And is that Monday morning meeting really useful? Or is it theater? Can't you just have a Google doc and get it done that way?
We're talking about humans. Why should I like you or trust you if I never get to meet you?
I don't know if you're married, but why do you have to meet your wife at all and their kids? Can't you just have a Google doc? We just write down the stuff you want to, like if there's something you want to teach your kids, put it in the goddamn Google doc. Maybe you don't even need to respond to the Google Doc. Cloud cam.
Hey everybody. Today we have Ali Ghodsi on the podcast. He's the founder and CEO of Databricks. I've wanted to have him on for a while now. I had Ben Horowitz from A16Z on a few months ago and I asked him who is the best CEO out there and without thinking much about it, he said Ali. And after interviewing him, I kind of agree. He's really sharp. A younger me would have loved to have worked for him and learned from him. Hope you like it. I'll be back at the end with my takeaways from the interview. Ali, welcome to Long Strange Trip.
Thanks so much. Excited to be here.
You had an interesting road to the CEO chair at your company. From what I understand, the company was founded. There were seven co-founders at Databricks. And a few years in, it wasn't exactly ripping. The board decided it wanted to make a CEO change. Can you kind of take us into the room when those conversations were happening and I assume they interviewed you like what happened?
Yeah, I don't know. I think I knew I was hearing from the grapevine that they were like interviewing other CEOs and I would hear, oh, they interviewed that guy and they interviewed this guy. So, as far as I knew, I was like, they're not gonna even pick me. I knew the identity of at least two people. So, you know, it was I mean 2015 was kind of a turbulent year for Databricks because we were having great success with our open source project Apache Spark. We were just not having commercial success. Revenue was, you know, GAAP revenue came in at like one and a half million that year. So, the vibe wasn't great. And so, I kind of, and I'm like a glass half empty guy. So, I was like, I you know, I'm probably going to leave and we're all probably going to leave. So, I actually like, yeah. So I actually applied for you know a faculty job at Berkeley and I was going to take that actually kind of towards the end and I was like kind of facing the dilemma which one should I, should I become CEO which is I never wanted to be CEO or should I go back to my dream of being a professor which is what I always wanted to do.
Fascinating. Um did they interview you?
Not no like hey this is a CEO interview like what's your strat? No not really. Maybe they had some one-on-ones with me that I knew like, okay, are they kind of like feeling me out or something, but all this was very hush-hush. Actually, I was not allowed to know that there's like a process going on kind of.
The interesting thing about them picking you is my sense of the the problem the board had with the company is it had very little commercial success. You would have thought they would have hired someone with a lot of commercial background. You had negative amounts of that. What do you think was going on with that?
I think it's A16Z and Ben. This is the period also. I mean they're still that way but they were like religious about like founders only and you know because they had themselves been through it. Remember Ben famously was asked at some point hey when are you going to bring a real CEO into your company and he felt like, he wrote about it in his book right. So I think he didn't want to do that to you know us founders. So I think he really believed like let's let's let's pick someone that is a founder. He later then said hey this was anyway just a trial. We didn't even give you a CEO salary. So, we were like really testing you out. So, I think from his point of view probably, I don't know, he should you should ask him. He's probably like, 'Yeah, we'll try it out for six months, 12 months. If we're going to do a search, we'll, you know, we'll put another guy in place in six months or so.' And what do I know? Maybe the search they were doing didn't turn out very great. Maybe they hadn't seen any very good candidates. So,
I see. How do you think your life would have turned out if you had left and gone back to be a professor? Like, do you ever think about that?
Yeah. Well I mean right now academia is not doing super well so it would have probably been a big mistake but also I I introspected a lot during that period like which one should I pick like my dream is professor the CEO thing I'm not even sure I want to do it like I in the business world I don't have that much respect for it even. It's kind of like going to the dark side but then I like looked over my life and the decisions that I had done up until that point and I kind of like realized a pattern. So when I was a kid, I grew up programming. I wanted to be a game programmer. My dream was to move to LA from Sweden and work for Electronic Arts because they were making the best games. And in high school, I kind of, you know, someone I knew floated, hey, you can come to the US, you can get paid, I think it was 80K and be a game programmer. So I was like, this is it. This is my dream. At that point, my parents were like, no, no, no, you're going to university. No way. And I thought like this is like end of life. Like they're destroying my but then I went to university and it actually turned out I learned a lot of things I learned a lot about computer science actually I thought I knew everything about computer science but then at the university I learn I didn't know anything I knew a little bit of programming and and then I was a startup in the year 2000 and I was doing an internship and that startup I did really well and they like offered me to be number two guy there like drop out of school be number two the startup was called Room 33 it was actually I think Europe's largest like mobile startup at the time so it was like wow this is like opportunity of my life. But then at that time I went back to university and then you know the IT bubble burst and it turned out to be like the best decision of my life. Then that very university which was kind of like in a city far away they offered me professorship even without a PhD. And that even that I kind of was like oh do I take the professorship now and I'll be a full professor or do I go do an actual PhD at the top university which is very difficult to get into and challenge myself. And I picked the challenging option and again it like opened my horizons like it was way harder and it was much more difficult for me and you know but I learned so much and it's like challenged me and actually so eventually I became a professor at that university.
