Stephen Spagnuolo

Nikesh Arora's Strategy for Building a $268 Billion Company: The fastest way to build a giant business is to sell more products to the customers you already have. And the fastest way to get those products is to acquire companies rather than build everything yourself. Nikesh realized two important things when he became CEO of Palo Alto Networks: 1. The biggest companies sell many products to the same customers. It's much easier to grow revenue by selling additional products to customers who already know and trust you than by constantly finding new customers. 2. Building great products takes 4–7 years. If Palo Alto Networks wanted to expand quickly, it couldn't build every new product from scratch. The solution was to acquire companies that had already spent years developing great products. Nikesh explains his thinking in this clip. This part is awesome: Nikesh Arora: If you look at the largest businesses, there's Microsoft's enterprise business or Salesforce, or take the largest businesses, they sell a lot to the same customer. That was the insight. I'm like, well, if we’re going to be big at Palo Alto, we've got to find a way of selling a lot to a customer. We only had one thing to sell. So you go knock on the door, you knock on 20 doors, you spend all the time, and 15 people say, "I'm sorry, I don't need it, I already have it," you're stuck with five. If you knock on a door, you have a truck behind you saying, "What do you want? Do you want this? You don't want this? You want this? You want this?" It's like, the world's your oyster. What can I get you? Armed with that insight, I'm like, well, we need to figure out a way that we can find adjacencies to our business, which the customers will trust to buy from us, so that we can keep expanding what we sell to customers, so we can go serve the top 10,000 customers in the world and increase the amount of money you can get for them. You only get that if you earn their trust, you only get that if your shit works, you only get that if it's best in class, because nobody wants to buy the second best product in cybersecurity. It kind of sucks. So customers want to buy the best which means we’ve got to be the best. Now that's one part of the insight. The other one of the insight is, which is still true, it takes four to seven years to build a good technology product. It doesn't matter who you are, what you are, where you are. Whether it's an Uber, it's YouTube, it's Facebook, it's Google search, it took four to seven years, sometimes longer, to build a useful product that the customers found exciting and interesting. That's true in enterprise as well. So I just joined this company. We don't have a large product pipeline. It's gonna take me four to seven years to build new products. What am I gonna do? David Senra: Acquire them. Nikesh Arora: That's right.