How to Castrate a Bull E-Book

Dave Hitz

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 255

Veröffentlichungsjahr: 2008

Beschreibung

Dave Hitz likes to solve fun problems. He didn’t set out to be a Silicon Valley icon, a business visionary, or even a billionaire. But he became all three. It turns out that business is a mosaic of interesting puzzles like managing risk, developing and reversing strategies, and looking into the future by deconstructing the past.

As a founder of NetApp, a data storage firm that began as an idea scribbled on a placemat and now takes in $4 billion a year, Hitz has seen his company go through every major cycle in business—from the Jack-of-All-Trades mentality of a start-up, through the tumultuous period of the IPO and the dot-com bust, and finally to a mature enterprise company. NetApp is one of the fastest-growing computer companies ever, and for six years in a row it has been on Fortune magazine’s list of Best Companies to Work For. Not bad for a high school dropout who began his business career selling his blood for money and typing the names of diseases onto index cards.

With colorful examples and anecdotes, How to Castrate a Bull is a story for everyone interested in understanding business, the reasons why companies succeed and fail, and how powerful lessons often come from strange and unexpected places.

Dave Hitz co-founded NetApp in 1992 with James Lau and Michael Malcolm. He served as a programmer, marketing evangelist, technical architect, and vice president of engineering. Presently, he is responsible for future strategy and direction for the company. Before his career in Silicon Valley, Dave worked as a cowboy, where he got valuable management experience by herding, branding, and castrating cattle.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

CHAPTER ZERO

PART ONE - BEGINNINGS

Chapter 1 - BEFORE NETAPP

INTERLUDE - What NetApp Does

Chapter 2 - STARTING NETAPP

INTERLUDE - Redundant Array of Pyramid Hieroglyphics (RAPH)

Chapter 3 - CEO LESSONS

INTERLUDE - Tom Mendoza’s Lessons on Public Speaking

PART TWO - TURBULENT ADOLESCENCE

Chapter 4 - HYPERGROWTH

INTERLUDE - How to Fail in Executive Staff Presentations

Chapter 5 - VALUES AND CULTURE

INTERLUDE - Lawyers Aren’t Evil—Fairness and Morality Are Not Their Job

Chapter 6 - MANAGING ENGINEERS

INTERLUDE - Scientific-Truth and Useful-Truth

PART THREE - GROWN-UP COMPANY

Chapter 7 - CUSTOMERS

INTERLUDE - Shark Island—A Parable of Risk and Mass Media

Chapter 8 - STRATEGIC CHANGE

INTERLUDE - Speckled-Egg Thinking

Chapter 9 - VISION

APPENDIX A - Early NetApp Business Plan

APPENDIX B - NetApp Company Values

Glossary

Bibliography

Acknowledgements

The Author

Index

More Praise for How to Castrate a Bull

“How to Castrate a Bull is two memoirs: one of Dave Hitz and another of the company he created. It tells of how Hitz founded and helped to grow one of the world’s greatest technology companies, playing a key role in shaping the strategy and culture of NetApp through its early growth, the technology bubble, and into the new millennium. His story illustrates how a brilliant founder can stay with a company—playing a crucial role in keeping entrepreneurship alive even as the firm becomes huge and successful. This book tells the human side of that story, made all the more real by the memoir it records of this remarkable person. A must-read for those who delight in seeing genius in action.”

—Bill Barnett, Thomas M. Siebel Professor of Business Leadership, Strategy, and Organizations, Stanford University

“Lots of lessons for entrepreneurs, execs, and ordinary managers from the founder of one of Silicon Valley’s most successful companies. Dave Hitz peppers his tale with light-hearted anecdotes and powerful insights. He’s done an especially good job at describing how NetApp has created one of the country’s most resilient workplace cultures. Highly recommended.”

—Robert Levering, coauthor of Fortune’s “100 Best Companies to Work For” list, and cofounder of Great Place to Work Institute

“NetApp may be the most successful high tech company you’ve never heard of. Dave Hitz is a founder and has written a book filled with insightful examples of the challenges facing any successful organization as it grows. The lessons he learned as NetApp grew from an idea on a cocktail napkin to a $4 billion company are useful to managers everywhere. Moreover, his candor and humor in telling these stories make the book a joy to read.”