So then I had the opportunity to come to Berkeley at some point and at Berkeley they wouldn't take me as a professor they would only take me as a measly postdoc. So kind of what happened is I took the chance and I went to Berkeley and I took the postdoc and it again like widened my horizon. So I was like facing this decision. I was like I should probably take the thing that challenges me. I know nothing about being CEO. I know nothing about businesses. Probably the most challenging thing I can do is probably take the CEO on. Going back to Berkeley, it's kind of like I know how the game works. I know academia. So that's and I think that was the right thing. And now it's kind of become a philosophy of mine. I want to sort of challenge myself as much as possible because you know how many years do we have on this planet?
Yeah. Okay. Love that. Um you were obviously successful. At some point, did the board come back to you and say, 'It's not interim anymore. It's full-time.' And I I'll give you the background on why I'm asking this. I'm a ginormous Boston Red Sox fan. And the Red Sox were terrible at the beginning of the season. They fired their manager and they brought in the interim manager, Chad Tracy, who has he broke a 125 year record of wins in a row. Like he's just done a fantastic job, but he's still got the darn interim title, and it's like when are they going to drop the title? Did they have a conversation with you? And what precipitated it after that six-month, one-year trial?
Again? Like it was like about one year in. One of the one-on-ones I had with Ben, he first of all, they gave me like much bigger equity package. And they bumped my salary and it talked about like the things that we strategically need to do. So it was kind of started to become clear, okay, this is not just, you know, a practice run or, you know, this temporary. They have like a little bit longer term perspective. So I think but they never said it, you know, officially. Then a couple months after that, I invited Ben to our company All Hands, where he kind of said, 'Yeah, we didn't think he's going to do it either. We gave him like a temporary salary.'
I had been on the pod and I asked him who is the best CEO in Silicon Valley not in the Andre portfolio and he didn't hesitate he said you. Which I thought was quite a nice compliment. Um what can other first-time CEOs learn from you're stuck in the chair, you didn't know anything about it. What can you teach first-time CEOs that that led you to where you are today?
Well, I think that, you know, you have to be on this extreme learning curve. So, you know, it's not going to be easy. I mean, you're going to be working 100 hour weeks. That's what I was doing. I was making sure that I was networking with all the bests and learning from everyone that I could find. I was reading all the books. I was doing all these kind of things. But I was applying first principles thinking to everything I was sort of sucking in. So, I was making sure that it's actually making sense to do these things. I wasn't just like, 'Okay, let's copy this. Let's copy that. Oh, that person said this. I'm going to do it that way.' You know, I was kind of building my own like kind of Bruce Lee built his own Jeet Kune Do based on all the different, you know, martial arts. I was building my own CEO playbook based on all the ingredients I was learning from the different places. And that way was like self-consistent. I think that was one thing. That's one thing I would recommend to do. The second thing that's kind of been with me this whole time is I think typically companies are failing because one major problem, you know, I mean, maybe they have two major problems or three, but usually it's like one giant bottleneck. And I think you should at that point identify what that giant bottleneck is and then focus the whole company and your all attention almost to an extreme like orders of magnitude of attention and focus should just go to this one issue and if you overdo it and you go too extreme overboard on that one issue that's great.
