Y Combinator Startup Podcast - #23 - VMware Cofounder Diane Greene with Jessica Livingston at the Female Founders Conference

Episode Date: August 4, 2017

Diane Greene is SVP of Google Cloud and she was also the CEO and cofounder of VMware.Jessica Livingston is cofounder of YC.

Hey, this is Craig Cannon, and you're listening to Y Combinators podcast. Today's episode is with Diane Green and Jessica Livingston. Diane's the SVP of Google Cloud, and she was also the CEO and co-founder of VMware, and Jessica's a co-founder of YC. This interview was recorded at our fourth annual female founders conference, which took place here in San Francisco this June. All right, here we go. I'm going to sit here.

Oh, okay. All right, well, we'll just get into this because I have a whole list of questions, and see how many we'll get through. So I'm going to selfishly ask a question because I'm very interested. When you started VMware, it was in the late 90s, but a very exciting time. How many, were any of you in Silicon Valley in 98? Raise your hand. Okay, we got some hands.

We got some hands. I want to hear more about it. I want to hear what was Silicon Valley like and sort of how did you get started with VMware? Yeah. Well, the way, it was interesting, the way I got started, I was, I co-founded VMware with my husband as a professor at Stanford, and he was doing research, and he had sent me on the email. I was actually the one startup I didn't mention.

I was working on at the time, and he sent me this mail, because I was sort of an advisor to that, so I never counted. But it actually went public. But anyhow, he got this email. from all these people up at Microsoft about a paper that was supposedly under blind review and I'm like, oh man you really got to get a patent filed here.

And then I'm like, you know, this is just so valuable. Your research, we should take it to market and then we kind of did it with our grad students. And we weren't, you know, it turned out it was just we did this thing and it was

right at the beginning of the dot com era. And there was Pets.com and web And, you know, these companies that were raising huge amounts of money. And I can remember, I went to some party, and I'm talking to this guy, and he's like, what do you do? And I'm like, well, we're building this software that you can put on your machine and let you run multiple, you know, it'll multiplex all the resources.

And he just looked at me and he goes, this is hopeless, you know, and like you really got it. It seemed like a dubious idea. In fact, I couldn't even get a PR. firm to come and work with us. Because it was all about thinking big and this whole dot-com thing. And it was, and it wasn't that hard to get engineers because we were such deep technology. They understood what we did. But getting business side people was pretty much impossible.

And so companies were just sort of getting slapped together and going public. Well, I don't know if they were slapped together, but they were going public right and left. That's for sure. In fact, the company that I advised the one public, I was stunned. Did you have any equity? I did. That was bizarre. So then did your husband, tell me how you got started specifically with VMware,

did he say, okay, come on board now. It's like we're making real. Well, it was me. I was like, I think you should do a company. And I said, I'll help you. and and famous last words and then I found out I was pregnant

and I said look I really I'll get it going but then I was about to have our second kid and I was like can't do a startup and and I and then we had his two grad students that were going to join us and so I said I better tell him

I'm going to have a baby and I did and they were like so and so I'm like, okay, so we did it. And then six months into it, I had my baby. And it was kind of cool because we didn't have any customers, and we were in this little building that you could open the windows. And so I just brought my baby to work and hung out with her.

In like a little bassinet or something. Where was the office down? Oh, it's funny. It was, you know, yeah, you know near town and country there's a car wash? Yeah. So it was right behind there. and healthy I haven't been there before, and they moved out and they called it the crack house

because people were doing drug deals in front of it. Right next to your baby. But the building is not there any longer. So did you then, were you fundraise for VMware early on? Or how did that work? Because I'm interested in what fundraising was like back in 1998. So I'd made money for, from the extreme, the streaming video company from Microsoft,

and I always delighted in telling Steve Bomber and whatnot that they paid for the extreme because they didn't, it wasn't really a great company for them because we got in between Intel and Microsoft in the stack, so we disintermediated them a little bit. And so, but it, anyhow, so we had money. So what we did was we did are friends and family, and we only allowed friends and immediate family to do a seed fund. And then, and I held back on how much I put in to

kind of be fair to, you know, all the founders. And then we said, okay, let's do an outside just to get some credibility. And this is sort of advice I've always giving people is you want to find investors that really deeply understand what you're doing. And so, and you want to get rich people that deeply understand what you're doing. And so that's what we did. We got Andy Bechtelsheim and a few other people, John Hennessy. So how did you get, did you know Andy? Well, we kind of knew them. We were a bunch of, you know, pretty deep engineers. And, you know, we were, kind of knew the engineers. And Andy's a really a phenomenal engineer. And David, his partner, David Chardon, was a professor at Stanford that I windsurfed with. He was my windsurfing, buddy.