—Charles A. O’Reilly III, The Frank E. Buck Professor of Management and The Hank McKinnell-Pfizer director of the Center for Leadership Development and Research, Graduate School of Business, Stanford University

Copyright © 2009 by Dave Hitz

Published by Jossey-Bass A Wiley Imprint 989 Market Street, San Francisco, CA 94103-1741—www.josseybass.com

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Library of Congress Cataloging-in-Publication DataHitz, Dave. How to castrate a bull : unexpected lessons on risk, growth, and success in business / Dave Hitz with Pat Walsh. p. cm. Includes bibliographical references and index.

eISBN : 978-0-470-44267-8

CHAPTER ZERO

I am the product of a tryst in a squalid Times Square flop-house and was raised by a brothel owner and his opium-using wife. I am a high school dropout who started college at fourteen. My youth was spent hitchhiking and cutting the testicles off bulls. I sold my blood for money. I am an ordained minister and an atheist. I once ate dog meat and the still-beating heart of a snake. I made a billion dollars and I lost a billion dollars. I am presently employed as a shaman.

Or . . . I can say that I am the son of comfortable and educated middle-class parents. My father was an aerospace engineer while my mother took care of the three children. I went to college and studied to become an engineer like my father. I earned a computer science degree from Princeton in 1986 and headed off to Silicon Valley to write software. In 1992 I joined two colleagues to start a data storage firm called NetApp, where I still work today.

Both accounts are true. My story, like everyone’s, depends on the circumstance in which it is told.

This book is a memoir of a company and of a man, because both stories are intertwined. NetApp started as an idea scribbled on a placemat, became a real business, and quickly grew to a Fortune 1000 company. Our sales are about four billion dollars a year. I began as a software engineer, became a manager, and eventually developed into a businessman. In a sense, NetApp and I grew up together. Being there from the very beginning has given me an amazing tour through business. I’ve seen—and participated in—venture capital financing, management shake-ups, hypergrowth, going public, economic disaster, strategic reversal, and recovery. It’s rare for one person to survive such a volatile trip, seeing the whole thing as an insider, so I’ve tried to capture my experiences and distill lessons that may be useful to other businesspeople. I also want to tell a story that non-business readers can enjoy.

NetApp sells mostly to large corporations, so it isn’t a household name—even though the company has thousands of employees, billions in revenue, and offices in over a hundred countries. Let me briefly describe what NetApp does. We sell giant boxes of disk drives to big companies that store large amounts of data—Internet e-mail, X-rays and CAT scans for hospitals, design data for new cars and computers—and we help customers manage all that data. If you’ve flown Southwest Airlines, seen Lord of the Rings, or driven a Mercedes, then you are an indirect NetApp customer. Major banks, telephone companies, and retailers around the world use our equipment to track customer records, which covers still more people. (I try to avoid getting too technical in this book, but there are more details in “Interlude: What NetApp Does” after Chapter One. There’s also a glossary for when I do use jargon.)

I care more about themes and lessons than about chronology, but stories lose their meaning without a sense of time, so I divided the book into three parts: NetApp’s childhood, adolescence, and adulthood. Childhood is about getting started, raising money, venture capitalists, and so on—plus one chapter on my own beginnings. Adolescence, in NetApp’s case, was a time of rapid growth in the dot-com boom, and then a sudden, painful end to rapid growth. Adulthood is about becoming a grown-up company, selling largely to other grown-up companies. The bull of the title is a metaphor for risk. In some ways, the first part is about risk, the second about growth, and the third about success, but in fact, all three themes run through all three parts, especially risk.

This is my personal journey as well. In Part One, I am a programmer, spokesman, and company gadfly. In Part Two, I am a vice president with a $100 million budget and a staff of hundreds. In Part Three, I have no direct reports but influence NetApp’s strategic direction by trying to predict the future.

There is more than one way to tell a story; however, this book is the best way I know to relate not just what I’ve learned but—more important—how I learned it. Let’s start with my first business lesson ever:

Don’t listen to my mother.

