SaaStr Podcasts for the Week with InCountry and Y Combinator — July 19, 2019

 

 

 

 

Ep. 250: Peter Yared is the Founder & CEO @ InCountry, the startup that allows you to operate globally with data residency as a service meaning they store your mission-critical data in it’s country of origin, without compliance. To date, Peter has raised $8m for InCountry from some of my very favorites including Bloomberg Beta, Felicis, Ray Tonsing @ Caffeinated and CRV just to name a few. Prior to InCountry, Peter founded six and sold 6 enterprise software companies that were acquired by Sun, Citrix, VMware, Oracle, Sprinklr and Prograph. Previously, Peter was also the CTO/CIO of CBS Interactive where he brought CBS into the cloud. At Sun, Peter was the CTO of the Liberty identity consortium that designed SAML 2.

In Today’s Episode We Discuss:

* How did Peter make his way into the world of enterprise SaaS with the founding and selling of 6 companies and how did InCountry come about? What is that founding moment?
* Why does Peter feel like it enterprise is really hard again? Why is it no longer to come into large enterprises with a small contract and expand? How does Peter think about enterprise pilots today? Do they really mean anything? What proof points suggest an enterprise is really bought in? What benchmarks should startups bake into the agreements?
* How does Peter think about and approach market sizing today? Why is market risk no longer a risk he is willing to take? Where do many entrepreneurs make mistakes when it comes to market timing? In terms of timing, how should entrepreneurs think about whether to start at SMB and move to enterprise or start enterprise and move to SMB? What are the considerations?
* Why does Peter believe that large orgs are so dysfunctional today? What can founders do to extract the truly special talent out of these large orgs with big pay packets and troves of options? How has Peter found the transition from CTO to CEO this time? What have been some of the challenges? Where has he asked for external help?
* Having built numerous successful remote teams, what have been Peter’s biggest learnings in what it takes to successfully build remote teams? Where do many people go wrong? Does it have to be from Day 1? When is the right time to start thinking about this as a startup?

 

Ep. 251: Michael Seibel is CEO and a partner at Y Combinator and co-founder of two startups – Justin.tv and Socialcam. He has been a partner at Y Combinator since 2013, advised hundreds of startups, and has been active in promoting diversity efforts among startup founders. Hear his take on the future of work with a decade in learnings from YCombinator.

SaaStr’s Founder’s Favorites Series features one of SaaStr Annual’s best of the best sessions that you might have missed.

This podcast is an excerpt of Michael’s session at SaaStr Annual 2019.

Missed the session? Here’s what Michael talks about:

  • How quickly should you hire?
  • When is the right time to sell a startup?
  • How large a differentiator will investors make in your company?

If you would like to find out more about the show and the guests presented, you can follow us on Twitter here:

Jason Lemkin
SaaStr
Peter Yared
Michael Seibel

Below, we’ve shared the full transcript of Harry’s interview with Peter Yared.

Harry Stebbings: You are listening to the official SaaStr podcast with me, Harry Stebbings, @hstebbings1996, with two Bs, on Instagram, and I would love to hear your thoughts on guests you would most like me to have on the show. You can message me there and I would love to hear your thoughts. But to our episode today. And in my eyes we have one of the most under-the-radar rock stars of Silicon Valley on the show.

Harry Stebbings: He has started six enterprise infrastructure companies and sold yes, you guessed it, six. In addition, he’s also one of the most genuine and lovely people in the industry, and so I’m very, very excited for this, and with that in mind I’m thrilled to welcome Peter Yared to the hot seat today.

Harry Stebbings: Peter is the founder and CEO at InCountry, the start-up that allows you to operate globally with data residency as a service, meaning they store your mission-critical data in its country of origin without compliance. To date, Peter has raised eight-million dollars for InCountry from some of my very favorites including Bloomberg Beta, Felicis, Ray Tonsing at Caffeinated, and CRV, just to name a few. And prior to InCountry, Peter founded, as I said, and sold six enterprise software companies, acquired by the likes of Sun, Citrix, VMware, Oracle, Sprinklr, and Prograph. And previously, Peter was also the CTO and CIO of CBS Interactive, where he brought CBS into the cloud.

Harry Stebbings: I do also have to say a huge thank you to the very wonderful Fouad ElNaggar and Ray Tonsing at Caffeinated for providing some fantastic question suggestions today, mojitos on me for that.

