All Segments
From the Dot-Com Crash to the AI Era: How Builders Survive Waves of Disruption
30 segments available
What happens when a startup becomes a giant—and then has to reinvent itself all over again? In this episode, a16z General Partner, Martin Casado, sits down with Raghu Raghuram (former CEO of VMware) and Jeetu Patel (President and CPO at Cisco) for a deep, tactical conversation on scaling, disruption, and navigating transformation from the inside. They share hard-won lessons from leading two of the most iconic infrastructure companies in tech—through waves like virtualization, cloud, containers, and now AI. They cover: - How to keep innovation alive inside large companies - Why the best companies operate with a founder’s mindset, even without founders - The difference between selling to buyers vs. practitioners - Why the story is the strategy, and how to tell it at scale - How Cisco is rebuilding its startup DNA in the age of AI If you're building or leading through a major tech wave, this episode is a playbook. Timecodes: 0:00 Introduction 0:29 Mindset Shifts and Weapons of Mass Disruption 2:55 Cloud & Container Disruption 4:18 Cisco's Approach to Market Waves 5:45 Resetting for Innovation at Scale 6:04 Leadership, Teams, and Founder’s Mentality 8:15 Go-to-Market Challenges & Strategies 10:21 Organic vs. Inorganic Innovation 12:34 Defining Insertion Points & Competing in Brownfield 14:05 Structuring for Disruption: Teams & Agency 15:29 Ideal Customer Profile & Product Adoption 19:15 Storytelling as Strategy 19:55 The Consumer/Prosumer AI Wave 22:41 Infrastructure’s Role in the AI Era 25:36 Innovation, Brand, and Scale 27:00 Founder Mindset, Owner Execution 29:55 Truth-Seeking as a Leader 32:26 From Sales-Led to Product-Led 34:14 You Can’t Cash-Cow Innovation 35:42 AI Is Rebuilding the Stack 40:09 Vertical Integration, Horizontal Openness 43:14 Advice for Founders Resources Find Martin on X: https://x.com/martin_casado Find Jeetu on X: https://x.com/jpatel41 Find Raghu on X: https://x.com/raghuraghuram Stay Updated: Let us know what you think: https://ratethispodcast.com/a16z Find a16z on Twitter: https://twitter.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Subscribe on your favorite podcast app: https://a16z.simplecast.com/ Follow our host: https://x.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details, please see a16z.com/disclosures.
Segments Timeline
The Evolution of VMware: Disruption and Resilience
Raghu Raghuram reflects on VMware's 20-year journey, highlighting the dual phases of disruption: first as a disruptor and then facing disruption from others. He emphasizes the importance of maintaining innovation and a founder's mindset within large organizations, stressing that storytelling is integral to strategy.
"If you look at VMware's roughly 20 year history, the first decade was us disrupting and growing and the second decade was others coming after us to disrupt us. Right? When a company gets large, you ge..."
Cloud and Container Disruption: Lessons Learned
Raghuram discusses the significant disruptions caused by cloud computing and containerization, particularly how AWS changed the infrastructure landscape. He explains the challenges VMware faced in adapting to these changes and the emergence of new user classes that transformed the market.
"faced was the first one of course was cloud. >> Yeah. And the second one was um call pallet uh uh containers and kubernetes. Yeah. Right. >> Um in the case of cloud all the same elements were present...."
Cisco's Journey Through Market Waves
Jeetu Patel shares insights on Cisco's historical success in navigating multiple tech waves, including the internet and data center revolutions. He discusses the current AI wave and the opportunities it presents for Cisco to innovate and adapt, while reflecting on missed opportunities in the cloud space.
"iconic company for so long. Um, I mean, it really rode the, you know, the internet wave and then it rode the data center wave. It's been incredibly successful at riding multiple waves. It feels like i..."
Resetting for Innovation: The Founder’s Mentality
Patel emphasizes the necessity of a founder's mentality within large organizations to foster innovation. He describes how Cisco had to reset its approach to maintain a competitive edge, focusing on leadership dynamics and the importance of having executives with startup experience.
