by Y Combinator8/4/2017
Diane Greene is SVP of Google Cloud and she was also the CEO and cofounder of VMware.
Jessica Livingston is cofounder of YC.
Craig Cannon [00:00] – Hey, this is Craig Cannon, and you’re listening to Y Combinator’s Podcast. Today’s episode is with Diane Greene and Jessica Livingston. Diane’s the SVP of Google Cloud, and she was also the CEO and co-founder of VMware. Jessica is a co-founder of YC. This interview was recorded at our 4th annual Female Founders Conference, which took place here in San Francisco this June. Here we go.
Jessica Livingston [00:24] – I’m going to sit here.
Diane Greene [00:25] – Oh, okay.
Jessica Livingston [00:26] – You sit right there.
Diane Greene [00:27] – You can come over here.
Jessica Livingston [00:27] – Well, we’ll just get into this, because I have a whole list of questions, and we’ll see how many we’ll get through. I’m going to selfishly ask a question, because I’m very interested. When you started VMware, it was in the late 90s. A very exciting time. Were any of you in Silicon Valley in 98? Raise your hand. Okay, we got some hands. We got some hands. I want to hear more about it. I want to hear what was Silicon Valley like and how did you get started with VMware?
Diane Greene [00:57] – Yeah. Well it was interesting the way I got started. I cofounded VMware with my husband as a professor at Stanford, and he was doing research. He had sent me an email. Actually the one startup I didn’t mention I was working on at the time, and he sent me this mail because I was a advisor to that. I never counted, but it actually went it public. But anyhow, he got this email from all these people up at Microsoft about a paper that was supposedly under blind review, and I’m like, “Oh man, you really got to get a patent filed here.” Then I’m like this is just so valuable. Your research, we should take it to market. Then we did it with our grad students. It turned out it was just we did this thing, and it was right at the beginning of the dot com era. There was pets.com and webvan.com and these companies that were raising huge amounts of money. I can remember I went to some party, and I’m talking to this guy. He’s like, “What do you do?” I’m like, “Well we’re building this software that you can put on your machine that’ll let you run multiple …It’ll multiplex all the resources,” and he just looked me. He goes, “This is hopeless.” You really got to…
Jessica Livingston [02:29] – It seemed like a dubious idea?
Diane Greene [02:31] – In fact, I couldn’t even get a PR firm to come and work with us because it was all about thinking big in this whole .com thing. It wasn’t that hard to get engineers, because we were such deep technology. They understood what we did, but getting business-side people was pretty much impossible.
Jessica Livingston [02:53] – Companies were just getting slapped together and going public?
Diane Greene [02:58] – Well I don’t know if they were slapped together, but they were going public right and left. That’s for sure. In fact, the company that I advised that went public, I was stunned.
Jessica Livingston [03:09] – Did you have any equity?
Diane Greene [03:10] – I did. That was bizarre.
Jessica Livingston [03:16] – Then did your husband … Tell me how you got started specifically with VMware. Did he say, “Okay, come on board now.”?
Diane Greene [03:24] – Well with me, I was like, “I think you should do a company.” I said, “I’ll help you.”
Jessica Livingston [03:33] – Famous last words.
Diane Greene [03:35] – And then I found out I was pregnant. I said, “Look, I’ll get it going,” but then I was about to have our second kid. I was like, “I can’t do a startup.” Then we had his two grad students that were going to join us, and so I said, “I better tell them I’m going to have a baby.” I did, and they were like, “So?” I’m like, “Okay.” We did it, and then six months into it I had my baby. It was cool, because we didn’t have any customers and we were in this little building that you could open the windows. I just brought my baby to work and hung out with her.
Jessica Livingston [04:17] – In a little bassinet or something?
Diane Greene [04:18] – Yeah.
Jessica Livingston [04:19] – Was the office down the hall?
Diane Greene [04:22] – It was funny. You know near Town and Country, there’s a carwash?
