GoGrid, one that he repositioned in 2007 even though its predecessor was healthy and growing. Four years later, John’s hunch appears right on the money. GoGrid finds itself in one of the fastest-growing sectors of the $3.3 trillion global information technology industry: cloud computing. And the firm has more than doubled its revenue.Since 1991 John Keagy has built and sold a number of successful Internet services companies. His most recent creation is
Part of John’s story is a familiar one in Silicon Valley: a visionary, driven CEO who launches and leads his firm to rapid growth. But other parts are less typical. First, he put his own money behind his companies: he funded GoGrid and its predecessor (ServePath) without outside investments. Second, he realized that repositioning and managing a firm far bigger than any he had run before required him to raise his game as a CEO.
John’s instinctive grasp of the potential for cloud computing has certainly been on target. Cloud today is a $40 billion sector of the global IT industry that is projected to balloon to $240 billion by 2020, according to one respected industry market research firm (Forrester Research). Even Larry Ellison, the legendary founder and CEO of software giant Oracle, has had to backtrack on his skepticism about the cloud market. (He once called it so much “water vapor.”) In October 2011, Oracle announced it would pay $1.5 billion for a cloud company called RightNow Technologies. And while cloud services might not be as tangible as smart phones or notebook computers, rest assured that cloud is white hot – as hot among venture capitalists as any IT sector.
GoGrid has commanded a great deal of attention despite the fact that it lacks the funding of much larger rivals in the cloud space, including Amazon.com and a venture-funded and now publicly held firm called Rackspace Hosting Inc. In fact, GoGrid, a privately held based in San Francisco, is viewed as a market leader in one corner of the cloud market: infrastructure as a service.
John himself has been lauded by tough Silicon Valley technology sector watchers, including the highly influential GigaOM blogging site. “Under Keagy’s watch, GoGrid has been expanding in terms of scale, scope and capabilities at a fairly rapid pace – all without venture funding – and it has developed a reputation for quality performance,” wrote GigaOm blogger Derrick Harris in June 2011. (click here)
GoGrid’s growth has been stunning, and over the last five years Rob Sher has helped John improve the way he leads the organization. “When a business’s pain points come to the CEO level, that’s where Rob can really help,” John says. “Rob can bring multiple department heads to work effectively together. That saves the CEO from needing to be a Judge Wapner” (of the TV hit show ‘The People’s Court.’)
John readily admits that was the case at GoGrid and its predecessor firm for years. “I had bootstrapped the business myself and so, as you can imagine, everything unfortunately revolved around me,” he says. “The business couldn’t function without me, and that’s not healthy. It won’t let a business scale. It wouldn’t let me go on vacation.”
John has since been able to take peaceful vacations. The guidance he and his team have received from CEO to CEO has ranged from the strategic to the tactical. John’s first assignment for Rob was of the latter type: to help the firm attract hard-to-find tech talent by creating “sizzling” collateral that marketed GoGrid as a model place to work in the highly competitive Bay Area.
Soon after helping John and his management team wrestle with a number of critical decisions and tasks, Rob was asked to help the firm with its biggest strategic challenge: creating the business plan to reposition GoGrid from a managed hosting company to a cloud software vendor. While this may sound like two ways to say “IT services vendor,” it isn’t. Using its own computer hardware, a managed hosting firm typically maintains their hardware and stock operating software at the ready for customer applications. A cloud software vendor, in contrast, writes software and provides access to it as a service (SAAS) to run customers’ critical business applications and technology infrastructure.
The difference is similar to providing an airplane and access to a runway (the managed hosting firm) or engineering and building the plane and the airport (the cloud software vendor). A cloud software vendor must spend far more on research and development to ensure its software is flawless and its data center infrastructure is modern, secure, and fail-safe. “We went from a company that didn’t spend much on R&D to a company that spends a third of its revenue on R&D,” says John.
The shift in GoGrid’s business model required John to raise his game as a CEO. He is a creative “out of the box” thinker with tremendous passion and charisma. But coming up with new ideas – especially new complex software products – wreaks havoc on an executive team that is trying to implement the last idea. In terms of leadership skills, Robert taught John the importance of committing to a plan. To reposition GoGrid, John put the firm’s business plan on a large poster and kept it hanging in the executive conference room. John then signed the poster and had his team do likewise. The symbolism was big. It showed John’s team that he was fully committed to the plan and the transition to a cloud software vendor.
John also learned how to delegate better – entrusting his executives with executing their part of the strategy without lording it over their moves. They all learned to set and live by an office code of conduct: No one would be allowed to yell or display other forms of unprofessional behavior in meetings, including John himself.
In another key part of the transition, Rob helped John determine what skills his management team had to master in order to make the transition. “We had one guy who was a staff systems administrator, who had then had become manager of systems administrators, and then had become the director, and then a vice president,” John says. “Not only did he have to learn management on the job, he then had to learn executive management, and managing managers. We have several people like that who became vice presidents who had gained all their professional experience working for one company.”
Rob designed a training curriculum so that the rest of the management team could raise its game too. He worked with several GoGrid executives and brought in additional advisors with specialized skills (e.g., on running an R&D organization). The firm made several new management team hires as well.
GoGrid’s growth has been rapid. In the four years that CEO to CEO has worked with John and his team, revenue have more than doubled. Additionally, the firm has expanded globally. GoGrid has two data centers today (San Francisco and Ashburn, VA.), and clients across the U.S. and Europe.
In June 2011, John announced that a new CEO, Warren Heffelfinger, would run the daily operations of the company. After nine years as CEO of GoGrid and its predecessor company ServePath, John is now executive chairman. This new role allows him to focus on long-term strategy and relationships with key customers and business partners.
John sees Rob’s assistance as invaluable in GoGrid’s successful transition from managed hosting to cloud services firm. “Rob operates as a comrade and a peer for the CEO,” John says. “He knows so many CEOs and has been working on CEO pain points for so long that he’s not going to get thrown something that he’s unfamiliar with. He understands the CEO’s challenges. That’s his expertise, and that’s where he delivers optimum value.”