The problem is because you know you most likely won't be able to actually unclog or remove this bottleneck. So you should just turn all your attention to that. So for me at that time it was you know open source project check super successful you know tech super awesome no commercial success so put all the attention on figuring out how do we get this you know commercial engine humming so that was like laser attention I was getting the whole company mobilized I was talking every all hands about this I was thinking only about this one issue and so I think that's a useful way of operating a company I still operate the company that way I try to identify what the main bottleneck is at the time and I try to just focus on unclogging that because there's so much other stuff you have to do every day to hire people there's drama people are quitting the board this and that legal department customers revenue missing this there's like million things coming your way every day you don't have any time to move the needle on anything so focus on that main bottleneck
Okay and typically so you're laser focused on that bottleneck like what is the cycle on that there's one bottleneck a year you're tackling or one every three years or one every three months like kind of what is the cycle cycle.
Yeah, it's a longer cycle. So like I would say if I would if the answer to that would have been months or week then actually that's what everybody's doing every day. I think that's all the CEOs like you know cuz disaster lands in your knees you have to drop everything else you got to fix that thing that is not a strategic focus that's just tactical stuff. So I would say a year, two years, sometimes three. Like creating the lakehouse category took I think multiple years. You know when we announced the lakehouse category, we were ridiculed online. But it was a long journey to get to the launch of the lakehouse because there was so much resistance internally and from you know consultants and whatnot. Then when we finally launched it, people like were laughing at us. So you got to give things a few years. You can't you can't just give up immediately. So I think you should that that's it's really important that you identify that focus really clearly because if you pick the wrong thing and you're focusing on it for two three years needless to say you're not going to go anywhere.
Okay. Super helpful. Um what I read was the one of the first things you did on that bottleneck was you went out and hired I forget 13 kind of been there done that enterprise sales reps. First is that correct? And second, like how did you even know how to interview them? How did you know who was good? Like how does so many of the CEOs I'm working with are going through this process. How did you do that?
Actually, the first thing I did was kind of more or less revamp the whole executive staff. So I would say a year, year and a half later, the executive staff that was running the company was completely different from the one that I kind of inherited. So I would say that's like the one thing that I knew we got to we got to change that. Because it's not working like the go like engineering a product I handed it off to a co-founder and I basically ignored it for two years I focused my attention on everything else to building up the rest of the muscle of the company and so that was that was the first one we have been doing this PLG thing so we wanted to product led growth we loved AWS people swipe a credit card we didn't want to have any sales people so that was kind of codified into the sort of ethos and culture of the company we don't want sales and we had hired sort of sales engineers and they were actually the sales department. We had a couple of AEs but it became clear that look PLG is not working and actually in 2015 before I became CEO for a little while we ran an experiment called zero touch which was we shouldn't even ever talk to a customer it should all be automated funnel because it's PLG and actually you could see that there before that revenue was going up and it just flatlined for two quarter when we started doing that so you know at one and a half million revenue and you know you know that sales AEs have a quota of like a million or two million in most companies you like gosh, if we just get one AE and that guy or that gal crushes it, that would be the whole thing that we've done for the last few years. So, we should probably that's all the other options make no sense. We should just double down on hiring sales people. Okay. But what kind of sales people should we hire?
Yes. And how did you know even what questions to ask in the interview?
Okay. Well, I ran this little experiment in my head which was let's look at companies where this is working. Are the best salespeople technical? Super technical, super smart. Do they have PhDs? Like the PhD technical, you know, kids are the best sales guys and no like absolutely not. So then I learned two things from that. It's like, okay, so probably that's like not the main thing. And secondly, it probably doesn't even have any advantage because if it had an advantage, there would be some some of these sellers that were great salespeople who also happen to have a PhD would be at the top making all but no, you found none of those guys.
I I don't think it's not only not an advantage, it's a disadvantage to have a PhD.
There you go. There you go. So it became pretty clear that okay the way we are hiring AEs is like we should change that. Like we were testing them on whether how technical they were because how smart are they? But I just looked at the best and none of the best are technical. So what are we even doing here you know? So we have to change revamp who we're hiring now. We also had an amazing sales leader that we hired Ron Grisco who knew what great looked like. So we worked with him and you know he should get 99% of the credit for what happened on the sales side. But it was pretty clear that we don't just get only the technical people. It started becoming clear that there's you know other skills that sales people have that you should probably go after those. One of them is you know I think great technical people tend to be kind of more introverted. I'm generalizing here and they're sort of maybe not the most aggressive opinionated people that are just like toe stepping and so on, but I learned quickly that the best sales people actually they're kind of aggressive.
