01:09:53 · Varun Badhwar, Siddhartha Ahluwalia
You're buying this because it's an important problem to solve and you haven't been able to solve it fast enough or well enough. And now you'll put this founder and this company under this individual. And I think all of that is so wrong. Because one, you take the entire existence of the company, is the culture and the operating rhythm that the startup has created to work together. And you shouldn't, on day one, split it up and break it. Maybe there's a day and time to do that. But I think for until stabilized, you need to keep that unit as tightly coupled as possible to keep doing what they're doing while it's they integrate into your acquired company. The second thing is there's something to be said about the founder hustle and the founder mindset. And like there's instincts, there's a reason you were successful and the big company wasn't. And so I think you have to be very careful in the dynamics of who's leading what part of the business. And I think going kudos back to Nikesh and Palo Alto Networks, they were very good at making sure the founders were leaders of whatever this business was they were acquiring and were continuing to lead to the greatest degree possible their integrated teams, as is, with maybe more fuel, more capital, to scale faster. Like the first thing wasn't break down the company, first thing was scale it 10 times faster and then go figure out the right natural multi-year uh evolution of the organization. [01:11:17] S1: So, so in your case, did you have a relationship with Palo Alto much before the acquisition happened?
01:11:17 · Siddhartha Ahluwalia, Varun Badhwar
[01:11:17] S1: So, so in your case, did you have a relationship with Palo Alto much before the acquisition happened? [01:11:23] S0: Uh not besides when they bought my biggest competitor, they had also talked to us and perceived us to be too small at the time. So, so no, we didn't have a actually my whole most of my rule on that one failed. That was just a very unconventional um acquisition, to be honest. [01:11:40] S1: So, why did they they they buy RedLock when they had already bought the computer? [01:11:46] S0: Uh because we were kicking their butt in the field. Like we were we were a better long-term architecture that was multi-cloud. Um and and frankly, I think that was one of the core pieces of like our architecture was much more extensible. Like you could build, sell, and scale a lot more capabilities on the uh Redlock architecture than the evident I.O. architecture. I would say that's probably where it came down to the most. And of course, the results in the field. Like Palo Alto customers were preferring Redlock. [01:12:26] S1: So they were hearing from their customers. I think that's the best way. [01:12:30] S0: That's right. [01:12:30] S1: When you are able to beat them at their customers, which is a very tough thing to do for a younger startup. [01:12:36] S0: Yeah. [01:12:36] S1: With only $10 million raised. [01:12:38] S0: Yes. [01:12:38] S1: But today Palo Alto is a very different beast from that point in time, right? [01:12:44] S0: Yes.
01:12:44 · Varun Badhwar, Siddhartha Ahluwalia
[01:12:44] S0: Yes. [01:12:46] S1: In your opinion, because you acquired nine companies for Palo Alto, right? What makes Palo Alto so successful? [01:12:55] S0: I think all the mistakes that I said most companies make, they don't make those mistakes. They keep the units as closely together. If you listen to a lot of Nikesh's public wisdom on MA, he says the same thing. Usually the founder of the business, the CEO, or the founder specifically, will get to lead this business inside of Palo Alto Networks. They will keep the unit as closely intact as together as they can. I think it's really the mindset. The mindset's not, hey, we're the bigger guys, we know what we're doing. It's like we bought you because you're doing something right that we couldn't do. And we want you to show us how it can be done even better at a bigger scale here. And we'll give you the resources. Like, think of it as you got a growth stage investor with a blank checkbook that's going to allow you to do everything you can with a long-term play in mind. [01:13:47] S1: But but then uh every founder that Palo Alto acquires would stay for an infinite period of time. Because if their incentives are aligned, they're getting infinite capital. Why would they then go out?
01:13:47 · Siddhartha Ahluwalia, Varun Badhwar
[01:13:47] S1: But but then uh every founder that Palo Alto acquires would stay for an infinite period of time. Because if their incentives are aligned, they're getting infinite capital. Why would they then go out? [01:14:00] S0: Because remember, I told you at some point, it's unsustainable for Palo Alto to can't run 25, 30, whatever acquisitions they've done as 25 business units. Some point these things at their natural point come together. And look, that period of time is usually finite, two to three years. Um I will say though, a lot of founders there have stayed on. I stayed beyond my retention period and golden handcuffs period. Others I know have stayed beyond. So I will say Palo Alto is probably, by the track record, most successful at keeping founders around and motivated and excited to do what we do. It's one thing to be on payroll and just be there. It's another thing to be adding value and making a dent. And I think a lot of people are very motivated, Palo Alto, to I think they've had the highest success rate in terms of odds of acquisitions that have done well. [01:14:54] S1: So let's say if you start at some point of time acquiring companies at Endor, you would follow some of these principles. [01:15:02] S0: Yeah, I think so. Totally. [01:15:06] S1: Now, you know, one liner's question on rapid fire. What's one thing about AI you have changed your mind this year? [01:15:16] S0: Um it's more real and more impactful than you know the pessimist side of me wanted to believe. [01:15:26] S1: Three AI tools that you are using right now.
01:15:26 · Siddhartha Ahluwalia, Varun Badhwar
[01:15:26] S1: Three AI tools that you are using right now. [01:15:30] S0: Um Claude Code, of course. Um also codecs. And um we have a new tool we use in marketing that is showing very promising results, which is called AirOps. [01:15:49] S1: One interesting GTM hack that we never discussed during the podcast. [01:15:54] S0: I think I think it's just as a founder, you never get away from being the best sales development rep in the company. [01:16:01] S1: Uh founder, slash operator or slash investor, you wish that could be part of your team. [01:16:06] S0: I think Nikesh is phenomenal, as I said, right? Like I think his instincts on some things are incredible. [01:16:12] S1: God. A book that you would recommend for every founder? [01:16:16] S0: Uh I'm not a big book by book guy. [01:16:18] S1: Or a podcast or anything. [01:16:22] S0: I think in the AI world right now, I'm I was very skeptical about the all in podcast. And I think now and now recently there's just more insightful things coming out of there about just as a business, as regulation, as macro to think about. So all in podcast is kind of back on the top of my list again. [01:16:39] S1: Well, thank you so much, Varun. I enjoyed a lot this conversation with you. I learned a lot. [01:16:43] S0: Thank you so much for having me. [01:16:45] S1: It's been a pleasure. Thank you so much. [01:16:47] S0: Awesome.