PART ONE

BEGINNINGS

1

BEFORE NETAPP

On Computers, Colleges, Castration, and Risk

My good fortune to be involved in technology came from not listening to my mother. When I was young, a family friend taught me the rudiments of programming, and I loved it. I read early computer hobby magazines like BYTE and Dr. Dobb’s Journal. At fourteen, I bought a build-it-yourself mail-order computer called an IMSAI 8080. It had binary toggle switches on the front and little flashing lights. I programmed the lights to go back and forth. A television set was the display, and an audiocassette tape recorder was my first storage system ever. This was in 1977, right at the dawn of the personal computing era.

My mother seemed to feel that working with computers was not a serious profession. Perhaps she saw a matchbook cover that read, “You, too, can learn computer repair!” with a picture of some guy fussing with vacuum tubes and his butt crack hanging out. She made her opinion clear: computers were fine as a hobby, like ham radio, but you would never make that your career.

Sordid Details Explained

The 42nd Street Fleabag

I was, in fact, conceived in a dodgy hotel outside Times Square. My parents had arrived in New York on their way to Europe. Bad planning and bad luck conspired to put them up in a low-cost hotel in Midtown. My father told me, “The place wasn’t so bad,” but my mother insisted, “Oh, yes it was,” in that tone of voice that ends discussions. They went out for dinner, and by the time they got back, the drug store had closed.

That night in Times Square had to be my beginning. My father had been away on a business trip for a couple of weeks before, and their trip to Europe was romantically challenged due to a rough ocean crossing that left them both hopelessly seasick.

That was my first trip to Europe, and I don’t remember a thing.

Opium

My mother was on a trip to India, and her tour group came to a little hut in the desert. Mom approached some wizened old men who were stirring a pot of liquid, and one of them cupped some of the fluid in his hand and offered it to her. She asked the guide if she should partake. He told her that it would be the polite thing to do, so she slurped the liquid from his hand. Only then did the guide tell her it was opium.

Computers challenged me, but high school did not. Some might feel that high school boredom is normal. My mother disagreed, and she worked to make education rewarding for her children. My younger sister had learning disabilities, but somehow, whenever we moved to a new location, or my sister graduated from one school to another, a perfect program for her needs was always just starting. Years later, I commented on this lucky streak to my father, who said, “Dave, you do know the reason for that coincidence is because that’s what your mom did with her life?” Many school systems were not aware of the laws about what schools must do for students with learning disabilities. My mother made them aware.

Much later, at a family gathering, Mom was sitting with a particularly staid relative, and I took it upon myself to suggest that she tell us all about the time she did heroin. “It wasn’t heroin. It was opium,” she blurted out. She then reconsidered and said, “I mean, I don’t know what you’re talking about.”

The Cathouse College Fund

While living in Virginia, my parents owned some investment property in Northern California. One day, the local sheriff called my father and asked if a man named Kentucky Wooten was his property manager. Dad had never heard of the man. It turned out that this con artist searched property records for out-of-state owners, rented out their property illegally, and pocketed the cash. He rented the ramshackle house on my parent’s property to an enterprising woman and her two grown daughters, who established the property as the local whorehouse. Evicting anyone in California is tough, but tossing out pregnant women is especially hard. So, for the next couple years, at any one time, at least one of the women was pregnant, staving off any attempt to clear them out. My grandfather, who lived nearby, collected the rent for my parents until my grandmother found out and put a stop to it. Eventually, my parents did extricate themselves from being brothel owners, and later the property paid their kids’ college tuition.

My problem required a different approach: the law protects students with disabilities, but not students with boredom. My mom came across an article in Smithsonian magazine about young teens taking college courses at George Washington University (GW) in Washington, D.C., not far from our home in Virginia. We followed up, and at age fourteen, halfway through my sophomore year of high school, I started college: high school classes in the morning and college classes in the afternoon. I had always planned to be an engineer, like my father, but my adviser at GW felt that a narrow focus was bad for kids so young. For every course in calculus or physics, he made me take one in literature, philosophy, or creative writing. Even for an engineer, writing is a powerful tool; being forced to take classes with term papers was lucky for my later career. Never underestimate the power of a clearly written proposal.

This mix of college and high school worked well, but after a year and a half, my high school principal told me that I needed another year of high school math to graduate. Despite my three semesters of college calculus, he suggested pre-calculus, since that was the most advanced math class available. He also said that I’d never be successful without a high school diploma. That was an early lesson in idiot bureaucrats. I dropped out of high school to go to college full time.

