Jay Chaudhry is the co-founder and CEO of Zscaler which is a global cloud-based information security company. He took Zscaler public and currently has a $10B market cap. Prior to this, he founded AirDefense (acquired by Motorola), CipherTrust (acquired by Secure Computing), CoreHarbor (acquired by AT&T) and Secure IT (acquired by VeriSign).
In this episode you will learn:
- The most satisfying thing about ringing the bell on Wall Street
- Jays number one priority in building a company and as CEO
- How Jay hires and leads company culture without a corner office
- The 3 questions he asked himself before starting his latest venture
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Jay Chaudhry:
Jay Chaudhry is an accomplished entrepreneur, having founded a series of successful companies, including Zscaler, AirDefense, CipherTrust, CoreHarbor and Secure IT.
Chaudhry has a history of introducing visionary innovations to market that address the demand for securely enabling emerging technology trends, such as the Zscaler global security cloud for distributed and mobile enterprises. His considerable work in the security technology sector has made him a trusted advisor for many enterprise CIOs and CISOs.
Chaudhry leverages more than 25 years of security industry expertise, including engineering, sales, marketing and management experience with leading organizations, such as IBM, NCR and Unisys.
Prior to founding Zscaler in 2008, Chaudhry founded and led AirDefense, a wireless security pioneer, before its acquisition by Motorola.
From 2000 to 2006, Chaudhry founded and led CipherTrust, the industrys first email security gateway, before its merger with Secure Computing.
Chaudhry founded and led CoreHarbor, a managed ecommerce solution, before it was acquired by USi/AT&T.
In 1996, Chaudhry founded and led his first company, SecureIT, the first pure-play Internet security service, before it was acquired by VeriSign in 1998.
Chaudhry has been honored as an Ernst & Young Entrepreneur of the Year (Southest USA), an Information Week Innovator & Influencer and SC Magazine Market Entrepreneur.
Chaudhry earned his MBA and his MS in Computer Engineering and Industrial Engineering from the University of Cincinnati and his B.Tech in Electronics Engineering from IIT BHU Varanasi.
Chaudhry has completed the Executive Management Program from Harvard Business School.
Connect with Jay Chaudhry:
* * *
FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. What I like about the guest that we have today is that he’s done it not once, but five times. So I think we’re going to learn what the full cycle looks like and what it looks like when you do it not once, but five times. Without further ado, I’d like to welcome our guest to the show. Jay Chaudhry, welcome to the DealMakers show today. It’s an honor to have you.
Jay Chaudhry: Alejandro, thank you. I appreciate the opportunity.
Alejandro: I like to do a little bit of walk through memory lane here and go about how you were brought up and your childhood because I believe you were born and raised in a very little town next to the Himalayas. Is this right?
Jay Chaudhry: That’s right. In the foothills of the Himalayas.
Alejandro: How many people were there?
Jay Chaudhry: My village had 800 people.
Alejandro: So, how was life growing up there?
Jay Chaudhry: It was wonderful. It was a small little town of its own, happy, and contented, without any big things in life. We got electricity once I finished my eighth grade. We got running water when I finished tenth grade, but it was good. My parents were farmers, small-scale farmers. I learned all the hard work and ethics and integrity from them.
Alejandro: That’s amazing. At what point do you start getting involved with computers because I understand that you got your Bachelor of Technology there in India. How did you start to get involved with the world of electronics and computers?
Jay Chaudhry: You know, I don’t have a history of a young kid at six or eight-year-old playing with computers. I did farming. My dad, who never got a chance to really go to school encouraged me to study, and I was good at my studies. When I finished high school, people said engineering is good to do, I said, “Wow, I should do engineering.” When the opportunity came, I said, “What kind of engineering?” Computers were not widely used at that time, and I heard that electronics engineering was a good thing, so I applied to IT (Indian Institute of Technology, India) and got into electronics engineering and that took me toward computers. I probably went there by accident rather than by choice or by design.
Alejandro: At what point do you land in the U.S.?
