ANET - Jayshree Popovich


Warning this is a long post. The too-long-don’t-read version of this is that I looked into the CEO Jayshree Ullal to see why so many fawn over her and call her a star. I find the devotion and hype around her justified. She has some qualities that remind me of the massively successful San Antonio Spurs coach, Gregg Popovich, and is truly an inspired, elite leader. So I doubled my ANET position. I also make a short case for expanding our definition of the “fundamentals.”

I have been thinking a lot about the intangibles of investing, the things that can’t be modeled on a spreadsheet, the things most investors would not consider “fundamentals” but are absolutely fundamentals, or maybe even more important than fundamentals as the fundamentals flow from great people, not the other way around.

Recently with the big stock drop in ANET there was an unusual degree of excitement. I would argue there’s an X factor at play here. And it’s the CEO, Jayshree Ullal. Much is made of what a “star” she is, so I wanted to dig into this a little deeper for myself.

I find her to be truly enlightened, a leader who talks about empathy, work-life balance, her culture, gender, family, Indian heritage, and success, with great depth, intelligence, introspection and humility. Though she’s often asked in interviews about being a successful female tech exec - a loaded subject if ever there was one - she always navigates that terrain in a way that elevates the conversation.

Here’s her Wikipedia page, get a load of all her honors listed on the bottom…

Jayshree Ullal Wikipedia

And if you watch the way she handles Jim Cramer in this 2014 interview…

Arista CEO Fires Back at Cisco…

… You see that she is extremely composed, mature, tough and eloquent. I read in another interview with her that competition to get into the best schools was so fierce in India that if she got a 98 on a test her dad would ask what happened to the other two points. She notes that her dad was not being too hard on her, and she doesn’t whine or complain about it, she appreciates what he did as the reality of competing in overcrowded market places is you need to be the very best of the best.

If you watch this Cramer interview closely you can see that she is really a corporate black belt - she takes the high road but with some edge. Cramer puts her on the hot seat by playing a clip of Cisco’s John Chambers talking about the lawsuit and essentially calling Ullal/Arista thieves. She does the following:

  1. She asserts her disapproval of the lawsuit
  2. She doesn’t resort to insults or cheap cracks
  3. She says they can share the market place and slips in - with some cold blood - that Cisco is losing market share (from 80 to 70) while Arista has gone from 0-8.
  4. She personalizes it - says Chambers should have called her, not leaked it to the press, making Chambers seem like a bad guy.

This woman is ultra badass. She is truly great figure. What I love so much about following the markets is they are living stories. At the heart of great stories are figures who become metaphorical, who stand for something bigger than themselves. Here we have a successful female tech exec who inspires both men and women; an Indian who is very devoted to her the rigors of Indian culture while praising the creativity of American entrepreneurship; she has climbed a large corporate ladder within Cisco but also has the heart of an entrepreneur, who appreciates the value of making quick decisions. She also points out that Arista (pronounced Uh-riss-ta) is Greek for “to be the best.” This is in her DNA. I’m no expert in networking but it seems many feel that Cisco is a large, bloated giant whose best days of innovation are behind it. There’s a David and Goliath battle going on in which the stakes - better, faster, safer computing/Internet - are gigantic.

For Arista’s insurrection to occur, for the best talent to join Arista’s side, there has to be a leader like Ullal at the heart of the story.

She reminds me of the San Antonio Spurs’ Gregg Popovich. Popovich has lead the Spurs to FIVE NBA titles, which is not easy in a smaller market. He values his players as people and he is that rare guy who can inhabit both the world of the more conservative white man (he was in the Air Force) and show great empathy for the African American experience, which is obviously a necessary skill when you coach in the NBA. (NOTE: I know Pop has criticized Trump - that is not relevant to this post, so please let it go. thx.)

Here’s a valuable bit from Businessweek, where they note Popovich’s ability to relate to his players on a more fully human level than other coaches…

Businessweek - The Five Pillars of Gregg Popovich…

Seven years ago, at the MIT Sloan Sports Analytics Conference in Boston, I saw Jeff Van Gundy, an ESPN analyst and former coach of the New York Knicks and Houston Rockets, speak on a panel about what makes a great athlete. Van Gundy said that when he was a coach, he looked for players who, if you put a copy of USA Today in front of them, would pick up the sports page and ignore the rest. He wanted his players to be interested in two things: “Chasing women and basketball.” His words startled me. They seemed to degrade NBA players (not to mention women) and make their lives sound dreary. But Van Gundy was just expressing, in especially blunt fashion, what was once locker-room orthodoxy. The message from many coaches, Robinson says, was “Be an animal. Focus on the game.”

