Peter McKay (Snyk): Leading Through Hypergrowth
Peter McKay: The challenge for any CEO, founder is how to anticipate the plateauing before you plateau. Those are all the things. You got to just be looking at the 20 different things that could go wrong or the things that your company's going to struggle with.
Blake Bartlett: Welcome to BUILD, the podcast from OpenView. I'm your host, Blake Bartlett. The show features conversations with software founders, leaders and investors. Each episode unpacks a new key insight on how to build your company and navigate the fast changing world of software startups. Today, I sit down with Peter McKay, who's the CEO of Snyk, one of the absolute hottest security companies around today. Snyk has raised well over a billion dollars in funding and was most recently valued by investors at eight and a half billion dollars. What I love most about Snyk, is that they've brought PLG to the world of security. That's big because the inherited wisdom today says that security products can only be sold via enterprise sales efforts, directed at the CISO. Snyk is showing us all that PLG has just as much potential in security as we see in other software end markets. Now, with all of that being said, I have to confess that we don't really talk about PLG or security at all, in this conversation today. Instead we're back to one of my favorite topics on the BUILD podcast, leadership. We've had really great conversations with folks like Godard Abel from G2, about conscious leadership. And Prashanth Chandrasekar from Stack Overflow, about leading in a non- extreme way. Folks seem to be really loving these conversations. So, I'm pumped for you to hear Peter's perspective on how to lead a company through hypergrowth. Hypergrowth looks really fun from the outside, when you're just seeing the TechCrunch headlines and the big funding announcements. But on the inside, it's hard, really hard, like winning a gold medal in the Olympics hard. The main reason for that, is that you're constantly making hard decisions and having hard conversations. Nothing about that is fun, but it's absolutely necessary, to scale and to win. Luckily for us, Peter is the perfect leader to learn from, on this tough topic. So, it's high time for me to step out of the way, so that we can dive right in with Peter McKay, on today's episode of BUILD.
Blake Bartlett: We're talking about hypergrowth today, which is a popular topic, perennially for startups because that's the goal of being in a startup, is to experience hypergrowth. But as many people talk about, it's also difficult. There are many challenges that come along with sustaining hypergrowth, growing through hypergrowth, your org, your team, et cetera. That's what we're going to unpack today. So I'm curious, from your perspective, what makes hypergrowth hard for a startup leader and a team, in your experience?
Peter McKay: Yeah. There's just so many dimensions to it. When you're thinking about scaling, it's really, to do it effectively, you have to get all the different components going, consistently. You can't have one particular part of the company is lagging behind the other. You're look looking at the orgs. You're looking at your team. You're spending a lot of time understanding the strengths and weaknesses of the team. You know where they can scale, who's got more capacity, who's running out of capacity. You also look at, where a lot of companies kind of struggle with, is when groups start needing more collaboration together because the businesses just get more complex. As much as you try to minimize that complexity and try to keep things as simple as you can, invariably, they become more complicated. You get into different GOs. You get into adding multiple products. You're getting into financial services or federal, that require a security check. All these things just add to this massive complexity, small companies, medium, large. So, you really need to work well together as a team, and making sure that they're all kind of moving at the same time. For a CEO, it's something you've just... your number one job is just watching and seeing, where are the problems, where we're going to run into challenges, six to nine to 12 months ahead at least and trying to stay ahead of that. A lot of times, it comes down to people. Right? I mean, unfortunately, as you're growing and the faster you're growing, the faster you're going to outstretch a lot of the people and teams that you have. So, it's your job to kind of assess when you see people struggling. There's tons of signs of all that happening. And then you're having these conversations with people, along the way. But as you grow, the most frustrating part, I think for some founders and CEOs, are just what got you to this point is not going to get you to the next and the next. That's why you see these companies grow and then plateau, and then they change up. They make all these changes, and then they grow again. The challenge for any CEO, founder is how to anticipate the plateauing before you plateau. Those are all the things. You got to just be looking at the 20 different things that could go wrong, or the things that your company's going to struggle with. Got to try to get ahead of it as much, as you possibly can.
