The New Rules of Silicon Valley with Rubrik CEO Bipul Sinha

Product market fit is dead. So you have to repeat zero to one every six months. It's not a one-time process at 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 will be a trillion-dollar cybersecurity company within the next five years.

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 a 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 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.

For seven, eight years.

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 a 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 are pessimistic and they think what could go wrong. And entrepreneurs work in this state of will where they say, I have a 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.

This idea that I wanted to go and really put all my force to go start this business.

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 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's one place where all enterprise data goes? It is mission-critical. It's a large market and not served well.

As human beings, we always face two kinds of situations: certain situations and uncertain situations. So if you're 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 beings, 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 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.

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 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.

What I found was that all the decisions I made based on my gut, they turned out to be the right decision. All the decisions I made based on the influence of other people and support of other people, where I looked for some kind of like a backstop saying, oh, my partner agrees to this or my business relationship agrees to this, those were all wrong decisions.

So we knew that this is a large market and it's an underserved market. The idea was can we build a futuristic product which is five years out now. So their reaction is extremely positive and that's what we 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're 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 you start 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've made the progress in building the business.

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.

Look, I have a fundamental thesis about how do we build a long-term business. And the way you build a long-term business is you 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 align to your agenda. But as soon as they align to your agenda, your messaging starts 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 disasters 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're 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 market space called cyber resilience. And so then you see that shift happening.

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 70%, 80% of people who don't agree, that's what gives you the moat because they will not agree for the next few years while you're creating the moat and capabilities so that when the market comes your way, then you have an advantage of time.

So look, if you're going after a new market or new idea, there's a high chance of it not working. So you have to assume that not all your ideas will work because the non-consensus ideas by very definition are 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're 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're 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 two aspects to it. One aspect about AI is productivity, and 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 a 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, the natural thing for us is AI. And again, this is a non-consensus idea that we have, that Rubrik 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.

See, in business, particularly in the uncertain part of business, there's no right or wrong answer. It's 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, 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 directions till you find the road.

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 kind of see whether I'm convinced about this idea. And 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, "Niraj, let me pitch you this new idea that I'm working on." And I didn't tell him 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 the conference room, he looked at me, he said, "There is something in this idea that we should pursue." And that was 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.

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 startup founders are found in all different varieties in all different places. If you look at my colleagues at Oracle, was Benoit and Thierry, 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 having any expertise in this space. As of now, how will this look? And it creates a high degree of dissatisfaction and a 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.

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 largest-scale companies 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 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 force such as Google and Facebook and Twitter, they found a great talent pool at Oracle to pull from. So people who created messaging and storage platform, Kanan and Karthik, Kanan was from Oracle. People who created Hive at Facebook for the largest-scale distributed query was Ashish Thusoo 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.

Eleven.

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 a fully formed board and everything else and advisers, and they would always give us advice that go after this person to hire as an executive, or I have 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 sit 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.

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 were 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 get their early feedback and made sure that the product didn't embarrass them. Sometimes in Silicon Valley we think that if you're not embarrassed with your product, then you shipped too late. Those are things again from the past. 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.

One lesson that I learned about leadership that now I have and probably I didn't have starting Rubrik 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're not hiring for diverse skill set and diverse thinking because you're trying to see, I'm driven this way. I want people to be driven in 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 and 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.

So 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 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.

Open board meeting was my way to tell the organization that there are no sacred cows. There is 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 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 people come to me and I'm like 30 years old or 35 years old in the 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's 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 on the TCV basis. First six months of selling Rubrik, we sold five million. First full year of selling Rubrik, we sold forty-seven million of TCV. Next year, we sold one hundred sixty-eight million of TCV. The following year, we sold three hundred fifty 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.