Popovich has flipped that idea on its head. He wants his players to be fully human. And he’s genuinely curious about them. “I was kind of amazed by how much he wanted to know about you as an individual,” Perdue says. Other coaches, he says, stopped short of where Popovich was willing to go. “They cared about you, but they didn’t really want to overextend themselves in case you got cut or got traded.?… I don’t think Pop ever even considered that. He saw you as a human being first and a basketball player second.” As Popovich’s former players and assistants—including Steve Kerr at Golden State, Mike Budenholzer of the Atlanta Hawks, and Brett Brown of the Philadelphia 76ers—have taken head coaching jobs around the league, his approach has become the new orthodoxy.

The bottom line - I am very grateful to Fools who work their behinds off to build spreadsheets, analyze numbers and present valid scenarios to help us all invest more intelligently. These fundamental elements are key. But we need to expand our definition of what is fundamental, though it can’t be definitively, objectively proven. I just wanted to put a good word in for us Foolish investors who do not have the skill set, inclination or time to analyze numbers.

Generally speaking, the market seems to be saying ANET is pretty fairly valued. Maybe the value investor linked above is right, the stock can go below 200. Maybe it was fine where it was just a short time ago at 311. No matter how detailed your spreadsheet is, it can’t detail, with precision, exactly what price a gigantic, complex market should land on. It’s the X factors that ultimately will determine if ANET will be a major player in 5, 10, 15 years. For this Fool, I just doubled my position, based on what I consider the most fundamental factor, the leader at the helm. And I will sleep fine assuming that over the long haul, Arista will steal more share from Cisco and increase their relevance.

Fool On,



Excellent post Dan.

Having an engineering degree, I used to invest mostly off the numbers from a company.

Now I think the unmeasurable factors are just as or more important, intangibles as you call them.

You can’t out spreadsheet the quants, computers, and AI.

Just look at how stock prices are moving now after earnings releases based on the computers finding key words in the releases. (my guess at why they are moving so quickly and reversing in many cases)

Our advantage is the unmeasurable, intangible factors.



Thanks a lot Jimbo.

I’m trying to incorporate this strategy…

  1. Start with the stocks that are banging out cash and are exciting the more numerically gifted Fools and Foolish analysts.

  2. See which have the intangibles, purely based on my own judgment, though I’m working to define these more clearly over time.

And this last one is new to me, and might be the hardest.

  1. Bet big on highest conviction stocks. Cash generating machines with big moats + intangibles + bigger bets.

If I’m going for passable, even decent returns, I think I might just do indexing, some funds. If gonna really try to hit home runs, this 3rd one is huge. I read an article by Morgan Housel (that is buried behind a paywall, so can’t share) which basically said legend, Ben Graham had one major home run in GEICO that radically altered his performance. I think it made up 50% of his overall portfolio at one point despite his having 100 stocks. I think Housel said Graham let it build to that naturally, and did not advocate going in big and taking on inappropriate risk.

I consider one and two of pretty much equal value.



I rec’ed your post here after just the TL;DR part, and the rest was good too.

If you haven’t looked at Ubiquiti Networks before, there are some potentially very interesting story aspects at play, with founder Robert Pera as majority owner of the Memphis Grizzlies. Since it sounds like you might be at least a mild NBA fan, you might look into that some (if not to make an investment, to see some of the back-story).

long UBNT & ANET, with more shares controlled of each as of today than before the respective earnings announcement of each

Had read about her, but never heard her interviewed. She certainly seems like the Real Deal. Love the Spurs/Pop small market analogy. Thanks Dan!

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Nice post. I knew Pop back when he was a DIII college coach, he is a class act through and through.

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This thread is making me worry even less. I had just bought a bunch of shares because of selling puts that unexpectedly expired way in the money. Only slightly earlier, ANET had gone to $300, and I slept well and decided not to buy back the puts. Then I woke up and discovered that ANET was now over 15% of my portfolio.

But I know that if I sell calls on it now, the calls will go into the money just before they expire, and I’ll be left with a huge opportunity cost.

