Updated: Mar 25, 2019
This episode features Paul Dawes, CEO of MODE.net, a software-defined private global network company backed by New Enterprise Associates (NEA) and Google Ventures (GV).
Paul Dawes was previously the CEO of iControl Networks, a leading provider of SaaS IoT smart home solutions purchased by Comcast in 2017. Earlier, he served as the VP of sales and marketing at Liberate technologies and Verdisoft corporation. Paul has extensive experience creating, managing and selling innovative technology, products and services. He held a bachelor’s degree from MIT and a Master’s degree from Stanford University in Mechanical Engineering.
Paul shared his career path from a sales engineer to a startup CEO and how to successfully build and lead a team for sustainable growth.
Highlight 1: How to develop products from customers' hints
Highlight 2: Leaders vs. Individual Contributors
Watch the full interview:
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Wenli: Thank you for coming to share with us your experience.
Paul: Of course, I’m happy to.
Wenli: I’d like to start going a bit backward. Where did you grow up?
Paul: I grew up in Tampa, Florida.
Wenli: I've been there. It’s such a beautiful town. Were you there through the entire childhood?
Paul: Yeah. I was there through high school and then I went away for college.
Wenli: When did you see the first computer?
Paul: My first computer was in high school. Actually my dad had an Osborne, so I started playing on that when I was probably junior high.
Wenli: What kind of kid was Paul when you grew up?
Paul: I think even though I didn't know what engineering was, I was always kind of an engineer at heart. I liked to build stuff, I liked to create. I liked science and math, and I liked to do sports and stuff. That was me.
Wenli: In college, your major was Control and Embedded System. You went to MIT and Stanford. You were going to engineering, the technical side, and what made you changed your career path from engineering to sales and marketing?
Paul: I love engineering and I still consider myself an engineer. But I think that in my first job out of Stanford, I was recruited to work in a control and embedded systems company. I loved the technology. I was a sales engineer to start with. I got to go out and meet with customers and helped them solve real-world problems and controls using the software that we developed. And I liked the idea of understanding problems, helping people solve problems. I really liked it. But also during that time, because I was a sales engineer, I got exposed to salespeople and marketing people and customers. And it made me realize that I felt like I could have a bigger picture view of how the whole thing worked, how business worked, how technology worked, if I got some exposure outside of the core engineering that I was doing.
Wenli: Is that a career like combining sales with engineering?
Paul: Yeah, honestly, it's a great way for an engineer who wants to branch out and learn more about the business aspects. It's a great fit. I look at sales engineers as being a kind of critical part of the technology process, because you're thinking about you've got engineers on one side, building stuff. And that's fun, it's great, and it's all about focusing. And then you've got this whole idea that you got to take this thing you built and sell it to people. Because in most businesses, that's part of the process, maybe there's something that you don't sell so hard. But for most technologies, you need to really sell it. If you don't understand how that works, which for most engineers - when you're focusing on stuff, you don't really understand how that works - it's hard to have as big of an impact on the company.
Sales engineering is about taking the people who are really smart and know how stuff works, and getting them in front of customers and helping customers solve problems with whatever products you are selling. In my view, in some ways it’s a hard role, you have to learn a lot about presentations and how to deal with customers and a lot of interpersonal stuff that you don't really get in an engineering school. But I think it's a great transition role for an engineer who wants to make the move from focusing on technology to learning more about business and applying that technology to business .That's the path I took.
Wenli: For some of the engineers in our community who have never been exposed to sales and marketing, what’s the different mindset that you learned from doing marketing, and like as before you were in engineering and would never thought of?
Paul: Good question. I think one of the harder things for me and for a lot of engineers is when you get in front of customers, your job is to help them understand about your technology and want to buy it. So there's a convincing aspect of it. And I think when you start becoming an engineer, like here's ABC equals D, or whatever, it's not like that in sales. In sales, it's like: Okay, you got to listen to what they're saying. There’s a lot of listening. And then there's: How do you apply whatever you're building to their problem, and convince them that it's going to work, and believe it's going to work there. Obviously, you don't want to sell them something that’s not going to work.