GW taught me to love liberal arts, so even though I planned to be an electrical engineer, I didn’t want to attend an engineering school like MIT or Caltech. I chose Swarthmore College in Pennsylvania because it is a liberal arts school with a solid engineering program. That didn’t work out so well, because engineering prerequisites dominated my coursework. I could share a dorm with nonengineers, but I couldn’t take many classes with them. Always read the fine print.

Even though I was at Swarthmore, I was still supposed to be a senior in high school, so colleges continued to send me applications. One was from Deep Springs College, a two-year liberal arts school located on a cattle ranch and alfalfa farm in California’s high desert. The school had three hundred head of cattle and twenty-six students who worked the ranch when not studying. It looked crazy, but I mentioned it to my uncle, a Russian history professor at Cornell, and he said, “Deep Springs is a great school. If they invited you to apply, you must.” Instead of trying to take liberal arts courses at the same time as engineering, I decided to go to Deep Springs for a concentrated dose. If you keep your eyes open, solutions often present themselves.

Deep Springs College was founded in 1917 by L.L. Nunn, a high-tech entrepreneur of his time. His story is a lesson in business. He was a pioneer in alternating current (AC) electricity, which powered his mine in Telluride, Colorado. In the late 1800s, there was a battle between George Westinghouse, who thought AC was best, and Thomas Edison, who preferred direct current (DC). Westinghouse was right—AC is what we use today—but Edison was a brilliant if unorthodox marketeer. AC was too dangerous, Edison argued, and to prove his point, he traveled from town to town, publicly electrocuting dogs and cats. Search the Web for “edison electrocute elephant” for an unsettling video. Edison even funded an electric chair company—AC powered of course—to promote the link between AC and death. L.L. Nunn convinced Westinghouse that a remote mountain mine was the perfect proving ground for this dangerous technology. It worked, and Nunn converted his mining company into a power company, electrifying mines across the rugged West.

Finding skilled workers so far from civilization was a challenge, so Nunn started a school to train electrical engineers. That sparked a lifelong interest in education, and Nunn later bought a ranch in eastern California, two valleys over from Death Valley, and started Deep Springs College there. Deep Springs combines a liberal arts education with hard physical labor, desert isolation, and student self-governance. Students select the faculty as well as the next year’s incoming class. The isolation and small size—just twenty-six students—create an intense community life. Nunn believed that ranch work helped balance intellectual pursuits. Adolescents reading Aristotle and Nietzsche can get a little full of themselves, but it is hard to take yourself too seriously when shoveling cow manure.

Ranch work can be risky. If someone gave you a dull pocket knife, pointed out a five hundred pound bull calf, and said, “Jump that fence and cut off his balls,” would you do it? If you were fool enough to try, you’d probably end up with a broken arm (best case). Most people intuitively avoid foolish risk. But what if the ranch manager demonstrated the procedure and explained its importance? Castrated bull calves are easier to manage and fetch a higher price at market. Before Deep Springs, I could never have imagined performing rudimentary surgery on a touchy region of an enormous, angry beast; now I’ve done hundreds. Risk can be managed.

People are sometimes shocked that I’ve slaughtered cows and pigs for food. They say, “That’s awful—I couldn’t do it.” But how is paying someone else to kill your food for you more moral than doing it yourself? The reality is, they could do it if they needed to. Ranch life demands self-sufficiency: it includes many jobs that you may not want to do, that you may not even be qualified to do, but when no one else is available, you do them anyway.

Years later, these lessons were surprisingly relevant in Silicon Valley start-up companies. Not the details, but the attitudes and styles of thinking.

After George Washington, Swarthmore, and Deep Springs, I was ready for a break from college. I spent the next two summers as a paid cowboy for Deep Springs. Between the two summers, I rented a room by the week in a seedy part of San Francisco and looked for work.

Short on cash, I spotted a place where you could sell your blood. What the hell, I thought, and got eight bucks twice a week for my plasma. Mom was appalled. My parents were not rich, but they were comfortable. Both came from families that had little money during the Depression, and like many from that era, they were savers. They would have taken care of me, but I wanted to make it on my own.

