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| Home - CEO Spotlight - Dec 02 Issue |
CEO Spotlight with Dennis Ryan, CEO, Allegis
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Sterling-Hoffman: Was there anything in particular with the 50 people that caused you to step back and pay attention or was it just standard management?
Dennis Ryan: One, we realized we were starting to hire a lot of people and went beyond hiring a person with a specific skillset. So the prospect of bringing a lot of people on without having any guidelines as to what are some of the principles are to that selection process beyond the professional skillset was a little scary. It was the hiring spree that motivated us to say, ‘How do we do this other element of the selection beyond professional skills?’ ‘What does it mean to be the right fit in a way that’s fair and open?’ Someone brought in this book, “Beyond Entrepreneurship”. They said, “Maybe we can use some of the techniques in this to define what our core values are and use that in the hiring process”. So we formed a taskforce of about 6 or 7 people cross-functionally to go through this discovery process of defining the core value, the core purpose of the company and then we wrote them down and we launched them at a big annual company meeting in January one year. From that point forward whenever anyone walks in the door here as a potential interview candidate, they’re handed an Allegis binder with company information that you’d expect as well as a sheet that explains our core purpose and core values.
Sterling-Hoffman: Was life different at your first startup experience (Claris), than it was in the early days of Allegis?
Dennis Ryan: Yes. The thing that was different about Claris was my role, even though I was the tenth person who helped start the company; my role was as an individual contributor not as a manager or executive. Second, Claris was a spinout of a business that existed already at Apple. We already had products and revenue, so the company was started. On Day 1 it probably had $25 million dollars of revenue and a handful of products that were already on the market. It was more of a spinout start-up starting with ten people with an existing product family, existing revenue stream and capital, then it was of the Claris variety, so the combination of the things were very different.
Sterling-Hoffman: What component of your role do you enjoy the most nowadays?
Dennis Ryan: The clear one is ‘customer’. Talking to customers who have worked with our people and our product that’s the most motivating. If you look at our customers, we have a great list: Charles Schwab, Dell, Corning, HP, Microsoft, Janis Capital.
These are large companies…very large market organizations that have dealt with lots of different vendors. To be able to go to an event where I get to meet one of the executive sponsors of the Allegis Project at one of those companies and get a chance to talk to them privately on how things are going, what their experience is with Allegis, the product and the people. The most common question asked of me is “How is it that you get such great people at the company?” We met a lot of different people that’s probably the most motivating and the most enjoyable part; it’s the most common question I get. We’ve had a couple of account managers and product managers and, at first, we were very concerned with changeover and then after awhile my team and I have been amazed that no matter who we get, the quality of the professionalism of the domain, knowledge and space is so high. In terms of what I enjoy the most is interacting with customers and hearing the comment, ‘our people first’ and second, ‘our product’.
Sterling-Hoffman: What do you enjoy the least?
Dennis Ryan: The hardest part is making people changes, changing members of the team. I think that’s something that I’ve learned to do better and continue to learn to do better. Early on I put so much focus on trying to make the team successful and sometimes lose sight of the fact that maybe some of the ingredients weren’t exactly right. I think one of the key lessons for me, especially when you’re in an environment as dynamic as a new company creating a new marketplace, I think it’s safe to assume that there needs to be a similar amount or a commensurate amount of volatility and the make-up of the team at some level. You can’t assume that you’re going to get it right and having all the right people and all your people making the right decision to come here.
One of the things I’ve learned is to be more willing to make people changes in a position or whether or not they work here if it’s not a right fit and that’s one of the more difficult things.
Sterling-Hoffman: When do you know that someone needs to change? Have you defined a pattern yet in terms of seeing danger signals in seeing when someone needs to go?
Dennis Ryan: My experience is that you know a lot earlier when you actually decide to act, versus a question of ‘is the person in the wrong job within the company or are they in the wrong company?’ Sometimes they’re in the wrong job and moving the person to a different job remedies the situation so even just making that change is enough. However, sometimes it’s not a person in the wrong job it’s the wrong person in the wrong company and I think you know pretty early on at least if there’s a problem with one of those.
Sterling-Hoffman: Is it a gut feeling?
Dennis Ryan: There’s an element of it in terms of the feeling that you have. My experience is the feeling is based on something that is not produced or not delivered right, so it’s almost a bit of a surprise. I thought that team, that group, that individual would deliver differently here and it’s often convenient for you to internally rationalize, maybe the direction wasn’t clear enough or maybe there are too many competing goals that that individual or team had so that’s the reason why that project, that deliverable or that result didn’t turn out the way it was supposed to.
I certainly had a tendency to over rationalize why something wasn’t the way I expected it to be.
Sterling-Hoffman: You would assume it’s everything but the person doing the job, essentially?
Dennis Ryan: Yes, or they’re in the wrong job.
Sterling-Hoffman: What keeps you up at night right now?