Blake Bartlett: Yeah. This plateaus piece is interesting. Because it's very easy when you read a TechCrunch article or a INC Magazine article, or you hear about a company that just had a massive IPO, it sort of sounds like it was always up and to the right. You look at the annualized numbers, like, wow, that's some pretty great growth. They did it every year, for a handful of years, but that's always obviously a myth.
Peter McKay: Yeah.
Blake Bartlett: Internally, it is never up and to the right. Like you were saying, the strategies that worked for you in the very early days, aren't what's going to work for you when you're a hundred million of ARR and beyond. So, anticipating this idea of plateaus, is that maybe you're kind of sprinting from one to 10 million of ARR. You hit 10 million, things stop working. And if you don't anticipate that, that's a plateau, and you got to work through it. So, understanding that there are these different break points, if you will, and anticipating that that's where plateaus can happen, that is key. As a board member and as an investor, I see it all the time.
Peter McKay: Yeah. There's no question. Usually, what makes that hard is, the time to make those changes are when things are going the best, when the numbers are the best, the metrics are the best. When you're at your best, that's when you should think about, okay, how do I evolve? How do I think differently? How do I look at it and adapt. Because sometimes, when all the metrics are all solid, part of that is historic, number one. And two, they may be leading you down the wrong path because you're just, okay, I don't want to screw it up because it's going well. So, I'm just going to let things go, until they're not. That's sometimes too far past that time. So, it's just having that read on, what do you do? Constantly questioning and asking the teams the questions about, is the market evolving? Is it changing? What are we hearing? What are the objections? Why are we winning? Why are we losing? What are the problems that we're facing? What could go wrong? The team, internally at Snyk, I'm always the paranoid one. Andy Grove used this line, only the paranoid survive. So, I'm always looking for what could go wrong. That's a big part of the CEO's job, to be well out in front, looking for all the things that we may be missing. The other thing I would say is, that's not the sole responsibility of the CEO or the management team. That's your board of directors, that's your advisors. The worst thing that could ever happen is you miss something because your head was down and you were into the weeds, and you didn't see something very obvious and right in front of you, that you didn't do. I am incredibly paranoid that, that's something that's going to happen. So, I'm always asking people, what am I missing? Here's what's going on. Tell me what I should be doing. I've been doing this for 30 years, and I'm still asking those questions all the time, because it's just some of the easiest and obvious things that are right in front of you, that you don't see. You don't see because you're enamored with the results, and you think everything is going to go good forever. That doesn't happen. Then you have to react. The hardest thing to do is, when it's all going well, is to change. You go, why am I changing? Well, I'm changing because I'm worried that it's not going to keep going. So, we have to do things differently. We have to try different things. That's really hard for companies to do.
Blake Bartlett: Yeah. Yeah. So the first takeaway that I have there is, we might want to consider a change of title from CEO to CPO, for chief paranoia officer, because that sounds like it's part and parcel to the job.
Peter McKay: Of, if that was the case, I think I'd get a... I'd be one of the better ones, then, I think.
Blake Bartlett: Yeah. Yeah. Number one in the industry. That's great. Yeah. The image that was coming to mind to me, it's kind of thinking of sports analogy. One team does a really great play or scores a basket, whatever it is. They're busy celebrating, and then the other team sort of moves faster. And then you're like, oh no, what's going on? You can get caught by surprise. When things are going really well, if you're too busy celebrating, if you're too busy high fiving or patting yourself on the back, that's exactly the moment at which things can change and you're not paying attention. Getting into this a little bit, and I think one piece of feedback that you said, that was really interesting is that the time to be think about these changes, the time to be anticipating plateaus, is when things are going really well, which is counterintuitive.
Peter McKay: Yeah.