The state employment agency wasn’t much help for landing a computer job. San Francisco wasn’t as close to Silicon Valley as it appeared on the map, and the job agent knew nothing about computers except that they involved typing. She gave me a test, and I could bang out seventy words a minute, so she sent me to an insurance company where I spent the winter typing people’s names and diseases on index cards. I’d rather have been shoveling shit. A winter of typing at Blue Shield gave me a very clear vision—better than most students have—of why I should return to college.

I applied to Princeton and was accepted as a physics major. Even though physics had been my favorite part of electrical engineering at Swarthmore, I struggled immediately. Princeton had multiple class tracks: physics for nonmajors, for majors, and for honors. I was in the middle track and getting middling grades. Meanwhile, I was taking computer classes just for fun. I talked my way into the “cutter course,” designed to weed out students who didn’t belong in computer science. The professor told me that I didn’t have the right background and would not do well. Eventually he relented, and he later gave me one of only three A+ grades that he had ever handed out. When I got a programming assignment, I would rush home to start work. The problems were like fun puzzles. Physics homework was a painful grind.

Aristotle said that the secret to happiness is to find what you do well and do it. Getting a C- on a required physics course finally convinced me I was in the wrong place. I changed my major to computer science. Thank goodness for that bad grade. Had I been a tiny bit better at physics, I might be a second-rate physics teacher at a second-rate school today. My brain was not wired well for physics, but it worked great for computer science. This was before people saw computers as the path to riches. I didn’t switch to computer science for the money; I switched because I loved the work.

The Secret to Success

Jeff Bezos, founder of Amazon .com, was my roommate for a year at Princeton. He also started as a physics major and switched to computer science. The president of Princeton told me that they were examining the room we shared for the secret to entrepreneurial success. In our senior year, we discovered a mummified mouse in an old couch that we scavenged off the street, and we hung it by a string over the entrance to the room. Perhaps that was it.

After Princeton, in 1986, I moved to Silicon Valley. Résumés are generally boring, so I decided to include “herded, branded, and castrated cattle” on mine, if only to see whether anyone actually read the whole thing. During one interview, I watched the hiring manager read my résumé. She scanned down the page and her eyes went wide. She cracked a little smile and said, “Management experience, I see.”

My first real job was computer programming at a two-year-old start-up called MIPS Computer Systems, which designed computer processor chips. It had about a hundred employees and was growing fast. Too fast. This was my first experience with rapid growth, and it taught me how growth can cause pain and confusion. There were always new bosses, and communication was spotty and vague. Being a programmer at a chip company put me outside the company’s core mission. I wanted to be part of a company where my work was the focus; I wanted to be on the cutting edge. After two years, I decided to leave.

In 1988, I joined Auspex Systems as employee number seventeen. It was my first small start-up, and product development had barely begun. Our goal was to build a network storage system that was bigger, faster, and more reliable than anything on the market—better, in particular, than anything from Sun Microsystems, which was the market leader.

Start-ups have a sort of pulse. You work work work: no customers and a limited supply of money. It’s very creative and exciting because you are inventing from scratch. Eventually, hopefully, it all comes to a crescendo where you ship version 1.0. Then the creative work goes into a lull. You want to ship the exciting new features of 2.0, but first you have to do the bug fixes of 1.0.1 and the minor features of 1.1 and 1.2. But the features that matter most to customers often aren’t the most exciting to design and develop. I had a knack for finding small projects that made the customer’s life better. At a trade show after the 1.3 release, we had a poster listing four new features, and three of them were things that I had thought up and developed. If you focus on customers instead of technology, that lull becomes more interesting.

I went through several bosses at Auspex—I might have been a problem employee—but James Lau was the boss that stuck. Our skills and styles were a perfect match, his strengths aligning with my weaknesses and vice versa. For the past twenty years, James has always been my boss or my partner. I also met Mike Malcolm, who was brought in by Auspex’s venture capitalists (VCs) to help resolve some technical disputes among the engineers. He was like a professor overseeing unruly graduate students, which wasn’t a surprise since he actually had been a professor of computer science at the University of Waterloo in Canada. He had also started and been the CEO of Waterloo Microsystems, an operating system company that competed with and lost to Novell and Microsoft. Together Mike, James, and I started NetApp, but that came later.

