The Xconversation: Software CEO Meets University Innovation Leader, Part II

Startups, technology giants, and mainstream companies of all shapes and sizes are clamoring for software expertise, but top-tier computer science programs are struggling to expand capacity to meet that demand.

Barry Crist, CEO of Seattle software company Chef, wants to see a dramatic increase in the number of well-trained programmers coming from places like the University of Washington. Vikram Jandhyala, the UW’s vice provost for innovation strategy, says constraints in computer science programs are one thing causing universities to re-think educational models. “We see complete alternatives to universities happening now,” he says. “There won’t be one size fits all. Not everyone should have, or needs, a four-year degree or a PhD or a Master’s.”

Crist and Jandhyala hash out these issues and more in today’s Xconversation, an occasional series that brings Xconomy readers along for lunch with a pair of leaders in the local innovation community.

In yesterday’s installment (Part I), the discussion focused on a broad definition of innovation—“inclusive innovation.” Crist and Jandhyala asserted that the worst thing to do would be to shy away from innovation, even if the term itself is over-used. They also shared their earliest memories of technology, discussed the UW’s role in the Seattle tech ecosystem, and sounded off on threats to the region’s innovation economy.

As the conversation continues, Crist and Jandhyala discuss new models for higher education, including the UW’s Global Innovation Exchange; the importance of failure—but the right kind of failure; how they avoid burn-out and stay balanced; Chef’s approach to an IPO; and more.

The following has been condensed and edited for clarity.

Barry Crist: To what extent is the higher-ed model under siege from disruptive innovation right now, and how do you see that evolving over the next 20 years?

Vikram Jandhyala: You can divide universities into the top third, the middle third, and the bottom third with whatever metric you want, but you’d probably get the same division. MIT or Stanford or UW is in pretty rarefied atmosphere, so in some sense they don’t really worry too much about disruption yet.

Online education—that was considered a big disruption. I think that’s settled down. You can almost think of a MOOC [massive open online course] as a 21st century textbook. It’s a social textbook.

Tuition costs are a big issue, and the whole student debt issue. Public universities are even more concerned, because we are funded by the government.

A reason we are doing [the Global Innovation Exchange] is to see what next models are permissible where we can work closely with industry, and bring those [models] back to the central campus.

The only caveat is I don’t think we should start thinking of universities as businesses, because otherwise, those metrics are just too narrow. We are educating. What education means will change, and we need to keep that relevant.

But technologies will disrupt us. Costs are going to disrupt us. Business models. We see that happening.

Vikram Jandhyala, left, vice provost of innovation at University of Washington, and Barry Crist, CEO of Chef. Photo by Benjamin Romano / Xconomy

Vikram Jandhyala, left, vice provost of innovation at University of Washington, and Barry Crist, CEO of Chef. Photo by Benjamin Romano / Xconomy

BC: How about capacity? One of our frustrations is, it’s not a matter of increasing your computer science degrees by 20 percent. We want a 20-times increase in what’s coming out of UW. How do we tackle that? There’s just not enough capacity at the top.

VJ: Absolutely. And I think that’s where the classic low-end disruption will happen. Do you really need everybody to have that amazing UW computer science degree, or is there something else which is a subset of that?

We see complete alternatives to universities happening now, like in the Bay Area you have Peter Thiel saying dropouts will do better. I think his first class didn’t really prove that, but there’s everything from totally dropping out to doing something which is like what Galvanize is doing right here.

I think all those models have a place. There won’t be one size fits all. Not everyone should have or needs a four-year degree or a PhD or a Master’s. So what are these other models?

Xconomy: We’ve seen a proliferation of code schools and programming boot camps to soak up demand from people who can’t or don’t want to get a university computer science degree, for various reasons. Barry, leading a company that’s hungry for talent, have you found a lot of applicants coming from those places? Are they up to snuff yet?

BC: We are super hungry for well-qualified coders. In fact, you picked up a news blurb that we did a little restructuring to free up headcount to hire more product, development, UX [user experience] folks. The news got a little twisted on us, but that’s what was behind that.

We have a broad spectrum. I think we just got our third intern from the Ada Developers Academy here, which does retraining of women as a second career in code, all the way to people that have advanced degrees in a variety of things, computer science, machine learning. We’ve found that there is enormous demand.

I look at our customers. We were born out of the big Web companies. Facebook, Yahoo, Amazon, Google. And now what’s happening is the mainstream enterprise—the Alaska Airlines and Weyerhaeuser and Nordstrom—they’re borrowing the same patterns. They’re embracing software. They are so hungry for people that are qualified in the world of code, there’s just a massive shortage worldwide now.

Back to where we started, software isn’t the only element of innovation, but is, especially in this time, a very important element of it. And we have a worldwide, global shortage.

X: Chef has been growing fast. Some numbers, correct me if I’m wrong: nearly 1,000 customers, more than 70,000 people in the open source community, annual recurring revenue growing at 94 percent. One of the things you pride yourselves on—how you’ve built your community—is a really personal interaction with customers. How does that scale with customer growth?

BC: One of the top challenges that I find as a leader is preserving our own culture as we grow. And we’re growing, as you noted, any key metric of the company is growing about 100 percent year over year, so how do we continue to preserve that?

What our customers buy from us is technology, and about 75 to 80 percent of that revenue is software licenses. And then about 20 to 25 percent is services. That is what we use as a spark plug to help our customers embrace this, if it’s a Ford or a Nordstrom. And usually we spend a lot of time in those early parts of the engagement around culture, and we talk about things that aren’t necessarily Chef-related, but helping them embrace DevOps, and lean, and agile, and all these things.

