Ping Li (00:07):

I'm your host, Ping. I'm here with the CEO of Sysdig, Suresh. Welcome.

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Suresh Vasudevan (00:13):

Thank you very much, Ping. Thanks for having me.

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Ping Li (00:15):

Well, Suresh, just for the audience, maybe give us a little bit of a background soundbite on Sysdig and what you guys do.

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Suresh Vasudevan (00:22):

Yeah, so Sysdig is a cybersecurity company and our mission is to secure and accelerate cloud innovation for our customers. So if I start with the problem description, we all know increasingly that companies are turning to the cloud for more and more of their software powered innovation and the cloud accelerates that innovation. At the same time for security teams, the cloud presents a massive surface area. In terms of risk of security breaches, there are two things that we do for our customers. The first is how do you prioritize which security gaps are most likely to lead to a breach in the first place? So which vulnerabilities, which misconfigurations, which permissions and entitlements that users and identities have could lead to a breach in the first place. Secondly, if and when attackers do make their way into your cloud estate, how do you detect and respond within minutes knowing that you only have 10 minutes before an exploit is launched once they make their way to the cloud? So that's really the problem that Sysdig set out to solve

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Ping Li (01:29):

For the listeners. We've known each other for at least a decade, and I've had the chance to work with Suresh on multiple occasions in different companies. How did you become a CEO Suresh? Was it like when you were a kid in India, you were like, Hey man, one day I want to be a CEO, or was this kind of a journey that kind of happened on its own?

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Suresh Vasudevan (01:48):

No, actually, so first of all, I'll say all three of the companies that I've been CEO of were Accel portfolio companies, just coincidence or people I worked with.

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Ping Li (01:58):

Good taste.

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Suresh Vasudevan (01:58):

Good taste, exactly right. I was an engineer, I have to say I left engineering and did my business school, and I was a consultant at McKinsey for six years. My last project at McKinsey was trying to cut costs in a paper mill in Indiana, a town that was already decimated by years of cost cutting, and that's when I realized this is not what I wanted to do. So I came to the valley on a whim literally to meet a friend at NetApp and he just said, why don't you just meet a few of the folks at NetApp? And I could not believe the difference between the paper industry in Indiana and Silicon Valley in 98 / 99. So I completely fell in love with the valley, and that's my journey to tech at NetApp. I spent a decade starting in alliances, then ran product management, then ran engineering.

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(02:42): But at the very last two years at NetApp is what turned me on to startups and CEO. So we acquired a company called Decru at NetApp. This was a security encryption company, and the premise of the company turned out to, so first of all, the company grew from one to 20 million in four quarters because Bank of America had to testify in Congress that they had lost a tape with tens of millions of US consumers’ credit card details. And so that just created a frenzy around encryption and security, and that's when we acquired Decru. So it grew extremely quickly. It turned out the technology was better embedded inside file systems and so on. So the company itself had a very quick rise and a quick fall. But those two years I left my role running all of NetApp's product portfolio to run Decru. And at the time we had structured Decru as this independent subsidiary because half of its business was protecting EMC customers, a company that competed with NetApp. And so we structured this as an independent subsidiary with its own sales, its own marketing, its own everything. And I just had the time of my life. I realized then that while NetApp was a fun company, I loved growing up there. My greatest joy was in running the small Decru company. And so that's what I wanted to do next.

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Ping Li (03:59):

One of the things that you've had to do was the founder CEO transition, right? Most of the companies you've been involved and there was a founder and CEO, all three of the companies, all three founder, CEO, they're super talented, very bright entrepreneurs. The founders were always still at the company, highly engaged. They become friends and what makes that work? Because as an investor, that's one of the riskiest things we can do. 

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Suresh Vasudevan (04:25):

I think there are two or three things. One, I think you have to invest an enormous amount of time and as a CEO, the more that you can take the attitude of I am a custodian of what you've built. I'm not taking over from you. It's a partnership. You have to believe in your head that it's a partnership that the founder created this and you're grooming it. And so it's a joint. So I always treat, even now, anytime there's a big decision, even if it has nothing to do with Loris the founder of Sysdig, his domain, I always call him to say, here's what I'm thinking. Even if it's something as completely removed from his daily job as we want to get into Asia and Australia, we found this person and we are going to make a big bet on a new VP where we didn't even have that plan.

