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| Home - CEO Spotlight - May 03 Issue |
CEO Spotlight: Peter Lee, DataSynapse
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The second issue is that we keep things as lighthearted as we can; we’re extremely competitive people but we also try and respect each other’s domain expertise and that’s been very helpful.
Angel Mehta: Let’s go back to the time when you were still an Investment banker and getting ready to move into a startup. At that point, was it the business idea that was so compelling that it pulled you away, or were you already wanting to start a company and the grid computing idea just happened to be the path you chose.
Peter Lee: I was already fairly deep into exploring a different start-up venture and there was a team of folks I was working with at the time who were pretty far down the path. We had already soft-circled some investors and we were pulling together a team of about 6 or 7 folks. I was quite literally in the midst of that when Jamie gave me a ring and said, “Hey you know I’d really like to talk to you…we really have to do something together”. Honestly, Jamie had a single sheet of paper with a paragraph written on it. Meanwhile, I was working for several months with a team of six other guys who had extensive financial models, business plans, the whole deal. We had indications of $2 million in seed funding. But in that one night that I sat down with Jamie at my house, what caught me is that Jamie had already quit his job – he had been unemployed for a couple of months. He’d been sitting in his apartment coding and had already developed a prototype.
Meanwhile, the other group of guys I was working with…maybe one other person was as committed as I was. That group just wasn’t ready to jump. The point is, if you’re going to start something there’s no looking back. You can not have a halfway venture. You can’t both be fully employed and then try and launch something. You need to make a decision…you either believe and you’re 100% invested or you don’t play. Starting a company is not a spectator sport.
Angel Mehta: Do you ever see a point in the near future where you think the company will outgrow you? Are there days when you wake-up and think you’re not qualified to do this anymore and say, ‘I need to hire a new CEO?’
Peter Lee: I’ll tell you the toughest event where I did feel like that was 9/11. We lost four people in the World Trade Centre attacks and at the time I think we were only around 25 people ourselves; a small close knit group. There was a conference on the top floor of the World Trade Centre…we were exhibiting and I was going to speak…there were six of us on our way down, four had already shown up. Two of us, including myself, had not yet left when, of course, the plane hit and the disaster began to unfold. So I would tell you that in the aftermath of that we were challenged in a number of ways. You can talk a lot about the difficulties of being a CEO in terms of a business context…in terms of setting a business plan or helping chart a technology roadmap or engaging with clients…but I don’t think anything prepares you or trains you for dealing with that kind of emotional trauma and grief. During that time, I was extremely fortunate that Jamie, the other folks, our senior team…our entire company really pulled together. But that was a very challenging time period…there were certainly days when I woke up and I wondered whether or not I was the right guy and was I going to guide us through what were very murky waters at the time.
Angel Mehta: I remember talking to some investors once about the advantages of growing a software company from the valley as opposed to somewhere else. He was pretty insistent that companies in the valley just take off in the way that others don’t. Have you felt that at all? That you’re outside the epicenter because you’re not in silicon valley? Have you found that to be a disadvantage?
Peter Lee: No, in fact, you know it’s funny you raised that. On our earliest round of fundraising we met with a lot of different venture investors in the valley and then on the east coast and I’ll tell you after meeting with the guys in the valley, we felt they were from another planet. I don’t think the west coast guys got what we were trying to do. They kept talking to us about proteonomic gene sequencing…. the world of a billion connected computers…and we kept saying, ‘Look, here’s a certain suite of applications…there’s a lot of pain, and this is an enabling technology that could really unlock value.’ …The west coast was more of a ‘go for broke’ horizontal play… ‘big picture’ thinking. What we really were looking for and what resonated ultimately with us were investors who were close to home…who understood our clients well…who were a little more sane about how to go about building a business. I can’t tell you how pleased we’ve been with that difference.
Angel Mehta: Tell me about some of your biggest mistakes with Datasynapse and what you’ve learned as a result.
Peter Lee: Sure. So there’s so many….I could give you a daily log. I’d say the first mistake both Jamie and I made was that not firing people early enough. I think when you start a company, no matter how careful you are in the interviewing process, you never know what someone is going to be like until you see them ‘in production’, so to speak. I think there was a tendency in the early days to think that, oh, we could help mentor this person, we could guide that person, we could change any given behavior pattern. But I think, in retrospect, whenever we have had to terminate someone, we really regretted not doing that earlier. The impact of someone who is a negative player on a team is so much more hurtful to the overall company… as leaders, you owe it to everyone to move decisively and to excise that type of non-productive behavior. You have to be prepared to remove a negative force from the organization. Because it eventually, it will happen.