Yeah. And the first one of the first AEs that Ron had hired, Dave, got us a meeting with a customer that we couldn't get a meeting with. And in the meeting, the exec that had gotten us the meeting said that AE, get him out of here. I don't want to see that guy ever again. You know, he's he's emailed my boss, everybody else. This is like unacceptable. So like, got Dave guy. I don't want to see him at all. So then after I'm like, 'Hey Dave, you've like pissed off the customer.' Like, 'Well, what the hell is going on?' He's like, 'Ron told me get in into the building. Figure out some way of getting in.' Nobody was responding to an email. So I went through every door I could and I had to break glass. I got you the meeting. You know, what are you complaining about? So it suddenly became clear that okay they need to be professionally aggressive otherwise you know so it's kind of a little bit the squeaky wheel gets all the grease. So that itself is actually kind of counterintuitive for engineers you know from professor land that those are the kind of you know so that was one but also there was another meeting with one of the early ones I remember Keith we were in the room and the customer somehow got pissed at this guy and kind of told him like hey who the hell are you what are you even telling you like you should you know I was like that's pretty bad then he suddenly just started asking her these weird questions he's like okay so what is your team working on. I thought we're supposed to do sales. What does he do? I'll shorten the story. At the end of the meeting, she was hugging him saying, 'I'm so sorry for saying that.' And you know, so I was like, 'Oh, wow. What did you do in there?' Like, he's like, 'Well, I noticed she was emotional, so I wanted to bring it to subject that she's comfortable with. Everybody's comfortable talking about what their team members are working on.' So, I moved the subject to an area. So I learned, okay, these these guys, they're just like really really amazing EQ of handling really difficult conversations, you know, that get really uncomfortable, you know, they're, you know, they're the kind of people that it's kind of hard to ignore them. You got to like if they email you, you got to respond back to them. So it started becoming clear that there's like a rubric. They need to be a little bit professionally aggressive. They need to have amazing EQ. They need to be the kind of, you know, command of the room. And then eventually I started learning that okay the really smart ones they actually figure out what's called the power base of the company like how decisions get made high up in an organization. It's actually complicated. Not a single person will say I'm going to buy this for $100 million. It's a complicated web of influencers and people inside the customer you know that make this decision. So they have to work that power base. So it started became clear that this is an art and it's a very different art from what I grew up doing and we should just hire the pros and since it's so humanly intensive it's sales people are dealing with other humans a lot of the things we learned about how to deal with computers and math and logic and physics it doesn't apply over here and humans haven't changed so probably these techniques that they've learned over the last 30 years we should trust them so that that that was kind of the journey we went through and we revamped our sales team that way and a lot of this I learned learned from Ron. I pushed back and we had like all these arguments but you know eventually turned out he's right and we you know landed this model.
Okay. So many of the CEOs I'm working with are struggling with this. They have PLG they should go to enterprise then they're like I need my Ron. How did you find your Ron and talk about the early Ron because every it seems like everybody's looking for their Ron.
Yeah. Well first of all I think he was unique because he's a classic salesperson. Like he's the classic they call them, you know, meat eating, doing push-ups, you know, he's the classic, you know, they call him PTC, BMC style school, seller.
By the way, I'm a PTC, I grew up at PTC.
Okay, so then, you know, so, you know, he had been selling FTP, which is free, and making a lot of money on selling free FTP.
It's hard to sell free stuff. So he was good at this is a phenomenal sales guy. But Ron was special. Ron also happened to have an engineering degree. He actually had a, you know, undergrad engineering degree and then when he at Stanford did his GSB degree, he also kind of got an engineering masters just for fun because he had cycles to burn. So I think he kind of could push back on us and he could kind of sort of talk in our kind of our language, you know, but he was really from that breed, but could speak our language and we could talk to each other and he would like entertain. So it wasn't like oil and water.
So he was smart. He was smart.
He's smart but also are kind of smart. You know we've already covered now other types of smart that maybe an engineer won't have but he had both types of smart.
By the way those people are very very rare that they not only have an engineering undergrad but they have masters in engineering with Stanford GSB.
Correct. The second thing I looked for is you know and this comes back to you know can they build it? I like to think of it as can they build the machine or can they just run somebody else's machine?
Yeah. My joke is kind of like, you know, do you have a driver's license? Are you a good driver? Okay, can you build the car for me?
You know, very different, right? But Ron had been in a startup called Cyclone and I think they went from 0 to 50 million ARR-ish. So, he had seen that journey from 0 to 50. Then company eventually sold I think to Axway and there he had seen the growth up until hundreds of million.