Harry Stebbings: However, you’ve had quite enough of me drearering on, and so now I’m very excited to hand over to a dear friend, Peter Yared, founder and CEO at InCountry.

Harry Stebbings: Peter my word, it is such a pleasure to have you on the show today. You know I’m one of your biggest fans and so I’m so thrilled we could make this happen. And thank you so much for joining me today.

Peter Yared: Hey, Harry, thanks so much for having me as well, and it was great to see you in London a few weeks ago.

Harry Stebbings: Oh it was so nice to see you in person, but I do want to start today with some context.

Harry Stebbings: Now, you founded and sold an incredible six companies, so how did you make your way first into start-ups, and then really, secondly, what was that founding moment for you with InCountry today?

Peter Yared: Well, it’s a funny story. I started programming computers as a kid, in the late 70s and 80s, because I’m old. So I was always building tools, and infrastructure, databases, things like that. And then when I was in my early 20s, I wrote some tools for an existing tool and the company loved it. And initially they licensed it, and then they acquired it, and then I did it again. And again, and again. And so really it became a bad habit.

Harry Stebbings: And then what was the founding moment with InCountry after the bad habit of selling companies?

Peter Yared: Well, you know I grew up overseas. My father worked for the UN so I had sort of a global perspective on things, and a few years ago I noticed that there was a trend, not for globalization, but de-globalization, and mainly because of technology. So this goes beyond Trump and Brexit and things like that, but you look at some technology trends like automated manufacturing, and 3D printing, and lab-grown meat, vertical farming, and clean energy, and I honestly think just in a few short years people are going to go, “Can you believe that they used to make all the washing machines in the world in one place and then ship them everywhere?” Or, “Every lamb chop came from New Zealand?” Or “Every pineapple from Costa Rica?”

Peter Yared: I think technology is going to distribute this, so everything’s going to be made locally. And you want a pineapple? It’s grown down the street. You want a lamb chop? It’s grown down the street. And from the technology perspective, you have a set of large companies that have been going internationally, they enter markets, they extract all the value, they shift the profits out to other places, they abuse the right to hold citizen data, and you now have a lot of countries are starting to push back on this.

Peter Yared: And this is not just Russia, and China, and authoritarian regimes wanting to track a text message between two people, this is the UAE just passed a law that all health data has to be stored in the UAE. So France is passing a law, Germany had a law, Indonesia, Vietnam; India just passed a massive law in December that said all payment and transaction data has to be stored in India, and managed in India, because the countries are really pushing back, and they’re saying “Hey, we manage our citizens’ data here, and it’s going to be under our laws, and stored here.” And that was really the impetus for InCountry.

Harry Stebbings: Now I absolutely love that as the impetus. I do have a couple points to unpack, one is on the schedule, one’s totally off the schedule, so let’s go with the first on the schedule next.

Harry Stebbings: I had Joe Fernandez on the show from Joymode. He said that serial entrepreneurship is potentially overrated. Now, with the vast wealth of six companies and six companies sold, I’m interested: would you agree with the overrated nature of serial entrepreneurship, or would you actually say that there have been some real takeaways? And if so, what have those been?

Peter Yared: Well, I don’t know if it’s necessarily overrated. I think entrepreneurship is overrated, everybody wants to do it, and not everybody has the aptitude or attitude for it. My old boss, Jim Lanzone at CBS, used to call it like being in a band in high school. You’d be like “I’m in a band!” Everybody was in a band, right? Because they wanted to be cool, and for a long time there everybody was in a start-up because it was cool. The main thing you get from doing it a bunch of times is you’ve made all the mistakes already, or a lot of them. Six, seventh time around you’re only making new mistakes.

Peter Yared: But for me it’s fun to build stuff, I’ve always built stuff and now I’ve learned the knack of how to build this kind of thing, and I love tech, and I love building teams and working with fun people, so it’s kind of hard not to do it again.

Harry Stebbings: Now I always say I use the show mercilessly for my own self-improvement and I’m going to here. So obviously you know I’m an investor today. You talked about the natural aptitude in terms of entrepreneurship, how do you think, and how as you the entrepreneur, do you think about stress testing that aptitude within a potential entrepreneur, and whether they have that a) aptitude, b) resilience, grit, that is required, especially in such short fundraising timelines today?

