NetApp - Dave's Blog

Company Values are a Tool for Employees to Beat Up Management

Corporate culture is one of the first things Dan focused on when he joined NetApp in 1994. (Profitability was another.) He wanted to create a formal set of company values, so he asked everyone on his staff to hold “values meetings” to collect input.

James and I met with Engineering, and it didn’t go well at all. In fact, we absolutely pegged everyone’s Dilbert-o-meter. Lots of cynicism. At the time, Engineering was maybe 20 people, so we all fit into a medium-sized conference room. I remember a woman named Florence asking, “How will these values be used against us?” I found out later that she’d had a bad experience with values at a previous company, along with many others. I confess that company values made me uncomfortable as well. To me, values seem like something personal, not something that a company can tell people to have.

Dan got so much negative feedback that he postponed the project, but he didn’t give up. A year later, at another staff offsite, we spent several hours talking about values. Mostly they were what you’d expect in anybody’s corporate values – integrity and honesty and so on. At first this bothered me. What’s the point, if it’s just the same old stuff? But then I thought about it differently. If you started a new country and needed a constitution, you’d probably include freedom of speech and habeas corpus and a bunch of other stuff just like everybody else. The point isn’t to be original; the point is to capture what’s important to the culture you hope to have.

Telling people what their values should be still makes me uncomfortable, but I have gotten comfortable talking about NetApp’s values. Two things helped me.

The first is that I personally do believe the values we came up with. I can’t tell people what their values should be, but I can tell them what my values are. Not all of my values of course, like about religion or marriage or children, but the ones that apply in a work context. In essence, I’m saying: “These are things that we – as a management team – believe, and since you are an employee here, it seems only fair to let you know.”

Florence’s question haunted me: “How will these values be used against me?” The more I thought about it, the more I realized that values aren’t that useful for beating up employees. I mean, if managers want to beat up on employees they have so many tools at their disposal. They can give them bad reviews, no raises, bad assignments – even fire them if it comes to that. Realizing that values are a tool that employees can use to beat up management is the second thing that got me comfortable talking about them.

Here’s an example. Early on at NetApp, we were competing against Auspex (now dead). Auspex had promised the customer support for a new protocol within 12 months, but we knew we couldn’t deliver it in less than 18. The thing is, we knew enough about Auspex to know it would take them 18 months as well. We told the customer that, but they said we should focus on our promises and let Auspex focus on theirs. They made it clear that they would choose the vendor who could meet this requirement. We were having a meeting about what to do, and the question was whether we should also lie. The argument was that neither company could deliver it sooner than 18 months, so it wasn’t like this lie would hurt the customer any; they’d get the protocol in 18 months either way. In fact, we suspected that we could actually get it done faster than Auspex, so if we lied, we would actually be helping the customer, wouldn’t we?

We went on like this for a while until someone – I can’t remember who it was but it wasn’t the boss – said, “I can’t believe that are discussing whether or not to lie to a customer. Don’t we have Honesty as a value? How can we even be having this conversation?” I’m not proud to admit that we had the discussion, but I am proud to say that this comment shut it down immediately.

We were honest, and we lost the business. We were a small company and that deal really would have helped us. But here’s the ironic twist: Auspex never did deliver the new protocol – it’s not clear they ever intended to – and the customer was furious. Two years later, Auspex was out the door and they became one of our largest customers. Over ten years later, they still are.

I think that values are like that. Adhering to values can painful in the short run. Sometimes lying or cheating is the best way to make a quick buck. But if your goal is long-term success, then values are in your own self-interest. I can’t prove that “Cheaters never prosper”, but I do believe this: In the long run, cheaters tend not to prosper, especially if they need to keep dealing with the same people. Tom Mendoza once summed it up like this: “Life is a long game. People remember.”

I’m sure that NetApp doesn’t always live up to our values, but it is something that I aspire to, and it is something that I’m happy to be beat up about.

The Story of Grandma at the Bottom of the Dot-Com Crash

The dot-com crash was hard on a lot of people. At NetApp (NTAP), the stock dropped from a peak of about $150 down to $6. Hard for investors and also for many employees.

I remember the first shareholders meeting after the stock had hit its $6 low. It had "recovered" to about $12, so it wasn't quite at its worst ever, but the mood in the room was not at all cheery. Still, Dan gave a good presentation, and then opened up the floor for questions.

A small, old woman got up, clutching her walker, and slowly made her way to the microphone. She had a quavery voice. "I was watching the stock ticker a couple months ago. When I saw my beloved Network Appliance hit $6, I almost fell out of my wheelchair rushing to the phone to call my broker..."

What flashed through my head was, "Oh my God, Grandma sold it all at the bottom." As if I didn't feel bad enough already.

She continued, "...and I told him to buy as much as we could get our hands on. Mr. Warmenhoven, I've doubled my money since then. Here is my question. Whatever you are doing, are you going keep doing it?"