Jessica Livingston [04:26] – Yeah.
Diane Greene [04:27] – It’s right behind there, and Healtheon had been there before. They moved out, and they called it the crack house because people were doing drug deals .
Jessica Livingston [04:38] – Right next to your baby.
Diane Greene [04:41] – The building is not there any longer.
Jessica Livingston [04:47] – Did you fundraise for VMware early on or how did that work? I’m interested in what fundraising was like back in 1998.
Diane Greene [04:57] – I’d made money from the VXtreme, the streaming video company from Microsoft. I always delighted in telling Steve Ballmer and whatnot that they paid for the VXtreme. It wasn’t really a great company for them, because we got in between Intel and Microsoft in the stack, so we just intermediated them a little bit. But anyhow, we had money. What we did was we did a friends and family, and we only allowed friends and immediate family to do a seed fund. I held back on how much I put in to be fair to all the founders, and then we said, “Okay, let’s do an outside just to get some credibility.” This is advice I’ve always given people is you want to find investors that really deeply understand what you’re doing. You want to get rich people that deeply understand what you are doing. That’s what we did. We got Andy Bechtolsheim and a few other people .
Jessica Livingston [06:14] – Did you know Andy?
Diane Greene [06:17] – Well we knew him. We were a bunch of pretty deep engineers and we knew the engineers. Andy’s really a phenomenal engineer, and his partner David Cheriton was a professor at Stanford that I windsurfed with.
Jessica Livingston [06:39] – First Google, Google … You windsurfed with him?
Diane Greene [06:41] – He was my windsurfing buddy. We just called them up and we told them what we were doing. Yeah, they were seed investors in Google too. It took an hour.
Jessica Livingston [06:56] – Oh my God.
Diane Greene [06:56] – Because they got it. They were like, “Whoa, yeah.”
Jessica Livingston [06:59] – Was it like that famous Google story where Andy wrote the $100,000 check and said, “Here you go.”
Diane Greene [07:05] – Yeah, we got $300,000.
Jessica Livingston [07:06] – Oh, well even better story. That is so great.
Diane Greene [07:13] – Yeah, he gave me … He said, “The checkbook’s at my house.” He’s like, “I’m going to leave it in my driveway,” and I got his address. I’m like, “Is this his house?” It was like newspapers all over the driveway. He hadn’t even been there. I’m like, “Is this really the right address?” There was the envelope.
Jessica Livingston [07:35] – Oh my God. Sorry, I live for this stuff. All these random little details make things so colorful. Then you stayed on after the birth of your daughter.
Diane Greene [07:47] – It was working so well and I was having fun. I convinced my mother to come live with me.
Jessica Livingston [07:58] – Part of the village to raise…
Diane Greene [07:59] – To help with my daughter, and I brought her with me. In fact, she was raised… She’s the same age as VMware. It’s really interesting, so I can always remember how old VMware is. I just brought her everywhere. When we got more advanced and started having customers and partners all over the… Selling all over the world. She went all over the world with me, and then I would just stay at a really high-end hotel and have them hire a really high-end nanny to take care of her and take her around. She just loved it.
Jessica Livingston [08:38] – Oh wow. I can imagine, a really high-end hotel. Okay, so things are going. Looking back on VMware, were there any mistakes that you made there that you said, “Gosh for my next startup, I’m going to be sure not to do this.”? I’m always interested in…
Diane Greene [08:55] – Well I think the biggest mistake I made was getting… Feeling like it was selfish of me to not sell, because everybody else wanted to. I was like…
Jessica Livingston [09:05] – Your cofounders? Who’s everyone else?
Diane Greene [09:08] – Yeah, my cofounders wanted to sell. I thought it would be selfish not to, although they would have thanked me had I not. But in hindsight, I’m actually really glad that I ended up leaving VMware. I probably wouldn’t have left and I had several years with my kids just home with them that I really valued, which I might not have got.
Jessica Livingston [09:31] – After it was acquired.
