Varsity CEO Summit: Keynote CEO Landmines I Have Stepped On:

A CEO Survival Guide for Managing Growth

Bob Brennan, CEO, Veracode

1

CEO landmines

•  Be increasingly precise •  Drive clarity, including Board

–  The Pitch –  Functional Capabilities –  The Board

•  Replace bad actors and poor performers •  Get the company into a routine

•  Expect more from the team

•  Confirm the “big deals” first hand •  Take more risk

2

Growth Enterprises go from Conservative to Aggressive

Start-up Growth

Search for Product/Market Fit

Search for Repeatable & Scalable Sales Model

Scale the business

Typical Time to Build a Company to IPO is 8-10yrs

1997$ 1998$ 1999$ 2000$ 2001$ 2002$ 2003$ 2004$ 2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 1H12$Med$Age$2$Yrs$ 6.49$ 4.86$ 4.29$ 5.22$ 6.84$ 8.38$ 7.58$ 7.06$ 6.44$ 8.26$ 8.82$ 9.59$ 10.3$ 9.18$ 8.51$ 11.07$

0"

2"

4"

6"

8"

10"

12"

Med

ian$Ag

e$2$Y

rs$

Source: Thomson Reuters/National Venture Capital Association

Characteristics of Success Change with Time

Start-up

Vision

Kinetic Energy

Creative Product/Service Design

Fungible Talent

Growth

Strategy

Execution

Fine-tuning Product/Market Fit

Human Capital Mgmt

How Veracode’s complexity increased in 2013

•  Pick a growth number… in all cases, operating the enterprise gets exponentially more complex during rapid growth –  Products/Development

–  People –  Selling/Customers

–  Finance

–  Governance

“Make or Break” Years are the Growth Years not Start-up

Start-up

Growth

Maturity

0%   10%   20%   30%   40%   50%   60%   70%   80%   90%   100%  

At  3  years  

At  8-­‐10  Years  

At  15+  Years  

Alive  (Private)   Dead  (or  Bad  Outcome)   PosiEve  Exit  (or  Public)  

Sources: US Bureau Labor Statistics, Kauffman Foundation, NVCA, Shikhar Ghosh/HBS Research, RCK Analysis Notes: “Positive Exit” is returning 1.0x Investor money or better, Dead/Bad Outcome is 0-1x

Growth Phase – Highest Point of Value Creation Leverage

Metrics of Success Get Easier to Measure and More Difficult to Achieve:

•  Recurring Customers

•  Revenue

•  Profit

Capital Structure

Entering New Geographic

Markets

Formalizing Strategy and

Execution

Board

Professional Management

Functional Expertise

Early Adopter Customers

Initial Product / Market Fit

Aspirations for Greatness

P

rofi

t

$10M+  

<$0M  

Start-up Phase

Mergers and Acquisitions

R

even

ue

$100M+  

$5M?  

C

ust

omer

s

Many  

Few  

Board & Investor Stages

Self Funded

Friends, Family & Fools

Advisory Board

Early Stage VC

VC’s and Independent Director

Later Stage Investors and Independents

Late Stage VC and Private Equity

Time

IPO

Governance Skills

People Who Need a Life

Activist Investors

Per

form

ance

Behavior

High

Low

Bad Good

Term ASAP

Move to good behavior quickly or term

Take time to develop

Increase reasonability and rewards

People

CEO Landmines

•  Be increasingly precise •  Drive clarity, including Board

–  The Pitch –  Functional Capabilities –  The Board

•  Replace bad actors and poor performers •  Get the company into a routine

•  Expect more from the team

•  Confirm the “big deals” first hand •  Take more risk

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