Jay Chaudhry: Once I went to IT, I realized that there are lots of smart people who had come from various parts of India, from the best schools and best backgrounds. After the first or second year, everyone was talking about going to the U.S. for Masters. It was a very popular thing to do, and I started to talk to those friends, and I started looking at different schools and said, “I will apply to go to the U.S. as well.” So after I finished my Bachelor’s Degree, I applied, and I got admission in a few places, but there was only one place I could come to because they offered me a U.S. scholarship. So I came to the U.S. in Cincinnati, and I was lucky that Tata, one of the big industries in India, they offered a small scholarship that could give me a plane ticket. So I bought a plane ticket, and I came here. I was very lucky.
Alejandro: Was it like a big culture shock to all of a sudden land here and see like everything that was happening around you, especially with innovation?
Jay Chaudhry: You know, it was a fairly big change coming from India, but I would say going from my village to IT was a much bigger change for me than coming from my college to the U.S. because we all read and talked about the U.S. We knew what to expect. But going from my village to IT was a much bigger change.
Alejandro: Got it. One of the things that I thought was really interesting is that you went right at it as an entrepreneur yourself. So you didn’t wait very long. You literally in ’96 went at it with SecureIT. Why did you decide to take this route rather than working for someone else? What was the trigger?
Jay Chaudhry: I did actually work for different companies, but a little over a dozen years for 13, 14 years after doing my Master’s. I learned some of the sales and marketing at companies like IBM, NCI, Unisys. But in the early ’90s, I started reading about Silicon Valley. Netscape had just gone public. I loved the internet. The browser had just come around. I was reading more and more about it, and really after reading all this stuff but asking the question: why can’t I do these startups? That’s really how the whole thing started. I don’t have a history in my family of starting businesses from very early on. It was reading that got me excited about these things, and that’s when I said, “Let’s try.” I’ve always been a risk-taker all along. So getting into a startup was a little bit natural for me because startups mean taking risks.
Alejandro: I believe that with SecureIT, this is your first rodeo, and when it’s your first venture, it’s not as easy. Who was the founding team to build this company up? Who was there with you behind the trenches during the early days?
Jay Chaudhry: I did all the business model figuring out, and when I started it, we didn’t just put our lives on the line. My wife is actually an IT professional with an NBA in finance. I told her, “Why don’t we do the following. You also quit your job.” She was working at Bell South. So we burned our bridges behind, so there was no turning back. “You handle all the finance, the payroll, all the other stuff that needs to be done, and I focus on sales and marketing.” It was a professional services company. We did security services. There was not a lot of engineering needed to build the product. It was essentially designing, architecting, selling, supporting, deploying security products like firewalls and the likes. I needed to hire people who were technically good to deploy these products. So we hired a few of them, but the biggest inspiration and my starting partner was my wife, Jyoti.
Alejandro: That’s amazing. I started my last business with my wife, so I know the feeling. Two communications. One at the house, and then another one at the office. Right?
Jay Chaudhry: Yeah.
Alejandro: So I understand that you guys, especially when it’s your first business, it’s a little bit tougher to secure some financing. How did you guys go about capitalizing the business?
Jay Chaudhry: We did not get any finance. Cincinnati isn’t the easiest place to get funding. I spent about three months trying to raise funds. I realized that it wasn’t working out, so I had two options. Either stop thinking about starting a company or put our life savings on the line. We choose the second path. You know, looking back at life, my life was pretty simple. I didn’t have a fancy big home to pay a big mortgage. I didn’t have any fancy cars, so the expenses weren’t that high, and we said, “Let’s try. If it works, that’s great. If it doesn’t, we can always find a job.” It was a mindset. So there was no outside funding involved. We funded it.
Alejandro: So you funded it and thank God the outcome was good.
Jay Chaudhry: Yes.
Alejandro: So, everyone was happy. At what point do you guys have VeriSign knocking at the door?
Jay Chaudhry: There were lots of companies that came knocking at the door. For VeriSign, they knocked at the door once, and we said, “Sorry, not interested. Go away.” Or the term I used was, “We’re too young to get married.” Then they came back again, and I said, “No” again. And Jyoti said, “Do you even know what you’re saying no to? Should you sit down and talk and understand and then say no. I thought I was pretty smart. Then we sat down, and we had a dialog, and it seemed like it would be a good opportunity to bring the two companies together. So we decided to get acquired by VeriSign.
Alejandro: This was a really big deal. It was your first company as well that you started with your wife. What was that day like when you actually signed the agreement, and you made this deal happen?
