Over the course of his 30 year career in enterprise software, Tom Reilly has been known as the go-to resource for companies looking to scale and prepare for an IPO. Tom was brought on to both ArcSight and Cloudera before their public exits, leading ArcSight through its $1.5 billion acquisition by Hewlett-Packard (HP) and Cloudera through its successful $5.2B merger with Hortonworks. After retiring in July 2019, he’s stayed very involved with growth companies, working as an active advisor, board member and investor.
Below, Tom shares lessons he’s learned, from charting the path to a successful IPO, to the role of a CEO in civic life, to the next big cybersecurity threat on the horizon.
IVP: As a three-time CEO, what have you learned since transitioning from leading companies internally to becoming an external advisor?
Tom Reilly: In my career, I was hired as CEO to replace three separate founding CEOs to help scale their companies. However, now as an advisor, I take pride in helping founders keep their jobs by providing the insights they need to stay successful. It’s been deeply rewarding to share learnings from my career with these young, technical leaders who are eager to learn and grow. Some of the greatest technology companies on the planet have successfully kept their founder at the helm and my mission is to help create more of those companies as an advisor.
Here are 3 tips to consider as your company grows:
- Always be hiring - You will need to continually improve your team with each stage of growth. Every executive has their sweet spot of performance whether at early stage, growth stage, scale, or public company. Rarely, can a functional executive perform consistently at every stage. Offer your team mentoring, continually monitor their performance, and when the need arises, be ready to hire an exec that is better suited for your next stage of growth.
- Over-communicate - You can never communicate too much to your team, customers, partners, and the market. They all want to hear from the CEO. As a company scales, your methods and means of communicating need to evolve. A small team of 25 can quickly get aligned, but a large team of 2,500 takes a lot more communication and tools to stay aligned.
- Stay positive and have fun – The CEO job is tough and it’s easy to have bad days. You cannot let your team see that. The culture, motivation, and performance of your team is a direct reflection of your daily interactions with them. In times of success and times of crisis, stay positive and your team will respond as such making the journey more fun.
IVP: Do you have any particular success stories or cautionary tales that are relevant to founders today?
Reilly: There are two major lessons from my most recent CEO role that I’d share with founders: The first is to keep it simple. When I joined Cloudera as CEO, it was the most complex and technical product suite I’d ever worked with. To make it easier for the market to understand and for us to sell higher in an organization, I drove the company to simplify the message, the product, the packaging and pricing. Armed with a focused message, we entered a period of competitive advantage and growth.
The second is to be paranoid about market shifts. In 2013, the market was rapidly innovating and companies were adopting cloud based infrastructure. While we began the transition to cloud at Cloudera, we weren’t as aggressive when it came to adoption, leaving us flat-footed when pure cloud competitors like Snowflake and Databricks made the leap before us and grew into massive companies. Today, that market shift is AI. If you’re a business application provider and you’re not incorporating AI, there’s a good chance you’ll be left behind.
IVP: What’s the most important piece of advice you’d give founders who are contemplating an IPO in 2024?
Reilly: When ArcSight went public in February 2008 in the midst of the financial crisis, we were the only Silicon Valley company to enter Nasdaq that year. During the roadshow, investors asked why we were going public then, rather than wait for a better market environment, and our answer was, “we’re ready.” The environment when Cloudera went public in 2015 was different. The market was in a better position and we had raised nearly a billion dollars in venture capital, compared to the $29 million we’d raised at ArcSight. But in both scenarios, we were ready.
What I’ve learned is: you can’t control the markets, but you can control being ready for the markets. Focus on getting your company ready and don’t try to time the market. As a public company, you’re valued based on your performance and metrics, not the market’s ups and downs and there will be plenty of those in the years ahead.
I’m on the board of several companies contemplating IPOs next year and my advice is to start operating like a public company now. Work on the performance metrics the market will want to see and get prepared to compete with every other public company out there. Ultimately, regardless of timing, well-run companies will succeed.
IVP: How has cybersecurity changed since your days leading Arcsight? What is the biggest cybersecurity threat that lies ahead and are we prepared to fight it?
Reilly: Cybersecurity is an industry that has and will continue to evolve because every underlying technology shift creates a new surface area for attackers to exploit. Think about recent shifts from the internet to mobile to cloud – each one also required a cybersecurity shift to determine a new set of defensive technologies against newly created exploits.
Today, the latest and most lethal cybersecurity threats are AI-driven and all of the cybersecurity professionals are innovating with AI to defend the enterprise. This battle of AI cyber attacks vs. AI defense mechanisms will continue to play out over the next decade, but threats will never subside. Cybersecurity is the closest thing to sports in the tech industry because you have an adversary or an opponent always trying to outsmart you. It can be an intimidating sport that requires a lot of creativity and advanced thinking, but if you’re passionate and competitive, you can begin to anticipate your opponent’s next move, giving your team the upperhand.
IVP: What inspired you to get involved with Cybermindz and why do you think mental health is an important issue to address among cybersecurity professionals?
Reilly: When I talk to cybersecurity professionals, I always thank them for the job they’re doing because while I’ve always been a builder-of-tools, they're the ones using them to fight bad actors. Those operators have incredibly stressful jobs with some of the highest turnover rates within tech organizations, making cybersecurity professionals a difficult skill to retain and hire.
Stress puts pressure on all of us, but the relentless stress that cybersecurity professionals face is particularly challenging. Cybermindz is an amazing nonprofit that’s modifying the protocols used to successfully treat veterans with PTSD and applying them to cybersecurity professionals. I wanted to find a way to give back to the people who have helped me in my career, which is why I felt compelled to get involved with Cybermindz and do whatever I can to help support them.
Reilly: I think there’s a lot to learn from participating in civic life. I was lucky enough to have that opportunity about a month into my retirement, when one of my local city council members in Sausalito was called to active duty in the Navy Reserves and asked me to fill in.
Each of Sausalito’s city council members had an equal vote, and we took pride in our ability to find consensus on most issues. The experience taught me so much about the importance of listening, understanding different viewpoints, and finding common ground.
After a year on the city council, I became one of the founding members of the Sausalito Economic Development Committee, which was formed to advise the city on how to increase revenue. We’ve been primarily focused on helping the city recover from the pandemic by transitioning the marketing approach from a day trip destination for San Francisco tourists to a destination in and of itself. Two years later, our hotels and restaurants are having record years, and our performance is now 122% higher than it was pre-Covid. I really enjoy getting to know my community, and having these kinds of metrics to demonstrate the positive impact has been icing on the cake.
IVP: Any other need-to-know advice you’d like to share with up and coming CEOs?
Reilly: Every company goes through stages, but as a CEO, it’s important to recognize that what got you through the first act, won’t get you through the second. Don’t rely on what you did in the past to achieve success in the future. Actively seek out every opportunity to listen, learn and look for new opportunities to evolve.