“Embrace The Failure To Transform” Words Of Wisdom With Sunny Gupta, CEO And Co-Founder Of Apptio

I had the pleasure of interviewing Sunny Gupta, CEO and co-founder of Apptio, and a serial entrepreneur who has led six businesses to successful acquisitions. Gupta has been a Top 40 CEO’s under 40 and was named Ernst & Young Entrepreneur of The Year for Pacific Northwest in 2011. Gupta founded Apptio, which is a global organization providing cloud-based applications for IT leaders to manage, plan and optimize their technology investments across hybrid IT. The company was founded in 2007 and is now a public company (NASDAQ: APTI) with hundreds of customers. Apptio was also the first-ever investment by the now-renowned Venture Capitalist firm Andreessen-Horowitz.

Thank you so much for doing this with us! What is your “backstory”?

I grew up in India and went to school in New Delhi until I was 19. My father was the secretary of education for the Indian government, but my mom was from a whole family of entrepreneurs. Being surrounded by people who were creating new things and controlling their own destiny, I knew early on that was the path I wanted for myself. I grew up hearing that you could start with nothing and create something meaningful in the U.S. so I felt like I needed to go there to finish my education. My father couldn’t afford to fund my education, so he gave me $2,000 and a plane ticket to get me started. I went to school with a partial scholarship to University of South Carolina, and worked my way through school.

After finishing my studies, I worked as an engineer at IBM and another software company before starting my first company in 1996, which sold in 1998. Then I started another company in 2005, which was acquired as well. I decided my next step was to become a venture capitalist, so I started having meetings with all these CIOs. I remember I was in a meeting with the CIO of Goldman Sachs and there were a couple minutes left of the meeting when the CIO complained of not having a way to make data-driven decisions around their spend on technology. This spurred the idea for Apptio, and I was hooked on finding a way to solve this problem. I validated this idea with more than 40 CIOs as I wanted to make sure this was a real need which was universally felt by all CIOs, regardless of organization size. I became convinced that I could bring transformation to the CIO function by providing a data-driven software solution to build the next Salesforce.com for the CIO. The rest is history!

Can you share the funniest or most interesting story that happened to you since you began leading your company/started your company?

It must have been in the second year of our business operations and we were trying to figure out our selling motion to CIOs. I don’t remember if I owned any suits at that point, but I had a meeting with the CIO at Puget Sound Energy. I was in such a rush and it was one of my first CIO meetings with Apptio, so I was nervous. I ended up wearing two completely different colored shoes, and a jacket and a belt that were mismatched. I showed up looking like a clown, and I didn’t even know it. I was proud of myself for looking so professional, until I got about a quarter of the way through the meeting, when I looked down and noticed my shoes didn’t match. I remember thinking, “oh no, this whole thing is a mess,” as I tried to cover it up. Nevertheless, the customer noticed. We’re friends now, and years later he made a joke about my attire the first time we met.

So what exactly does your company do?

Apptio is the business management system of record for hybrid IT. We transform the way IT runs its business and makes decisions. Apptio’s applications are powered by a cost analytics platform that automatically takes data directly from financial, operational, and billing systems, to sophisticatedly manage trillions of dollars in IT spend. Just as sales has CRM, and finance has ERP, today’s IT leaders need a way to manage technology investments, plan for the future, and communicate the business value of IT.

With our cloud-based applications, IT leaders manage, plan and optimize their investments across on-premises and cloud. With Apptio, IT leaders become strategic partners to the business by demonstrating value, accelerating innovation and shifting their technology investments from just running the business to being the driver of digital innovation.

How have you used your success to bring goodness to the world?

My wife and I are private and generally like to keep our philanthropy to ourselves; but we support scholarships for international studies at my university alma mater. Coming from a family of modest means, I know fully well the difference a scholarship for higher education can make.

My wife and I also are passionate about educating underprivileged children so we provide resources and funds to help raise children from poor families in India. There’s a lot of poverty in the world, and I want to do everything I can to help young people succeed.

What are your “5 Things I Wish Someone Told Me Before I Became CEO” and why?

It’s lonely

Being a leader can be hard because sometimes the issues you’re dealing with are ones only you can solve. Some involve issues related to your team or run the business, and there’s nobody who can make those decisions for you. It teaches you to trust your instincts over time.

Get many mentors

Because being a leader involves making hard decisions, I’ve learned it’s important to develop mentors outside your board and leadership team. You need to find other leaders who have walked in your same shoes, who can empathize with you without being judgmental. Moreover, you can’t have just one mentor. As your company evolves through different phases of growth and strategic choices, you need people with different expertise to help guide you along the way. Your mentors should not be stagnant; they should change as your company evolves.

Building a new software category is 10 times harder than replacing an existing one

There’s a difference between displacing an existing process or category and building a product that is brand new. There’s huge value in tapping into an unbudgeted, unfunded item and institutionalizing it. That also means there’s nothing existing to go after, so it’s challenging to convince companies to spend money on an idea that is new and untested. There are very few companies that have succeeded at this — SAP, Uber, EBay, Amazon and (of course) Apptio. Jeff Bezos said you have to take a long-term, customer driven mindset, and I agree. You have to build longevity for a company.

Embrace failure to transform the company

In Apptio’s life, the first three to four years were the easy part. But transformations happen, and they can happen often. Apptio has been through a couple of what I call ‘inflection points,’ where we had to question and change the things that had previously delivered success to us. It can be incredibly surprising when you don’t see these moments coming, and you almost never do. I have concluded that failure is an opportunity to change and evolve your company to better protect the business and your people against the future. When I first started, I wanted a playbook of exactly how to build a company and hire the right people through those inflection points: 0–10 million, 10–100 million and 100 million and above in revenue. It doesn’t work that way, you need to have a learning mindset and embrace change instead of fight against it.

It is all about the team

You always hear people say that the team and culture matters, so this is one I actually did hear. I just didn’t believe it when I first started. About every three of four hires you make as CEO are good, even if you’re a perfect CEO. So, there’s always people who aren’t a good fit, and the speed at which you address team issues makes up the culture for your organization. I’ve been lucky enough to cultivate a star team over the years — my CMO Chris Pick and CRO Larry Blasko, for example — who have diverse backgrounds and viewpoints, but all have the same values. We are obsessed about delivering value to our customers, we develop our people, we operate with transparency and self-awareness, continuously improve and aim to win. But when we don’t win (because you can’t always), you have to have leaders that will say, “What can we do better next time?” Your business will succeed if you build and hire people who are open to learning, are curious about the world, and are committed to delivering extraordinary results. Everything else can be taught. An A team hires A-level teammates. A B team will sometimes hire C-level players, so keeping a high bar is critical to success.

I have been blessed with the opportunity to interview and be in touch with some of the biggest names in Business, VC funding, Sports, and Entertainment. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why?

Without a doubt, Steve Jobs. Even though he’s no longer with us, Jobs was always someone I wanted to meet. His mindset and approach to innovation is still unparalleled.