20VC MongoDB CEO, Dev Ittycheria on Why Sometimes You Have To Be Inefficient To Be Effective, The 2 Different Types of Decisions and How Great Leaders Respond To Each & Why Value To Overhead Ratio Is The Metric To Use When Selecting Investors

In this episode of "20 Minutes VC," host Harry Stebbings interviews Dev Ittycheria, President and CEO at MongoDB, a leading next-generation database company. Dev shares his journey from an engineering background to sales, emphasizing the value of understanding customer problems and building a compelling sales organization. He discusses his transition from venture capital to MongoDB, highlighting the importance of product-market fit, a restrictive licensing model, and a strong go-to-market strategy. Dev also offers insights on leadership, advocating for vulnerability as a strength, and the necessity of embracing bad news to build trust with investors and teams. He advises new board members to be students, not masters, of the game, and underlines the significance of investors who do their homework and maintain conviction through tough times. Looking ahead, Dev envisions MongoDB capitalizing on a massive market opportunity, aiming to increase market share by simplifying data management for developers across various platforms.

• MongoDB is recognized as the world's most popular next-generation database.
• It is the first database company to go public in over 26 years.
• Dev Ittycheria is the president and CEO at MongoDB.
• Dev has a history of leadership roles, including managing director at Openview Venture Partners and venture partner at Greylock Partners.
• He was CEO and co-founder of Blade Logic, which sold for $900 million.
• Dev has experience on boards of high-profile companies like App Dynamics, Athena Health, and Bizarre Voice.

"Now Dev is the president and CEO at MongoDB, recognized as the world's most popular next generation database and the first database company to go public in over 26 years."

This quote introduces Dev Ittycheria's current role and the significance of MongoDB in the tech industry.

• Dev Ittycheria's career began in engineering, though he quickly discovered an interest in the intersection of technology and business.
• His first job was with AT&T, where he enjoyed sales and customer engagement.
• Dev observed challenges startups faced against large companies with strong customer relationships.
• He was inspired to start his own business after seeing the success and enjoyment of other founders.
• Dev's first company was Applica, which merged into Breakaway and went public in 1999.

"I being a good indian boy, I could do anything I wanted to do as long as it was either being an engineer or a doctor. So I went to engineering school."

This quote reflects the cultural expectations Dev faced and his initial career direction before finding his passion for the business side of technology.

• Dev Ittycheria witnessed the tech boom and bust of the late '90s and early 2000s.
• His experience with a company that went public and later failed impacted his approach to building businesses.
• Dev focused on creating operationally sound businesses with the right culture and fiscal attributes.
• These lessons influenced his leadership at Blade Logic and its successful public offering.

"But that seemed, candidly at that time, normal. And what I realized, though, was that when we went public, just felt like the victory dance we had declared victory."

This quote captures the atmosphere of the dot-com bubble and the sobering realization that going public is not the end goal but the beginning of new challenges and expectations.

• Dev Ittycheria advises founders to view investors as partners and to share challenges openly.
• He encourages vulnerability as a strength and a way to build trust with investors and teams.
• Sharing bad news early with the board can lead to better support in resolving issues.
• Honesty with investors is critical, as they can sense when everything is not as perfect as presented.

"I encourage ceos to share bad news quickly. So with my board, I share bad news very, very early, and it does a couple of things."

This quote emphasizes the importance of transparency with investors, which fosters trust and collaboration in addressing business challenges.

• Dev Ittycheria has learned to embrace vulnerability and informality in leadership.
• He has found that admitting a lack of understanding can lead to more candid and productive discussions.
• Good news will always find its way to him, but as a leader, he focuses on addressing challenges.
• His leadership style has become more about fostering open communication and authenticity.

"And informality breeds more candor. And so the temperature in the room goes down, you have more authentic conversations."

This quote highlights the shift towards a more informal and candid leadership approach that has proven effective for Dev in creating a comfortable environment for honest dialogue.

• Bad news travels slowly within an organization, especially upwards.
• By the time bad news reaches senior management, it's often understated and delayed.
• Leaders must create a culture where bad news is shared promptly and openly.
• Quick sharing of bad news can be actionable and build trust within the team.

"But bad news, bad news travels very slowly, especially up the organization. And it's far worse than what people are telling you."

This quote highlights the common issue in organizations where bad news is not communicated effectively to higher-ups, leading to a diluted and delayed understanding of issues.

"So you as a leader have to create a culture where bad news is shared very, very quickly, that people can be comfortable sharing bad news..."

Here, the speaker emphasizes the leader's responsibility to foster a culture that encourages the prompt sharing of bad news for swift action and problem-solving.

• Leaders must embrace and thank employees for sharing bad news.
• Recognizing and rewarding the sharing of bad news is critical.
• Incentive systems should encourage the quick sharing of bad news and taking action.

"One, as a leader, you have to embrace bad news. You have to thank people for giving you the information straight."

The speaker stresses the importance of leaders showing appreciation for honest communication, which is essential for creating a trustworthy environment.