Peter Yared: It’s kind of hard. It’s interesting because you see repeat entrepreneurs, even if they’ve failed, people want to invest in them because they know what they’re in for. And if somebody hasn’t done it before, you really have to poke around a little bit to see whether they have it or not. And it’s really not clear.

Peter Yared: You know it’s funny, some people look at sports or other things that you do where you just have the grit and resilience to get through something and be good at something, right? And it’s difficult, it’s hard to read.

Harry Stebbings: Totally, I’m with you, it’s one of my biggest challenges.

Harry Stebbings: The second there was also actually kind of related to InCountry and why it’s such an exciting opportunity now. Potentially, it was also market timing. How do you think about market timing? It’s always one thing that I say, it’s not a risk that I’m willing to take. Do you think market timing actually is a risk that investors should be willing to take, and how do you think about the importance in the stack when assessing opportunities?

Peter Yared: Well, market timing is no longer a risk I’m willing to take, because I’ve done a few companies that were too early, and it can just be the depth of misery. Sometimes you’re forced to sell early, and I remember somebody said years ago “Early is wrong.” And my last two companies actually started as side projects. So Mark Riser, the chief architect at InCountry, was also the first guy in at Sapho, first guy in at Postano, PostPost; and we just tinkered for a couple years, and then the time was right, you could see things shifting, new laws passing, and it was time to go full-time and invest in this.

Peter Yared: So I actually really focus on making the timing right for these deals now, I don’t just jump into them because I had crazy idea. This one I had the idea three years ago, and then we developed it for a good two years before I jumped into it.

Harry Stebbings: Now I absolutely love that and I’m so glad that you agree on the market timing, I have to say.

Harry Stebbings: I do want to ask, though, because you said about landscape shifting there, and I think we’ve seen real shifts in the enterprise landscape, and when we chatted before on the subject, you said to me, “It seems like enterprise is hard again.” So what’s your thinking for saying this, Peter?

Peter Yared: Well, here was a window there where you could build a little SaaS start-up and start selling it into enterprise, build your way up, get in at a department, get in at a division, cross-sell, there wasn’t that much competition in a lot of areas. And so there was this Cambrian explosion of little SaaS start-ups.

Peter Yared: Now a lot of them flat-lined, but a lot of them did really well and a lot of them rolled up and exited. But you look at what’s going on in enterprise now, if some person, a manger of a department, brings in a SaaS vendor without an InfoSec check, they’re going to be fired.

Peter Yared: So the days of creeping into an account sideways are behind us. And it’s funny because I remember… this is kind of funny, actually. My first VC pitch of my career was in 1996, I think I was 25, 26 years old. It was Kleiner Perkins. And I go in there and I’m like “Oh you want to see a demo?” They’re like “Why don’t you tell us about yourself?” But it was really funny, they asked me “What are you going to do…” and this was an early Java company, “What are you going to do when IBM and Microsoft enter this market?” And I was like, “Oh come on, they’re not going to be in this market for four or five years,” which proved to be true, “I’m worried about the other start-ups.” And you look at this company, and people are like “What are you going to do about the other start-ups?” I’m like, “I’m not worried about other start-ups, I’m worried about Amazon and Google.”

Peter Yared: So it’s almost like the entire thing has flipped now, and you really do have to worry about the large incumbents, and there’s just not that many people doing large-scale enterprise start-ups anymore.

Harry Stebbings: Can I ask, why is it flipped? Because I often hear from the investing cross that actually nope, when we’re assessing competitive landscapes, “Oh don’t worry about the big incumbents, let’s worry about the four people in a garage building the next API-centric company” or whatever that may be, as the real competitors. Why do you think it’s actually shifted back the other way to the incumbents being the real competitors?

Peter Yared: Well you look at my segment, which is infrastructure software, and the large cloud vendors, they’ve been like a vacuum cleaner. They have hoovered up all the talent, they’re incredibly aggressive; I mean you go look at Amazon’s services page on Amazon web services. They have products that I don’t even remember them launching that are now on their tenth iteration. So they are all over the place in this segment, and it is increasingly difficult to compete. And they’re also hoovering up all the talent. A lot of the folks I know that started companies ten, fifteen years ago, now work for Amazon and Google because they just give them big checks to come and have some fun.

