, but majority will be 500 million or less.
And then on the asset side, like large asset class based, The compensation structure will change.
It will change from being carry oriented to more of like management fee oriented.
And that will create the intrinsic value to the firms.
And you might see some venture firms even go public based on the intrinsic value of the firm brand and fees that the firms make, just like Blackstone or BlackRock and others.
And that's only natural because in the age of technology acceleration you will have hauling out of the middle.
You will have very, very large outcome and a big number of of smaller outcomes.
So, in that scenario, for a very, very large outcome, since there is such a huge pool of money involved in terms of taking bet on these businesses, and then it's relatively consensus investing
You are thinking about whether this thing will become 50 billion or 100 billion versus zero or or nothing.
Zero or something.
So it's a very different risk reward equation.
And in that risk reward equation on the larger side you would have different mindset of investment and different kinds of investment committees and analysis and all the rest of it.
And the reward will be different.
As you kind of map out the AI landscape, are there areas that, if you were still a venture capitalist, that you would be pursuing from an investment standpoint?
Or maybe if you weren't doing Rubrik, you would think about starting a company to go after?
The way I see, AI is all about productivity, and then you have to map the productivity back into the scarce skill set and professionals.
So if you think about In our country, we lack doctors.
There are not a lot of doctors in America.
In many rural situations, there are no specialists.
If you think about like accountants again, it's a high-reward profession but again, as the businesses grow, the need for them grows.
Constantly if you look at lawyers, so skills software engineers like there's always need for more software engineers but there are not enough software engineers exist.
So the professions which are knowledge-based professions and there is a scarcity of professionals.
That creates the natural AI opportunity.
And I don't believe that is going to be augmentation of human beings.
Over time.
The AI has to fill the gap from information to knowledge, which human beings are doing today.
So we will have both AI employees and regular employees.
And regular employees, human employees, will be more about further judgment on the AI's judgment.
But we are not going to do it together with AI every activity.
I guess I hadn't thought of that point specifically.
It's an interesting one that The areas where we've had the strongest product market fit inherently with AI are the ones that have had some supply constraint to people doing the job.
I guess, causation correlation.
In some ways it does seem like the LLMs are best suited for jobs like doctor, information retrieval, accountants doing that workflow on it, computer science actually doing the programming.
In some ways, I guess I thought of it as that's things that the LLMs are uniquely well-suited to go do.
I hadn't thought about the demand, need for people to solve those problems, so that we actually just didn't have a supply of the functionality.
Because if you look at the cost for software engineers keep going up.
And so ultimately, technology is about economics.
And the other interesting part is that the lawyers are not inventing new laws.
They are looking at all the past laws and saying how do I read these laws and correlate them with each other to have an applicability to this situation?
They're not predicting the future.
So all the jobs that requires connecting the dots of the past for this current situation can be done by LLM, because the expertise is dead.
There's been a lot of people that have spoken about I guess Dario from Anthropic maybe most notably about how we're going to end up I think, by the end of this year is what he said with software producing the totality of code written, or something close to it.
Do you think that's true, that we're on that path and, at the end of the day, what has traditionally been software programming will move to a higher abstraction of managing the prompts themselves?
Or do you think there's a human element that will always be in the fingers to keyboard side of programming.
Look, machine will generate more code.
And if you, and the codes have all flavors of it.
Codes could be testing code, codes could be integration testing code.
There are many different kinds of code being generated, but I agree with them that the codes will be.
The machine generated code will be bigger than human generated code.
The question is which creates more value for the business and where the human software engineers will be more applicable versus AI software engineers.
If you were giving advice to someone about what field to pursue or a job that might be far more important in five years' time than it is today.
Is there a field of work or a skill set that you think will be more valued by society as we look forward than it has in the past?
I think the biggest thing with AI is that, I'll repeat, expertise is dead.
So if you are a hedgehog, then the AI will do the job of a hedgehog.
So you have to be a fox.
And this is not a new concept.
It has been talked about in the past, but this is even more urgent and relevant today because, since everything that is can be known by existing knowledge is known to LLM.
So you, as a human being, if you think about the purpose and the value that you are creating, you're creating value in the space of intuition, where you're connecting dots which are not connected in the past.
Then only you create value.
And how do you connect dots that have not been connected in the past, that LLM can't connect?
And you can only do as human beings.
And that's where the value is.
So you have to be more diverse in your knowledge, more diverse in your perspective.