And I think that a hard thing there for engineers is crossing that gap, to convince people that what you have is good, and not just looking at a problem and say: Oh, we can't solve that. And engineers would say: That's a bad problem. I've talked to a lot of engineers, they were like: A, B, black, white. That's it. That's not the way the world is. And so someone comes in with a problem, and they're a big customer, and the sales guy sees a lot of opportunities here, and you’re only kind of like: We can't really solve that problem. That's the first thing you want to do. Sometimes that's true. But a lot of times they are like, if you look hard, you say: Well, actually, if we did this and this, and they did that, we can actually solve the problem. And so I think a hard thing about moving out of strict engineering into more of a sales engineering is, understanding how to take feedback in, look at problems and reposition them in a way that you can actually help solve those problems. And that's the goal. The goal is to have to solve the problem, not to walk away and say we can't do it. I think that's a pretty big difference from core engineering.
Wenli: You worked at iControl Network. During the 10 years at iControl Network, you helped grow the company very steady from the team with 10 to 15 people to 200. What kind of challenges did you face?
Paul: There were different challenges along the way. But I'd say that it's the classic in a startup. The first challenge engineers think about is how do I build something. But the first real challenge I think in a startup is, who are you building it for? What market are you trying to go after? Because one of the problems is - it’s give-and-take, you need both - but pure technology building for its own sake, is fun. But often that technology doesn't really apply to a big market, or you haven't thought about how to apply to the market. So I think the early stages of iControl were, first of all, figuring out: That's a cool technology, what's the market we should go after? And why? So that's an interesting problem. And most engineers are going like: How to approach that problem? But it’s just because they haven't done it before. But the reality is, it's like any engineering problem, you break it down into small pieces, and solve the small pieces and get to a bigger picture, as long as you're going the right direction. So you want to understand it. For me, the first step was understanding about the market we want to go after, really learning about it. So you do market, you do research, right? Google, look up, talk to people. So challenges were, I think it started with what marketing should we go after?
Second was, now we figured out the market to go after, which in that case, was IoT, home security, home automation. Then you say: Okay, what do we need to build? How do we take what we have and build it for that market? So that challenge was big with a lot of engineering problems, but it's also customer and product issues, right? It's like talking to the customers and understanding what they really want without assuming they're going to tell you what they want. And that's kind of a hard thing, right? I'm in my experience, customers never tell you what you should build. But they give you hints. And if you take the hints and put them together with enough data and enough knowledge, you can build a great product, and they will say: Oh, this is great. That's the goal. So that was the challenge early on.
Then once we had a product and we're going into the market and we're selling and getting customers, then competition becomes an issue, right? So it's: Okay, you got competitors, and how to deal with that? There's a whole bunch of strategic stuff and learning about how you deal with competitors. Different markets are different, right? And then the obvious one is scale. How do you take these early things and turn it into something big? So all those problems were there. And along the way - fundraising, that's a huge issue. Most asked: Hey, how do you raise money? Well, raising money is sales, right? It's just like selling to customers, you're selling to investors. And so you have to have clear messaging, clear thought patterns, good people, you have to represent your technology and show me you have good technology, all the same stuff for sales, but just in a little different packaging. Those are some of the examples of the challenges we have.
Wenli: Going back to when you said that you actually pick up hints from customers, but customer doesn't really tell you what kind of products they want. Can you give us a clear example of what kind of hints that your company got?
Paul: Let me give you an example of Mode. Mode does private networking. So we offer a totally different way to do private networking. Software-defined is based on some really innovative algorithms came out of Cornell University that the founders came up with brilliant PhDs. So you've got this new networking thing. And the networking thing applies to any wide area network. The logical thing from an engineering perspective when they started was: Hey, let's go work with the Telcos. Telcos have big networks, they have big network problems, let's go work with. So the feedback that we would get from the telcos is: Hey, this is great. Let's go program our Cisco routers, our Juniper routers with this. That's the product you need. The engineers are smart guys, like: Let's go figure this out, put your hands down to do it. But what happens is, the hint we got was: Hey, we see value in this whole control thing you're doing, you're doing it a different way we want to do it. That's a good hint, right?
