By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
Angel Mehta: How has your Sales background influenced the kind of CEO you've become?
Phillip Dunkelberger: It made me customer-focused. There's an old adage that nothing happens in business until somebody sells something. In reality, a lot happens before something gets sold. I believe in forecasting everything, not just revenue. We forecast product builds, marketing spend, and return on investment. When I'm in charge, managers are held to the kind of metrics I first learned in Sales. The best source of information is your customers. As much as I like the analysts…
Angel Mehta: Like the Gartners of the world?
Phillip Dunkelberger: Right…they're very good. But nothing beats a good customer round table for getting product and marketplace feedback. So it's one of the core things on which I spend my time as CEO. Realizing that the customer is why we are in business…that OUR goal is to improve what THEY do… that's the fundamental thing that sales teaches you as a CEO.
Angel Mehta: Does that mean that CEO's who lack the Sales experience are at a disadvantage?
Phillip Dunkelberger: Very few entrepreneurs / founders grow a company from start to finish without changing jobs a few times and getting broader experience. At different stages of the company, a CEO has to have different capabilities. You have to have good financial discipline and metrics; you need to understand the technology from an engineer's standpoint; you must understand your customer's support and operations issues. But the key is how much revenue you generate. Ultimately, what you're called on to do is increase shareholder value. A sales background helps you understand how to get the entire company to focus process-wise on acquiring, supporting, and enriching our customers. If you do that well enough, everything else will take of itself.
Angel Mehta: I ask everyone about CEO DNA, as if the qualities to be a successful CEO are 'in the blood', to some degree. But at this point I'm wondering…is there even such a thing as CEO DNA?
Phillip Dunkelberger: I think that it's a great question…there are really two aspects to it. One is leadership. The other is people-skills. There's an old leadership adage that states that managers do things right, but leaders do the right things. As a CEO, you must do the right things. You must motivate your people. You have to make people believe they can do things that they don't think they can do, especially in start-ups.
Angel Mehta: Every CEO lacks something…what were your weaker areas?
Phillip Dunkelberger: If I look in the mirror and ask, "What don't I do well?", I end up answering: Finance. To compensate, I hired great people in that area. As a CEO, you must have a working knowledge of revenue recognition, auditing, and corporate governance. But you need somebody on your team that lives and breathes this sort of thing every day - so they can make you better at it.
Angel Mehta: Do you insist on making the final decision after collecting information from your team, or are you the kind of CEO who says, "You know what: you just make the decision since you know more about it than I do."
Phillip Dunkelberger: I think that's a style issue. But if you hire good people who have the expertise, you should let them do their jobs. When I started PGP Corporation, I had approximately 22 days from the time we closed on the assets to the time we went live. In that short time, we had to get a website up and start taking orders and get a product updated that hadn't been touched in 6 months. That kind of situation requires you to let people do their jobs.
But, and this is the important point: ultimately I'M responsible for all the decisions that get made, whether I make them or not. When things don't go well, it's my fault…PERIOD. I'm accountable to the shareholders for what happens because I'm CEO. There are many CEOs who might blame a breakdown in a particular function…
Angel Mehta: The VP of Sales couldn't deliver… the CTO couldn't get the product out…
Phillip Dunkelberger: Exactly. But guess what: I manage those people and probably hired them as well. So if it goes wrong, it's my fault.
Angel Mehta: You and I were talking once and I remember you saying that one of the lessons you learned from John Laing is that you're never as good as your numbers and you're never as bad as your numbers. Does that mean you have something other than numbers to measure your VP of Sales by?
Phillip Dunkelberger: I believe salespeople must do more than sell. That's the difference between sales managers, and sales reps. Many of the guys who became Sales VPs were good sales reps but didn't know what 'customer success' meant. They were focused on the next deal, not on making current customers successful. So yes, I measure my VP of Sales on customer satisfaction, successful deployments, customer references - though revenue, of course, is still the primary metric.
Angel Mehta: You also made an interesting comment once that the Fortune 50 was a completely different segment than the remaining Fortune 450. What did you mean by that?