Jay Chaudhry: It was exciting, but I’ll tell you, I had this weird thinking. I have little attachment, for one. I turned down some crazy offers that were made by some of these other companies who really wanted to show me that if I sold, my return would be 20x or whatever. None of that stuff moved me a whole lot. I think a lot of my success is because I’m not attached to money. I do the right things. I’m really not into fancy, expensive houses, and cars, and having five homes or whatever. So, it’s a good thing. I felt good. I’d been having independence. The wealth you create is a good option to have.
Alejandro: And that’s great that you’re saying that, Jay because one of the things that I’ve seen as patterns from some the great founders that I meet is that, that attachment is out the window. For them, it’s all about passion, having fun while they’re doing what they’re doing. Then also, to a certain extent, to give back. That’s what really moves some of these folks.
Jay Chaudhry: Yeah. A lot of that influence came from my mother. My wife is also not into any of that or money stuff. So it’s a good thing. You do it because you should do something. The most satisfying thing to me was all these people who became financially independent about 70 or 80 employees. The day I left, I looked at the stock price. I looked at the options. I went to the spec sheet and did the math, but 70 or 80 essentially had more than a million dollars in their worth. I don’t know exactly when they sold or how they sold, but that was probably the most satisfying thing for me.
Alejandro: Very nice. What were the terms of the transaction?
Jay Chaudhry: The terms of the transaction. VeriSign, it was a stock deal. We got about 8.5% stock and about 3% options on top of that.
Alejandro: Got it. So while it was reported, it was about 70 million in stock.
Jay Chaudhry: That would be about 8.5% of that valuation, and there were some different options on top of that.
Alejandro: Really cool. So obviously, the first rodeo, first success. If you had to look back at this experience, what was the biggest learning for you?
Jay Chaudhry: Answering, first, the previous question a little bit, when we did Zscaler IPO and the Zscaler and the secure acquisition, I felt a similar sense of accomplishment because these [13:58] at a much bigger level and at a much higher scale. What was the learning out of SecureIT? If you choose the right market at the right time, and you put together a great team, and you focus on your customers, good things will happen. That’s what I carried on throughout the journey. Also, linked to that was going into new markets. When I started SecureIT, there were no security services company. We were probably the first few players in a security services company. First-mover advantage can be very hard.
Alejandro: Yeah. First-mover advantage in many instances is everything. So one of the things that I see here is that you worked for a little bit for VeriSign after the transaction, and then after this, you go at it again for your second business, CoreHarbor, Inc. This company eventually was acquired by AT&T. What were you doing at CoreHarbor, and how did the idea come about?
Jay Chaudhry: After building SecureIT, one of the things that felt like, “Wow. This thing happened so well. Was it a fluke or can I really build a business systematically?” There were one, two I was pleased to see so many people financially independent. The goal was if we do more, more people who work with me will be financially independent. So driven by a couple of those things, I was looking for new ideas. CoreHarbor was the first eProcurement ASP using Ariba software. We wanted to build an ASP business. If you think what ASP ASP is a precursor to SaaS. SaaS is multi-tenant. ASP would be a single-tenant where you had a dedicated box for a given customer. So I went to the best eProcurement software company, Ariba, that was the mark leader, and I said, “Look. You’re selling this on-prem software. Let me do the hosted version of Ariba, where I will manage the service and make it available to our customers. That was a very novel idea. It was a good idea. I mean, if you look at what I was doing 15 years ago, and now a number of the security vendors were trying to compete with Zscaler, they’re trying to take a single-tenant off boxes and trying to spin them in public clouds and trying to do this. I can look back and say, “Huh.” We really thought through some of these things early on and then moved to the more advanced technology. But eProcurement was a good idea. Eventually, now, it has evolved to a level where electronic-procurement is done on a SaaS version. Everyone does it. Ariba got acquired, but getting procurement online has become the norm. We were the early company that proved it and really made it very successful.
Alejandro: Really cool. Then CoreHarbor was acquired by AT&T. Then basically you move on to probably your second biggest success, and we’re going to talk about your biggest success, which is your current company now, which is Zscaler. But before we get into that, I’d like to talk about this third business that you built, CipherTrust. Tell us about CipherTrust.