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(05:07): Just making up an example, you still want the founder to feel like he's partnering with you in company decisions, not just technology or whatever the founder's domain happens to be. I think that's the first thing is you have to go in saying this is a partner, not someone that's owning a domain of the company. The second thing I think is if the exec team acts like a unit, then the founder sees that there's a group of people that are shepherding the company rather than just this relationship between the CEO and founder. So I find that the most valuable time is in aligning the rest of the exec team.

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Ping Li (05:43):

How do you build the chemistry with the founder? Because I've watched you now over the years, build that trust and you gave some good examples of how you get everyone aligned. But is there things that you do that you would say, Hey, look for a founder going through a transition or a CEO coming into a new situation. Here's things that help build that because at the end of the day, the trust is everything.

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Suresh Vasudevan (06:08):

No, for sure. So most of the founders that I've dealt with come from a product background, and so I think it helps that I have a product background and honestly, my goal is to know the technology and product as well as the person that's running product management or R&D every time, not at the level of code, if you will, but at the level of every function in the product and why is it shaping. And so I think the first thing is investing that time. And then the second thing is I always create a kitchen cabinet around the different functions. So while we have an exec team at Sysdig, for example, my VP of engineering, my VP of product, and our founder, Loris and I probably spend at least 12 to 15 hours a quarter where we are just in open loop brainstorming mode.

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(06:58): And so when you invest that kind of time on a topic that the founder deeply cares about, then automatically there is no more “I can finish his sentences.” He can finish my sentences when you're doing it quarter after quarter, month after month. So I think you just have to invest time and you have to almost be conversant in what they care about. I think that helps as well. And lastly, Ping. I really think it makes a huge difference when the founder believes that you are acting in the same interests as they are. So that's what I mean by you have to believe that the founder is a partner, not that he's reporting to you. And so if you can completely eliminate this notion of who reports to whom and act almost as if they are your partner in building the company and every decision is a shared decision, then I think the guard's go down completely.

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Ping Li (07:48):

Sysdig is one of those classic pivot stories. When we invested in Sysdig in the seed round, it was observability, almost more forensics frankly, than observability around an open source project, Sysdig. And that's not what it does today. Right? Take us through that transition pivots. Everyone loves talking about a starland. They actually rarely work. Having done this for a while. How did you go from one space to another?

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Suresh Vasudevan (08:19):

Yeah, no, indeed.

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Ping Li (08:20):

All the things that needed to happen to actually execute it successfully.

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Suresh Vasudevan (08:23):

So I joined in 2018 and there were two big ahas in the first nine months for me. Two things struck me, and I'll tell you a little story at an offsite that happened at the end of the year. First thing was Prometheus was an open source project for observability that had just come along. And I remember sitting in a conference room in a debate between my founder, Loris, our head of product at the time, and our head of engineering at the time, and the debate was how compatible are we with Prometheus? And the debate was one person saying 70%, another saying 50%. I'm sitting there saying, guys, you just finished telling me that Prometheus is the most impactful open source technology for observability. We are competing in that space. Our customers want to use Prometheus, and you're debating whether we are 50 or 70% compatible, and we know it takes a hundred percent compatibility to it. So problem was that was a problem. The second observation was that we had shaped our product on the strength of some really large customers like Goldman Sachs, Comcast, Experian, and Bucking were among the four largest customers

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Ping Li (09:31):

For observability product.

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Suresh Vasudevan (09:32):

Our observability product. Every single one of them was doing something different with our product. And so the core, what I realized was that, and then we had the security product that was just nascent. The core technology was so powerful that we let individual customers shape the products that we built on top, and we didn't necessarily have a consistent pattern. So that was the reason why we had to step back and say, where do we need to go from a product strategy standpoint? At the end of the year, we had this offsite, and when I asked the exec team guys, we can't invest in both building a full on observability platform and a full on security platform, how would we make a choice? It was a bit daunting because we had two and two people saying monitor, two people saying secure. So as an exec team, we were split in our minds about which way to go. And so that was the backdrop to having to pick, which is we had spread ourselves on many areas, and we knew that we had not just me, this was all of us collectively concluded that we couldn't fund as many areas. The core technology was perfectly suited to threat detection and response. It was a bit of a force fit in the monitoring world. It was much more of a troubleshooting tool. And most of the world first wanted monitoring, not troubleshooting. And so given all of that, security was the logical choice.