Blake Bartlett: Maybe unpacking that a little bit, what it sounds like to me is that, if you're needing to do this when things are going well, then relying solely on metrics or on KPIs might not be enough of an early warning sign. So, what do you look at? How do you get this sense, if it's not necessarily the KPIs?
Peter McKay: Yeah. It's a lot of these early indicators that kind of tip you off that there's smoke, there's issues that you should start paying attention. There's a little bit of a fire going. You look at group frustrations, like sales and marketing, marketing and product teams. You start to see these signs of frustration. The wheels start wobbling because people are frustrated, decisions aren't being made fast enough, or this conflict that isn't being resolved, this artificial harmony that people are... Well, they're really not talking about the tough problems. Or a manager is struggling to hire really good talent because they're overwhelmed in what they're doing. I don't have time to hire because I got too many things going. It's not usually one thing. It's usually three, four or five things. I'm worried about this part of my business. And then as the CEO, you just start digging in and observing and asking questions. You get an instinct. And then you got to have these conversations with, let's say it's a particular individual and say," Look it, I'm worried about this. I'm worried that we're not going to be able to make it to the next level here. Let's talk about it." Then we go and go and go. And over time, you mutually come to... Hopefully, if you do it ahead of time, that at some point, we should think about reducing your scope from this to this. As companies get bigger, all roles get smaller. And then bring someone else in, that does this really well. That'll save you from trying to be too many things. It's just this dialogue you have, of anticipating a problem happening and getting in front of it and doing it in a way that people understand it. And if you do it proactively, then it's just, everybody is better. A manager is better. A company is better. Everything is better when you do this proactively. Rarely does anybody say," Hey, when it comes to people, I did it too fast." It's always the opposite." Holy cow, I should have made this move six, nine months ago," is usually the case. So if you have an instinct as a CEO or leader, you really got to dig in, get the data points, validate it and then go as quickly as you can. It's the crappy part of the job. It's the worst, because it's constant. It's never, okay, I just finished this, and I don't have to worry about it forever. No, it's constant. It's a constant part of the job.
Blake Bartlett: It looks like the way you're describing it is, instead of looking at those metrics, you're looking at people. You're looking at the people dynamics. You're looking at the organizational dynamics. You're trying to identify, where is there organizational friction? Within a team or across teams, where is there friction? Where is one team perhaps acting as a bottleneck to another team? All of those types of dynamics, it sounds like, which it's viewed as the softer side, but the that's actually the more important side. Being data driven, so to speak here, actually suggests that you might be a little bit too late to the party. So, is that the right way to parse that out?
Peter McKay: It is. The people may be the outcome, but usually it's the signs that kind of point to that being the case. You think about, if there's the increase in support calls coming in, or your NPS is dropping or your pipeline is dropping. There's these early indicators of some of the problems that you deal with every day. You mentioned it first. You see what it's like on the outside, but on the inside, you see how the sausage is made. There's so many of those early, very, very early indicators, that point out to something. People accuse me of too much into the details, sometimes, but I think that's what serves me well when you're looking at how to stay ahead of that growth. I mean, we were growing at 170%, year over year. It's hard for an individual to develop themselves fast enough. You got to be 175% better every year. That's hard. So, not everybody can do that or want to do that. These conversations, on a regular basis, are critical for the company to stay ahead. Don't slow down. When you're growing at that pace, usually what happens is, growth outstretches talent. That's where you hit that plateau. If you don't stay ahead, then you're going to hit a plateau and then start the decline on the other side.
Blake Bartlett: Yeah. Yeah. That's a really interesting way to put it. If your company is growing at a particular rate, a hundred percent year over year, 200% year over year, then effectively, each person at the company needs to be getting that much better year over year, as well. Otherwise, you're not going to scale with the org. I had never thought about it that way, but that's an unlock for me. I like that.
