From $18B to $100B: The CEO that Revolutionized Palo Alto Networks
EP 88 of The Logan Bartlett Show: Untold stories from tech's inner circle
Nikesh Arora became the CEO of Palo Alto Networks with no cybersecurity domain expertise and has grown the company from $18B to nearly $100B in under 6 years. In my latest podcast episode, we discussed some of the greatest learnings from growing Palo Alto Networks into a powerhouse, his celebrated M&A strategy, and stories from his wide-ranging career path, which is one of the most interesting careers in Silicon Valley. Nikesh was…
CMO of T-Mobile
The first external VP hire at Google before ultimately becoming their Chief Business Officer
COO of SoftBank leading the start of the vision fund with Masa
Now the CEO of Palo Alto Networks
Click here to view the episode transcript | Watch on Youtube | Listen on Spotify or Apple Podcasts
✉️ Episode Memo
Some of Nikesh's learnings and advice:
Lacking domain expertise can be a huge advantage
Nikesh didn't know marketing when he joined T-Mobile. He didn't know ads when he joined Google. He didn't know enterprise software sales or cybersecurity when he joined Palo Alto Networks. At some point, every "domain expert" didn't know anything. With humility and work, you can get up-to-speed on almost any sector and fresh eyes can bring new perspectives.
Silicon Valley overemphasizes product and underemphasizes marketing
Nikesh believes that Silicon Valley over lionizes product and under appreciates the storytelling of why people purchase products. There's a balance for both, but if you're not telling a cohesive story about why someone should care about your product, it might not matter the quality of your product.
Great products take 4-7 years to build
It is true of Palo Alto Networks. It was true of LinkedIn. It was true of Uber. It was true of Airbnb. Know that you're going to be on a long journey to get your product to where it needs to be even if you have a great start, and prepare your team for the journey.
Nikesh’s 3 M&A rules from making 17+ acquisitions
→ Rule #1: Cut out the middleman: Nikesh and the Palo Alto Networks management team negotiate directly with the principals who started the company with blood, sweat, and tears. As Nikesh puts it, “You've got to make sure they understand you think it's as important as they think it is.” Nikesh believes in bypassing corp dev and bankers, and if someone else gets in the middle of the negotiation, ask them to stay aside.
→ Rule #2: Hire emerging leading companies and let the founders run it. Don't settle for anything but #1 or #2 in a space. The founders whom Palo Alto Networks acquires become the bosses of existing employees because they beat in-house teams with limited resources faster, show more agility, and have a super strong product vision.
About 70% of Palo Alto’s product team is run by acquired founders or their teams, leading to a positive cultural transformation. Nikesh emphasizes the importance of retaining founders for 4-5 years so they can fully realize their product visions. Once the product is fully integrated, founder departure or loss of motivation poses minimal risk compared to right after the acquisition.
→ Rule #3: Align the product roadmap and org structures before closing a deal: Nikesh and his team ensure that there is a clear plan of how the acquired company will fit into Palo Alto Networks and what they will build together. If there’s misalignment, they cancel the deal.
→ Common Mistake: Nikesh cautions against undervaluing new innovative players and overestimating the ability of in-house teams to replicate their success, an error frequently made by larger corporations.
Overall a fascinating conversation with someone who has executed in enterprise software as well as anyone in the last 6 years.
⭐ Trailer
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