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Ping Li (10:52):

And what was the interaction with you and Loris, right? Because Loris created the open source project. 

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Suresh Vasudevan (10:57):

Good news with Loris is that he didn't have this sort of absolutely dogmatic view that it has to be this way and no other way. He is to this date humble in his willingness to learn all the time. And so that helped, his fundamental conclusion was, look, we built this because that's what customers told us to build it. He was the first to recognize the problem we were facing. There were some signals from the customer base telling us we needed to make some hard choices here. The temptation was to let revenue dominate the decision because remember, 95% of our revenue came from the product that we were saying is not our future. I mean, I have to tell you, that was a nerve wracking period because we were basically saying we are going to go completely in a different direction. 

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Ping Li (11:41):

In some ways, pivots are easier when things aren't working.

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Suresh Vasudevan (11:44):

Exactly right. I agree with that. I agree with that.

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Ping Li (11:49):

Let’s jump ahead a bit. So then you fast forward, you make the pivot, you're growing now in cyber, but you now jump from a market where there are a little bit of competition to a market, which is like a competitor every day. You got the incumbents like Palo Alto, you got a different startup every day. And how do you have that challenger mindset and how do you not get beat up, or discouraged?

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Suresh Vasudevan (12:15):

Some days you feel like you do, actually.

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Ping Li (12:18):

How do you keep the winds going? 

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Suresh Vasudevan (12:21):

I think there are two or three ingredients. I think the first one is culture, which is you have to look inward and say, what am I really good at that I really deeply believe will matter to my customers in the long-term? And so you have to have this core strength, core differentiation, core advantage that you believe matters to the market. Because if all you're doing is chasing, then you can't have a challenger mindset. You have to believe that something deep down gives me great strength. Second, I think you need your customers to validate that area of strength. You need so many of these customer validations in the core differentiation that over time, you know, can grow that into a market leading position. So I think to me, that's important. What do you have deep conviction in inside? Because the risk you run, and this is sort of, to be honest, even as I say this, I will say every day you wake up and you look at your competition Slack channels and some sales rep is posting something that your competitor is doing that scares you or that makes you feel like, oh my gosh, why are we not also doing that?

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(13:20): So it takes great discipline to say, here's what we are good at. Here's our strategy for execution and all this noise you need to sort of fight back every day with your deep conviction. And so I think that is the hardest thing. That's what it takes to sort of constantly challenge the status quo.

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Ping Li (13:35):

And how do you keep your team, how do you not get them distracted with, because the big companies can generate a ton of noise whether they have the product or not.

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Suresh Vasudevan (13:47):

Define first where you are competing, make sure you're highly differentiated, make sure you're getting customer validation. And use that to align both your exec team and the larger team to say, this is our domain where we'll win. Eventually we'll get everywhere. Let's make sure we don't lose sight of what our own focus is.

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Ping Li (14:10):

This is your first open source company. It is it. How does that fit into the strategic priorities for the company?

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Suresh Vasudevan (14:18):

When we pivoted to security in 2018, if we did not have something foundational like Falco, that was creating community buzz around Sysdig, and if we just did the old fashioned enterprise push model of we want to move to security from monitoring, I believe 99% probability we would've failed. The momentum that Falco created around Sysdig as an important security innovation company is what allowed us to do the pivot in the first place. And so as I step back, the thing I've learned about open source, it is incredibly powerful in creating name recognition, brand recognition, community followership, the other two or three lessons. The other one that I would say I've learned the hard way is I don't know if too many open source projects that have more than one winner associated with an open source project. I'm just generally of the opinion that open source projects have a one winner to one project relationship.

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(15:19): And so the energy has to be on making the project as successful. The rest falls into place. And so for us, where Falco has been successful is in creating brand pull and brand recognition where we are still learning. So two out of three customers that are today customers have come to us because they know of us through Falco. What we've not yet been able to avoid is they come to us and then we have to do a formal enterprise sales cycle where they go through proof of concept and everything. They don't automatically just upsell. And so the learning I've had is crafting an open source strategy where there's an automatic uplift from open source to commercial. Less than 10% of the companies are successfully able to do that. Most companies can create community awareness around it, and not most many companies create community awareness, but the push from community to commercial success has to be engineered very carefully. And we're still learning how to do that.

