Good to Great - Blog post from Jayshree Ullal

Good to see grounded point of view of Arista CEO…gives more confidence in her driving further growth of this company.

https://blogs.arista.com/blog/hallmarks-of-high-tech-leaders…

You are probably expecting me to write another monthly blog on exciting innovative technology. Today I digress and reflect on recent awards and accolades Arista has received and how we got here. At Arista, we have worked very hard to become a great company. Building a good company takes constant hard work and heavy lifting. Making a great company is an even harder work-in-progress, demanding tenacity, especially in high technology, where disruptions are daunting and challenges are frequent.
Technology evolution is complex, and changes happen at a rapid pace, requiring dexterous course corrections. An undisputed champion of an industry today can become stagnant in merely a few years. Silicon Valley celebrates successful start-ups, applauding hot IPOS and declaring winners by measuring the net worth of the founders. Companies and leaders go from hero to zero, unable to live up to the hype. A fairy tale existence can turn into a nightmare when companies fade into oblivion if they trip.
Why do we see this cycle repeating itself?..

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Throughout reading that whole thing all I could think about was that it was directed almost directly at Cisco. Cisco not being willing to implement the strategies of the Arista founders was the whole reason they started a new company.

Here is a different collection of sections of her letter:

by Jayshree Ullal on Nov 3, 2017 3:02:55 AM

Building a good company takes constant hard work and heavy lifting. Making a great company is an even harder work-in-progress, demanding tenacity, especially in high technology, where disruptions are daunting and challenges are frequent.

To quote Scott Cochran in the Herald Journal in a recent September 2017 blog*
“Just because your product sold well yesterday, doesn’t mean it will tomorrow… Being inappropriately risk aversive is a death sentence for your organization.”

Tech Time moves at the pace of cloud-years. Every calendar year is the equivalent of ten cloud years. To navigate high-tech company in real-time goes beyond incremental shifts. Tech companies and its leaders must adjust to the rapid pace of change. It transcends their skills and familiar business models to distinguish decision-making in “tech-time”. Tech time is often days or weeks not years. Anticipating trends, seeing patterns and placing big bets keep the best companies on top of their game.

We want to invest only in great companies. Most of the companies covered on this board are in tech. “Tech time” is reason enough for “modified buy and hold”. Disruptions are daunting and challenges are frequent. Tech time is often days or weeks, not years.

And all we have is the promise that tomorrow will be a continuation of the past (with an upward trajectory or we wouldn’t be invested). A continuation of the past in the face of daunting disruptions and frequent challenges.

I have Arista (#3), Nvidia (#1) as companies for which I have the conviction to hold large positions despite “tech time”. Square (#2), not so much. My next two, LGIH (not in tech time) and Facebook are do not face tech time challenges (IMO). After that, a lot of my holdings including NTNX, AYX, TTD, TLND) are more black boxes to me that could be challenged and disrupted at any moment.

Just another joy of investing in rapid growth tech.

KC

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Alternate titles:

Trading Places
by iShow U How

Why I quit Cisco
by I M Bossnow

I Got People
by Used2 B Yours

You Shoulda Listened
by Tu LateNow

Kicking Cisco’s Butt
by Hooscry N Now

What My Old boss Should Have Done
by Read M Anweep

Good Publicity For Your Lawsuit
by Make M Pay

Why I’m Great
(and my company ain’t bad)
by Techie Brag Hero III

You Wish You Were Me
(if we lose, I’ll wish you were too)
by Keep M Gessin

Be Your Own Publicist
by Make M. Famous

To my Old Boss: na na na na na
by Kissmi Butt

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Making a great company is an even harder work-in-progress, demanding tenacity, especially in high technology, where disruptions are daunting and challenges are frequent.
Technology evolution is complex, and changes happen at a rapid pace, requiring dexterous course corrections. An undisputed champion of an industry today can become stagnant in merely a few years. Silicon Valley celebrates successful start-ups, applauding hot IPOS and declaring winners by measuring the net worth of the founders. Companies and leaders go from hero to zero, unable to live up to the hype. A fairy tale existence can turn into a nightmare when companies fade into oblivion if they trip.

It’s hard to find a better reason for investing in high tech ETFs instead of in companies directly. It reduces the work and the risk considerably. It also reduces the profit as compared to the best high tech stock pickers but then, who is to say I’m that gifted?

Denny Schlesinger

Good to see grounded point of view of Arista CEO…gives more confidence in her driving further growth of this company.

Thanks vinvest, for the link. It’s good to see that Jayshree is a very smart and insightful CEO.

Saul

Throughout reading that whole thing all I could think about was that it was directed almost directly at Cisco. Cisco not being willing to implement the strategies of the Arista founders was the whole reason they started a new company.

I suspect that was the defining lesson of her life - the dinosaur’s dilemma: Do we introduce this new better product which will make our legacy products obsolete?

Saul

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Mismatched CEOs of the 1990s in Apple, Yahoo, etc. taught valuable lessons in choosing leaders carefully without alienating founders. The great leaders foster healthy partnerships with founders as a united team (as we have seen in Facebook, Google, Microsoft) to avoid toxicity and ego at all costs.

Even this segment has some aspects of kicking at Cisco. On the way back home from traveling for Thanksgiving, I watched the documentary “Something Ventured” (included in Amazon Prime Instant Video). A portion of that towards the end talked about Cisco and included interviews with Sandy Lerner and discussed her and her former husband Len Bosack being ousted from Cisco. They were the co-founders of Cisco. As I was watching it, I thought to myself that a portion of Arista’s “secret sauce” could go back as far as to the way Cisco mistreated their 2 founders and I thought to myself that Arista having a great CEO who also happens to be female can also present some advantages and differentiation for them.

https://en.wikipedia.org/wiki/Sandy_Lerner
https://en.wikipedia.org/wiki/Something_Ventured

The Cisco portion starts at about the hour mark or so, if I remember correctly.

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Dinosaur’s dilemma? Clayton Christensen has a lot to say about that in The Innovator’s Dilemma. From Wikipedia summary:

For this reason, the next generation product is not being built for the incumbent’s customer set and this large customer set is not interested in the new innovation and keeps demanding more innovation with the incumbent product.

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Arista spends 10% or less of revenues on sales (they will be increasing this, but it will still be ridiculously low for a tech company), and they barely make any news, and yet they are beating everyone else in a market where all the incumbents have reported either dramatically slowing growth or negative growth.

That is an exclamation point on their results.

Hope to hear little to no news again until next earnings.

Tinker

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I suspect that was the defining lesson of her life

It is a rare success story of a woman in valley. I have nothing but utmost respect for Jayashree.