Harry Stebbings: But I do have to ask, and it’s again asking for advice. I see so many start-ups hacking the enterprise and they have pilots with big names, impressive people behind them. Does that really mean anything though, today? Having these pilots? And what are the proof points that would suggest to you that something really does have the legs in those very, very early days?

Peter Yared: Well, in the early days there’s a couple hacks to market, which is you get your buddies at Airbnb and Slack and Dropbox to use it, and there’s your big names. Or, you’ll get into the bigger enterprises through the innovation teams, which a lot of times go nowhere. So you really have to look at who the names are, and are they actually using the tech, and is there an actually fit in the companies? You can’t just look at the list of names, you’ve got to look at what the projects are, and then ask the entrepreneur, “How did you get into that account?” And who’s using it, who’s the decision maker?

Harry Stebbings: Totally. I’m very much with you. I guess another thing is, how do you think that they can instill, especially when selling to these large enterprises, how can they instill confidence that they’re maybe much bigger and more stable player than they are? Maybe if you’re applying it to yourself with InCountry, when you’re dealing with huge incumbents’ data, how do you instill a confidence when, relatively speaking, you’re still a small company?

Peter Yared: Well it’s funny, this company is only five months old, the quality of meeting we’re getting is unbelievable. Just two weeks ago we had a meeting with the head of infrastructure, and this was actually THE head of infrastructure, for a massive financial institution. And it was very funny because, the days of a start-up pretending they’re bigger then they are, are kind of over, because the level of diligence these companies go through before they work with you is pretty high. And they can tell just from their diligence process on you, where you really are at, and they’ll do the reference checks and what have you.

Peter Yared: What this guy said was really funny, because in one way it was really validating, he’s like “We clearly have a problem in this space.” I’m like, “Oh, wonderful.” And then he was like, “Now we have to decide whether it’s worth the pain of working with a start-up, versus doing it ourselves.” And it’s my job to make the pain of being a start-up, and working with us, not that difficult and add some salve to that, such that they want to. And a lot of folks don’t do that, I’ve been on the buy side, I was a CIO with CBS Interactive, the digital group at CBS, for years. It’s my job to structure this company such that we’re not a pain to work with, and a lot of that is just communication and transparency.

Harry Stebbings: I totally agree. I do have to ask, you know I speak to Jason Lemkin a lot at SaaStr, and he’s always very, very much focused around the founder-centric salesman. Can I ask you, you’ve mentioned there about speaking to the head of infrastructure at a huge organization. Do you personally really enjoy the sales process? And would you agree with Jason that being truly central to being successful as a CEO of an infrastructure company?

Peter Yared: You know I do agree, especially in the early days, but sometimes it’s a bad signal when you’re buying something and there’s no salesperson, there’s no SE, there’s not a bunch of materials, there’s a lot of infrastructure buying, and then you meet the CEO after, later in the sales process. It can be a bad signal that the company’s really not mature, actually. Because you don’t have a scalable sale if the founder’s the only one selling.

Peter Yared: But in the early days, who else can do it, right? And, as long as you’re transparent about where you are, I totally agree. The founder has to be the one in there selling the software, selling the solution, and learning from the customers, and the prospects.

Harry Stebbings: So that’s always one question that I get is, does the founder have to do the selling themselves? The other one really applied to enterprise and SMB, is where on earth do I start? Is it easier to start at enterprise and work down to SMB, or vice versa? How do you think about the right insertion point within enterprise or SMB and which way to go?

Peter Yared: A lot of times people are like, “This is the answer!” And the thing is, it depends on the context, it depends on the product, it depends on the market. I will say this, it is very, very difficult to only sell to enterprise, because you end up with very bumpy sales quarter to quarter. One slipped deal destroys your quarter. So my strategy is you have to have something that you can sell to SMB that’s enterprise grade. So you have something that you can sell into mid-markets that are a little more flexible in their buying cycles, but that also you build everything you need to do an enterprise sale. You get your sock 2, you get all the processes in place, and then when the enterprise sales do come in, it’s just a boon. But in the meantime, you do have some steady revenue.

Peter Yared: So a lot of people say you have to focus on just one market and what have you, and for me it’s, you focus on an entry point, but you have to have a product that can scale up. And you don’t want to go back in time and try to add that stuff later, because it can just be a nightmare.