"hit the reset button. Um and let me tell you like um what needs to happen when you hit the reset button which is you have to make sure that you you get people who have a founders mentality and >> as e..."
Operating Like a Startup: Speed and Scale
Patel outlines Cisco's mantra of operating like the world's largest startup, stressing the need for speed and scalability in product development. He discusses the importance of having effective practices for different stages of growth, from initial product launch to scaling to significant revenue.
">> throughout like most of the people that are on my leadership team a lot of them are ex CEOs of acquisitions. >> Oh that's great. that we've had that are actually running these pieces. And you have ..."
Navigating Market Disruption: The Role of Frontlines
Raghuram and Patel delve into the complexities large companies face when adapting to market disruptions. They discuss the challenge of losing touch with front-line users and the necessity of retooling go-to-market strategies to cater to new customer bases, emphasizing the importance of innovation in response to disruption.
"the level. >> Okay. So let's dig into this very specific I I think many people don't appreciate how complex this exact thing is for a large company. So actually you said something that I think is exac..."
Organic vs. Inorganic Innovation: Finding Balance
The conversation shifts to the strategies of organic versus inorganic innovation. Raghuram shares insights on VMware's successful approaches to both, highlighting the importance of aligning product development with market needs and the challenges of navigating different buyer personas.
">> you know what's so interesting about VMware it's one of the few companies that that actually did both pretty successfully like VSAN was storage >> exactly >> you pulled it off I don't know how and ..."
The Importance of Market Fit: Lessons from VSAN
Raghuram discusses the lessons learned from VMware's VSAN product, emphasizing the need for a strong market fit and the importance of targeting the right buyer. He reflects on the iterative process of refining their approach to ensure successful product adoption.
"compute >> but it's a different buyer right is it is it you tell me I mean you're the expert >> yeah in fact we had two iterations on VSAN right initially we said hey let's go after the storage buyer ..."
Defining Insertion Points in Brownfield Markets
The discussion focuses on identifying clear insertion points in established markets, emphasizing the need for companies to coexist with incumbents before attempting to displace them. The speakers stress the importance of an open ecosystem mentality for successful market entry.
">> Just to finish that thought in the case of networking as you all know >> Yeah. It was a different way of operating a network, right? So that was the value proposition. Not necessarily 10x better. I..."
The Role of Incubation Teams
The speakers explore how Cisco structures its innovation efforts, particularly in the context of AI. They discuss the concept of 'two pizza teams' that operate with autonomy and support from leadership, and the importance of defining an ideal customer profile for successful product launches.
"first before you can displace and so that requires a very open ecosystem based mentality which large companies sometimes can tend not to have. So, one thing I've seen fail consistently, again, like yo..."
Building Momentum with Ideal Customer Profiles
In this segment, the importance of establishing an ideal customer profile (ICP) is highlighted. The speakers explain how starting with a focused market segment can lead to product-market fit and eventual expansion, countering common misconceptions in large organizations.
"structuring it? >> So we the way that we structure it is you you'll think of a two pizza team initially that you start with >> really small >> and that that team has agency that has air that team has ..."
Overcoming Internal Resistance
The conversation addresses the challenges of internal resistance when launching new products within large companies. The speakers share strategies for ensuring that new initiatives are not prematurely dismissed by sales teams and the importance of aligning product readiness with market expectations.
">> Yeah. >> For making that thing successful. >> Yeah. >> And when that happens you start to see, you know, kind of a snowball effect start to occur. But it takes a while. Like one one of the things w..."
The Power of Storytelling in Strategy
The speakers emphasize the critical role of storytelling in unifying large organizations. They discuss how a single, coherent narrative can galvanize employees and drive momentum, drawing comparisons to successful companies like Apple.
">> Yeah. >> And so just being very clear on where you're going to actually make sure that you So what we do is >> Yeah. >> When now when you have an incubation team, they they have two jobs. Build a g..."