Peter McKay: From a company perspective, you've got to constantly do whatever you can possibly do to develop your talent, because it's so much better to promote from within and bring people in and groom them. It gets much harder when that growth rate gets that high, to be able to do that all the time. Some of the areas you can. In some areas, just by scale, yes, you were doing this job and it was at half of what it is. Now it's double it. So if I reduce this scope to half, it's still because of scale, so much more than you've ever done. I think people need to look at, when you're asked to do you maybe a lesser scope, it gives you more ability to have that impact and to stay ahead. But as a company, we got to do whatever we can to develop our talent, so we don't have to go outside as much, and we can promote from within. But it takes two. We got to do everything we can as a company, but the individual, if you're not investing to do it, then the outcome is going to be clear in a period of time.
Blake Bartlett: Yeah. Yeah. So if we focus a little bit on the bringing in new people aspect of things, because obviously that is part and parcel to any leader's role, but certainly CEO role. And that's what we've been talking about right now, a lot, but this idea that you're constantly needing to be recruiting and bringing in really great folks. I think that what I'm hearing from you is that, some people can perceive that as I need to constantly... if I got a VP of sales now, I need to be thinking about, who's my next VP of sales? That might be the right answer, but it doesn't necessarily only need to be through that single lens of replacing somebody. You talked about bringing in specialized talent. So maybe you have a VP of sales today, but we're going to bring in somebody to lead channel and partnerships, or we're going to bring in somebody to lead international. That's more so adding to, as opposed to just looking at the single option at your disposal, of replacing. Right?
Peter McKay: Yeah. Yeah. Part of it is, if you have someone in a certain role that doesn't have a certain skillset, you can hire someone strong in that team, to help that person scale. So, it doesn't have to always replace or uplevel a certain spot. It could be strengthening the team. That's one of the areas where you kind of see where the wheels start wobbling. When they can't recruit really good people on their teams, that's a sign that. Okay, if you can't get top talent in your team, then you're only going to go so far because you're only as good as your team. Whether you're a front line manager or a second line manager or a third line manager or the CEO, if you can't find amazing talent, then you're going to struggle because you're only as good as your team. So for me as the CEO, that's 20, 25% of my time, is just constantly looking for talent at all levels. Not just reporting to me, at all levels. And especially in this market, where resources are getting harder and harder to find, that's got to be a top priority for the CEO, is just looking for talent, because they're very specific skillsets today. As you get bigger and people have gone through hypergrowth and a billion dollars in revenue, you got to always be looking for talent. That's the driver. It doesn't matter if you're the CEO or you're frontline sales manager, you're only as good as your team. And if you can't hire top talent, that's usually an indication of you're not scaling.
Blake Bartlett: So if you're constantly bringing in new talent at every layer of leadership within an org, whether that's up- leveling somebody, whether that's replacing somebody, whether that's adding another person, you're kind of dividing a role into two as the org scales... Or even as you mentioned, hiring people below, as an enabling role, in order for that person to be unlocked or unblocked.
Peter McKay: Yep.
Blake Bartlett: If you're constantly going through that motion, then you obviously have the factor of my current team and you needing to communicate that with your current team. You had alluded to it earlier in our conversation, about these hard conversations, these difficult conversations with your team, but that communication is incredibly important. Because otherwise, it'll cause problems down the road. I guess maybe unpacking this hard conversation piece, what makes them so difficult, beyond the obvious, delivering perhaps bad news or mixed news? And then how do you approach these hard conversations, in order to get to where you want to go?