Harry Stebbings: Can I ask, I also notice you mentioned there about the lumpiness of sales; do you also notice very volatile sales confidence amongst the sales team, due to the much lower cadence of actual deals that they do compared to maybe SMB and mid-market where you have a much more consistent flow of deals being signed, logos being added. Do you notice that kind of sales morale hit in large enterprise only?

Peter Yared: If you have sales people that are used to that type of sale, I think it’s okay. But yeah, you go six, nine, twelve months without a deal, it really saps morale. And then people leave, or they have to be cycled out. It can be tough, right? So it is important that you do have some kind of trickle of sales coming in always. And it’s foundational to a company to have customers and users. If you go too long without that, it really creates a lot of dysfunction. When you have an engineering organization that lives in an ivory tower, they get annoyed, there’s a feature request, “How can this be we’ve got great plans here?”

Peter Yared: So it’s not just sales that gets impacted if there’s not a regular trickle of deal flow.

Harry Stebbings: I’m very much with you there in terms of the multiplier effect. But you said the word insertion point, and insertion point is kind of one of my favorite topics to discuss, one of the many reasons I’m still single, Peter, as you know from meeting me, but I do have to ask. Before, what you said, you have to find the crumbs that are falling out of the big cloud vendors’ mouths. Now, what did you mean by this, because you left me on a cliffhanger.

Peter Yared: Like I was saying earlier, these large cloud vendors, they are gobbling up this market, and they’re just biting off massive pieces of it, and you have to figure out, “Hey, I do infrastructure software, I’m doing it in the cloud, I can’t sell what Amazon is selling and Microsoft is selling and Olicloud is selling,” because you can’t go head-to-head with that. So you have to find the crumbs that are falling out of their mouths. You look at my insertion point right now, it’s the large cloud vendors are not in these smaller markets that have bad power infrastructure, and bad internet connectivity, and what have you, like Vietnam or Indonesia. When they build out a region, it’s massive. So our insertion point is “Hey, you need storage and processing in Indonesia, use us, don’t go find your own facility.”

Peter Yared: So you have to find your insertion point where these guys are not. Now of course, you have people that have proven me wrong. Like Snowflake is doing data warehouse in the cloud, and they competed head-to-head with one of Amazon’s products, Redshift, and they’re doing very, very well. And now they’re moving to multi cloud.

Peter Yared: So again, there’s no hard and fast rule, but generally you don’t want to be competing head-to-head directly with a big vendor’s product.

Harry Stebbings: I totally get you in terms of that head-to-head competition. I do have to ask though, if not doing that and going for that nicher insertion point, it makes me think of market size, and actually I had Peter Fenton and Sarah Tavel at Benchmark on the show, and Peter and Sarah said don’t worry about big markets, find your niche and expand. Would you very much agree with this thinking, and when assessing opportunity, how paramount a thought is initial market size when entering an industry?

Peter Yared: It depends. You doing a replacement product that’s better? Then there’s a definite TAM. But usually I’m looking for a big trend, and then what’s my insertion point into that trend? And you can’t start big, you have to have something small. “Hey, we have a server in Indonesia you can use,” towards this big trend of hey, pretty soon you’re going to have to store all your regulated data the way these various countries want and that’s going to be a nightmare if you’re a multinational.

Peter Yared: So for me you always have to have something that you can sell that’s small, that’s easy to deliver, that’s easy to consume, but that is part of a big trend.

Harry Stebbings: I totally get you. If it’s part of a big trend, does that not have market timing inherently inserted within it?

Peter Yared: Hundred percent. This company, InCountry, when I had the idea three years ago, people thought it was absolutely insane. So pre Trump, pre Brexit, everyone’s like “It’s much more efficient to store all the data in one database, don’t people understand this?” And most of Silicon Valley still thinks this way. But I think the trend is out there, and it’s happening, and just in the last six months, the number of laws and regulations that have passed have been astronomical. So I think the timing on the trend is the most important thing, so you’ve got to read the trend before everybody else does, and then once it starts getting a little bit of momentum, the wave’s starting to suck in, you’ve got to catch it.

Harry Stebbings: I’m totally with you in terms of catching it and really capitalizing on the momentum that you have. I do want to talk about building that team around you that will allow you to capitalize on it in the best way that you can. We chatted, again, over lunch and you said highly dysfunctional nature of some large orgs and how prominent that is today. Walk me through this, Peter. They seem very organized and functional from the outside, so why are they so dysfunctional and why maybe now more than ever?