Diane Greene [09:31] – Afterwards, yeah.
Jessica Livingston [09:33] – Did your investors want you to sell? Were you the only one that wanted…
Diane Greene [09:36] – Well we didn’t have VCs. We didn’t have VCs, so I took money. After we took the money from Andy and David and John, we raised money from Dell. From Dell and a few banks that were wanting to take us public.
Jessica Livingston [09:59] – Okay, so you were really in control of things…?
Diane Greene [10:02] – Yeah, we were totally…
Jessica Livingston [10:02] – Totally in control, which is obviously the place…
Diane Greene [10:06] – Without having to do the 10 to 1. 10 to 1 voting rights.
Jessica Livingston [10:13] – You had some time with your kids and then you joined the board of Google.
Diane Greene [10:19] – Yeah, right after I left VMware, I joined the board of Intuit. Then a few years later, I joined the board of Google.
Jessica Livingston [10:27] – Okay, I’m curious being on these boards of these super successful companies in addition to running your own super successful company. What kind of things did they have in common or not in common that make them…
Diane Greene [10:40] – I wouldn’t say too many companies have much in common with Google.
Jessica Livingston [10:43] – Yeah, that’s true. Well what was it about the things about…
Diane Greene [10:47] – Yeah, but people. It’s about the people. Certainly in Silicon Valley, everybody focuses on the people. Maybe it’s just across all off Silicon Valley. Intuit and Google… It’s funny, they had Bill Campbell in common. But they were so different, the board meetings and everything.
Jessica Livingston [11:17] – Were you the only female board…?
Diane Greene [11:19] – No. Google when I joined had, and still does, Shirley Tilghman, who’s president of … Not anymore, but she was president of Princeton. Then Ann Mather, who still is chair of the audit committee. Phenomenal board member. I’m the third woman to join that board, which it makes a huge difference to have three instead of two. We actually have conversations in the bathroom.
Jessica Livingston [11:47] – That’s probably very rare. In 2012, you started Bebop. You were very much in stealth mode right? If I remember…
Diane Greene [12:01] – Yeah, well because it was such a big ambitious investigation, I saw no reason. There was too much interest.
Jessica Livingston [12:10] – Everyone wanted to know what Diane Greene was working on. How did you come up with the idea? What made you want to work on this and how did that one get through?
Diane Greene [12:20] – Well I had actually been trying to convince anybody that would listen that they should go start a company to do what Bebop did.
Jessica Livingston [12:28] – That sounds very familiar. My husband is like that.
Diane Greene [12:31] – Yeah, I just really thought this layer of the stack where you build the applications for the enterprise, because it’s so much more complicated where you have multiple users and access controls. It’s really hard to do it well, and I was like, “It really needs some attention.” That was the vision.
Jessica Livingston [12:50] – You were bugging other people like, “Hey, this is great. You really should focus on this.” There’s a need, so you saw this need. Did you finally say…?
Diane Greene [12:58] – Well then the cofounder … I found a professor at Stanford. He was like, “Yeah, let’s just do it.” I’m like, “Oh, okay. If you’ll do it, I guess I’ll do it.” Then he didn’t stay.
Jessica Livingston [13:09] – And then he bailed. Then your husband…
Diane Greene [13:15] – Like thanks a lot.
Jessica Livingston [13:18] – Wasn’t your husband cofounder on that one?
Diane Greene [13:19] – Well no, he didn’t. He came in after I had been working on it for a while, a couple of years.
Jessica Livingston [13:25] – You were a solo founder?
Diane Greene [13:27] – Well then I convinced some of my friends from VMware to come in, and I said, “We’ll just call you a founder.” And they were great people, and they’re still there.
Jessica Livingston [13:41] – And you had worked with them before?
Diane Greene [13:42] – Yeah, it’s just phenomenal people.
Jessica Livingston [13:43] – You had that relationship. What was it that made you think this is an important thing that needs to be working? What was missing currently, why there weren’t good solutions out there?