Jay Chaudhry: CipherTrust came from my work at SecureIT. At SecureIT, I was very familiar with all the security issues, and all the hacks and attacks are happening. We were seeing emails taking off. It wasn’t widely used. I said, “Huh. If email takes off, we’ll do more text. So it seemed like, “Yes. If that’s the issue, why shouldn’t we build something like an email security database, so that all the emails that are being sent flow through our security inspection service to make sure that you’re not infected with viruses and worms and it all can be taken care of? ” Again, the first-mover advantage is what the key thing was here, and we built a technology that was purpose-built from scratch, and the business took off. The business grew pretty rapidly. The reason I rank this company high is that the ROI here was very impressive as well.
Alejandro: Got it. How did you capitalize this business? Obviously, this is your third rodeo, you’ve been around quite a bit, and I’m sure that when investors were probably knocking on your door nonstop. So did you accept their money, or how did you capitalize this business?
Jay Chaudhry: You know, when you don’t need money, everyone knocks at your door. All right?
Alejandro: Well, that’s how the saying goes. Right? When you need money, you don’t get it, and when you don’t need it, people throw it at you.
Jay Chaudhry: Exactly. So after SecureIT, I never went out looking for money. I funded CoreHarbor all by myself. I funded CipherTrust all by myself. Now, I did take a round towards the end of it, and that’s because I was working on going public and I wanted somebody, an outside investment because it seems weird to go public without any external funds. But that was the last date. That business went very well. We were cashflow positive after only about three years, and we had some impressive growth. So very happy with the business. We had some of the largest companies around the U.S. as its customers.
Alejandro: Got it. I think it was reported that the intention was to raise 100 million for the IPO, but I guess the question here is, how big was the business when you guys actually did the IPO?
Jay Chaudhry: Sorry, we didn’t do that IPO. Eventually, it was acquired.
Alejandro: So before the IPO, that’s when and this is going to be interesting. That’s when you guys sold to McAfee?
Jay Chaudhry: Yes, that’s correct.
Alejandro: Why don’t you tell us about what exactly happened? Because you’re the second person in a month that I’ve spoken with that announced an IPO, and then all of a sudden, they decided to make an acquisition and go that route. So why did you decide this?
Jay Chaudhry: Actually, the acquisition went through Secure Computing to McAfee. We were growing pretty well. We were doing about 100 million dollar round rate, analyzed business. Warburg Pincus approached me, and they said, “Look, we have a serious investment in this company called Secure Computing. That was doing about 200 million dollars a year. If we merge the two companies together, I think you have an opportunity to become a billion-dollar-annual-revenue company. So I had email security technologies, secure computing firewalls, back security, and a few other pieces of technology. That seemed a pretty attractive plan. Warburg Pincus seemed good. I really wanted to build something big. I didn’t want to remain like one of the 2,000 small security companies. So that’s how we merged into Secure Computing. A couple of years later, got acquired by McAfee.
Alejandro: What was the deal of the transaction? I believe it was about 273 million. Is that right?
Jay Chaudhry: I think it was a cash and stock deal. If you look at the overall value, it was just shy of a 400-million-dollar range.
Alejandro: Got it. For you, Jay, what was the biggest lesson of this journey of CipherTrust?
Jay Chaudhry: I’ll tell you the lesson here was I want to be careful, but candid. If you combine with a legacy company and the cultures don’t align, it doesn’t go well. Acquisitions need to work well if the cultures are aligned. So I was coming from a fast-moving, high innovation environment, and hoping that after the merger, we move the whole thing fast. I realized and learned that you really can’t. They were a little bit in a steady-state, slow-growth mode. I was actually a misfit there even though I was chairman I was the second actually probably the single largest shareholder. And that’s when I decided, ” Hum. Probably I could grow. I could build a bigger company if I start from a clean slate without having to worry about integrations and the like. That’s what I eventually ended up doing. So lesson learned: new, clean slate technology meant for the future world is a far higher chance of success than taking legacy technologies and trying to retrofit. That’s where Zscaler eventually, the idea of these came from that learning.
Alejandro: Got it. So after this transaction, you did your next business, and your next business was AirDefense. I really want to talk about Zscaler, so why don’t we just really quickly six years that you spent in building AirDefense. If you had to summarize how you guys came up with the idea, and what ended up being the outcome and the lesson, what would you about AirDefense before we get into Zscaler?
Jay Chaudhry: Quickly, first of all, these things are not Zscaler. Remember, earlier I said kids are a year or two apart, raising all of them. At one time, I see three companies.