And there's another hand, which is yes, it applies to our wide area network, that's a good hit. The problem was their direction wasn't right, like, let's go control Cisco routers, or Juniper routers. And the problem with that, it turns out, there's some technical challenges. But more importantly, that's not a market that really makes sense. And if we did that, there won't be very many people to buy it. That’s the whole thing. So as an example, we took those hints and realized: Okay, the control stuff's important, they see that. We wanted to control wide area networks. But let's look at building a product that's geared towards someone who’ll actually buy a wide area network from us, as opposed to someone who wants to take technology and control routers. And so we refocused everything around the private wide area network market in selling directly to enterprise and building a network using this technology, not using Cisco routers, not using Juniper stuff, just using blade servers and put our stuff on. So as the example is they gave us direction about what they wanted. But if we just take in that direction, it would put us in a path that I don't think would be successful. And I don't think our board or investors would think it would be successful, it might be something we want to do longer term, but not now. So we took that and changed it and look at other requirements in the market and said: Ah, this is a better way to go. That's one example.
Wenli: Yeah, definitely a really good example of how you changed the direction of it from the market. I remember Peter Thiel once said, when he invests in a company, he likes to ask the CEO, how do you persuade this number 20 people to work for a company? Because he thought that before the number 20, the first 19 people have already divided all the shares. And when the company grows to 20 to 30, it’s not big yet, but doesn't have the leverage for a startup. How do you persuade people to join?
Paul: It's a good question. The equity side of a startup is important. If your company is really successful, a lot of people can make a lot of money. I think, though, that when you look at a career decision for people in technology, that's one of the aspects of it, right? It is an important aspect, but the others are: Is this cool? Is this like something I want to do? And I would say, I've made decisions not to go places where probably it could have made more money, but wasn't really interested in it. I didn't want to do financial software, right? It wasn't for me. iControl for me was: Hey, it was super cool, doing home automation. Mode became interesting because this was not about equity, it was super cool. They sell this really fundamental math problem. It was a whole new way to do networking, and you've got this giant market, totally change it. All the telcos are going to be doing stuff differently. And fundamentally, we can change the way the internet's run in the long term, right? That was interesting to me. So I think that's true for a lot of people, I think it's when you go to a startup, you want to make a difference, you want it to have an impact on the direction of the company. And there's no better place to do that in a startup. And so the first whatever, there's founders, and there's next set of people. Like Google, I think probably the top hundreds of people made way more money than anyone ever need. So it just depends on how big the scale is. I think that the critical thing is something you really want to do.
Wenli: You joined a startup, Mode, after iControl was acquired. Why did you choose Mode?
Paul: I think startups are super fun. They're very challenging intellectually, challenging emotionally. You get really close with the team. And you get to know people in a way that you don't really have outside of something where we've got a common goal when you're trying to solve a problem with your team. So I generally like that. Mode specifically was interesting to me, because one is, I like the people here. So I definitely like the founder, Nithin and the rest of the team. But I would say that the thing got me was, there's very few startups that I see that actually have a huge differentiation in terms of the core technology. And that's not a bad thing. I mean, I think a lot of the stuff that come out is just their first or their fastest or they thought something different. But in terms of the actual differentiation, like someone else could do it. And that doesn't mean someone else will catch them. It just means they don't have it. Mode has this patented solution to a math problem that is guaranteed to be optimal. And it's a math problem that governs how any network works. And so when I look at that and say: Wow, I've never come across that before. I've never seen a company that has - I call it PageRank for networking. So Google had PageRank, they had a bunch of cool stuff. It's a really smart guy. I'm not saying we're Google. But I would say that I looked at it and said: Wow, this is like, they have this thing which no one else has, this is huge differentiated. And then I looked at the market size, it’s enormous, networking markets, hundreds of billions of dollars. The part they can go after is tens of billions of dollars. So to me, that was exciting. So I liked the people, they got this huge differentiation, it’s a big market. And by the way, tons of problems to solve. So look at it, it wasn't like you just go in there and turn the crank, and it's going to work. It's like, we got to build stuff and figure it out. So for me, it addressed my desire to challenge myself and figure stuff out, build a team and go out to a big market with something that's hugely different.