Peter McKay: Yeah. Wow. That is the challenging part of the job. It's a skill that you kind of learn over the years. Usually it's kind of like too, if you have the conversation late, it's probably not a surprise because the metrics are telling you that the data's there. But if you're doing it ahead of time, and you're proactive in doing it, and you're having conversations ahead of time, it is a surprise. Because it's like, well, all the metrics are there. I'm doing this, this, this. I know, but here's what I'm seeing. Let's just watch it. Let's just watch this. I'm worried, if we continue down this path, we're probably going to need to reduce the scope or do this or this. I said, I just want to be all the cards on the table, so nobody's ever surprised. That's a little bit of a shock to someone who's like," Why? All the metrics say I'm doing well." In a lot of cases, you try to do all this beforehand, where the metrics aren't... it doesn't show up yet. So, it's just being honest. One of our core values at Snyk is care deeply. One of the parts of care deeply is everybody generally cares about each other and they do. I mean, it's the core part of our values at Snyk. But when I first got here, it was a little bit like, well, but people weren't giving feedback to each other. People were afraid because they didn't want to hurt people's feelings. I'm like, well, that's not caring deeply. Caring deeply is, if you really care about someone, you'll give them feedback. You'll coach them. You'll tell them. It's this transition. If you really care about someone, you will give them feedback. You'll talk to them about what's working and what's not. You'll be very transparent. You build this loyalty. You build this trust, that nobody should be surprised at these conversations because you've been doing it over a period of time. That's what you try to do. It doesn't always happen that way, but it's the toughest part. I'm on boards and advise founders who've built a company, it's harder. It's hard, because all these people who have been on this journey and scaling, they've been on this together. And then at some point, you have to now start having some tougher conversations, with people who are maybe need a much more narrower scope or a different role. That's hard to do that. Definitely hard to do it proactively. It's hard to do it reactively. If I can just encourage people to, the more difficult the conversation you do it, do it ahead of time, have those conversations. And if you really care about them, you will. You'll tell them what you feel. That's only going to help them and help the company, as well. That's the job of the CEO. That's why they say it's a lonely spot. It's tough because you're there, making tough decisions, that are the best interest of the company, a year or two, three years down the road. That's definitely, a lot of times, not the most popular decision. Sometimes people don't understand all the dynamics because you can't necessarily explain all the rationale for why something is done because it's between an individual. I think one of the core tenants of any leader or any person in a company, is just trust. They have to trust the people they're working with. Both me trusting them, them trusting me. And that you know that you're not doing it for any other reason than to help strengthen the company. Right?
Blake Bartlett: Yeah.
Peter McKay: It's not for political or not a popularity contest. It's just to do what's right for the business, long term. That helps everybody. Right?
Blake Bartlett: Yeah.
Peter McKay: I think sometimes people think, well, why you picking on me? You're not. You're doing what you think is the right moves to make for the business. Those are the tough decisions you got to make.
Blake Bartlett: So if I take a step back and put my philosopher's hat on a little bit here, I've been very personally focused on this idea of, you can't avoid pain. In life and business, in anything, you can't avoid difficulty. But there is a choice. Do you voluntarily embrace pain of your own chosen flavor, or do you wait and have the unchosen, unvoluntary pain catch up with you later? There is this myth, and I think we all fall prey to it, is that if I don't embrace the voluntary pain and just pretend like it's not there and do the ostrich strategy and put my head in the ground, it will go away and it will get better. It doesn't. You're just forestalling and delaying the pain. You can choose to have a hard conversation before it's difficult, before things are breaking. It's a little bit of a surprise, but you're doing it in a caring deeply manner. You're doing it in a proactive manner. You're choosing the pain of a difficult conversation, well ahead of the curve. Or you could wait and wait for everything to be falling apart. It's like, this person's got to go tomorrow. I've never told her or telegraphed that at all. Now I'm having that conversation. That's very, very painful and not a great experience for either person. So, which flavor of pain do you want? And then against the organizational backdrop, what has happened to that team? What has happened to the numbers? What has happened to the performance in that interim, while you were playing ostrich?
Peter McKay: Yes. Yeah. It's a great observation and it's totally true. We use this phrase of kind of ripping the bandaid off. Anything you think is a tough experience, a tough decision, a tough restructuring, just do it as quickly as you can. Get it behind you. When people come to me with org things and changes, and I'm thinking that they're doing this in six months. I'm doing it." Why are you doing it in six months?"" Well, by then, I'll be there." I said," Why wouldn't you just do it now? Get it out of the way. Get it clear behind you." People, I just think reacts better to it, to being more proactive in thinking about things and getting the bad stuff behind, to get to a better place. Instead of it dragging these things out and making more pain and the symptoms of all that throughout the organization, rip the bandaid off. Move forward, make the moves and just get to a better place as quickly as you can. That could be people or systems or process or whatever it is. Rarely does it benefit you, by delaying and dragging it out.