Okay. So he had really seen 0 to 50, 50 to 100ish, you know, so he understood that scale very in sort of very detailed way and he was very cerebral. So you could kind of really figure out can he he's either a guy that can build the the car or you know he just he's along for the ride and he's a great driver. But no, he he he knew how to build the car and you could like argue with him like hey why don't we put the engine on the back or why don't we change the design this way like we could but then that would break over this that wouldn't make any sense. So he had that third he had been in these two company like basically not changed company for 11 years. So it meant he had longevity because a lot of these folks will just bomb out again back to if you're doing something strategic like figuring out go to market motion it's going to take you two three four years. So if the guy or gal is like bombing out after two years it's you got to reset and start overturns the organization. So he'd been there a long time. So I knew that he's going to kind of be loyal. So like if the going gets rough, he's not going to quit in the first instance, which also meant that I can probably be pretty rough like managing him. Like I can be pretty aggressive and he's not going to leave. Like we can we can have huge fights and he's not going to leave cuz he didn't leave from that, you know, hole is kind of how I felt. So then he's not going to leave from this hole. You know, okay. That turned out to be crucial because, you know, the classic PTC sellers, they're hard to manage. They're aggressive. You know they're they're they're a handful to manage. They're very very difficult to manage. Ron as amazing is and he's created our like you know 1 million to 7 billion ARR engine.
Okay. So Ron is still running sales.
He is. Yeah. CRO. Yeah. We have a president but yeah Ron is CRO.
It's very in fact these days I would say VPs of sales because these companies are growing so much faster than they used to. They're churning through them every like two or three years and they say, 'Well, they can't scale. They haven't seen the scale.' So that is congratulations on you and Ron. That is a really rare thing. Okay. You built out your exec team. Can you talk about that? And then same thing like did you turn people over? Did you miss hires? Did people not scale? Like everyone's struggling with this that I work with.
Yeah. Look, I think that by the time you know that you need to hire some an exec, it's too late. And there's sort of a trade-off. If you give me infinite time, I'll hire the best person. You know, I can find the best person. If you give me like five, six years, I can find a phenomenal person. But if you give me a very short amount of time, I can also hire someone quickly, but then the quality will not be great. So, what I did is I tried to hire ahead of the curve. So, like before we needed it, that would give me more time so that I could run the search for a longer period of time. And I could sort of increase false negatives and decrease false positives.
Wait, how did you do that?
False positives means that you hired someone that you thought was going to be great and they're not great. You made a mistake. Now you have to fire them. You know, it's going to take you a year to figure out that they're not great. I mean, you might know after six months, but you're not going to fire your executive for six months. So, you're going to say that, oh, that's h you know, it's not clear. So, you're going to give it another six months. Then, after a year, if you have the guts, you're going to tell them it's not working out. You know, that might that might end there. It might take another six months. Now they've once they've left, you got to do the search again. You're doing the search now. You're gunshy because last time you screwed up. So now you're hesitating. You might go for you might go for a compromised candidate which doesn't have any strengths but also no weaknesses. And then you have to ramp that new person. And so like you lost two two and a half years. So try to avoid that whole thing. So how do you do that then? I mean it sounds obvious. Well be really really picky. So skip on a lot of candidates who could be great. So at Databricks I've skipped and said no to phenomenal people who've gone on and done great things and they have like a chip on their shoulder with respect to me. They're like I can't believe you didn't hire me. Look at what I've done since then. Like a big mistake by you. I was like yeah but my my playbook was err on the side of being just extremely picky. Take decent amount of time start early and most of those guys that have been with me and gals have been with me like a decade.
Okay. So you you haven't seen the turnover in these.
I have. I am, you know, I probably I would say two two cases where I made a mistake. Maybe more, but two like really come to mind.
And then and then you said give yourself some time. Is that 3 months, 6 months, nine months to be picky.
I think it takes at least six months to do a good search, maybe longer, could take a year. We have had searches that took a year, right? Keep looking. People settle, you know, people settle and they say, 'Look, I looked at everybody. This is the best we can get. You know, we haven't had a person in this role now forever. You know, just get someone in the seat right now.' And that's the problem. Okay. So, you knew like look, the two that didn't work out. When I looked back at the process I ran to hire those two, all the signals were there. You know, even in the interview process, they told me stuff that kind of was outrageous. And I knew it was outrageous, but I was like, well, yeah, I guess this person had a big fight with that person. None of my business. It's like, wait, I could be that person next. So I when I look back and I do a postmortem I always see like hey all the signs were there like what what was I doing or you know in one of those cases I rushed through the hire like I hired it looked good they like you know I went fast and then I think that back doors are phenomenal like do just do a insane amount of back doors.