Phillip Dunkelberger: With the largest companies, the top 50, you're dealing with so many people, it's unbelievable. You deal with VPs and CIO's who make big policy decisions, but you also work with the guys in the trenches. They are the ones who make your stuff work. They've got to implement it; they've got to keep the end users happy. These are the guys who re-sell your product repeatedly inside the organization and outside to new accounts. Such customer references get more deals done than sales guys, because customers like to talk to other customers.
Angel Mehta: Let's talk about PGP Corporation. What does the problem of 'email security' really refer to?
Phillip Dunkelberger: Sure, we're all about email encryption. Less than 2% of email and instant messaging are really secure. Many files attached with email include transaction and legal documents, customer information, and customer lists. A large San Francisco bank had two of their computers stolen and with them a large number of customer files. They had to file an SB 1386 declaration in California, which means they have to notify all their customers that their security was compromised.
There's a great quote: '70% of corporate information ultimately ends up in somebody's email box.' Think about ERP and CRM systems: How many times do companies use email for…oh, here's your customer number, oh, here's your purchase order history. That's sent in the clear, open to theft or corruption.
Now, how do most viruses, spyware, and other malicious code enter a corporate network?
Angel Mehta: Email.
Phillip Dunkelberger: Absolutely. This is because the email ports are left open in the firewall. So we're securing email at the network level, with two goals in mind. One, make end users have to do nothing other than send and receive email the way they always have. No user training. Just send and receive. They don't have to click an Encrypt button…no Digital Signature button to push for non-repudiation…nothing. We automatically take care of email encryption, instant messaging encryption, ultimately VoIP encryption, storage encryption… everything.
The second goal is to keep total cost of ownership down, which means the product must work with the existing infrastructure. So our product works with what people have, lowering the total cost of ownership, without any impact on end users. In a nutshell, that's it.
Angel Mehta: I noticed that you sponsor healthcare / medical events on occasion. What is it about that vertical that has drawn PGP Corporation's attention?
Phillip Dunkelberger: The Health Insurance Portability and Accountability Act (HIPAA) was created out of a concern about how to secure people's health records. Your health records should be kept private - electronically and physically. When the final legislation came out, encryption wasn't mandatory, but was an option to secure health records. So the legislation in that area has opened up an opportunity for PGP Corporation.
Angel Mehta: I know that you spend a lot of time forecasting, but do you make plans for doomsday scenarios? That is, what if certain business assumptions turn out not to be true? What if everything that could go wrong does go wrong? Do you plan for that?
Phillip Dunkelberger: On a macro level, I don't lose sleep over it because those are things you can't control. However, you do need to plan. So we have three different versions: plan A, B and C: for expenses, revenue, and product delivery schedules, etc., We know certain things are out of our control…the economy, the war in Iraq, policy changes in government, technology shifts… but we have to work with them.
On a micro level, it's about execution. It's about being brutally honest with ourselves about what we do and don't do well. Are we doing the right things for our customers? Are we listening to our customers? Are we investing in the right things?
We have a big responsibility because people defend core corporate secrets with PGP products. They protect their intellectual property as it moves around the Internet with our products. Our engineers take that very seriously. We prove that our products don't have back doors, did you know that? We're the only commercial security company that publishes our product source code. We do that because we want to show people that we're trustworthy, first and foremost, which we achieve through peer review of our code.
Angel Mehta: If you could have done something differently earlier in your life, what would it have been?
Phillip Dunkelberger: I would have been less fearful. I've found, as I've gotten older, that this can be the heaviest driver of both the positive and negative aspects in life. I think our greatest fears are about home and family. Are my kids going to be healthy? How are my parents going to be in old age? Will the world economy be strong so I can have the jobs I want? Given a chance to do it again, I would have worked a lot harder earlier-on mastering the fears associated with living.
Phillip Dunkelberger is CEO and president of PGP Corporation. He has extensive technology and security industry expertise. He served as CEO of PGP Inc., the original PGP software startup, and as Vice President of Sales at Symantec Corporation. For article feedback, you can contact him at: phillip.dunkelberger@pgp.com
Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies. He can be reached for feedback at:amehta@sterlinghoffman.net