In the early 1990s, Silicon Valley was an entrepreneurial wonderland, and for anyone involved in start-ups, it was tempting to start your own. Pen-based computers looked like a great opportunity. They were small, portable computers that you could carry with you all day and operate with a pen. Apple had the Newton, Microsoft had Pen Windows, and there were also start-ups like Go, EO, and Momenta. James and I observed that each new generation of computers created the opportunity for new start-ups. The people who quit their jobs and developed the first programs for PCs or for Apples hit it big. Our idea was to leave Auspex and develop applications for these emerging pen-based computers.

The decision to quit Auspex was hard. We were in on the ground floor, working with people that we liked and respected. Only a small fraction of start-ups even get funding, and of those, only a fraction survive to ship product, never mind getting profitable or going public. So it seemed like a big risk. Then I examined the situation from a different perspective. Several of my friends had left jobs to earn law degrees or MBAs, and nobody viewed that as risky. I figured that starting a company had to be at least as educational as an MBA. So my downside was the same as theirs—a year or two without pay—and my upside was much better, because we had some probability, no matter how small, of creating a successful company.

Castrating a bull is a metaphor for learning to take risk. Dropping out of high school, moving to San Francisco, switching majors, leaving MIPS—all were early experiments in risk taking. Each taught something valuable about what I wanted (for example, a career in computer science), or what I didn’t (a career typing “osteoporosis” and “chlamydia” on index cards). You shouldn’t take risks so dangerous that they might kill you. Or if you must, get lessons first. But even when not deadly, risk should feel uncomfortable, should push you beyond the familiar and safe. An ex-girlfriend arranged a special Vietnamese meal for me: snake prepared seven ways. As the guest of honor, I knew I’d be the one to eat the raw heart. What I hadn’t realized was that it would still be beating when I swallowed it.

The trick is figuring out which risks are worthwhile. Sometimes opportunities arise—but should you grab them? Was it really sensible to leave high school, quit a great job, or jump that fence into the bull’s pen with a dull pocket knife? Those choices all worked out pretty well for me. You obviously can’t accept every risk that comes your way—you shouldn’t—but when I look back at the really significant turning points in my life, they all involved risk. That ex-girlfriend? She’s my wife now. Perhaps How to Choke Down a Live, Beating Snake Heart should have been this book’s title, but that seemed like too much. All in all, the snake was better than the dog meat.

James agreed with me that starting a software company to develop applications for pen-based computers was a worthwhile risk, and the two of us left Auspex in January 1991. One risk that never occurred to us was that Auspex might sue us. Nevertheless, our former boss threatened exactly that. He was upset with us for leaving and said that the other engineers had to understand that leaving was not okay. James objected that our new venture was not even remotely competitive, so Auspex had no grounds for a suit.

Our former boss explained, “You don’t understand the legal system. Maybe I can’t win, but I have more money, so I’ll have better lawyers. If anybody else leaves, I’ll sue you, even if they don’t join your company. I have to stop the bleeding.” That lawsuit never materialized, but the threat left a sour taste in our mouths.

In any case, we didn’t have much luck starting our company. Venture capitalists were very happy to talk with start-up-experienced programmers like James and me; they were curious about what we thought and tried to hire us for their other projects, but they were not happy to give money to two technical guys without business experience or a CEO. Basically, they bought us lunch. Eventually we teamed up with another fledgling venture, but never got much traction. To make matters worse, Pen Windows, Apple Newton, and the other devices were not catching on. Today lots of people use smartphones and tablet PCs, but the hardware back then was too heavy, too bulky, and the handwriting recognition didn’t really work. It was an idea ahead of its time.

It’s hard to be at the right place at the right time, so perhaps the best alternative is to go to the right place and wait there. VCs never gave us money, but we met quite a few of them, which helped us understand how they think. I had saved some money from MIPS’ going public, and we also took some consulting jobs to make ends meet, but my bank account was running low. It was almost a year since we’d left Auspex, and I was unsure what to do, when James called one day and said, “I just heard from Mike Malcolm. He wants to have lunch with us to talk about building toasters.”

INTERLUDE

What NetApp Does