And so we just called them up and we told them what we were doing. And yeah, they were seat investors in Google too. Yeah. And it took an hour. because they got it they're like whoa yeah so was it kind of like that famous google story where Andy wrote the hundred thousand dollar check and said here you go yeah we got 300,000 oh an even better story that is so great yeah he said you know I got the checkbooks at my house and he's like I'm going to leave it you know like in my driveway you know in my driveway you know, and I got his address, and I'm like, is this his house? And it was like newspapers all over the driveway, like he hadn't even been there. I'm like, is this really the right? And there was

the envelope. Oh, my God. Sorry, I live for this stuff. All these random little details make things so colorful. So then you stayed on after the birth of your daughter. Yeah, it was working so well. and I was having fun and I convinced my mother to come live with me part of the village to raise to help with my daughter and I brought her with me as long as in fact she was raised she's like the same age as VMware

really interesting and so I can always remember how old VMware is and and and I just brought her everywhere like when we got more advanced and started having customers and partners all over the, you know, selling all over the world, she went all over the world with me. And then I would just stay at a really high-end hotel and have them hire a really high-end nanny to take her and take her around.

She just loved it. Oh, wow. I can imagine a really high-end hotel. Okay, so things are going. Looking back on VMware, were there any mistakes that you made there that you said? gosh for my next startup I'm going to be sure not to do this I'm always interested in I think the biggest mistake I made was getting you know feeling like it was selfish of me to not sell you know because everybody else wanted to and I was like thought it your co-founders or who's everyone else? Yeah my co-founders wanted to

sell and and I thought it would be selfish not too although they would have thanked me had I not But in hindsight, I'm actually really glad that I ended up leaving VMware because I probably wouldn't have left. And I had several years with my kids just home with them that I really valued, which I might not have gotten. After it was acquired. Afterwards, yeah. Did your investors want you to sell? Were you the only one that wanted to keep going? Well, we didn't have VCs.

So, you know, we didn't have VCs. So I took money after we took the money from Andy. Andy and David and John, we raised money from Dell. And from Dell and a few banks that were wanting to take us public. Okay, so you were really in control of things. Yeah, we were totally in control, which is obviously the kind of place. Without having to do the 10 to 1. So then...

10 to 1 voting rights. You had some time with your kids. then you join the board of Google. Yeah, right after I left the EMR, I joined the board of Intuit, and then a few years later I joined the board of Google, yeah. Okay, so I'm curious being on these boards of these super successful companies, in addition to running your own super successful company, what kind of things did they have in common or not in common that make them?

I wouldn't say too many companies have much in common with Google. Yeah, that's true. Well, what is it about? But people. It's about the people. That's what, I mean, certainly in Silicon Valley, everybody focuses on the people. And so maybe it's just across all of Silicon Valley. And but those are, you know, Intuit and Google. You know, it's funny, they had Bill Campbell in common, kind of.

But they were so different, the board meetings and everything. were you the only female board no Google when I joined had and still does Shirley Tillman who's president of not anymore but she was president of Princeton and then Anne Mather who was who still is chair of the audit committee phenomenal board member and so I'm the third woman to join that board which is it makes a huge difference to have three instead of two we actually have conversations in the bathroom that's

probably very rare okay so in 2012 you started b-bop and you were very much in stealth mode right if I remember I was saying like

what are you working on because it was such a big ambitious open you know sort of investigation I saw no reason and there was too much interest yeah everyone wanted to know what Diane Green was working on.