Peter Yared: Maybe larger orgs are still functional by some aspect. They’re moving forward, they’re delivering stuff, but what’s happening nowadays in larger organizations, is the level of matrix decision making is unbelievable. And you see this pretty much everywhere but Amazon. It’s endless meetings, nobody wants to have any accountability, everyone’s totally inauthentic, people are terrified they’ll say the wrong thing and piss somebody off so you can’t really challenge any assumptions anymore. And it’s just incredibly painful, the level of meetings and talking and being on, just to get anything done at larger organizations now. And we always used to joke about… I was at Sun Microsystems for five years, “Oh yeah there’s a lot of meetings and da da da,” but you did not have to align with 15 different people that don’t tell you the truth.

Peter Yared: And that’s generally the reality of large organizations nowadays.

Harry Stebbings: I do see that, personally, and understand that. But I do want to ask then, if you place yourself within that context and go, okay we want to extract the best talent, what do you think founders can do to extract the best talent from these dysfunctional but well-paid jobs in large orgs?

Peter Yared: It depends on the role. There are some roles you can’t pull out anymore and there are some that you can. If you go to large organizations, they usually have a ton of different products and different strategies, and you go to what’s middle management at Google, is definitely more than qualified to be your VP, and if that person isn’t sitting on a massive treasure trove of stock, you have an opportunity to pull them out.

Harry Stebbings: Okay, so now you have the opportunity to pull them out, you go directly to them? You work through networks? How do you think about building the best exec team you can strategically in terms of extraction?

Peter Yared: It’s a mix, some people come to you, other people you’ve known for years, and you’ve got to have a good idea and you’ve got to make it fun and interesting. And so you can pull certain types of people out of large companies. Then there’s other things where you just kind of give up, the days of hiring a bunch of engineers out of Google. And it’s funny because you go to these VC talent things and they’re like “Here’s how you pull somebody out of Google.” I remember at one, I just got tired of it. And there was like 30 CEOs in the room I’m like “Who here has actually hired an engineer out of Google, Facebook, or Microsoft?” And there was not a single hand that went up, and finally somebody said “Well, you get them after somebody else has pulled them out, and then maybe you have a chance.”

Peter Yared: So the reality on engineering talent, getting people out of these places, is really slim nowadays.

Harry Stebbings: I couldn’t agree with you more there, that’s a very funny event. But I did speak to Ray Tonsing, our mutual friend, before the show, and he’s very specifically about the transition from CTO to CEO. Now, I want to dive in a little bit on this. How have you found the transition from CTO to CEO?

Peter Yared: I’ve done both before. It’s funny doing it this time, it’s like, “I miss my co-founder, Fouad ElNaggar, from Sapho.” He did his stuff, I did my stuff, we used to shoot the shit together. And I don’t get to focus on the tech as much, but I get to spend more time selling, and team-building, and selling a vision. You have to do one or the other, it’s kind of hard to do both, and for me it’s kind of fun to switch back to the CEO role this time. But definitely, he was better at raising money and stuff like that and sometimes I’m like “What would Fouad do?” I call him up I’m like “Fouad, what should I do?”

Harry Stebbings: That’s hilarious, have him as a little intercom chat in the sidebar.

Harry Stebbings: I do want to ask, and Ray asked this, where do you think you’ll need help?

Peter Yared: Definitely I’ve had a lot of experience building teams, I’ve had a lot of experience with go-to-market. For me the help is mainly around financing, financials, revenue recognition, that kind of stuff, and that’s where I reach out to friends, my former co-founder, other people who know this business, Andy Rankin, who helped us bundle the Sapho rounds and helped me with InCountry and actually ran business development for us at Sapho. So there’s a set of people I go to for help on that kind of stuff.

Harry Stebbings: I did not know you knew Andy Rankin, Andy’s one of my favorites, so that is fantastic to hear.

Harry Stebbings: I do want to talk to you on one element there that’s very poignant about InCountry and the way that you’re building InCountry. So at Sapho you were in Prague, with InCountry you’re now global. So is this the end for SF and California as the place to build out start-ups, Peter?