Angel Mehta: Was that a new business concept for you, or was it more due to your personality?
Peter Lee: A little of both. At J.P. Morgan, we had a culture of 360 degree reviews. There’s an enormous focus on feedback…on constructive criticism…on helping people improve. But I think carrying that mentallity into the software start-up where time is of the essence and everyone is an INDIVIDUALLY deep contributor - but only in their specific area - …you’re not afforded that luxury. This is not a 175-year-old franchise that can knock on a door and get in. This is something where there’s six guys around the coffee table solving a real problem right now and we need to move.
Angel Mehta: I’ve always wondered if it’s a good sign or a bad sign when a CEO constantly feels like he or she is on a steep learning curve. On one hand, as a search firm, we have this tendency to want a CEO or executive who can walk into a situation and be comfortable because he’s seen these patterns or problems before. On the other hand, we’re always paranoid that the executive is stale and won’t be able to deal with new challenges…what do you think? Is the learning curve still steep for you? How long do you think it’ll continue?
Peter Lee: What I would tell you is that what I know now, relative to what I knew when I started the company with Jamie…the difference is extraordinary. The right analogy is when you’re a senior in high school you think “I know it all” …then you show up in college as a freshman and you think, “Oh my God…anyone who is a senior in high school doesn’t have a clue”…I mean, they don’t even know where to begin or what questions to ask, right? And I think it’s the same thing when you’re a senior in college and you’re looking out at joining the workforce for the first time and the attitude is like, ‘ah…what else can I possibly learn? I know it all…”
Angel Mehta: Right.
Peter Lee: And then the second you join the work force…. you look back at anyone in college and you think “They don’t have a clue what’s about to hit them.” Right? You know those big transitions?
Angel Mehta: Absolutely…I said this in a keynote to some college kids once…the first sign that you know a human being is growing…when every few years, you realize what an idiot you were. [Laughter]
Peter Lee: That’s right, that’s right. So I’d say that that kind of recognition and that kind of understanding of knowledge difference at each appropriate stage, at the ‘A-round’, at the ‘B-round’ , and so on….we’ve realized that it’s helpful going forward knowing that you know nothing and that you’re going to be an absolute moron about the new ‘domain’. But what that does is put pressure on us to be responsive in explicitly recruiting complementary personnel whether it’s the domain expertise that we need or functional expertise to help round out that missing gap, if you will. So coming back to mistakes, I think one error has been not moving quickly enough whenever we’ve jumped into a new market or jumped into a different area in really bringing the people that we need to bring onboard. We’ve dealt with that though.
Angel Mehta: Have most of your successes come as a result of well thought out planning or taking advantage of unanticipated opportunities?
Peter Lee: I would quote Sun Tzu…“Be prepared and you will be lucky”. Anyone who says their success is a result of well thought out planning whether its personal or professional is full of it. I think you can have a very good sense of where you want to go. I mean, we thought we knew the problem well…we thought we had a really terrific solution for the problem…we felt we ought to be recognized and we ought to be able to extract value in solving the problem.
Angel Mehta: But….
Peter Lee: But I also think we knocked on enough doors and learned both from getting thrown out of meetings and then invited for callbacks how best to articulate that message and then how best to ultimately execute on the vision. I really think our success has been driven one customer at a time because each time we engage with a different customer we solve different problems. We’re able to incorporate those best practices and then repeat the cycle and I think that’s really how companies grow…early on, they grow by 1’s and 2’s and then all of a sudden it’s 6’s and 12’s. I think that’s how the majority of companies do it.
Peter Lee is co-founder and Chief Executive Officer of DataSynapse. He previously worked as an Investment Banker at JP Morgan and holds an MBA from the Wharton School and an AB in Government from Harvard. To send feedback, email: peter@datasynapse.com
Angel Mehta is a Managing Director at Sterling-Hoffman, a retained executive search firm that specializes in VP Sales & VP Marketing searches for enterprise software companies. To send feedback to Angel, email: amehta@sterlinghoffman.net
 
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