So what made you, how'd you come up with the idea, what made you want to work on this and sort of how did that one? Well, I had actually been trying to convince anybody that would listen that they should go start a company to do what Pee Bob did. Sounds very familiar. My husband is like that. Yeah, I just, like, I really thought, you know, this layer of the stack where you build the applications for the enterprise,

you know, because it's so much more complicated, where you have multiple users and access controls, and it's really hard to do it well. And I was like, it really needs some attention. And that was sort of the vision. So you were bugging other people. Like, this is great. You really should focus on this.

There's a need. So you saw this need. And did you finally say, well, if not this. Well, then the co-founder I found, a professor at Stanford, he was like, yeah, let's just do it. And I'm like, well, okay, if you'll do it. I guess I'll do it. And then he didn't stay.

bailed. And then, then I, but your husband was like, thanks a lot. Wasn't your husband? Well, no, he didn't. He came in after I'd been kind of working on it for a while, a couple years. So you were like a solo founder. Well, then I convinced some of my friends from VMware to come in and I said, oh, why don't, we'll just call you a founder. Okay. So what, what was it about this? And they were great people and they're still there. And they're still there. And you had worked with them before. Yeah, just the common people. Had that relationship. So what was it that you that made you think this is an important

thing that needs to be working? What was missing currently? Why, there weren't good solutions out there? Well, like, have you ever used some of the... No, no, no. Has anybody ever used enterprise software? I mean, you know, so broken.

It's, you know, it's layers and layers of clicking through these screens, you know, where really, like, maybe you just talk to Slack. I mean, do you really have to, you know, it's just so convoluted and complex. And for power users, you have to have all this rich functionality. But it doesn't have to be, you know, this layer of screens that, you know,

like you can use machine learning and things and know what the person's trying to do and help them do it. And you can automatically fill in everything. And, you know, you can just make it like, Like when you're using it, you're just going, how did it know? That's what I was about to do. And it just makes it there for you. And that's what you, you know, it's just incredible what you can do today

that is radically different from what, you know, back when we, certainly when we found it that, I think people are doing that now. I even think Google G Suite is doing it. But, you know, everybody's doing it more and more now. And especially the phone drove a lot of it, because if you didn't do it on the phone, nobody was going to use it. But back then it was a lot worse. So then what made you decide you're working on the super ambitious plan that you know it's broken and you're going to do this? What made you sell to Google? Well, so one thing was there were a few things going on. One was that

in terms of being on the alphabet board by then, no, it was still Google. It was just become, no, it was still the Google board. Anyhow, as part of my work on the Google board, I got involved in Google's cloud efforts. They said, hey, Diane, can we ask a few questions about that? And so I really made very good friends with Orr's Huzzle, who is the guy that really, he's employee number eight at Google. He built all their, he's an amazing person, and really enjoy,

and I mean, I tell this, he lives near me. We started walking our dogs every Saturday. we became very good friends and talked about it. And it was just fascinating. So that was good. And then I was getting to learn all about Google's technology and the AI and the machine learning and the, you know, just everything that Google has the maps and the knowledge graphs and so forth.

And I realized that if you combine that with what Bebop was doing, it would be pretty special. So they were, so when I was busy kind of helping them find someone to come in and run Google Cloud. And we worked really hard on that. Sounds like it. No, I gave them so many names. I'm like, this is the person, you know,

because I really wasn't interested at all. How did they convince you then? And then I just started, what was a combination of bebop, both things kind of came. But anyhow, the last person, I thought they were going to hire, I thought the person was great. They decided not to. I thought maybe they weren't Googly enough or something.

And in hindsight, anyhow, so at that point, I just said, okay, if we can make this work for Bebop. And I talked to everybody at Bebop, you know, to make sure they would be okay with it. And, yeah, we had just raised a lot of money from A16Z. and Mark had joined my board. Oh, my God. Yeah. Were they supportive? Yeah, I mean, they weren't that thrilled.

But they weren't going to cause the problem. They certainly respected what we wanted to do. And it has worked out super well. And I have to say, I'm glad I did it. The cloud is really interesting. Yeah, tell me about what it's like running the cloud. Yeah, so I mean, for me, being in the enterprise for so long and seeing what's happening in the cloud is, it's just, I mean, I, VMware was like a big sort of mini revolution. This is like a giant revolution and everything.

