The Einstein Way of Choosing Your Next Company, Revisited

Note: This article was originally written in June 2017 and has now been updated with new reflections in December 2023. Connecting the dots after almost 7 years, the described framework for career decision making turned out to be remarkably true. And I have no doubt that it will be so in the future AI world as well.

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I’ve been thinking lately. A lot. And writing.

I’m having a rare opportunity to get some downtime before I embark on the next chapter of my professional career. And I am really enjoying also using it to pen some perspectives.

A few weeks ago, a good friend referred me to a person looking for some career advice. A Silicon Valley native who spent many years as a very successful technologist, the person in question recently graduated from the excellent Berkeley Haas MBA program and was seeking guidance on how to go about his decision-making process as he looked for a “hot fast-growth company” to join.

So, this got me thinking: is there a simple way to determine where you want to go next in your career? In other words, is there a framework for finding the next professional challenge that is simple, memorable and logical?

If you thin-slice the question, it has two parts:

1.????What career do we want to pursue?

2.????What organization do we want to join?

Answering the first question is not for this post. I’ve always believed that the best careers are those at the intersection of DNA and Passion.?This intersection not only fulfills our sense of purpose in a job (you know, where we don’t treat the job as a job), but also enhances our ability to maximize our earning potential.

We need to be realistic about this intersection. For example, I’ve been passionate about music for a long-time (singing and drumming), but as I hum and ratta-tap-tap away, my wife reminds me consistently that my passion and my DNA are mutually exclusive in this area :-) Clearly, the musical performance would never be be a good professional choice for me, despite the undeniable pleasure that I (at least) get from it.

What I want to focus on is the second question that I was attempting to answer for this friend - what organization does he want to join? And this is not an easy one to answer in Silicon Valley. After all, we are in the hotbed of innovation where every well-backed startup with a great idea, or a larger company with early scaling success, has the promise to become the next $1 billion software company. But we know that 99.9% of them don’t get close, and fail along the way due to a myriad of factors involving strategy, execution, culture or acquisition.

Now, people have different tasts in organization sizes – some like large companies with superior scale and processes and others like the “speed boats” that are more agile and innovate faster.

In this particular case, the question was specific to finding the “speed boat” – a fast growing organization with the potential to become the next salesforce.com or VMWare. So here are my thoughts.

Yes, E=MC2?is “my” equation to relatively determine a great “speed boat” organization to join when evaluating the field.

It’s a simple equation that we all are familiar with from high school or earlier.?And of course, for fun and for being epic, I’ve taken the poetic license to borrow from the great Einstein. And while there is no quantum physics to making a career decision, chemistry is surely part of the process.

I understand that this equation may simplify the variables, but I normalized on simplicity vs. comprehensiveness here.?As Einstein himself said, everything should be made as simple as possible, but not simpler.

As I define it:

Excellent Company =?Mandatory Category * Competitive Advantage * Culture

E = MC-squared.

Please let me explain:

1.????Mandatory Category

Every big company was once small. It became big because, as a starting point, the market opportunity for their category was large. In other words, the pond is big enough with lots of fish to begin with. But despite the market opportunity, companies can scale to become a $1 billion behemoth only when their product category shifts from a discretionary spend to a mandatory spend in a mainstream buyer’s budget. Until then, the category faces a “why now” problem – no compelling need to buy. For example, categories like CRM, ERP, marketing automation, middleware, Web conferencing, procurement, etc. have become a mandatory spend in almost all organizations- every savvy business will allocate a budget line item each year to fund these things. In contrast, categories like enterprise gamification, advanced marketing attribution, and time management software may never reach this status.

So the first variable to determine whether the product category for the company is currently or soon to become a mandatory spend for a mainstream buyer.

--------2023 Me: Applying the “M” to my Coupa Experience-------------

Every company makes money, and every company spends money. Just like Customer Relationship Management (CRM) became a must-have category to manage all activities around revenue, so has Business Spend Management (BSM) become a must-have bedrock category to manage all activities around spend. With a $40B+ TAM,? the category is essential for organizations of almost all sizes, regardless of the specific solution chosen.