• There are two types of decisions: irrevocable (type one) and reversible (type two).
• Type one decisions require thorough research and deliberation.
• Type two decisions can be made with less information and quickly corrected if needed.

"Jeff Bezos has spoken about this topic, and he describes two types of decisions."

This quote introduces the concept of two distinct decision-making types as described by Jeff Bezos, which informs how a leader should approach different situations.

• Patience is a challenging aspect for some leaders.
• Creating urgency can be beneficial, but inefficiency can sometimes lead to more effective outcomes.
• Leaders should strive for team buy-in, even if it takes longer.

"I'm not the most patient person. It served me well in many cases because one of my strengths is to create a sense of urgency..."

The speaker acknowledges their impatience and how it has both helped and hindered their leadership effectiveness, indicating a nuanced understanding of personal leadership style.

• Leaders who scale well remain students of the game, not masters.
• Being open to learning and admitting a lack of knowledge is crucial for growth.
• Applying past experiences without adaptation can lead to failure in new environments.

"One of the attributes I think it's really important for leaders who can scale is that they're students of the game and not the master of the game."

This quote emphasizes the importance of continuous learning and humility in leadership, especially for those leading scaling organizations.

• Leaders must approach each situation with fresh eyes, not relying solely on past experiences.
• Product-market fit and understanding unique business models are key.
• Embracing the role of a learner can lead to better decision-making and growth.

"Well, I have some guiding principles. One of them is I believe strongly in product market fit."

The speaker discusses their guiding principles, highlighting the importance of product-market fit and the willingness to learn as key factors in their leadership approach.

• The transition to managed services is driven by customer preference for infrastructure as a service.
• Open source companies must consider how to maintain a viable business while providing value to customers.
• Licensing models can protect intellectual property while leveraging open source benefits.

"I think it starts with the customer. I think the customers typically today want to consume infrastructure as a service."

The speaker identifies customer demand for service-based infrastructure as a driving force behind the business model changes in open source companies.

• MongoDB was the originator of its code with no prior art, setting a foundation for its cloud service.
• The company developed Atlas, a world-class managed cloud service.
• MongoDB supports the three major cloud providers: Amazon, Google, and Azure.
• The cloud service began in 2016 and has grown to over a $200 million run rate business.
• MongoDB focused on building a cloud business despite potential cannibalization of its core software business.
• The restrictive licensing model of MongoDB prevented cloud providers from strip mining their IP.

"There was no prior art MongoDB. Two, we built a truly world class managed cloud service through Atlas."

This quote highlights MongoDB's originality in its codebase and its successful development of a managed cloud service, Atlas.

"And three, we believe that it was important to support the three major cloud providers, not just run on one particular cloud, but we support Amazon, Google and Azure."

MongoDB's strategic decision to support all three major cloud providers is emphasized, showcasing its wide availability and flexibility.

• Assessing internal vs. external candidates requires understanding the asymmetry of data available for each.
• Internal candidates are well-known to the company, including strengths and weaknesses.
• External candidates may appear strong but come with less data and unknown nuances.
• Mistakes can occur when gravitating towards external candidates without recognizing internal candidates' potential.
• The quality of a leader's organization is a signal of their ability to scale.
• Dev Ittycheria used the quality of teams to assess leadership upon joining MongoDB.

"The biggest mistake they make is they don't fully appreciate the asymmetry of data that they have between the internal candidate and the external candidate."

This quote explains the common error in hiring, where the familiarity with internal candidates is overlooked compared to the seemingly impressive external candidates.

"A big signal for me is the quality of the organization they're building."

Dev Ittycheria indicates that the strength of the teams built by leaders within the company is indicative of their capability to scale and lead effectively.

• Clear communication and authentic feedback are crucial when an internal candidate is not promoted.
• Feedback should address both skill gaps and motivational aspects.
• It's important to work with the candidate to prepare them for future opportunities.
• Honest feedback helps individuals understand and work on areas that limit their advancement.

"I think it's very, very important to be honest and straight with people, and also not just give them the feedback, but commit to working with them."

Dev Ittycheria stresses the importance of transparency and commitment to developing employees for future leadership roles.

• Beyond funding, entrepreneurs should assess investors' credibility, conviction, and value-add to the business.
• Tier-one investors can enhance a company's credibility with recruits, partners, and customers.
• Investors' homework and understanding of the business determine their support during challenges.
• The network and insights provided by investors should be evaluated for their practical benefit to the company.
• Dev Ittycheria values investors like Roloff from Sequoia for their selective and insightful contributions to board discussions.

"What else do they bring to the table?"

This question encapsulates the broader considerations entrepreneurs must evaluate when choosing investors beyond the financial investment.

"The real test of an investor and a board member is what I call the value to overhead ratio."

Dev Ittycheria discusses the importance of assessing the practical benefits an investor brings in relation to the additional responsibilities they impose on the CEO.

• New board members should learn from experienced members and focus on being helpful.
• Building a trust-based relationship with founders is key for board members.
• Providing unvarnished feedback and supporting founders without overriding their authority is crucial.