Diane Greene [13:53] – Well have you ever used some of the…
Jessica Livingston [13:56] – No, no, no.
Diane Greene [13:59] – Has anybody ever used enterprise software?
Jessica Livingston [14:02] – It sucks. So broken.
Diane Greene [14:06] – It’s layers and layers of clicking through these screens, where really maybe you just talk to Slack. Do you really have to … It’s just so convoluted and complex, and for power users, you have to have all this rich functionality. But it doesn’t have to be this layer of screens. You can use machine learning and things and know what the person’s trying to do and help them do it and you can automatically fill in everything. You can just make it when you’re using it, you’re just going, “How did it know that’s what I was about to do?” It just makes it there for you, and it’s just incredible what you can do today that is radically different from back when we certainly when we found it that I think people are doing that now. I even think Google G Suite is doing it. Everybody’s doing it more and more now, and especially the phone drove a lot of it. If you didn’t do it on the phone, nobody was going to use it. But back then, it was a lot worse.
Jessica Livingston [15:15] – Then what made you decide … You’re working on this super ambitious plan that you know is broken, and you’re going to do this. What made you sell to Google?
Diane Greene [15:30] – There were a few things going on. One was that in terms of being on the Alphabet board by then… No, it was still the Google board. Anyhow, as part of my work on the Google board, I got involved in Google’s cloud efforts.
Jessica Livingston [15:50] – They said, “Hey Diane can we ask few questions about it?”
Diane Greene [15:54] – I really made very good friends with Urs Hölzle who is the guy that really… He’s employee number eight at Google. He built all their infrastructure. He’s an amazing person and really enjoy… He lives near me. We started walking our dogs every Saturday. We came very good friends and talked about it, and it was just fascinating. That was good, and then I was getting to learn all about Google’s technology and the AI and the machine learning and just everything that google has, the maps and the knowledge graphs and so forth. I realized that if you combined that with what Bebop was doing, it would be pretty special. I was busy helping them find someone to come in and run Google Cloud, and we worked really hard on that.
Jessica Livingston [16:47] – Sounds like it.
Diane Greene [16:48] – No I gave them so many names. I’m like, “This is the person.” I really wasn’t interested at all.
Jessica Livingston [16:59] – How did they convince you then?
Diane Greene [17:01] – Well it was a combination of Bebop both being… But anyhow the last person I thought they were going to hire, I thought the person was great. They decided not to. I Thought maybe they weren’t Googley enough or something. At that point, I just said okay. If we can make this work for Bebop, and I talked to everybody at Bebop to make sure that they would be okay with it. Yeah, we had just raised a lot of money from a16z and Marc had joined my board.
Jessica Livingston [17:46] – Oh my God. Were they supportive?
Diane Greene [17:49] – Yeah. They weren’t that thrilled.
Jessica Livingston [17:55] – But they weren’t going to cause problems.
Diane Greene [17:57] – They certainly respected what we wanted to do and it has worked out super well. I have to say I’m glad I did it. The cloud is really interesting.
Jessica Livingston [18:08] – Yeah, tell me about what it’s like running the cloud.
Diane Greene [18:13] – For me, being in the enterprise for so long and seeing what’s happening in the cloud is… VMware was a big mini revolution. This is a giant revolution and everything, and the enterprise is just moving so fast. Everything’s going to be in just a few, maybe four clouds or so. There’s not going to be that many of them, because we spend about 10 billion a year in infrastructure.
Jessica Livingston [18:45] – My gosh.
Diane Greene [18:46] – It’s not going to get disrupted by a startup, unless they invent quantum computing or something. It’s been invented, but they make it work. We have a project to make it work too. It works actually now, but it’s hard to use. It’s hard to program. Almost impossible, but it’ll get there. Sorry to digress.
Jessica Livingston [19:15] – It’s okay.