Peter Yared: You know it’s funny, SF is a magical place for–you want to build an initial exec team, people that know how to do start-ups, you want to raise money, you want to get press, and this is the place to do that. I mean you look at this company who in five, six months we’ve built a very seasoned exec team, we’ve raised a bunch of money, we’ve gotten a bunch of press. And this is really the only magical place to do that that quickly. In terms of building out a larger organization, at Sapho we learned the hard way, it was very hard. The stories I’m telling about hiring engineers in the Bay Area is insane. And we had contractors in Prague and we ended up building a massive organization in Prague, we got up to 80, 90 people there at the end before we sold it to Citrix. And there is really good engineering talent elsewhere, and they’re available.

Peter Yared: And what’s interesting is nowadays people are moving not just engineering out of the Bay Area. They’re doing customer service, and accounting, and finance, and inside sales. And it’s all going to places like, right now the hot spots are Salt Lake City, Phoenix, Reno. Now my question is, why not Sacramento? You can drive to Sacramento. It seems like people intuitively know that California is just a bad place to do business right now, especially for middle-class jobs, if you will. So there’s this massive realization all of a sudden that it’s not happening here anymore, and people are comfortable with it. And I remember at Sapho when we decided, “Okay we’re going to build out in Prague,” and we basically acqui-hired a team doing a start-up there, and they did just an amazing job for us. Our investors were really leery about it. Not Raymond, other ones that were like, “Ah you can’t build value this way,” and, “What are you going to do?” “How can you ever sell this company?” And two years later they were sending the rest of their portfolio, VPs of engineers, and CTO to me to learn how to do it.

Peter Yared: And it’s kind of funny, when you look at InCountry, InCountry isn’t just the name of the company, it’s the thesis of the company. We enter a country, we get data center facilities in the country, we cooperate with the regulators, but we also want to have staff in those countries. People are like, “Well what do you do in China?” Well we have 3, 4 people right now. “What do you do in Russia?” We have a whole team there. It’s part of the thesis of the company that we actually have feet on the ground in these countries.

Harry Stebbings: Can I ask, you mentioned that obviously about the incredible success scaling Sapho’s team in Prague, how do you make teams that aren’t where you’re located, how do you make them work so well, what are some of the best practices you’ve learnt?

Peter Yared: The thing is, we all think that we’re multicultural in the Bay Area, and we are in that people come from different places, but they’re all trained to work a certain way here. When you are actually working with people in other countries that come from those countries, they work the way they work, and it’s very hard for a lot of people to wrap their brains around that, even if they came from somewhere else.

Peter Yared: So one of the key things here, and you look at it InCountry, we work with people from Russia that have never left Russia, and we work with people in China who have never left China, and we have to have these people all work together. So you really have to be sensitive that it’s truly multicultural. You have a bunch of different cultures and a lot of them don’t understand the way technology is built at Silicon Valley start-ups. So there was some training there, definitely in a lot of foreign cultures people hate things like technical debt, it drives them absolutely nuts. But technical debt is a tool that you can use to get to market a little quicker, figure out what features are actually needed, and then beef them up.

Peter Yared: So a lot of it is just communication as to what it is that you actually want, and awareness of how that culture likes to approach problems so that you can position what you want in such a way that they can actually do it in the timeline you want.

Harry Stebbings: I’m sorry. I’m too interested not to dive in there. What did you mean by technical debt’s a tool that you can use?

Peter Yared: There is one perspective that anything you build in software, a lot of times engineers want to build it perfectly. We’re going to pick the right architecture and what have you, and it’s like you look at the Apollo 11 moon mission. You have to have the system, the back-up to the system, the back-up to the back-up, everything’s got to hang together, you have to think of every fail safe case. What if the moon’s orbit shifts, and what if this engine goes out, and what if this, and what if that, and the engineers just sit around and think forever about every possible thing that could possibly happen, and then years later they’re ready to launch.

Peter Yared: And you look at a start-up, it’s like okay, we need a set of features, we need the MVP on each of these, some of them can just be scaffolded. What’s most important is getting the whole thing working end-to-end so we can show it to somebody. It’s a very very different approach when you’re building software versus a rocket ship.

Harry Stebbings: Totally. I absolutely love that analogy and couldn’t agree with you more there.

Harry Stebbings: I do want to dive into my favorite, though, Peter. You know the score here, the quickfire round. So I say a short statement, my friend, and you give me your immediate thoughts. About 60 seconds per one. Are you ready for this?