I think I’m safe before too long - give it another quarter or two, and when Mr. Market will get manic again.

One thing that might scare me off is if Jim Cramer says it’s a good buy opportunity now. :slight_smile: But sometimes he’s right, just like a stopped clock.

Hi Dan,

This was a fantastic post! Possibly the best I’ve read in years!

I’m brand new to Saul’s boards, interestingly having stumbled upon them via volfan’s post on either the RB or SA ANET boards. Though a Fool member for more than a decade now, my interest in taking part on the boards had waned. I was very content to let my investments, which have done amazingly well over that time, ride. I was getting bored and starting to dabble in options, but found they leave me unfulfilled as an investor as compared to sinking my teeth into a really, really great company. Recently a friend of mine asked me to help him invest, and after making him join SA, we started having lots of chats via texting and IM, with the occasional phone call thrown in. As a result, my interest in reading the boards has picked up again, and it was my friend who asked me about ANET. And so I started digging in. And found Saul’s boards (OMG, what a goldmine of information. 10 years of subscriptions to TMF, and this board is worth every penny and more! :slight_smile: And here I am reading your post today.

It reminds me of the kind of thing I used to write for the SA NFLX boards many years ago. And having dug into ANET recently, I’m finding exactly the same sort of thing with ANET that I have absolutely loved for years about NFLX. I’ve never really been able to wrap my head around the numbers. Despite being an engineer, and a math person, for some reason, the numbers don’t tell me what I need to know. And that’s the intangibles. The people, the story, the struggle. With NFLX, I knew who Reed was, I knew where he came from, I understood the companies he had led, I had used and been trained to manage some of their software. I understood the battle against the Goliath that was Blockbuster at the time, etc. I’ve been searching for another NFLX for 10 years. I found one with Amazon. I thought I had found one with GMCR, but they sold out. I thought SBUX might be one, but no, not really.

But ANET. This could the next one for me. Jayshree seems like the real deal, Andy goes back to my roots as a UNIX geek having co-founded Sun Microsystems, a company I have a very long history with, and was deeply upset they sold out to ORCL a few years ago. And it’s as that UNIX geek that makes me intuitively understand exactly what ANET has accomplished (ironically, something I was thinking about 20 years when Linux first came on the scene!). SDN is something that is desperately needed in today’s data centers. It’s what rules the networking of cloud computing in AWS. But data centers have no real way of doing this. In order to change your routing rules, or firewall filters, it’s almost always done via request to the networking group who then has to figure out exactly what you want, try it out, have you test it, go back, fiddle with it, etc. in an endless loop until they get it right.

With SDN, though, combined with Infrastructure as Code, I get to define not only my entire infrastructure in code, but now my networking as well. Routing tables, firewall filters, etc. All as lines of code in the same place as the application I may be deploying! This is already the way things are in “the cloud”. But not so in the data center, where static hardware still requires human intervention to make the majority of changes. It’s a slow, tedious, manual way of doing things and building, managing, and updating infrastructure. ANET makes my data centers look more like a cloud environment. And, as much as I love AWS, and as unbelievable as they are, there are and will always be terrestrial based data centers for a variety of ways. But developers won’t want to develop for them unless they can deploy to them in a similar manner as they do to the cloud. And that’s where the private virtual clouds come in using things like Nutanix, VMWare, or even OpenStack. And with ANET’s SDN thrown into the mix, private virtual clouds have it all!

Anyway, that’s a very long-winded way of saying Thank You! Thank you for addressing the intangibles of the personalities, the characters, THE fundamentals. I’ve always invested more based on those than I ever have on numbers, and this is the first company since NFLX and AMZN that to get me this excited to want to post anything to a TMF board in a very long time :slight_smile:

So, Thanks!

Paul - making ANET a significant portion of his portfolio!



There is a lively discussion re:anet and their vulnerability at the npi board. Might u consider reposting there and joining in? I know ur participation will b welcomed.


Hi Rizz,

What’s the NPI board?

I’m perfectly happy to repost there if I can find it :slight_smile:


NPI = New Paradigm Investing



Warning, it is a board with lots of substantial investing content, but also lots of politics at times.


New Paradigm Investing…

Thanks everyone!

Found, reposted, and have joined the discussion :slight_smile:

Paul - who isn’t entirely sure “investing by gut-feel” qualifies as a “new paradigm”, but what the heck :slight_smile:

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