Alejandro: They’re all your babies.
Jay Chaudhry: Right. The AirDefense idea was very simple. It was like CipherTrust and SecureIT. Look for a new opportunity. When Linux showed up in the market around the 2000 timeframe, and I bought one from BestBuy or wherever and put it at home, wonderful I said, “Will businesses adopt WIFI technology?” I answer one, “Of course they should. It’s wonderful. If they do, will security become an issue because all of your signals are in there? So, yes. I should build something to really protect it.” So we came up with the notion of AirDefense. It has nothing to do with military. It is about defending your airwaves. So we built this monitoring technology that could monitor all the traffic going from your laptops to WIFI access points. It’s a great idea; great concept. It was fascinating. The business did very well, and we became complementary to infrastructure companies like Cisco and Aruba of the world who were offering WIFI infrastructure. Symbol Technologies was a big WIFI infrastructure company, and we sold complementary, and they kept coming and saying, “We’re so good together. We want to buy you guys.” So after saying “No” a while, we eventually agreed to combine with them. So it was very wonderful. By the time this happened, Symbol had already become part of Motorola company. So the AirDefense became part of Motorola.
Alejandro: Got it. So I’ve got to ask you this. It seems a pattern that when people approach you, you say, “No.” So you must be a magician when saying, “No” because you’re captivating people to keep knocking at your door. How do you do that, Jay?
Jay Chaudhry: No, see, it really comes from strength. If you are strong and you are doing well, you can say, “No.” If you’re not strong, you can’t say, “No.” Right? To be strong, you need to manage things right. I think sometimes entrepreneurs become overly optimistic and start spending so much. The return doesn’t happen, and then they become desperate. I think there’s a right formula to investing and growing somewhat in sync. Yes, you need to make investments ahead of your returns, but sometimes if you invest x and your ROI say a fifth of it, you will run out of money, and you have no choice but to say, “I need to do a fire sale.” But if you really have a little bit of coordination, life can get better.
Alejandro: Got it. So finally, there was a transaction, like you were saying, in this case. So a no transferred into a yes, and then eventually you go to build what is probably your most meaningful company from a market/value perspective, which is the way the valuation of the business is. You guys did an IPO, and the market cap is over 8 billion. But before we actually go into where things are today or at the present or future, let’s go towards the past, and I want to go back to 2007 where you are making this jump from your previous business, AirDefense to Zscaler. I want to understand how you came up with this idea because, at the end of the day, this is your fifty company. Did you already have enough before, Jay?
Jay Chaudhry: Right. So here was the thinking. When I did SecureIT, I was thinking, “Huh, can I really do it? It must be a fluke.” By the time I had done these, I kind of said, “I know I can do a startup.” I had no interest in doing one more and flipping it. This time, I want to do something big. I want to do something lasting. So the mindset was very different this time. I was ready to invest whatever it took. One big mindset change was I invested more money in Zscaler than all other startups combined. That’s because the idea was big. So the notion was simple. If you want to do something big and lasting that fixes some serious problem, and it is future-looking, what would that be? So I asked three simple questions: 1) The internet was a big source of information even ten years ago. Will the internet become a bigger source of information? The answer seemed like, of course, it will. If the internet became a big source of information, will more tracks come from the internet? Yes. It seemed very obvious. So that was #1. 2) I’ve been using SaaS companies like Salesforce and NetSuite since year 2001 in all of my startups when each was under 10 million dollars in annual sales. Will more companies or will more applications become SaaS? The answer seemed like, yes, it should. It makes so much sense. 3) We were mobile ten years ago. We all had laptops. We had Treo’s and Blackberry’s. iPhone was announced. Will we become more mobile? The answer was, yes. So if we become more mobile, information moves to SaaS or internet, why should security sit in the Cloud? Why don’t we build Security as a Service? So since I knew Salesforce very well, I understood the multi-tendency and all the clean architecture it had done. I’d seen how Salesforce was beating civil software left and right, and I said, “Why? If I build a security cloud like Salesforce for sales for CRM, I could be displacing all these thousands of applications that 2,000 security companies are building. So that was the inspiration behind it.
Alejandro: Really nice. So who did you build this with? What was the founding team or the first critical hires?