You you get like a phenomenal 360 view of a person if you just talk to all of their managers in their past. Just go talk to all of their managers. Do also all the front doors. I would say like 10 20% of the front doors end up actually being truthful. 80% are.
Ali, I want to switch topics on you. You had a rivalry obviously with Snowflake. It was an interesting rivalry over time and my sense is you were pretty far behind and at least from a revenue standpoint, you've passed them. And I just remember at HubSpot we were looking at the two when we picked Snowflake Snowflake way back when. What was the chess moves that worked relative to them? And I guess I have a thesis that that was a very sales-driven company. The CEO was a sales guy. He cold called me actually and you folks were product driven. Any thoughts on that in advising founders and CEOs about that kind of thing?
Yeah, that was the consensus at the time that that the companies were like that. I felt like at the time people would saying that were saying that I thought that was unfair to us cuz I thought with Ron and everybody we had like an amazing team and then we had Andy come here and build up like an amazing crazy machine that you know it's like an army. So I I thought that was unfair at the time when they were saying that. But it is true that we were half the revenue and we were growing slower. So to accelerate the revenue, you know, so much that you can sort of overtake someone that's got double your revenue and, you know, bypass them, we knew it's going to take several years. Back to the, you know, good strategies take multiple years. You can't do them overnight. So, you know, study your enemy carefully, understand their weaknesses, and apply your strength to their weaknesses. This was a great company. They had built an amazing product. It was a game-changing product that disrupted all the data warehouses of all the hyperscalers. So the hyperscalers were getting destroyed by Snowflake because it was such a great innovation, such a great product. So it's this is not like hey it's a PTC like company and you know like no this is like hardcore but they had a few weaknesses one was that it was proprietary cuz the folks came from Oracle so it's a fully proprietary stack and still today all the data gets stored inside of their proprietary format. They've now added open source stuff but that's just small fraction of what they do. Most of the customers we bump to they have this proprietary and people didn't want to get locked in. So that was one weakness. Second weakness they had was that they had no support for AI or they would say that they they would but we knew that that was pretty weak. So the second thing that we we wanted to push really really hard on and you know those two combined with third it was pretty expensive. Now it was expensive to be fair probably because it was a great product and they could extract a lot of margin out of it. So you know winners do that you know they have great product. So we went exactly for those three. So we said, 'Hey, open lakehouse means you own your own data. It's completely open. Don't lock it up over there. You can do AI on it because we were like our roots were AI. We'd been doing machine learning and AI since 2009. So that's where we came from. So like apply that strength.' And by the way, at the time it wasn't clear that was going to work because AI was not a big thing in 2019, 2020. But we knew that that's a weakness. We push keep pushing on that weakness. And then cost. So let's make sure that the TCO is a third and still today TCO is just would typically win on TCO. So and then we just hammered that extremely aggressively in account after account. We had very careful playbook and the playbook were you know it wasn't just like let's just go out and say that Snowflake sucks or anything like that. It was emphasize identify the Achilles heel and press on those. Don't just go say hey rip out Snowflake. It was a coexist strategy. Go in there look at the exact workloads that could be amenable to machine learning. Pull those out, move the format to open source. So we have very clear concise playbook and this kind of contradicts that our sales would suck or that they would be good at sales because sales executed this play at Databricks. They went account by account and did that. So you know I would say and then it took multiple years and we also had a category that sort of exemplified this playbook. The category was lakehouse. So we had a three-year strategy, four year strategy to create this category of lakehouse which by the way was controversial. People didn't believe in it but eventually the category took off. Now everybody says they have a lakehouse even Snowflake will say that and they say that they have open format and so on. So yeah so that's what I would say study your enemy study your competition carefully and then you know go after those weaknesses.
I had a professor Arnaldo Hax and Arnaldo was one of those guys he didn't have a double chin. And he had like a quadruple chin and he always had a line watch the competition but never follow the competition. He do it his chin would wag for another minute.
