How to go from Engineer to CEO

With Jyoti Bansal, Founder & CEO at AppDynamics

By Ashu Garg


Jyoti Bansal’s AppDynamics recently sold to Cisco for $3.8 billion. As a first-time sole founder and CEO from a tech background, Jyoti tells me what he learned about the business side of things.

I. Episode Recap

Jyoti Bansal came to America shortly after graduating from IIT Delhi in 1999, eager to put his knowledge to use in the startup world. He was an engineer at three different Silicon Valley startups before deciding he was ready to form his own. In 2008, Jyoti founded AppDynamics, an application performance management tool for the rapidly growing cloud-based distribution market. In his initial funding round, he attracted interest from seven VCs in one week. The company also attracted interest from customers including NBC Universal, Nike, FedEx, and Qualcomm. Less than nine years later, Jyoti sold AppDynamics to Cisco for $3.7 billion. Here are a few things he learned along the way.

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Raising Money as a First-Time Sole Founder

Jyoti says your pitch to VCs needs these three parts to tell your “complete story”:

  • How this idea will become a billion-dollar company: Does the market exist and is it big enough?
  • External validation: What do potential customers think?
  • Selling yourself: Why should VCs invest in you?

Lessons learned: Jyoti was working at another job when he began raising money for his new company. One VC asked if he really believed in AppDynamics, why he was he still working somewhere else? He quit his job the next day.

Finding Product-Market Fit

  • You want five to ten customers paying for a similar business case to have early product-market fit. It took AppDynamics about 20 months to achieve that.
  • As the founder, Jyoti constantly talked to customers to find out what was working and what wasn’t.
  • You need to have at least 100 of these customer conversations.

Lessons learned:

  • Don’t assume you will get all or any of your customers through your investors. No investor has a Rolodex big enough to get the 100 customer meetings you need. You have to take that on yourself.
  • Be open to hearing “no”: Negative feedback is hard to hear, but it is helpful. Jyoti asked all “four horsemen of SaaS” if they would use his product. All four said no. It was the most brutal feedback he could’ve gotten, but it obviously led to good things.
  • Get the engineering team involved: the product-market fit process usually involves a lot of changes made quickly. Rather than selling his engineers on every change, Jyoti opened customer calls up to everyone so they could hear the motivation behind the changes for themselves.

From Founder to CEO

As a young immigrant from a technical background, Jyoti had to prove that he could handle the business side of his company as well as he could the technical side.

Lessons learned: The three things you have to master as a CEO.

  • Technology: this is what investors bought into in the first place.
  • People: you aren’t doing this by yourself anymore. You have to learn how to recruit, inspire, lead, and manage people.
  • Sales: this is your number one job now. You are selling yourself, your idea, your company, and your product.
  • If you can’t or don’t want to learn this yourself, it’s time to bring in a CEO.

Pulling Back

You can’t focus on scale if you’re micromanaging. Now is the time to trust your team. Hire salespeople to do the selling for you. Don’t be directly involved in every single sale.

Lessons learned: Jyoti realized that he didn’t know enough about sales to know who to hire as salespeople, and didn’t have the time to learn. He hired a VP of sales and VP of marketing to fill in his knowledge gaps.

Published on 02.17.2022
Written by Ashu Garg

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