After a short silence, as her question sank in, the whole audience started clapping, and then laughing. One simple question completely changed the mood of the room. I've always wondered whether she did that on purpose, just to stop people from being so grumpy.

Sometimes the Conclusion Belongs at the End

My blog on how to fail in executive staff presentations argued that you should make your request—whatever it is that you are trying to get approved—right up front.

Several people complained that this blog didn't follow its own advice. Linda Henry put it best:

Okay, had to laugh. Your concluding statement on your blog "Always start your presentation with the conclusion" was in the final paragraph. Master of Irony!

The real irony is that I didn't do this on purpose—didn't even notice what I had done!

When I first started blogging, I did worry about the rules for conclusions in short essays. In most papers and presentations, I try to "Tell them what you are going to tell them, tell them, and then tell them what you told them." That argues for putting the conclusion in front.

For blogs, this format didn't work. The entries were so short that "conclusion, meat, conclusion" left no room for meat; simply repeating the conclusion twice didn't seem right. To confirm my intuition, I read several opinion/editorial pieces in the newspaper, because those are about the same length as my blog entries, 600-700 words. Sure enough, they generally make a short argument with the conclusion at the end.

Why? Why should the rules be different for an op/ed or a blog than for an executive staff presentation?

The key is whether you require a decision at the end of a limited time. If you have 60 minutes, and you hope to leave the room with a decision, then you better tell your audience right up front what you hope to accomplish. I have seen so many meetings fail because the goal doesn't appear till time is almost out, and then it's too late for the presenter to accomplish what he had hoped. Sometimes, if I want to help the presenter out, I'll interrupt early in the meeting and ask, "Before we go too far, can you tell me what you actually want?" If I suspect that I'd rather say no, I might choose not to help; I'll let the presenter dig their own grave.

In a blog I'm not requesting a decision and there is no time limit, so neither rule applies.

A written essay is also different than a presentation because you can easily go back and re-read the arguments after you get to the conclusion. One of the big problems with leaving the goal till the end in a presentation is that it's hard to evaluate arguments when you don't know where you are going. But in a short essay, it's easy to go back and re-evaluate the arguments in light of the conclusion.

A short essay is different from a long paper. Reading a long paper takes time, and at the end of the paper I'm going to be upset if the conclusion catches me by surprise and I need to re-read the whole thing. E-mails are also different because many people read only the first few lines before hitting delete, so if there's something you need people to know, you had better put it right up front.

Conclusion: For presentations that end in a request, or for long papers, it's best to start with the conclusion. E-mail too. For short essays, or for presentations without a request, it's okay to save the conclusion till the end.

The "Year of iSCSI"

I just read a blog by Chuck Hollis, from EMC, musing about why iSCSI hasn't been that successful. He says we keep waiting for the "Year of iSCSI", but it never comes.

I respectfully beg to differ!

For years, iSCSI really did stand still. The spec was coming, almost finished, almost-almost finished, shipping any year now... I do admit that's how it felt at first. But when I look at the iSCSI numbers for the past few years, what I see is an explosion of success.

Here's a little thought experiment. Let's compare the first four years of iSCSI revenue with NetApp's first four years of revenue. (I think that most people would acknowledge NetApp as a high-growth successful startup. :-)

	Year	iSCSI	NetApp
	1	$6.7m	$14m
	2	$80.9m	$43m      (The year NetApp went public!)
	3	$228.3m	$93m
	4	$457.5m	$157m

[Note: The iSCSI numbers are for the four-quarter periods ending in Q3, to align with the most recent IDC data. The NetApp revenue numbers are my fuzzy recollection and could be off by +/-$5m in the last two years.]

Just to put things in perspective, iSCSI is now ten times as big as NetApp was when we went public. I can tell you that it sure felt like the "Year of NetApp" when we reached that milestone! iSCSI's growth rate is way outstripping NAS in the early days.

I think that Chuck is thinking about it wrong because he is thinking from the perspective of a big VP at a multi-billion dollar company. Of course, I'm also a big VP at a multi-billion dollar company, but I remember NetApp's early days well enough to know how hard it is to create the first $100m in a new market.

My theory is that $100m qualifies any new technology for "the year of". (Back where I come from, a hundred million is a lot of money.) This means that "The Year of iSCSI" was 2004, with $109.6 million in revenue. The most telling statistic is that iSCSI has doubled in the last 12 months and shows no sign of slowing. The quarter-over-quarter growth rate was 15.6% three quarters ago, 19.1% two quarters ago, and 18.5% last quarter. Let it double two or three more times and iSCSI will definitely be a force to be reckoned with.

The other place I disagree with Chuck is his expectation that, "You'd think it'd be pervasive in large enterprise shops these days." A year ago I argued that, iSCSI Sucks, but that's missing the point. It's cheap and it's easy. My point was that you should not expect iSCSI to compete against Fibre Channel in enterprise data centers. Instead you should expect it to compete at the low end, helping small windows servers enter the modern world of networked storage. Over time, iSCSI might become disruptive and compete against high-end Fibre Channel, but that's not where you would expect the first billion in revenue.