Galvanizing Teams Through a Unified Vision
This segment highlights the importance of a unified vision in large organizations. The speakers reflect on how Cisco is regaining its competitive edge and employee morale by fostering a clear narrative and encouraging a winning mindset among its workforce.
">> I think the term ideal customer profile sometimes, especially in larger companies, misleads people into thinking about, oh, my customer is JP Morgan, my customers, Home Depot, etc. That's an ideal ..."
The Story is the Strategy
The conversation culminates in the assertion that 'the story is the strategy.' The speakers discuss how a compelling narrative can align a large workforce and drive innovation, particularly in the context of the current AI wave and its implications for the tech industry.
">> And most people want to come into the office wanting to win. Like it's not like people like I'm going to book it in. But what ends up happening is when you have 95,000 employees, you can tend to di..."
Navigating the AI Wave: A New Approach
This segment explores the unique challenges posed by the current AI wave, contrasting it with previous technological disruptions. The speakers discuss the necessity for companies to adopt a fresh perspective, focusing on first principles rather than relying on outdated models. They highlight the shift in buyer dynamics, emphasizing the need to understand the end user directly in this evolving landscape.
">> That is the strategy. Yeah. >> Right. Because human beings suddenly 95,000 people together >> are not going to understand it's five bullets. Right. It is the story. So something that's unique to th..."
The Broken Chain of Selling
The conversation delves into the complexities of selling in the AI era, where traditional buyer-seller relationships are disrupted. The speakers argue that companies must rethink their strategies, as the end users are now individuals with direct purchasing power, rather than just intermediaries. This shift requires a reevaluation of how products are developed and marketed.
"where the buyer is not just like ICP for you know it's the actual consumer. Is it like you sell to the people who sell to them like >> Yeah. Yeah, I mean I think firstly the biggest danger I would say..."
Infrastructure's Role in AI Success
In this segment, the speakers discuss the critical role of infrastructure in supporting AI advancements. They emphasize the need for efficient networking and low-latency systems to ensure optimal performance. As AI applications grow, the demand for robust infrastructure will increase, positioning companies like Cisco as essential players in the AI landscape.
">> So I mean I think this is the new skill to learn for companies to learn as well. Yeah, >> you've got to especially infrastructure companies or um application companies, you got to almost ignore it,..."
The Future of AI Infrastructure
The discussion focuses on the evolving demands of AI and how infrastructure companies must adapt. The speakers highlight the importance of safety and security in AI systems, as well as the need for scalable data solutions. They argue that understanding usage patterns will be crucial for infrastructure providers to meet the growing needs of AI applications.
"leverage if every user uses something, the network tam grows. And so I'm just kind of curious. I mean, so like one option for Cisco is like whatever you have a new data center, we'll sell you a new sw..."
Reviving Innovation in Established Companies
This segment addresses the challenges faced by established companies in maintaining innovation. The speakers reflect on a period of stagnation and the importance of re-engaging with customers to communicate recent innovations. They emphasize that scaling innovation efforts is essential for staying competitive in a rapidly changing market.
"inferencing and your your capacity of network appetite is going to go up quite exponentially because if you have a,000 employees and you add 10,000 agents, that's like having 11,000 employees. That me..."
The Founder Effect in Transformation
The speakers discuss the unique advantages that founders have in navigating company transformations. They highlight how founders possess the authority and credibility to drive change effectively. The conversation also touches on the challenges faced by non-founders and the need for them to establish early conviction in their strategic bets.
"customers get frustrated and for about a six sevenyear period we had just stopped innovating and I just don't think it was that um that that productive for us and and then getting back out to innovati..."
Owner's Mentality vs. Founder's Mentality
In this segment, the importance of adopting an owner's mentality is emphasized as a key to successful leadership. The speakers argue that being impatient and proactive is crucial for driving change, regardless of whether one is a founder. They discuss how this mindset can lead to effective decision-making and a strong commitment to the company's success.