Wenli: So from my understanding, first of all, the product, and then the market, and then lots of problems to solve. Have you considered about the current team? Or like a working environment? Or the culture?
Paul: Yes. And that's part of any evaluation. So here's the thing: Coming in as a CEO, it's a little different than coming as an engineer, or salesperson. My job is to build the team, typically. And my job is to get the culture going in the right direction, and my job is to identify the markets and all that. So what I say though, for any role coming into the company, there're very similar things I think you want to look at. I would look at it as pretend you're a VC, and you're going to put your own money into this company. Because if you're an engineer, and you're joining the company, or you are a sales guy, you are doing that, the money you're putting in is your time, right? You can only do so many things, you got full time in this thing, you'd be working there six days a week and living there, right? So what are the things that investor looks at the company, and so the things I look at or what we talked about: How big is the market they're going after? How good is the product they have? How good is the team? What's life like there? Because I'm going to live in that environment and kind of work with these guys. Do I respect them? That's the biggest thing. It's less about liking. Liking is nice. I typically like the people I work with. But the most important thing is to respect the people. These guys are all really good; these women know what they're doing. And so for me, that's an important part of the decision. But I'd say most of the other stuff is around what an investor would think about: Hey, do they have a differentiation? What's the barriers to enter for other people? And when I interview engineers - I was talking to do a woman who was interviewing with us. She wanted to know what prevents someone else from doing this? And those are smart questions to ask, and that's what you want to think about. I'm investing myself in this company. Why should I do it?
Wenli: Exactly. Mode was invested by GV and NEA in the series A and B round. I want to know the story behind the investments. How did Mode find them? Any interesting stories?
Paul: This is one of the advantages Mode had, I think that a lot of others don't have, because Nithin and Dr. Kevin Tang at Cornell solved this math problem. There's an IEEE paper that was published, it got down to the industry, people started looking at it, it was a big test, it was run by the National Science Foundation that funded the research and they ran this test. And the test was, this is great. They ran a national network, and they ran the mode algorithm against Google's B4 algorithm. So Google versus Mode. And Mode totally won, blasted three times amount of traffic to the same network. So that got a lot of attention from investors and business world. So investors approached these guys and said: Hey, you should do this. And so basically, Mode got a series A round led by NDA, Forrest, who’s on our board, and as an investor, as a Stanford professor, he knew about this problem. He understood the ramifications of how big the solution was. And so he was the one who invested in it to start with, so that's unique. I'd seen a lot of other companies, you don't have that luxury. You build something cool. Like I'm advising a startup right now, just helping them out and they're trying to raise a series A round. You have to go find out who's the right investors to meet, what's the pitch? What's the messaging? How do I make sure this is packaged in the right way that they can understand the value. That's the sales aspect of it. So that's important for Mode. Mode had a nice advantage. GV came in, and obviously, Google understood about Mode right after the test. So they were talking to a bunch of different investors, and Google really wanted to come in. And so Google let in the round, which was great, And I think like iControl, I went out to a bunch of investors with our Series B, it was hard, because I'd come in after the series A, they spent most of the money and we were now raising a Series B, and going to investors was hard because we didn't have any customers revenue yet. That's a little early. So we had to really show them what the opportunity was, and it worked out. We got Kleiner to come in, and that was great. But I'd say each case is different. The key similarity is you have something that gets people excited, and you can show them value and a big market to go after, and a good team.
Wenli: Yeah, but even though as you said, it was hard, but you raised about $230 million started from 10 years ago. And as right now you are a CEO, obviously still talking to the investors. What are some changes through the years, or have economic condition changes impacted anything?