Jay Chaudhry: I’m very proud of the founding team of Zscaler because the platform I wanted to build would be high, high performance, inspecting things at line speed, and I came across the chief architect of a company called NetScaler. NetScaler was a load-balancing company that was acquired by Citrix. This company was already acquired for two or three years ago. The team was getting unhappy. You know what happens after a company gets acquired by a large company. People just start getting tired of politics, etc. [32:32]. I talked to him about building a high-performance service. He’s amazing. He’s brilliant. As we had a bunch of sessions, I knew he was the guy who could do it. Then he and I met a few other engineers. So we came together. I was in Atlanta, and I said, “Huh. Let’s move to the Bay Area, where the core team is. I want to start this company in the Bay Area.” And that’s how the team came together very strong team. We started with about a dozen people literally on day one, and we formally started the company. About half of them were here, and half of them are [33:17]. So it started as a multi-national company with a strong team of very good people.
Alejandro: Very cool. In this case, you actually got some money from outside investors. So you did get some money from Lightspeed Right?
Jay Chaudhry: Not for the first five or six years. No. It was all self-funded.
Alejandro: Got it.
Jay Chaudhry: Look. By this time, I knew that I didn’t need funding. Here’s a lesson that other entrepreneurs should learn. If you really want to do well, put your own money in the game. The money from outside gets treated very differently than your own money. It sets the right culture. I really didn’t take any money. I put all the money in. I told my team, “We’re building lasting architecture, so don’t do any shortcuts. Build it right. The first round came actually it was led by [RS AMC 34:20], and Lightspeed came along with that. These guys were trying to acquire us. Everyone wanted to acquire us over time, and I had no interest in getting acquired. So they said, “Let’s take investments.” So we ended up taking some investments from them.
Alejandro: Why did you decide to take investment then?
Jay Chaudhry: You know, I said no for a while, and then they convinced me that we could open some more doors for sales and marketing side. I really didn’t need money, but two things: 1) Maybe they can open doors for us because customer acquisition was always important. 2) They could be sounding boards. It’s good to associate with some of the smart people out there. So those two reasons.
Alejandro: Got it. So tell us about the early days? What were the early days of ZScaler like? What were some of the challenges that you guys were dealing with?
Jay Chaudhry: You know, the technology we set out to build, multi-tenant, high-profile, global it actually turned out to be better than I expected. Since the dreams were so big, I thought if my team can deliver 80%, 90% of what they can tell me they can deliver, I’ll be very happy. They delivered more than 100% of it. So on the technological front, yes we had a bunch of challenges, but the team solved it very well. The challenges we face were more on the sales side. We took this solution out to the market and tried to go through the same traditional channel of value and resellers. Those resellers felt threatened because they would rather sell boxes with professional services and the like. We tried to sell the service to a technical audience and enterprises who kind of felt a little bit threatened as well because they want to patch and fill the boxes and control them. So over time, I learned and realized that our technology is not just a security thing, it enables transformation of the Cloud, and transformation is done by C-level. It’s a CIO. It’s a C-surface, CTO because what happens is, when applications move the Cloud, the traditional [36:53] Network, which is optimized to go to the data center has to change. It must go direct to the Cloud. That means every office should connect to the Cloud. If you do that, you need a security layer like Zscaler that’s sitting on over 100 data centers around the globe. So we had to sell differently. We had to learn how to sell top-down for Cloud transformation rather than selling like most security companies sell. What do most security companies do? They sell with FUD, fear, uncertainty, and doubt. They all start with hacks and attacks and all those things, and that’s not what we do. We show the CIO. We show the CTO how we help you transform to the Cloud, and that learning came over the years. We have lots of scars of the learning, but once we had adapted, our sales have grown immensely well as you know the numbers are all public these days. We’re very proud of the sales execution our team is doing.
Alejandro: Yeah. It’s amazing. I was able to take a look here about the trajectory that you guys have had. So you took the company public, and then I see that literally, it seems like 2008, you have more than doubled. The share price has more than doubled, which is amazing. I want to talk about the day where you were ringing the bell, and you did the IPO. We all know the press likes to talk a lot about money, and I know that you’re completely unattached to it, but they were obviously saying that this took you to the billionaire status, which for some of them was a milestone. We spoke about this, and for you, that was not a milestone, and you’re not attached to it. But when you were ringing the bell, that’s definitely a good way to celebrate; to celebrate your journey as an entrepreneur, and also what you have built from the ground up. I want to know what was going through your head when you were ringing the bell.