">> what they know the team you know they are product focused >> they have the model authority >> they have the moral authority they have support from the board I mean it's just you know so they can th..."
Owner's Mentality vs. Founder’s Mentality
Jeetu Patel shares his perspective on the owner's mentality, which he believes is more crucial than being a founder. He stresses the importance of impatience, a focus on market needs, and the avoidance of mediocrity. Patel highlights the challenges of seeking truth in large organizations and the need for direct communication to address failures and drive improvement.
"Founders have a better ability to do that because of the fact that they are founders and they're natural entrepreneurs. >> Yeah. >> See, I maybe I I have a slightly different like I I agree with every..."
Navigating Truth in Large Organizations
The conversation shifts to the difficulty of finding the truth within large companies. Raghuram and Patel discuss how organizations can create distorted versions of reality and the importance of having candid conversations about failures. They emphasize the need for a culture that encourages direct feedback and critical discussions to foster continuous improvement.
">> The other thing is I think finding the truth is especially hard in a large company. Yeah. >> Um, and that's another place where I think founders can get to the to the bottom of things more easily. ..."
Creating a Safe Space for Innovation
Jeetu Patel recounts his experience implementing design reviews at Cisco, emphasizing the importance of creating a safe space for open dialogue. He describes how removing titles during discussions led to a more collaborative environment where the best ideas could emerge, highlighting the need to prioritize ideas over hierarchy in large organizations.
"give you an example. When I first joined um you know I said let's start doing design reviews with the WebEx team and like what what are you talking about? Like you know this is a member of the executi..."
The Product-Centric Transformation
The discussion turns to the necessity of a product-centric approach in navigating transformations, particularly in the context of AI. Patel explains how Cisco has shifted from a sales-led to a product-led company, emphasizing that a strong product is essential for market success. He argues that innovation must be continuous and that companies should strive to improve incrementally every day.
"have to make sure you fight that that urge to say rank wins. It's like the best idea has to win. >> Yeah. It just occurred to me. I don't know why it didn't occur to me before that both of you are pro..."
The Imperative of Continuous Innovation
Raghuram and Patel discuss the dangers of complacency in large tech companies. They stress that failing to innovate leads to long-term decline and that companies must continuously outdo themselves. They advocate for a culture of improvement, where even small daily enhancements can lead to significant advancements over time.
"sure that there's enough pull. And I I feel like we are probably 70% of the way there now at Cisco where everyone originates by thinking about what's the product and how are we going to add value. >> ..."
AI's Impact on Infrastructure and Market Potential
The conversation shifts to the transformative impact of AI on infrastructure. Raghuram explains how AI changes every layer of infrastructure, from compute to storage, and predicts a significant increase in market size due to AI applications. He argues that the potential for infrastructure growth is much greater than previously seen, emphasizing the need for vertical integration in this evolving landscape.
">> It does. It's like just keep innovating. And it's a very simple formula. Just just keep outdoing yourself and doing better every day. And I we have this line internally we use just get 1.27% better..."
Partnering with Competitors
The discussion shifts to the importance of collaboration in the tech industry, particularly in AI. The speakers share insights on how Cisco has successfully partnered with competitors like Microsoft Teams, leading to significant revenue growth. They stress that integrating with major market players is crucial for survival and growth in a competitive landscape, especially as AI continues to evolve.
"infrastructure scale like you you will you will ind probably two to three orders of magnitude and I think one of the things that we are um extremely obsessed about is uh it's really important when you..."
Navigating Disruption: A Founder’s Playbook
As the conversation wraps up, the speakers provide a six-part formula for building a successful company amidst disruption. They emphasize the importance of timing, market size, team dynamics, product quality, brand identity, and distribution scale. The segment concludes with a message of optimism, encouraging leaders to embrace disruption as an opportunity rather than a threat, highlighting the ongoing relevance of human value in the age of AI.
"get even more and more prominent. >> That is a great that's great advice. That's why I asked Ragu whether I could insert into the hypervisor and he ended up buying the company. >> Yeah, that was the o..."