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2.????Competitive Advantage

If the answer is yes to the previous question on mandatory category, then we have a good problem to begin with – any customer is going to choose some company in this category to spend money on. Here is where the second variable comes into play. Does this company’s product enjoy a unique competitive advantage relatively to all other players? If so, that company’s batting average will be 50% or higher in competitive deals.

Simply put, you have to be #1 or, at worst, #2 in this category - being Coke or Pepsi is going to get you there in the “cola wars,” but being RC Cola is not!?Almost all product categories are eventually subject to the Law of Duality – it mainly becomes a two-horse race, as we’ve see across categories ranging from shoes, phones and soda pop to ERP software, Cloud hosting services and many more. The exception to the rule are companies in winner-takes-all categories like eBay, Facebook and IBM Mainframes, where even second best competitors are utterly crushed early on.

This kind of competitive advantage can be attained through a combination of product innovation, superior go-to-market models or customer experience.?Google achieved this advantage through product leadership, salesforce.com achieved it through a combination of product innovation and go-to-market models, Microsoft mainly thru go-to-market advantages (pricing bundling of Office with Windows plus tremendous channel leverage), and companies like Zappos are achieving it by providing a superior customer experience. And of course, cross-functional execution is the key to convert this advantage into actual revenue.

So the second variable to determine is whether the company is a leader in its category with a superior competitive advantage.

*********2023 Me: Applying the “C” to my Coupa Experience****************

The picture tells the story! Nothing more needs to be said except giving a hat-tip to the thousands of colleagues across the GTM, innovation and customer success functions whose excellent cross-functional execution over the years helped cement this leadership position.??

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3.???Culture:

Here is the most important part of the equation. The grand-daddy variable. If this is zero, it doesn’t matter about the other two variables – the net result is nada. Peter Drucker once said, “culture eats strategy for breakfast.” In this case, I say “culture eats category and competitive advantages for breakfast, lunch and dinner.”

Behind every successful company has been a strong and vibrant culture that was in the foundational fabric of the company’s success.?A culture that: a) is defined by egoless, authentic and strategic leadership at the top, b) driving strong alignment and collaboration across executives and functions on the same set of objectives, c) fostering an environment of empowerment, accountability, recognition and fun.

So how do you know it’s there? You can easily sniff it out while you speak to the employees and ask them to define their culture for you in their own words. You’ll quickly?get a general sense of what are the most important?people attributes within the organization, what principles are consistently adhered to and followed, and what kind of chemistry exists across the organization.

*********2023 Me: Applying the 2nd “C” to my Coupa Experience******

Coupa CEO Rob Bernshteyn instituted a “tree culture” very early at Coupa that became the foundation of daily actions. Paraphrasing Rob: At Coupa, leadership starts at the "bottom" where – like a tree – every leader supports (not manages) their employees. With a strong foundational “trunk”, every leader supports their teams who make up the functional “branches” around the organization. The entire tree is bound by a common set of core values that guide us every day. It is this belief and model that nurtures the tree so it can flourish and grow.

Senior leadership Tree Org. Chart Example from Website in 2021 below (CEO is at the bottom of the tree, the execs are the branches supporting have the leaves of leaders!

You could see this framework institutionalized across the company for all levels - from the leadership page on the Website to the internal org. charts to the internal portals. This leadership mindset was unique, forward looking, and a special part of the Coupa culture. The passion, innovation and personal rewards the culture engenders has been Coupa’s “secret sauce.”??

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So there you go: E = MC2. Relatively speaking, it’s a simple equation to evaluate the next great Silicon Valley company. Hopefully you find it useful as you explore your next career moves and find a place where your particular genius will shine.?

Chandar Pattabhiram

Top 5 CMO to Follow?on LinkedIn

#strategy #career #culture