Paul: Yeah, it's always changing. When we raised our series B, it was 2008. And if you recall, that was not a great time to raise money, it was hard. So the macroeconomic climate meaning whatever's going on in the world markets has a direct impact on how investors are feeling. Think about it this way, the simplistic thing, like investors are logical, and all that. But if your stock portfolio, your personal portfolio is down 40%, and you're going into work, and you got something pitching you on some big vision thing with unclear revenue stream, it affects the way you think about it, right? The flip side is market’s going crazy, Google just went up 15% and you got a bunch of Google stock and someone's coming in, pitching you on some cool thing. You feel differently. So macroeconomics do matter, but the issue for raising is you can't control that. You need to raise money when you raise money and within a certain range, you only have so much runway, so you have to raise. So you have to understand that and tailor some stuff around that. But for the most part you got to come and here I'd say for me, my philosophy is you got to come with core value that's meat and potatoes. I’m a vegetarian but it's like: Look here's what we're going to do, here's our differentiation, here's how we make money, here is how we grow, here is how we re-adjust the market. And you don’t get people who are more longer term investors, saying: Yeah, this makes sense, we want to do it. I can't give good advice on some - there's unicorns and their valuations are crazy, and people are raising $200 million on a story. I've never done that, but I think that's a different thing. I think most investors and most of the companies that are funded are based on a good story, track record, idea, the market understanding of these things, and ability to execute.
Wenli: You’ve been working as a leader for many, many years. How would you describe your leadership style?
Paul: The thing about leadership, and you think about how someone grows from being an individual contributor, which is super important to being a leader, which is super important, the difference is, as an individual contributor, you're looking at how I can best do something like, I did this and I get credit for it, I solved that problem, I wrote that code, I built this thing. And that's fine. That's actually a really fun thing about engineering, is being able to say: Hey, I did that. In leadership, it's much more about: Hey, I helped my team and they did that. And so, it's really about figuring out how to empower all the people that you're leading to be successful. And when I think of leadership, it's mostly leading from the front, it's actually not wanting credit for yourself. The credit for yourself part comes because if the company goes well, great, you did well. But the reality is, it's everybody else in the team who's really doing the work, and you're just trying to help them do their jobs better. And I think that when you make that switch, it becomes like being single or married. When you're single, it's all about yourself, bad or good. When you are married, it is all about your spouse, then you have kids, and it's all about them. And it changes. I think leadership is the same kind of transformations. When you're an individual contributor, it's all about what you do. When you're a manager, it's all about how your team does. And when you're a leader in the company, it's about how the company's doing.
Wenli: What are some of the important things that, for example, for the managers you're talking about, or for engineers or any individual contributors in a company to get promoted? What are the important things that they need to do?
Paul: Whatever job you're given, do it 110%. Your credibility and your ability to inspire other people is based on also how you do it. People look at you. If you're an engineer, you look at someone else, they're sloppy coder, and they don't document their stuff, and they don't share. And people see that, and that affects the way they think about you. On the other hand, if you have the worst job in the company, you have to do whatever you consider to be the worst thing possible: I hate writing code in this area, or I hate working on that module, it has a bunch of spaghetti code, right? If you go into a great job in that, everybody notices. They may not at first, but eventually everybody knows this. And so what I would say the first order of business, do a great job of whatever you do. Second thing is, I think once you've got that, take initiative. And too many times I see engineers waiting for someone to tell them what to do next. And you know what? Part of that problem is the engineering problem. When you go to school, you are told what to do, you don't have a whole lot of choices in what you're taking, right? You are doing this, this and this. So take the initiative and go and do what you think you need to do. Like figure out: Hey, this is the direction we should go and go pitch to someone like: Look, I think we should do this. I'd like to get these three people together and go do it. You may get shot down. But that's taking initiative. That's leadership.
Wenli: Thanks for sharing the leadership. My last question will be, where do you see yourself and Mode in the next three years?
Paul: I think at Mode, we have a huge opportunity and a big market, we've got a very differentiated product. In three years, I hope we are in hundreds of enterprise customers, thousands of enterprise customers, that we have a bunch of service providers using our technology. I think that in three years, we can be very viable cash flow business as well. I think we've got a good financial model. And I think that will be deployed globally with a lot of customers. What I would say is the longer term vision for Mode, I think the Mode technology should really be used anywhere there's internet. Internet routing really can be replaced by what we're doing at Mode. And so I think it's a much bigger play there. But for us, our focuses are on enterprise market. So I think the next three years is going to be all about enterprise success.
Wenli: Thank you so much for coming to share with us your experience.
Paul: Thank you for having me.