So that second part is really important. Some companies are not customer obsessed. I think that's a you know they're not competition obsessed. I think that's a mistake. You have to study the competition. If you know from the art of war which they say all the CEOs should read like art of war is all about studying your enemy right their position. Is it high, low? Do they have you know more troops and so on. So you got to study your troops your competition. But then there are the companies that actually are obsessed with your competition. Like they're absolutely obsessed. And we have some companies right now that are obsessed by us.
So then what they do is they just copy the competition. So they're just always trying to chase what capabilities or what positioning did the competition do and they're just copying that. I think this is the most common failure mode. I think it's covered really well in a book great book not innovator's dilemma but innovative solution talks about the solution and it talks about how product managers tend to just build the same features as the competition and so this is this is the second pitfall that I see a lot of CEOs fall into like either you don't obsess by the competition or you obsess and just copy them so in our case we didn't just go and build a data warehouse and say hey we have a data warehouse that's better than Snowflake's data warehouse no one would have believed us they would have just said what are you talking about they're the leaders in this they they are the they created this category. What what are you even talking about? So we have to say no no no no this is a different thing and it's different in multiple secular sort of trends. So we actually out innovated there on the product side as well. So you got to do that as well and not just copy.
Okay. So how did the idea for Lakehouse come? Was it your idea? Was it kicking around in your head? How did you sell it internally? And how did you set it up as an initiative? Did the core team do it? Did you break a team off company? A lot of the CEOs I'm working with are working on second acts and you know some are really struggling with it. How did you guys do that? What what did you do right? What did you do wrong?
Yeah. It was a controversial decision internally.
And you know a lot of the seasoned folks were saying don't do it. It's a funny word. It's a you know it's technical. What is a lake in a house? It's like a house in front of a lake. What does that have to do with what we do? Like it's kind of funny. Like this is kind of ridiculous. We're trying to be an enterprise company. We're going to talk to execs and you're going to talk about getting a house on a lake. But then so we went to strategy firms and strategy firms outside also said they did actually surveys with people and they said yeah indeed it doesn't work. So they came up with like bland category names for us. I think unified data science platform was their proposal. And then we ran it by some of our sales folks internally and they're like yeah this doesn't make any sense. It's too technical. How about and then they will propose something like you know. So we had to kind of put, you know, kind of march ahead and have a lot of conviction and that was not easy because you know there's like hey you're risking you have a company that's pretty successful you want to risk it all and going on this weird thing. But we did and initially all those people that said don't do it were vindicated because people were ridiculing it and saying it's such they were making all these haha data rapids going through the data river data you know so on. So, people are having a lot of fun with that, but I think it was also in the category of any PR is good PR. So, it wasn't that bad in the big scheme of things. But we really did mobilize the whole company behind it.
Okay. It wasn't a separate team. It was the whole company.
It became the whole company. And it was really, you know, we would do it across the board. Like, oh, there's an article about Databricks. Amazing. It said great things about us. And we were like, no, no, wait, wait. They didn't mention lakehouse in the article.
This is horrible. Can you go contact the reporter? What are you even doing? You know, oh, we got a big win here. Here's a customer win. Here's what the customer said. Hey, but but the customer didn't mention lakehouse. What the hell, you know? So, it became like a completely like maniacally, religiously across the board in the company. You know, it's got to be a lakehouse, otherwise it's a loss. I don't care, you know. And, you know, I think I saw at some point great ads from Databricks that I was receiving on Facebook. I was like, these are not mentioning lakehouse. What the hell? And, you know, my head of marketing said, yeah, you know how well the ROI is on putting a word lakehouse in an ad. Spark is the thing we're known for. Like, here's the conversion rates. You're a data guy. Look at the conversion rates. Spark sells. This other weird funny thing you have doesn't sell. I said, I don't care. Get rid of all those ads that, you know, work and use this ad that doesn't work. So, it took, you know, concerted effort by the whole company for multiple multiple years.
I'm sure sales reps are motivated by their comp plan and it was easier to sell the core product. How did you incent selling lakehouse?
Comp plans was always a thing we were obsessed with. I always personally obsessed with it. So there would be always multipliers and you know extra spiffs and gravy on top of the comp plan and things of that nature. We were every year we would make sure that the comp plan for sure will make sure like don't argue with sales that's dumb. Put it in their comp plan. You know if sales doesn't want to do something then put it in the comp plan to do that thing.
If you believe it's the right thing right you might be wrong but it's the easiest thing in the world. So, I don't really I I don't engage in those debates. I just I mean, I'll try to figure out are they right about it or