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Ping Li (16:19):

How do you prioritize how much you invest in the open source versus commercial, for lack of a better word? Products.

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Suresh Vasudevan (16:29):

First of all, our entire detection and response portfolio does build on the underlying Falco foundation. Got it. And what we've generally found is that by making things available within the open source, it does not create alternate competitors for us in the commercial product, there are customers, large customers like Apple that use Falco on hundreds of thousands of machines that we're still trying to convert. There are customers like Twilio and a whole bunch. 

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Ping Li (16:58):

Always been a tension. 

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Suresh Vasudevan (17:02):

Well, so this is the comment I'd make is we still have deep conviction that the moment these customers get serious about accompanying a detection with an incident response workflow with an investigation forensics workflow, they can't do that without relying on our commercial engine. And so cloud product, everything we do that we contribute helps you with detecting risk. But the moment you think about how do I arm the SOC with actually remediating, triaging, investigating that risk, the commercial product comes into play. And so if it's not today, then a couple of years from now they'll become customers of ours, so we still believe that we are building the engine for them to become commercial customers. So we don't have too much of a conflict on what we've done is consciously said, this is the domain of open source. This is the domain of commercial, and that boundary is not easily crossed. And so we are very comfortable with what needs to go in the open source,

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Ping Li (17:53): What the opportunities have been at Sysdig. A lot has been around the team. And having worked with you for a while now, you kind of obsess about team building. What advice would you give other young founder CEOs on the team building piece? And there's a couple components to that. One is I've always found that you've found the balance between hiring the best people and the best people for the stage of the company. And so how do you do that? How do you make sure you're not reaching for something that's not there, but also you're not settling for?

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Suresh Vasudevan (18:28): I think this is, it's a hard one to accept, but I think if I look back at the last 15 years, there may have been two years where I didn't have an exec change on my exec teams. And so if you think about that, you're changing 10% of your exec team almost every year, sometimes 20% to execs. And so you start with the mindset that someone or the other on my exec team is going to probably change, not for performance reasons. Sometimes it's for performance, sometimes it's for fit, sometimes it's for stage of company. And you buy into that and every year you say, this is probably my two hotspots this year.

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Ping Li (19:03):

So you kind of go in with the mindset. Yeah, this is a constantly evolving thing. Its just never static. So don't over.

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Suresh Vasudevan (19:09):

That's right. In fact, the advice I would offer is the moment you know that there's a change likely in a function, you have to know who's underneath that person. So that's just good prudent thinking, right? If that's an area at risk, who's reporting into that area? Is that strong enough that I can withstand a transition there? And you're almost always asking yourself that in every function. So you almost go in saying there's going to be change every year, which is the most likely area of change, and you prepare for that. That's the first thing I'd say. The second one is I really believe this, every exec on the team should be able to articulate every functional strategy. So you basically create a team. This is painful because I spend an hour and a half in offsites every quarter, sorry, a day and a half.

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(19:56):We do a day and a half in offsites every quarter where we are going through the entire business. We spend probably a day every six weeks reviewing the business where every exec has to listen to, even so engineer has to listen to sales updates, a marketing person has to listen to updates and so on. So the entire exec team is at no point confused about what's happening in any other part of the business thing. And so I think it's really important that if you want the entire exec team to act as if they want, you have to spend that kind of energy on shared understanding of the business across the entire team.

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Ping Li (20:31):

So you expect your head of engineering to know what's going on.

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Suresh Vasudevan (20:34):

A hundred percent. I mean, if I basically were to say to the person running HR, what are the top deals we are working on this quarter? They may not know why the names are what they are and so on. They can give you context into what they are and why they matter to the company and so on. And so I think the entire team needs to be aligned at that level of detail. I feel like in order to make, because even if you go there and say, look, you had five people you're going to hire, I'm going to take those five people because we need to do something in marketing that's really important. Everybody already knows why you're reaching into that wallet. And so everybody's already aware of the trade-offs you need to make. So I believe that's one of the most important things that A CEO could do is to constantly spend time on the alignment.

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Ping Li (21:14):

You're obviously laser focused on the cloud security market. I mean, it's kind of an acronym soup, and it keeps changing and keep adding more acronyms and keep step back. How do you see this cloud security category evolving? How do you see Sysdig shaping that?