And the enterprise is just moving so fast. And, you know, everything's going to be in just a few, maybe four clouds or so. You know, there's not going to be that many of them because, like, we spend. about 10 billion a year in infrastructure. And so it's not going to get disrupted by a startup unless they invent quantum computing or something. But, I mean, it's been invented, but they make it work. But we have a project to make it work too.

But the, or make it, it works actually now, but it's hard to use. It's hard to program, like almost impossible. but it'll get there. Sorry to digress, but so anyhow, it's just because with mobile and being able to bring all the data together

and have the security of the cloud like our world, you look at these ransomware attacks, I mean, we need more security and you're going to get it in the cloud. And, you know, you look at something like, you know, you want your OS in the cloud

updated constantly and tiny and monitored, you know, and, you know, it's like Gmail, you know, over 1.2 billion users, so we can see everything going on and respond immediately, and we can be constantly vigilant. And you just, you know, that kind of security you can get in the cloud isn't available to a company. And then, you know, the advanced technologies are there. So, you know, everybody's going to move to the cloud. and then once you have that scale, what you can build because of what you're seeing

is kind of revolutionary. So it's fascinating. Oh, wow. We're running, we have to ask one last question, even though we've just run out of time. If you could warn first-time founders about a mistake that they're going to make, what might it be?

You might not make any mistakes. Oh, everyone makes mistakes. Well, I don't like to say you're going to make a mistake. But you sort of learn the hard way. What's something they might learn in a hard way? That if you tell them about, maybe they'll try to avoid that. Well, one thing I was, I was listening to all these incredible answers that people were giving to this question. So one thing I didn't, and they were all great, the one thing I didn't hear people talk about was sort of board, your board of directors, which I think is, I mean, it can be something you manage or it can be something that helps you.

and you really want to try and have a board that you don't have to manage but that helps you. Like at VMware, I was able to select my board. We don't have time to go into the story of how I did it, how I pulled it together, but I picked the people that really had the unique kind of expertise I wanted. And then my board meetings, I never wrote slides. I just wrote a document. and it had a few metrics about how we were doing, if we were doing well,

but the whole rest of it was things I was worried about or trying to figure out. And so I had a board that I could trust so much that I could just say, look, here's the things I'm wrestling with, let's talk about it. And I don't have to impress you at first with all these stuff. I never tried to impress any of them. Yeah.

Okay, so the board. And how, did you, are there any, is there any advice on selecting those people. It's just people Well, like I'll give an example of what I did. You know, I decided, so because we sat between the Intel hardware and the Microsoft operating system,

they were both monopolies. And so it was a little bit sobering. And so I'm like, wow, we got to do all these deals and we got to struggle with Intel and Microsoft and I wanted to do all these partnerships with the hardware vendor,

big companies like IBM. So I thought I need someone that's really seen a lot of deals and knows how to structure a deal. And at the time, you know, Larry Suncini was a managing partner at Wilson Suncini. He was, I remember on the cover of American lawyer or something as the ultimate power broker and everything. Anyhow, I decided that was who I needed on my board. And we don't have time where I'd go into. It was a really, you know, fun little vignette when I got him to join my board. but, you know, that was the example.

So when I went into him, I just, I explained to him why I needed him and what I was doing. And why you were specifically? Because when I walked into his office and said, I wanted him on my board, he said, well, I'm pretty busy getting off boards. Oh, and there's a long story. But then I showed him how what he knew how to do was unique,

and he had no idea who I was. And what I knew, what he knew was a unique fit to what I was trying to do. And you got him to say yes. He closed the deal. Well, he's why it was really funny because he's like, okay, well, I'll think about it, you know, kind of thing. And it was a Friday late. And I came in Monday morning and I got in at 7 a.m. And my phone was already, and I'd been in on Sunday.

So my phone was lit up, you know, back then before I'd sell funds. And I listened. He goes, hello, Diane. Or I can't mimic him. But, um, anyhow, he said, I'm inclined to droid your board. And I'm like, what is inclined to me? And he goes, I'll join. Oh, my gosh.

That's great. Oh, wow. Well, we'll end on that happy note. Yeah. Thank you. So. Thank you. All right.

Thanks for listening. So as always, please remember to rate and subscribe to the show. And if you want to read the transcript or watch the video, you can, can check out blog.wcombinator.com. All right. See you next time.