Diane Greene’s Advice to Female Entrepreneurs: You Too Could Start a VMware
[Corrected, see below] Female technologists and CEOs are still rare in Silicon Valley, but Diane Greene has been both—and she’s been far more successful at it than most males.
Trained at MIT and UC Berkeley, Greene was the co-founder and founding CEO of Palo Alto, CA-based VMware, which introduced a layer of virtualization between hardware and software that allowed computer users to do something new—run multiple operating systems on the same machine in a way that makes the machine run more securely and efficiently.
The idea was based on research done by her husband, Mendel Rosenblum, an associate professor of computer science at Stanford, and it turned into a multibillion dollar market for VMware. When the company went public in 2007, it was Silicon Valley’s biggest IPO since Google’s.
Greene left VMware abruptly in 2008 over an apparent disagreement with VMware’s parent company, EMC. She was replaced by Paul Maritz, a former member of Microsoft’s Executive Committee. (Xconomy’s Greg Huang has a piece today about EMC’s merger & acquisition strategy.)
But Greene has continued to invest in companies and to advise entrepreneurs, and she’s now considering starting another company, she said in last night in an interview with Xconomy. Lately she’s been clearing her calendar so she has more time to think.
Greene spoke in San Francisco on November 4 at Women 2.0 PITCH Night—an event for female entrepreneurs to pitch their startups. Her most important achievement at VMware, she told Xconomy, was to create a culture where every employee in the company understood how important their work was and felt compelled to excel—although she wishes she’d introduced employee training earlier.
Here are excerpts from her public conversation on how VMware got started, followed by remarks on what other entrepreneurs could learn from her experience.
Diane Greene: We started the company with some graduate students from Stanford, and right off the bat, one of the grad students was saying, we need a killer app. We need to build a virtualized web server, or get a consulting contract with a server vendor.
But we had this strong vision and knew we had to get to that. It’s a lot of small steps – we couldn’t just jump right to the server. So we explained why we had to start on the desktop.
And then I wanted to get validation from friends I respected. There was a guy I know who has a PhD from Stanford, who had built three companies, and I thought, I’ll have dinner with him and tell him. He was not impressed. I was saying, you can run multiple things on one machine, and he said, I’ve got a great big house, and when I need to run something, I put another machine in a room in my house and I’m fine. Why would I ever need this? He knew this was a silly thing to say, but it was hard having somebody you respected say that. I said, but this is valuable.
Then there were other problems. The first time we ran the system, we were running Windows on Linux, and it took six hours for Windows to fire up. That was a show stopper.
At that point I said, we’ve not spent that much money—we could give it back. We had angel funding, and we could give it back. But we persevered.
[Correction 11/9/10: Due to an editing error, an earlier version of this story identified Xconomy as the questioner in the following five exchanges. In fact, it was the moderator at the Women 2.0 PITCH event.]
Q: So a lot of entrepreneurs here have impossible ideas, and you thought big and pushed yourself. What advice would you give to entrepreneurs who feel their ideas are unrealistic?
DG: …When you start a company you become a world expert. You learn everything you possibly can, and when you talk to different people, you have to remind yourself, they’re not the world expert. They showed up for dinner, and when they criticize your idea, you have to say, why are they criticizing it? You realize they haven’t been thinking about this, all day every day. Sometimes their criticism helps you refine your idea, and sometimes you have to take it with a grain of salt. They don’t have expertise.
In terms of a big idea, I think you can have a small idea and develop it. One thing that’s really fun to do is see how it can become a giant business—that’s the most fun kind of idea. But just because it’s a giant idea and you can see a big business, that’s doesn’t always mean you have to start out in a big business. I’ve done three startups and with all three, I had a big idea but started small, with a constrained subset of the big picture and the view that you create value every step of the way.
That’s why it was so terrible that it took six hours for Windows to boot on Linux. That was part of our value. It’s reverse engineering—you work backward to a small valuable thing you can do that’s a tiny subset of the big picture.
Q: I like that—are we thinking large enough? What are some places that people in this room could get into?
DG: I don’t have a good feel for who’s here, so it would be fun to get questions from you. The consumer space is leading now, and consumer migrates into the enterprise, like mobile and location and social networking and mapping. It’s a time when the pace of change is mind boggling, and the pace at which you can get to market and get a large number of customers…It’s so inexpensive to start a company. You don’t need capital equipment, and you can rent people from all over the world to build a product if you write a spec. I’m not sure companies fail as fast as they become successful, but there’s amazing viral adoption.
Q: What would you say to entrepreneurs who pursue different startups and move on?
DG: I think it’s fine to fail as long as you learn from your failures. I do think that when you go to do a company, two parts had better be there. One is the idea, the legs it has and how you see bringing it to market. The other is how in the world you reach customers and what will make them buy this product…When we built VMware, it was easy to adopt and totally non-disruptive…If you do all those things and still fail, an unforeseen thing has hit you, and there’s no shame in that.
Q: How important is the team?
DG: You want the best team possible…It was religion for me that the bar was kept very high. That made it really hard to hire people. It’s very hard in the beginning to find great people that see your vision until you’re more permanent.
Q: So how do you put a good team together, and what do you look for?
DG: There’s a startup I’m helping, and I told them they needed someone to come in—they’re 10 people—and organize them, to figure out how to handle hiring and paperwork and reimburse people and keep food in the fridge and keep track of expenses. That’s valuable if you have explosive growth.
Q: (from the audience) Who was your first customer?
DG: We had a big vision for an enterprise server product, but decided to roll it out on the desktop. We would get a lot more users and generate a lot more awareness of the product to spread it at the desktop level.
We decided to launch it at Demo, but we didn’t know how to do it. Somebody told us a marketing consultant could help us, but this person told us they didn’t think we could get in to Demo. We were a little depressed…but we got into Demo and got on stage and it worked out well.
We put (the software) up on our Web site – we made a fully functional product that people could download on the Web. We got 75,000 downloads, which was big then. It was a radical idea at the time. People usually inhibited their products, but we said you could run it for 30 days for free and let them renew it as many times as they wanted. That was our beta.
Then we put it up for sale—we did everything online. When we actually started selling, we were cash- neutral from the first day. We didn’t build a sales force until we’d been shipping a product for six months. Also we did customer support only via e-mail, so we didn’t need people answering the telephones. We still had to buy servers, but it was a couple of years before we offered phone support.
But I think it’s an execution game. There are so many things you can do today to get you to a customer base, with the access everybody has.
I think data is extremely interesting, the huge amounts of data that can now be generated, from social networks and also from sensors like location and images. There are some very big and interesting opportunities around how we can manage and process this data. I think some very big companies will be built.
Q: (from the audience) How did you get the word out initially?
A: We did this demo, and we believed we had such a good idea that instead of advertising, we should go to the press, so that’s what we did. We grabbed Dan Gillmor from the San Jose Mercury News and made him come and listen to us, and he wrote a story. Lee Gomes from the Wall Street Journal also wrote a story.
Then we also targeted our first product toward a group. Facebook was targeted toward college students, and we targeted toward Linux users. There’s a Linux site called Slashdot and we got Slashdotted, and that was a huge way to get word of mouth about products.
So you make a product that sells itself and then figure out the premiere audience, and they’ll spread the word. And now with social networking, it’s a great environment to do that sort of thing.