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Suresh Vasudevan (21:29):

Really what's happened is there's a consolidated platform thesis that has moved really quickly in the last year. So projects that were standalone for just management entitlements, CIEM is a term that people use for managing entitlements or just manage the risk posture, cloud security, posture management, or just do detection response by workloads, which is CWPP. All of these have quickly morphed into, I want a single platform that's able to do it with that the competitive landscape has expanded well. So it expanded a lot more two years ago when each of them was approaching this from individual lenses. In the last year, Ping, there are companies still around, but the number of competitors that can truly do the whole thing, we shrunk down to about six or seven. Six or seven is too many still in a space, but it's also an early space. We have poured all of our energy into being one of the companies that can have a full platform. So that's sort of where we focused on.

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Ping Li (22:26):

How does AI intersect. 

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Suresh Vasudevan (22:28):

So this is really where I whole think about what excites me about this market. One, it's early two, it used to be the intersection of cloud, cloud and security, two really hot themes. And then you've got this turbocharged third theme, which is AI coming into play. And there's two aspects. One, how do you use AI to make cloud security better? Our founder, Loris basically has given up on almost every other project he's been working on for the last nine months to just focus on how can we use LLMs? How can we use AI to really simplify the problem of how to do cloud security for our customers? So it's things like, how do I change the interface into a conversational interface for everything where I had to learn a workflow, the workflow should be implicit, and what I should be able to do is a conversational workflow.

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(23:18): Second, how do I build a copilot such that I leave the hard tasks to AI to perform? And so ultimately all of this translates into how do I make the security teams far more productive at using our product to solve cloud security problems and frankly go beyond just productivity into using AI to uncover things that I otherwise might not have been visible to me. So that's one aspect. In the last six months, we've had a sudden surge in customers that are saying, I need to protect my AI cloud. And so this is security for AI rather than AI for security, if you will. And so we are getting into conversations around how do we auto discover if I'm in AWS, how do I auto discover all of the assets that comprise my AI investment when I have a compliance breach or when I have a vulnerability on the workloads that are talking to my AI data, how do I make sure that I can prioritize those and surface them to the team that's working on AI as opposed to just the security team and so on. And so both of those have become important aspects of what we're doing in the context of cloud security.

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Ping Li (24:21): Yeah, well, I mean, it's going to be a lot everywhere. Yeah, it's going to be everywhere, and it's going to be in exciting times. Last question, you had a lot of first time CEOs listen to the podcast. Looking back, what advice would you give yourself when you were just starting off as a CEO that you're like, I wish someone told me that, that you've been able to leverage and learn from?

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Suresh Vasudevan (24:42): Yeah. I think, look, I don't know if I do this well still, but it goes back to the challenger mindset. I think the most powerful thing you can do, and the hardest thing to do is you obsess about competition. We are all, basically, I go to sleep thinking about the business. I wake up thinking about the business. This is just horrible. But that's the reality of a CEO. Just you can't turn it off. And so you obsess about the business and so much of what comes at you. You have to remember, if you think about all your press releases that you put out and how it reads to somebody else, you would think you're the next best thing to slice press because all your press releases show you in full glory, which automatically means that when you read your competitive press releases or when you hear sales teams that are losing, explain why they've lost, you're just paying barrage by, am I doing enough?

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(25:37): Right? It can so easily breed a sense of discomfort, insecurity, that you have to retreat your core of what am I really good at? What am I trying to achieve? And so you have to just revisit your convictions all the time. And so that is probably the single most important thing I would say is don't stop paying attention to competition, customer feedback, sales feedback. You have to take those in. But to have the mental fortitude to process them in the context of what you are trying to achieve and not lose sight of what your own goals are is probably the thing that you have to practice most. It's not being good at product or team or market or whatever. It's your own mental fortitude to know how you're going to win in the face of what everybody else is trying to do to win.

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Ping Li (26:23):

Yeah, knowing your true north.

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Suresh Vasudevan (26:25):

North. Exactly, exactly. And balance that carefully with outside inputs and inside inputs.

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Ping Li (26:30):

Well, thank you Resh for joining Spotlight On.

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Suresh Vasudevan (26:32):

Thank you so much,

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Ping Li (26:33):

Appreciate you sharing your journey as CEO.

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Suresh Vasudevan (26:36):

Oh, no, thank you. To Accel. All my startup journeys have been with Accel, and so I'm thrilled to have been part of three different journeys with Accel.

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