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A big ego is trouble for both people and companies, according to Peter Bell, CEO of StorageNetworks and a keynote speaker at the HBS Entrepreneurship Conference.
Capably remarking off the cuff after a technical failure caused his PowerPoint presentation to fizzle, Bell confessed to the largely student audience that he is not immune to technical glitches. At his new company's first road show in New York, before an audience of hundreds of potential investors, he told the group, his PC "went kaput."
Technical failures aside, Bell (HBS MBA '93) and cofounder Bill Miller nonetheless managed to raise $250 million in capital prior to their IPO in June 2000. One year ago, StorageNetworks—which delivers data storage and service—had five customers. Now it has 135. Customers include FleetBoston, Merrill Lynch, Lycos, Yahoo!, and Juniper Networks.
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"Egos kill companies because the companies get fat, dumb, and happy," Bell stated, reeling off the names of several now-defunct organizations whose outsized reputations, in his view, spelled their doom.
Part of developing a sturdy business ego, Bell suggested, is to spend time handling sales, as he did for 10 years. Most MBAs he knows consider sales a lowly position, he acknowledged. "We have about 20 MBAs in the company right now. Ten are really adding value. The other ten are definitely very smart, too. I say, 'If you really want to help us short term and long term, have a quota and go get some orders.'
"And they never want to do it.
"When you take a sales position and you don't make your number," he explained to the audience, "you have failed. It's so measurable: the most measurable job in any company besides that of the CEO.
"But selling is too important to a business, because that's where everything starts. If you spend your first year with a quota, you'll learn so much about yourself and about business."
A market niche
Bell worked for EMC Corporation—builders of information storage infrastructures—prior to and after graduation. From talking with customers, he said, he began to identify a niche in data storage and management. Even Wall Street corporations had difficulties managing their data.
At the same time, in the mid-'90s, two new connectivity and infrastructure technologies emerged in the marketplace. The combination of market opportunity and these technological advances allowed him to consider starting an entrepreneurial venture. Meetings with venture capitalists began.
"If you take the computing industry of 1985," Bell said, "that's when IBM would come in and offer the customer everything. They'd offer you the mainframe; they'd have the operating system, storage devices, database; and they'd actually run it for you.
"In the late '80s and early '90s the EMCs emerged, the Ciscos, the Dells, the Suns. We see that steep trend continuing. We see ourselves building a next-generation services layer."
No bureaucracy
Some of the biggest challenges his company faces today, though, are not about technology but rather about people, organization, and culture, Bell revealed. While a student at HBS, he said, "I dreaded Organizational Behavior and Human Resource Management. Absolutely dreaded those courses.
"But those are the ones I remember, because those are the issues that confront us every day."
In start-ups, Bell said, there is no bureaucracy. Everybody knows everybody; everybody knows the CEO. Anyone who has ideas can go straight to the CEO. Relations become more strained, though, when companies grow as fast as StorageNetworks, from 150 employees last year to 600 now.
"We disrupt the company about every three months," said Bell, "so in our hiring process, we ask, 'Are you comfortable working in that environment? Can you embrace that sort of change?'"
"We've hired about seven HBS grads," he observed. "It's very interesting seeing the new breed come in, versus the class of '89 or '90. The expectation level is so different.
"What's hurt the technology space over the last two years is the focus purely on wealth creation," Bell added. "We can all sit here with a rearview mirror and look back over the last two years.
"The expectation we have when we hire is: Can they contribute to the company? Can they work in teams? How big is their ego?"
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