Jay Chaudhry: You know, it was extremely satisfying. Yes, I got my financial independence at the time of SecureIT. I had more money at that time than I knew what to do with it. But I also had seen that at SecureIT, all my employees felt so happy being financially independent. So I looked at this opportunity as hundreds of people at C-scale becoming financially independent or having the ability to do things they could never do. Somebody wanted to send their kids to private school or buying a better house, or a better way, or all go on vacation for six months. These people have been working with me for years. The founding team of Zscaler [39:56] had started 11 years ago is still with us. So it was extremely satisfying. It was a very, very enjoyable moment for me and my executive team. We had about 75 people who had flown from different parts of the country or some outside countries to come together to be part of this celebration. So it was very memorable and very satisfying.
Alejandro: Really nice. How many employees are right now with Zscaler?
Jay Chaudhry: We have about 1,400 employees.
Alejandro: Wow. So how do you think about culture?
Jay Chaudhry: Culture is our #1 priority, and if you ask me what makes a company successful, the idea is obviously important of what you want to build. But ideas are a dime a dozen. It really requires a wonderful team to make it happen. So its own teams execute. So the #1 priority for me is all about teams, and teams that are passionate, that are hungry, that are driven, and they don’t mess with politics, but to do that, the culture is extremely important. So we look at culture as our biggest asset. We’ve built a great culture where there’s a lot of teamwork. There’s a lot of focus on customers. A true passion and drive in our employees that go the extra mile. If you ask me my #1 priority as a CEO is how do we maintain this culture as we are growing and becoming bigger?
Alejandro: So how do you do that, Jay?
Jay Chaudhry: Well, there’s no single silver bullet, but the #1 thing you can do is the following: Culture starts from the top, and culture is not about putting a big poster on every wall. Culture is how your leaders lead and live. If leaders in the company exhibit the right culture, everyone gets it. If I get a corner office on the top floor with a mahogany desk, no matter what I say, people understand what’s going on. So our culture opens communication, not a single office for anyone. I sit in the open desk the same way our employees sit. It sends a strong message. That’s #1: living the culture and leading upfront. The second thing, I think it’s important to hire people who are aligned with your culture especially the managers because if my managers we hired are not in tune with the culture we want to carry on, they’ll hire the wrong people. So those are probably the two most important things to keep the culture.
Alejandro: I love it. One of the things, Jay that I typically ask the guests we have on the show is in your case, it’s just unbelievable. I mean you have all these different experiences in companies that you’ve started from the ground up. So I want to ask you if you had the opportunity to go back in time and have a chat with your younger self before launching a business, what would be that one piece of business advice that you would give to your younger self and why?
Jay Chaudhry: You know, I ask that myself quite often, and I think about my time with my family, my time with my employees, and everything. I’ve been lucky. My wife and kids are involved. We got them involved in everything, so we spent a lot of time together. One advice I give people is if you want a good, happy life as an entrepreneur, get your spouse involved in a startup because my wife fully understands what it takes.
Jay Chaudhry: She’s part of it. She’s very different from me. I’m the risk-taker. She’s a risk-avoider. So we end up balancing out a little bit. I’m very driven, and she’s very happy and satisfied. It’s a good balance, but I think getting your family involved if you really want to do a startup, if it can be done, it’s a very good thing. You know, looking back overall, I made lots of mistakes along the way in every company I did. For example, at Zscaler, the biggest learning lesson I had was sales. My sales had to be done differently. But one lesson I would say is when entrepreneurs are emotionally attached with a company, and they’re doing it for money, they’ll be often disappointed. If you really do it for your passion and drive and believe that money will follow you, then you end up being a lot happier.
Alejandro: I love it. That’s very, very powerful, Jay. So for the folks that are listening, what is the best way for them to reach out and say hi?
Jay Chaudhry: I have a LinkedIn profile, and people can send a message to me on the LinkedIn.
Alejandro: Fantastic. Well, Jay, thank you so much for being on the DealMakers show today.
Jay Chaudhry: Alejandro, thank you. I appreciate the opportunity.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic, and if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help whether it is with your fundraising efforts or with selling your business, you can reach me at email@example.com.