Reflection: The Path from $400M to $1B?ARR

These are my reflections at the End of my Year 3 at Cloudera as a Product?Manager

Building a Product Business is a Higher Calling

To me, building a product business that serves society is a higher calling than chasing revenue or market share. Product businesses use non-uniformly distributed pools of resources within society to solve societal problems in collaboration with other businesses. Problems such as providing every human with access to nutrition, financial services, healthcare, internet connectivity, etc, by making effective and efficient use of those shared resources. Building a product business requires empathy for the human condition, appreciation of opportunities to serve and resourcefulness to deploy talent, capital and time in pursuit of an outcome. And in the process, we build an organization that over time earns the right to solve larger problems via growing annual recurring revenue (ARR). To me, ARR is a proxy for the impact that a business has on society. Growing ARR provides clean fuel for the business to solve societal problems on a grander scale.

Crossroad in 2018 → Cloudera

In late 2018, I was at a crossroad in that journey of building product businesses. I had exited my own Performance Management startup (shared in a previous article). In my past jobs, I had grown comfortable driving product businesses along ARR journeys from 0-$10M and $10M-100M. In my next role, I was specifically looking for an opportunity that would provide me with the next level of growth as an executive by driving a business in the $100M→$1B+ journey. I admired and was inspired by the leadership at Cloudera, who were closely aligned with my desire for growth. I joined the company. Since joining, after 3 years at the company, Cloudera is on track to $1B ARR. This blog is a reflection of my time at the company in a product leadership role. It is a reflection of products built, outcomes produced, and lessons learned. Success has many facets, so there are many contributors to this story: R&D Engineering, Marketing, Field Engineering, Sales, Finance, Human Resources and, most importantly, Customers. This blog post is a Product Manager’s narrative of it from inside the ring.

Destination, $1B ARR in a changing market

Back in October 2018, we as Cloudera had approximately $400M ARR. It is well known that scaling a business to a $1B ARR comes with unique challenges- primarily around what aspects of the business need the most focus during the growth- people, organization, technology, go to market, etc. We found ourselves in a situation where we needed to deliver products to an analytics market that was rapidly changing in the following ways:

Better software components

There were more scalable software building blocks available on the market that were enterprise-ready and maturing. The newer software based legos for compute, storage and networking would allow us to build better distributed databases. Specifically, containers and kubernetes had become mainstream, object stores were starting to become common in the datacenter and DevOps was getting more broadly accepted.

Better hardware components

Multi-core processors were also becoming common, memory and SSDs were becoming cheaper, FPGAs were starting to become available in the public cloud and 100Gbe connections were starting to be seen in data centers. These advances in hardware and networking made new software architecture possible, at a new price:performance point that wasn’t cost effective 5 years ago.

Product form factor

The mainstream market for us, the Global 2000, was starting to accept Data Platforms in PaaS and SaaS form factors in production. They had become ready for a cloud native analytics service in a big way since around 2016. What this meant was that we had to open up to new ways to not only build and manage our product offerings, but we also had to find new ways to market, sell and support our products. And see where that journey would take us.

The Journey towards $1B ARR

As I look back at the end of year 3 of the journey, here’s the path we took and this is where we stand today.

A small part of the engineering story

At the beginning of the journey, as an organization we flirted with, learned to use, and finally embraced components from cloud native tech stack from the CNCF ecosystem. As we grew comfortable, we started not only a mere replatforming exercise but we completely re-designed our products in fundamental ways to take advantage of the new stack. For instance, faster networks inside data centers and cheaper SSDs helped us rethink databases in fundamental ways. Including rethinking how non-functional platform capabilities such as High Availability, DR, Security, Performance, Migrations, etc would be delivered.