Blake Bartlett: So in closing here, Peter, if we have founders listening right now and I'm sure there are plenty, who are thinking uh- oh, that sounds like something that's very difficult. Also, that's something that I might not be wired toward. I don't know if I'm cut out for that. I don't know if I want to do that, but it sounds like it's pretty necessary for my business. What kind of advice do you have for somebody that's feeling that right now?
Peter McKay: Yeah. I don't think that's solely the founder's challenge. I think most people don't like doing it. If anybody says they like doing it, then they're not human. So just that aside-
Blake Bartlett: Masochist.
Peter McKay: I do think that a big part of a founder's job or founder CEO's job is to have these difficult conversations and to see things ahead of time and make these proactive moves. That's not for everybody. And at some point, if you don't do them, it'll catch up to you. I've been now, CEO of well, four companies. But three of them, founders were there before, including Snyk. The founder has been a friend of mine for 18 years. He asked me to come in and do it. We've had a lot of conversations beforehand. He said," Look it, the company's at a point where we've got to do some different things and things that I don't like to do and I'm not great at. But I literally like to do this stuff." He came to me and asked for my help along the way, and then said," Hey, can you come in and run?" We had that conversation because he recognized that he had strength and amazing strength. He also knew me and knew that I complimented him really well. That's kind of would be my message to founders, that you're going to have things that you're really good at and things that you really like to do. You really got to look at, can that keep the company going? Or am I going to need someone who can do the things that the company needs and I don't want to do, and do it proactively? That's a challenge. Some people will say, no, I got to be the CEO. I'm going to go hire a COO. A good CEO would never go to be a COO. Because it's just the moves and the things that you need to do, you got to be free to do all the things that you need to do and have these tough conversations and do it without the distraction of someone coming in telling you," Well, you can't do that." Well, that's the challenge. For a founder coming in, just understand what you're good at and what you're not. Understand how far you could go in the company and just be proactive. If that's not for you, if you're tending to do more of the things you don't like versus the things you do like, that's probably a good indication where you need to start thinking of making a move proactively yourself, versus waiting for it to happen to you.
Blake Bartlett: You can't opt out, but you can phone a friend. That's really helpful advice.
Peter McKay: You can't opt out, but you can phone a friend. That's it. That's a good way to look at it.
Blake Bartlett: Yeah. Yeah. Definitely. Well, I think that's a really great place to leave it. Thanks so much, Peter, for joining us here on the BUILD podcast. It's been a great conversation, and I'm sure very impactful for our audience.
Peter McKay: It's great talking to you, Blake. Thank you.
Blake Bartlett: Thanks for checking out BUILD. If you enjoyed the conversation today, make sure to subscribe on your favorite podcast platform. Leave us a review, so that others can find the show as well.
Hypergrowth is hard. Sustaining hypergrowth is even harder. Leaders need to constantly bring new talent into the organization to avoid plateaus. The tricky part? New talent almost always entails changing roles for existing team members. Peter says the answer is to embrace the pain of difficult conversations to maintain speed.
[2:54] What makes hypergrowth hard for a startup leader?
[5:48] Anticipating plateaus to guide company success, and answering "What could go wrong?"
[9:42] The time to anticipate plateaus is when things are going really well.
[13:56] Early indicators of problems, and staying ahead to scale talent with the organization]
[17:07] Adding specialized talent rather than replacing people
[20:02] How to approach tough conversations
[24:51] Choosing the pain of difficult conversation, and the context of delivering bad news
[27:32] Understand what you're good at and be proactive in finding talent who can do the things you don't like to do
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