Dennis Ryan: We’re still a small company and we’re selling million-dollar software to large companies and so increasingly there’s been a question, on behalf of customers, what’s the profile of the company we want to purchase from? So there’s the question of ‘viability’. Is that company going to be around in the long-term and, therefore, fit the profile of someone we want to make a multi-million dollar investment with? One of our concerns is doing what we need to do to overcome the questions of viability based on the profile of who we are and the value of the solution we’re selling to customers. There’s no easy answer for that not at all and that’s a tough challenge. We have not lost the prospect or a customer based on that ‘viability’ question but we’ve worked VERY hard to prevent that from happening in a couple of specific cases. It’s myself, our VP of Field Officer, it’s our CFO and if necessary Board members get involved to help the companies. Often our business sponsor at the customer but some of whom in the organization a signature is needed to get them over the hurdle of purchasing from a vendor of our profile.
Sterling-Hoffman: Do you have any advice for the early stage start-ups that are facing similar challenges? I know you said there’s no easy answer but what could they do to deal with that kind of sales situation?
Dennis Ryan: I think it’s a difference between very early stage and a little bit further along where we are today. As a small company, we have a lot more to prove then we have already proven. In a very early stage of a 25-person company, looking for your first customers I think the reality of the market today is there needs to be ‘shared risk’ in the whole purchase and deployment decision for your offering. In order to procure your early reference customers, what is the proposition that you could put on the table for those lighthouse customers that removes as much as the risk from them as possible - whether it’s financial commitment or how they can pursue alternatives if your solution doesn’t turn out. I think you have to be aggressive in removing risk on behalf of your early customers. Then when you do procure customers like we have, the critical thing is making those customers as happy as possible so that they have a personal and professional interest in making you successful and to help you by directly speaking with your next set of customers.
Sterling-Hoffman: Let’s talk about leadership. Everyone talks about how important it is – especially in this market. So how much time do you spend worrying about what kind of leader you are?
Dennis Ryan: I don’t spend any time worrying about how good a leader I am …and maybe I’m a fool for not thinking about it. I don’t think about that in terms of trying to measure myself against some leadership metric. I do have principles that are important and those principles are believing in what you’re doing and the ability to impart that belief to others. That passion an entrepreneur has about their idea needs to be unfaltering. The commitment to your passion and your ability to impart that passion to others is a key ingredient for any person or group of individuals that is going to successfully help create a company. In terms of leadership, passion is critical with an unwavering belief in that passion.
Second, is realizing that it’s not about YOU, it’s about the team of people who are going to go out there and build that product, market it and sell it resulting in your customers coming back to you as a manager, executive or CEO saying, “I hope you give a special reward to this engineer, marketing person or this sales person because they were really good at what they do.”. I think realizing that the success of the company is not about you….it’s about the team of people. It keeps your head on straight because any kind of manager has a responsibility for the outcomes.
Sterling-Hoffman: What do you think about the ruckus being made about CEO compensation packages? If the CEO is going to be the person blamed every time something goes wrong, shouldn’t they be able to reap the rewards? Where would you place yourself in the debate?
Dennis Ryan: I would say there is certainly some examples on the extreme where compensation does seem out of the line with what appears necessary or right. However, for the most part, I don’t pass judgment on the compensation that any particular individual gets because the compensation an individual gets is not a unilateral decision. It’s a decision that their manager or their Board make with them. For whatever combination of reason, those group of people decided that was the right compensation for that CEO, engineer or sales person. In the long-term I think the right compensation decisions are made because it’s the right balance. Will there be exceptions when you let things be handled by those market dynamics where some exceptions seem extraordinary? Yes there will be, but I think that’s fine because there is something good enabling that market-driven dynamic to happen…ultimately, the market balances out.
Sterling-Hoffman: If you could wake-up tomorrow having gained more strength or quality, what would it be?
Dennis Ryan: One quality that would be helpful is to not sweat the difficult decisions as much. Making difficult decisions is hard enough and having that translate into internal apprehension and angst doesn’t appear to add any value other than preventing you from sleeping as much as you should. I think the ability to make tough decisions without feeling it internally as much would be something that would add value without detracting much.
Sterling-Hoffman: Do you worry about exit strategy? I mean, you’re probably not going to want to do an IPO anytime in the near future.
Dennis Ryan: The only thing that we’re focused on is making the company profitable. If we’re not profitable this year I want us to be profitable next year. From a financial standpoint, building a sustainable business is predicated on delivering a product or service that has value to the customer but you could do it at a profit and today we’re not there. We’re fairly close and have a clear path on how to get there based on the strength of our business model but we have some work to do to get to profitability and that’s the key accomplishment we’re shooting for as opposed to any type of capital event such as public offering or a acquisition. For us it’s all about being a sustainably profitable company.
Sterling-Hoffman: Do you think the employees, in general, revised their expectations based on what the market is like now? The memories of the bubble are still so distinct and so clear that it almost seems like their expectations have not scaled back the way they should have. What is your sense?
Dennis Ryan: Using Allegis as an example and other companies I’ve interacted with by now I think anyone with their head on straight has realigned any expectations they had relative to financial reward of that start-up company that they’ve joined specifically relating to public offering. There’s no one here that comes to work on Monday and thinks about public offering and, to a certain extent, that’s based on the fact that by and large we never really thought that way to begin with. In fact, that wasn’t a key driver for any of the people that came here. People believed the business problem they were solving they believed in the importance of enabling companies to work together more effectively and deliver innovative solutions that made that possible. I think people believe more in that and have been motivated more by that then they were if and when Allegis would have a successful public offering.
 
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