In closing, however, I have to admit that I also agreed with many of Chuck's comments. In particular:

"Customers could save big money by avoiding the purchase of fibre-channel HBAs."

"They could use lower-cost ethernet switches rather than their more pricey FC counterparts."

"As we matched up iSCSI performance against our rather extensive knowledge of real-world workloads, it became pretty clear that a significant majority of applications could run comfortably on iSCSI with no negative performance impact whatsoever."

"First, I think you'll see more of the same: iSCSI in smaller, greenfield SAN builds where FC isn't entrenched yet. But from small acorns mighty oak trees grow."

In the end, Chuck and I may agree more about iSCSI's future than about its past. I'm arguing that the "Year of iSCSI" is well behind us, back in 2004, but as for the future of iSCSI, Chuck may be more right than wrong.

[The iSCSI numbers are from IDC's "Worldwide Quarterly Disk Storage Systems Tracker, Q3 2006 Release", November 2006.]

I'm Turning on Comments

After a year and a half of blogging, I'm finally turning on comments. The entry below on why lawyers aren't evil is your first opportunity to disagree (or agree) with me in public. I just couldn't handle the pressure from folks like Hu Yoshida saying that vendors without comments are basically wimps. Thanks for the nudge, Hu! :-)

My plan is to leave new blog entries open for comments for two weeks, and then lock them down. Why? The reason is simple laziness. I intend to read all of your comments, even if I don't reply to them all, and I don't want to have to deal with comments from 18 months worth of entries all at once.

I will sometimes filter comments, but my goal is to remove spam and porn, not to stifle discussion.

Have fun!

Lawyers Aren't Evil—Fairness and Morality Aren't Their Job

When I was young and naive I used to think the justice system was about fairness and morality.

My first exposure to the opposing view was when several of my college friends became lawyers. They were taught that laws were more like rules of a game. Four of a kind beats a full house, but there's no morality to it. I remember one lawyer arguing that morality and fairness are irrelevant; all that matters is passing some kind of judgment so that people can get on with their lives. This view just felt wrong to me, and it helped me understand the reputation that lawyers have for being slimy and evil.

My time at NetApp has resulted in an extensive legal education. Here's a blog entry about the time I violated SEC insider trading rules. Another time I was sued for sexual harassment, violation of the California constitution, and intentional infliction of emotional distress. (I wasn't alone: the suit was against all of NetApp's founders, officers, VPs and board members. Settled out of court. The alleged harasser no longer works at the company. The lawsuit included the rest of us just to get our attention. It worked!) At least two other times I've been accused of stealing another company's intellectual property, again along with a long list of people. (We didn't do it.)

My new slogan: Success breeds litigation.

I have a new respect for the lawyer's point of view: Sometimes what matters most is getting to a conclusion so that everyone can move on.

Suppose you accidentally bought a stolen TV. Let's say you bought it at a reputable store, so it's not like you could have known, like if you'd gone to a bad part of town and gotten 80% off from a guy selling TVs out the back of his van. A year later, the original owner somehow finds you, and he wants his TV. You didn't do anything wrong, so you think the old owner should leave you alone and go hunt down whoever stole it. But he argues that he didn't do anything wrong either, and since the TV was his first, he wants it back. For completeness, let's just say the store where you got it has closed down, no forwarding address.

Two people are in a dispute, and as a society we need a process to determine who gets the TV so that everyone can move on with their life. Laws are not about right and wrong. Laws are simply the operating system of the country.

That's all fine for this example, where neither person did anything wrong, but what if our moral intuition says one person was good and the other person evil. Then shouldn't we worry about right and wrong? The lawyer response is, "That's not my job. It's Congress's job to pass the laws. As a lawyer, all I care about is what the law actually says."

To put it in computer terms, laws are the program, Congress is the programmer, and lawyers, judges and juries are the CPU whose job is to execute the program. If there are bugs, blame the programmer, not the CPU. That blue screen isn't Intel's fault. Based on this analogy, I have come to agree with lawyers that their job is not to worry about fairness and morality.

Still, I think it's wrong if nobody worries about "moral bugs" in the legal code. It may not be the lawyer's job, but if the legal system veers too far from people's moral intuition, then I think that society runs into trouble. Perhaps one problem is that we have too many lawyers in Congress. As lawyers they were able to legitimately ignore the moral implications of laws, but that left them ill prepared for the moral debugging that should be part of their job in Congress.

I think there's also an important lesson for companies: The law sometimes matters less than the judgment of the public. Even if a company follows the strict letter of the law, it will run into trouble if it violates the moral intuition of its customers, shareholders and employees. Saying "what I did was legal" is not always a good defense.