Peter Yared: Yes!

Harry Stebbings: Okay. So let’s start with my favorite, and I have read very few, but I intend to read many more in the future. What’s your favorite book and why?

Peter Yared: Favorite book is Snow Crash, it laid out the future for me, and I will always remember it as my favorite book and it shifted my reality.

Harry Stebbings: Without being rude, you’ve sold six companies, why do another?

Peter Yared: It’s fun!

Harry Stebbings: I knew that was coming. Tell me, what would you always like to change about tech in Silicon Valley, Peter?

Peter Yared: I’ve been here over 20 years, I’ve been in tech for 30 years, tech used to just be a bunch of misfit geeks, the type of people that didn’t really fit in anywhere, and now it really seems to be dominated by douchebags. But it just is what it is.

Harry Stebbings: I’m totally with you, there’s tons of podcasters there. Tell me, hire fast, fire fast, agree or disagree?

Peter Yared: Again there’s all these hard and fast rules, it depends on the situation, the stage of the company. If you’re in a hundred person company and you keep cycling through a bunch of people, people start to lose their faith in management and management’s ability to make decisions.

Peter Yared: I had Jean-Louis Gassée, former Apple president, he was on two of my boards, and he used to always say “By the time you’re firing somebody, everybody else is like, ‘It’s about time that guy got fired.'” You know what I mean? So I don’t know. Even when you think you’re hiring fast a lot of times you’re not.

Harry Stebbings: Can I ask you one and it’s, how impactful have boards been in your operations of previous companies? And you don’t have to answer it, we can take it out. But boards are often hailed as these massive turning points. Have they spawned incredible changes in companies, and do they deserve the credit that often board meetings are heaped with?

Peter Yared: Well, it depends what board, when. I’ve had some board members that were just absolutely toxic, company destroyers, and I’ve had other board members that have just been absolutely magical. I think one of the key things on boards, is just transparency. I have a hack to work with boards, which is I send a weekly update. Literally every week I send out a report, I call it the TPS report, from the movie, but basically I say everything that’s going on with the company, good, bad, every area, what’s going on in sales, what’s going on in engineering, what’s going on in FPNA. And then this company we just had our first board meeting, there’s nothing tactical discussed. So I’m getting great leverage out of those board members.

Harry Stebbings: I couldn’t agree with you more and I love that weekly report. I didn’t know that happened.

Harry Stebbings: Tell me, who’s the biggest rock star in the Valley that’s maybe lesser known or slightly under the radar?

Peter Yared: He’s probably going to be mad at me for putting him above the radar but Raymond Tonsing at Caffeinated. I mean that guy’s done six unicorns. He’s just a total beast.

Harry Stebbings: Listen, I couldn’t agree with you more, he is the most under-the-radar person and I would love to have him on the show and he continuously shuns me. Ray, if you’re listening, I still want you on the show. But, tell me, Peter, the next five years for you and for InCountry, what’s the big road map ahead?

Peter Yared: Just grow this thing. Absolutely dominate regulated information. We went through this phase where, if you were holding a credit card number, this is just five or six years ago, you took that credit card number and you gave it to somebody who was PCI compliant, and they took care of dealing with it, all the regulations around it, the risk associated with it. And let me tell you, you’re paying that vendor a lot more than it costs to store 16 digits. And our thesis is that all regulated data, especially in multinational environments, is going to have to be treated this way and we want to host it all and just grow this company. We think it’s a rocket ship.

Harry Stebbings: Peter, as you know I’ve absolutely loved doing this, I’ve so enjoyed getting to know you on a personal level, and I can’t thank you enough for joining me today.

Peter Yared: Thanks so much. I really really appreciate being here. I can’t believe I’m following Bill Gurley!

Harry Stebbings: What did I tell you, an incredibly special individual and just such a wonderful person. And if you’d like to see more from Peter and what he’s building at InCountry, you can go to InCountry.com. Likewise, you can follow Peter on Twitter, @peteryared. It would also be great to welcome you behind the scenes here at SaaStr, you can do that on Instagram, @hstebbings1996, with two Bs. I would love to see you there, as always.

Harry Stebbings: As always, I cannot thank you enough for your support and I’m very excited to bring you another fantastic episode next week.

Published on July 19, 2019

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