You can't be like doing one thing for 30 years and be an expert, because that expertise will be irrelevant.
So if I'm a college-going kid today, I will try to study from humanities to history, to arts, to math and physics and science.
Like, broaden my horizon.
Don't go too far deep in one space.
And more importantly, focus on communication.
Because if the expertise is dead and the connecting the dot is going to be important, but connecting the dot inherently is uncertain.
So if you cannot express your ideas about how you connected the dot, Even if you are able to connect, the dot will be irrelevant.
The irony in that, I guess, is that for a while people have been talking about liberal arts schools being dead.
And I guess, does the implication of that then, that People might end up having multiple careers or job functions over the course of their work life.
And so you need to be amenable to.
Hey, this industry could be super important today and it might not exist in five years, 10 years, 15 years.
And so we just need to be able to juke and jive as new things come to be.
It has already happened.
Our parents' generation, they used to do one job for 30 years.
Our generation did every five, six years, they have a new job.
The next generation will look at work as a completely different thing.
See, technology evolution is the story of simplification.
And what is, when we use talk to computer, we had to give punch card to computer 30, 40 years ago.
Then from punch card, then we had black screen with typing, then we had windows and mouse and clicks.
So we are trying to adopt to technology and human behavior was trying to adopt to the technology that was available.
And that's why for the masses, it was very, very hard to deal with computer.
But over time, it gets simplified and simplified.
And iPhone was the easiest thing that had the biggest adoption.
Now, with AI, we are in the world where you can actually interact with AI or computer with natural language.
You can program computer with natural language.
You can get output from the computer in natural language.
Now, for the first time we have now enabled not just the usage of computer but the programming of computer and the usage that you can get out of computer and change that usage that you get out of the computer in natural language.
And that has serious implication, which means that again, a kid sitting in rural China will have the same amount of knowledge than somebody growing up in Palo Alto.
So how do you live in this new world?
The only way that you can live in this new world is to use this simplification, this accessibility of technology to create new worlds.
And that new world creation, again, will happen really, really quickly.
So you would see somebody become a hundred billion dollar person in two years because of this acceleration of the technology.
Something that becomes a hundred.
Somebody's become a hundred billion dollar person in two years, which means that the technology decays equally fast.
So the time compression that is on technology will get reflected on the careers and the technology cycles.
So the opportunity for everybody is that to not fall in love with anything in particular, but to live in the moment and create the future.
Are there ways that you foster the considerations of this within the company culture?
Do you do things around cross-team collaboration or retraining, reskilling people?
Are there things that you think you can do as you think through the derivative considerations of this for a business like yours?
Transparency is where things start.
We are not creating channels.
We are bringing the information out in the open.
We have, when we do our meetings, we encourage people from different spaces.
So if there is a sales thing we are discussing, we encourage people from like a product piece or legal person to kind of express their opinion because of the interconnectedness of these things.
See, the issue with this is these things are happening so fast that if you tell people that things is going to change too frequently, then it also has distraction factor.
So what you could do is you could create an environment, a cultural environment, where Everybody has uniform access to information and understanding of what is happening around them.
And then, as I said in the beginning, bring all the brains in the game.
Because that's how you'll connect the dots.
One person will not know everything.
But the way you communicate of not rely on the past, like leave the baggage of the past.
Everything that we knew in the past is irrelevant.
In fact, The day after Rubrik went public, I wrote a note to everybody in Rubrik saying that the old Rubrik, as we knew, is dead because somebody who put in money into our IPO they don't care.
We went zero to IPO and what returns we created.
They care about where we go from here.
And that's what you need to kind of encourage people to let the baggage of the past go.
Their own expertise is less relevant.
Don't tell people that I know this and you don't know that.
Always collaborate, bring all the game, all the brain in the game.
As you're looking forward for the future of Rubrik and what it might look like in five years, 10 years time.
Are there things that you're particularly excited about that maybe we haven't touched on?
I'm very excited about our culture, and that's the only invariant that we have as a company.
Has Rivet stood today?
Absolutely.
And we believe that it will withstand the test of time.
And our culture is what will bring great people into the company, will encourage the people who are already in the company to do great things.
And we don't know in 10, 15, 20 years what Rubrik would do.
But one thing we know for sure, that we'll be a huge company.
Well, Bipul, thanks for doing this.
This is great.
I appreciate you answering all the questions.
Thank you so much.