Product Management

• New Product Interfaces: We also realized that a cloud-native, microservices based architecture opened up new interfaces that allowed us to deliver new composite functionality higher up in the tech stack. These included automating platform lifecycle, breaking down barriers between IT and business, and compressing data-ingest-to-insight cycle times. We built that product. It has rough edges but our early customers love it.
• Managing diverse customer needs: We knew our customer base would split into two. We had those customers who needed more time with our older, on-premises stack and we had others who demanded a cloud native stack pronto. We protected our on-premises business continuing to operate “inside the tornado”. With the forward looking customers, we took a “crossing the chasm” approach.
• Disrupting ourselves: We understood that we had to be comfortable disrupting ourselves. We embraced the idea of “transformation zones” and as a result created an incubator program in the company to fast-track innovation.
• Driving Adoption: We were concerned that driving product migrations in customer environments from our traditional stack to the new stack that we called “Data Services” would be a massive effort. To accelerate adoption, we embraced an intense customer development process and shipped several early prototypes in design partnership with customers. We ran “war rooms” with account teams and messaging workshops with customers. We hired new talent, built new systems and processes to meet our evolving needs. In this way, we accelerated 3–4x what would normally take years to discover product-market fit through painful discovery hell.
• Scaling the great migration: We experimented and perfected workshops, automation and product-led growth as we learned to sell directly to users and migrate in large numbers. We redid the pricing, packaging and messaging (Hybrid Cloud Data Platform) using a broader and simplified value proposition to resonate with customers.

We are tracking well towards $1B ARR! All of this didn’t happen linearly but through many iterations. This way, we eventually found our new voice and our feet in the cloud-native world. We learned to accelerate product-market fit for our new tech stack all over again, from a place of strength. And I am super grateful for these lessons in growing a business along the $400M to ~$1B journey.

The Growth Mindset- Open Employees and Open Organization

Any journey worth undertaking transforms the traveler. Through our journey my teammates and I grew. Specifically, I have the incredible privilege of

• building a high-performing cross-functional team of product-engineering-marketing-sales engineering-finance leads. Together, we protected a large revenue base from our old stack and ramped up revenue from our new stack through weekly sprints,
• owning a business-plan for a product line with substantial ARR tied to it, owning the product strategy and executing against it,
• launching two new products- one on public cloud and another on private cloud- and taking responsibility for the commercial success of the latter,
• building systems and processes- that allowed us to respond in a timely manner to product feedback customers, field engineers, support engineers and partners

Transparency, Trust & Mentoring

Throughout this journey, I came to appreciate Cloudera’s culture of transparency, trust and mentoring.

• Most of the business processes in the company are instrumented. The data is shared transparently with everyone and the leadership team trusts employees with the data to do the right thing.
• Company employees can access literally everyone else in the company. There is clear ownership up and down the org chart as leaders hear out problems, address them and follow through. Employees support each other and there is psychological safety in challenging others for the sake of business.
• I am mentored by world-class executives who have built large companies from scratch and taken them public. I feel honored to have mentees who learn from my experiences. And I am proud to have been instrumental in having several super-talented coworkers get recognized for their contributions to the company. The key takeaway for me in my continuing journey is that no matter what the world throws at my business- merger, CEO change, pandemic, going private- having a culture of disciplined learning, adapting and execution can help my team build a $10B ARR business.

The Future- $10B ARR

In the US alone, one in four adults are unbanked or underbanked. They pay upto 10% transaction cost simply to cash their paycheck. The top 5 US banks are working very hard to make financial services available to every American. That is a societal challenge I can sign up for. Being a trusted technology partner by tech executives in all Top 5 banks in the US and many other markets is a privilege I never take for granted. Among all tech companies I could be working for, Cloudera is unique in the sense that it is the only company that is building compute platforms for a multi-cloud and hybrid cloud world. And that’s not even half the story. Over the last three years, as I tried to shape my products and product business, the journey and my customers ended up transforming my team and myself. This is the beginning for us in many ways as we approach the $1B ARR threshold. If you’d like to go on the journey to $10B and beyond, to $10B- with us, talk to us.

Useful links

• Cloudera Hybrid Cloud Data Platform
• CNCF
• Inside the tornado
• Crossing the chasm
• Transformation zones
• Customer development
• Design partnership
• Product-led growth