"Again, I would be the student of the game and not the master."

Dev Ittycheria advises new board members to adopt a learning mindset and to focus on understanding how to be most helpful to the company.

• MongoDB employs four different go-to-market strategies to cover various customer segments.
• The go-to-market strategies include enterprise sales, corporate inside sales, self-serve business, and leveraging partners.
• Recognizing the size of the market, MongoDB understood the need for different approaches for different customer sizes.
• The company's go-to-market strategy is tailored to efficiently reach and serve a diverse customer base.

"Yeah, actually, we have four different ways we go to market."

Dev Ittycheria outlines the multi-faceted go-to-market approach that MongoDB employs to cater to a broad market.

• MongoDB realized the need to build out various go-to-market channels due to the complexity of selling to large organizations.
• An inside sales team is necessary to navigate complicated decision-making processes within large banks and corporations.
• The introduction of Atlas, a self-service platform, allowed developers to engage with MongoDB seamlessly.
• Self-service has led to a significant increase in leads for the inside sales team, with three out of four leads originating from this channel.
• The self-service channel acts as a flywheel effect, enhancing sales by facilitating initial engagement with potential large account projects.
• A cohesive sales leadership team, marketing, and growth teams are essential for integrating different channels and ensuring they work synergistically to build a durable business.

"And so we just realized that we had to build out these different go to market channels."

This quote emphasizes the strategic realization that MongoDB needed to diversify its sales channels to effectively reach different customer segments.

"And what's interesting now is that self serve channel is creating an amazing flywheel effect for our sales."

The quote highlights the positive impact of the self-service channel on sales, generating a momentum that feeds back into the sales process.

• Dev Ittycheria discusses the importance of understanding why people fail, citing lack of skill or motivation as the two primary reasons.
• The book "High Output Management" by Andy Grove is considered a seminal work on management, influencing Ittycheria's thoughts on leadership and performance.

"Why Angie Guerrero's high upput management to me, that's a seminal book on management and he's the one who breaks down. There's only two reasons why people fail, a lack of skill or a lack of motivation."

This quote explains Ittycheria's perspective on the reasons behind failure and the influence of a particular management book on his approach.

• The Chief Revenue Officer (CRO) is viewed as the de facto head of HR in terms of dealing with people-related issues.
• A significant portion of a CEO's time is spent resolving people issues to drive business forward.

"At the end of the day, 80% of my issues are all around people who's driving, who's going sideways and who's going backwards."

This quote reflects the CEO's focus on managing personnel and their performance as a critical aspect of scaling the company.

• There was a historical bias against investing in East Coast tech companies, with a preference for West Coast startups.
• This bias is diminishing as talent and capital become more globally accessible.
• New York offers unique advantages, such as proximity to customers, easier access to international markets, and a more sustainable cost structure compared to California.

"I think that's changing fairly quickly."

The quote indicates a shift in venture capital attitudes towards East Coast tech companies, signaling a more inclusive investment landscape.

• Steve Walske, chairman of the board at Bladelogic, was a pivotal mentor for Ittycheria, influencing his philosophy on combining product excellence with execution.
• The legacy of PTC's sales force and its impact on MongoDB's approach is acknowledged.

"Steve was really the grandfather of all that and his influence on me and what it takes to be a great CEO was something that I can never repay back."

This quote expresses gratitude for the mentorship received and its lasting impact on Ittycheria's leadership style.

• Ittycheria faced challenges raising funds due to a perceived lack of credentials.
• There is a call to address systemic biases in the tech and venture capital community, particularly for women and people of color.

"But I think there's still some systemic bias in the system about enabling women founders, enabling people of color to build great businesses."

The quote calls attention to the ongoing need to address biases within the tech and venture ecosystem to foster a more diverse and inclusive environment.

• Having children teaches the importance of leading by influence rather than authority, especially with teenagers.
• Patience and the ability to communicate effectively are crucial leadership skills that parenting can enhance.

"You have to really lead by influence because they're not going to really resonate with you telling them what to do."

This quote draws a parallel between parenting and leadership, emphasizing influence over direct instruction.

• MongoDB targets a vast market with the potential to grow significantly by increasing market share.
• The company aims to disrupt incumbent technologies with its modern, cloud-based approach.
• MongoDB has a broad customer base and developer community support, positioning it for future success.

"The market is estimated to be about 100 billion by 2023, and we have little over half a percent share."

This quote outlines MongoDB's ambitious growth targets and the size of the opportunity in the market.

• Ittycheria expresses gratitude for the opportunity to share insights on the podcast.
• The host, Harry Stebbings, reflects on the value of the conversation, particularly regarding the flow of information within organizations.

"Thank you, Harry. It's great to be here."

The quote signifies Ittycheria's appreciation for participating in the podcast and contributing to the discussion.

"I think that was one of my favorite CEO shows that we've done before."

Harry Stebbings's quote captures his favorable impression of the interview, highlighting the significance of the insights shared by Ittycheria.