Diane Greene [19:18] – Anyhow because with mobile and being able to bring all the data together and have the security of the cloud, our world … You look at these ransomware attacks. We need more security, and you’re going to get it in the cloud. You look at something like … You want your OS in the cloud updated constantly and tiny and monitored. It’s like Gmail. Over 1.2 billion users, so we can see everything going on and respond immediately. We can be constantly vigilant and that security you can get in the cloud isn’t available to a company. Then the advanced technologies are there. Everybody’s going to move to the cloud, and then once you have that scale, what you can build because of what you’re seeing is revolutionary. It’s fascinating.
Jessica Livingston [20:20] – Oh wow. I have to ask one last question, even though we’ve just run out of time. If you could warn first time founders about a mistake that they’re going to make, what might it be?
Diane Greene [20:32] – You might not make any mistakes.
Jessica Livingston [20:35] – Oh, everyone makes mistakes.
Diane Greene [20:36] – Well I don’t like to say you’re going to make a mistake.
Jessica Livingston [20:39] – You learned the hard way. What’s something they might learn the hard way that if you tell them about, maybe they’ll try to avoid that?
Diane Greene [20:47] – I was listening to all these incredible answers that people were giving to this question. The one thing I didn’t hear people talk about was your board of directors, which I think is it can be something you manage, or it can be something that helps you. You really want to try and have a board that you don’t have to manage, but that helps you. At VMware, I was able to select my board. We don’t have time to go into the story of how I did it, how I pulled it together, but I picked the people that really had the unique expertise I wanted. Then my board meetings, I never wrote slides. I just wrote a document, and it had a few metrics about how we were doing, if we were doing well. But the whole rest of it was things I was worried about or trying to figure out, and so I had a board that I could trust so much that I could just say, “Look, here’s the things I’m wrestling with. Let’s talk about it.”
Jessica Livingston [21:53] – And I don’t have to impress you at first with all…
Diane Greene [21:55] – I never tried to impress any of them.
Jessica Livingston [21:58] – Is there any advice on selecting those people? It’s just people that..
Diane Greene [22:06] – Well I’ll give an example of what I did. Because we sat between the Intel hardware and the Microsoft operating system, they were both monopolies. It was a little bit sobering, and so I’m like, “Wow, we got to do all these deals and we got to struggle with Intel and Microsoft.” I wanted to do all these partnerships with the hardware vendors, big companies like IBM. I thought I need someone that’s really seen a lot of deal and knows how to structure a deal, and at the time, Larry Sonsini was the managing partner at Wilson Sonsini. He was, I remember, on the cover of American Lawyer or something as the ultimate power broker and everything. Anyhow, I decided that was who I needed on my board. We don’t have time, or I’d go into… It was a really fun little vignette when I got him to join my board, but that was the example. When I went into them, I explained to him why I needed him and what I was doing.
Jessica Livingston [23:11] – And why you were specifically…
Diane Greene [23:12] – Because when I walked into his office and said I wanted him on my board, he said, “Well I’m pretty busy getting off boards.” But then I showed him how what he knew how to do was unique, and he had no idea who I was and how what he knew was a unique fit to what I was trying to do.
Jessica Livingston [23:32] – And you got him to say yes and close the deal.
Diane Greene [23:34] – What’s really funny, because he’s like, “Okay, we’ll I’ll think about it,” kind of thing. It was a Friday late, and I came in Monday morning. I got in at 7:00 a.m., and I had been in on Sunday, so my phone was lit up back then before cell phones. I listen, and he goes, “Hello Diane,” or I can’t mimic him. Anyhow, he said, “I’m inclined to join your board.” I’m like, “What does inclined mean?” He goes, “I’ll join.”
Jessica Livingston [24:08] – Oh my gosh, that’s great. Oh wow, well we’ll end on that happy note. Thank you.
Craig Cannon [24:20] – Thanks for listening. As always, please remember to rate and subscribe to the show. If you want to read the transcript or watch the video, you can check out blog.ycombinator.com. See you next time.
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