I wanted to ask Vikram about the role of velocity because I think there’s this tie between velocity and innovation that’s worth exploring.

VJ: They’re almost complementary, I think. As you know, the quicker you can fail, the more you can learn.

Embracing failure very quickly, that’s a big cultural change, because very often people’s personal feelings, personal egos, self-worth are tied to success, especially in settings like where you are getting a grade for a course, or even faculty. So that’s a very big change for, for instance, researchers.

Because, in a tenure system, there is no place to say OK, I failed five times and then succeeded, so I should get more credit than you who only failed once and succeeded.

The faculty who are embracing this more are those who work in teams. And more and more of the grants that are being funded from the Department of Defense or from NASA [require] people to get together and do things which are so risky that no one of them could do it—and you’re willing to tolerate failure.

The more failure you can tolerate, paradoxically, your velocity will go up, because you’ll remove failure quickly from that system.

BC: Yes.

VJ: There’s good ways to fail and sloppy ways to fail. You can’t fail and say ‘Oh, I failed, that’s great.’ What is it that you learned that you won’t repeat? And how can you share your learning with other people so they don’t make the same mistake? That goes back to innovation, too.

BC: One of the things I say is let’s avoid failing out of laziness.

Crist at Chef's headquarters.

Crist at Chef’s headquarters.

VJ: Exactly. Or sloppiness, or because it’s fashionable. I think all of those tie into velocity: quick failure, learning from failure, parallel experiments, team-based work, sharing, communication, all of those things. That’s the system we are trying to build. And it’s a mindset.

BC: One of the things that I think has been very innovative that’s been applied not just in the business world but in academia—and really Toyota was one of the first innovators—is moving to high-velocity, small-batch production. That has affected in a positive way all aspects of IT, our business certainly. That’s tied to innovation, if you can rapidly do these small batches, where it allows failure on a small scale instead of on a large scale.

VJ: The whole lean movement, which starts on the business side—now our faculty even in the College of Environment and social work are talking about it. So they’re getting excited about those kinds of things. Hypothesis testing, small batches, pivoting—all of the things that businesses do, now I think in general innovators are learning from that. Even artists, for example.

X: Vikram, we’re talking about how to lead innovation organizations. And I read these recent tweets of yours:

That’s some wisdom that you’re kicking out on Twitter there. Can you unpack that a bit?

VJ: I’d love to be able to do that, so this is almost more a challenge to myself.

We see this in young students going through. They look at things like disruption and quick thinking, and sometimes try to imbibe it themselves, in their lifestyle, which I think can work for a certain amount of time. But you don’t want people to burn out. Especially in a large organization.

Yes, you can have all these exciting discussions. But you’ve still got to take care of yourself. You know this. People who are successful exercise. They will have something to go back to. They keep things in perspective.

Surprisingly, we don’t teach this in schools, in colleges.

So that’s really what this is about: The leadership. The more sanity you can provide as a leader, the more all of this exciting stuff will happen.

It’s a dichotomy. In fact, there’s another phrase, I don’t know where I got it from: Infinite patience leads to immediate results. So if you’re in the right mindset, things will happen. It’s not really spiritual, but it’s just common sense, right? Staying centered, staying balanced, staying emotionally connected, but not attached. These are things that leaders do all the time. Many of them just do this automatically. Some do it as a training.

I’d love to learn how you do this.

BC: One of my observations has been humans are deeply integrated systems, and it’s very difficult to have, in the long-term anyways, success in one part of your life and not others. Eating well, exercising, taking care of your personal relationships—those actually give you more energy and more stamina, and I think do amazing things in the work environment.

We’ve all been guilty of this. I know I have and I suspect Vikram has also, looking at his background. We’ve been guilty at times of our lives where you overpower one side. And you can’t do it in the long term.

VJ: We all know there’ll be times when we have to put everything into stuff, but the more balanced you are, the more you can do that and get back. So it’s not saying don’t do your best or be mediocre. It’s that you can’t be running at 100 percent all the time. You’ve got to keep something in reserve.

X: What are some things you do when you have free time to restore that balance? What are your hobbies that are restorative in that way?

BC: As a leader, when you have free time, do things that are hard. First of all, it’s a de-stressor. It knocks the piss and vinegar out of you a little bit. But also, it builds confidence that you can apply in other parts of your life, including business. I love doing cyclocross, which is a more specific cycling event. It’s hard, it’s bloody, it’s messy, it’s muddy. And then surfing. They’re both hard. Finding some hard things to get your teeth into as a leader is really worthwhile.

My wife and I are empty nesters. My oldest graduated college. My younger one is a sophomore. So that’s freed up time. I read a lot. I enjoy going to lectures. All sorts of things.

VJ: I always find my hobbies keep changing. [The photo of Husky Stadium at the top of this story is from his latest hobby: drone piloting and photography.] For a while it was making model airplanes because it just keeps you focused, and one piece of plastic suddenly becomes the most important thing. It was really relaxing. But I’ve also, for a long time, tried to do meditation. It comes and goes. There are times when you can do it and times, when you need it the most, it’s the most difficult time to do it.

I’ve been a longtime squash player. That gives you a totally different mindset on competing and at the same time being fair and keeping your body in good shape. So that’s a big help.

And then I’ve got two small kids, which keep me in perspective. A 2-year-old and a 4-year-old.

BC: It goes quickly. I will warn you. It goes from all I want is a good night sleep to Hey, where have the kids gone?

X: Barry, I can’t pass up the opportunity to ask about Chef’s roadmap going forward. I know you’ve been asked a lot about whether an IPO is on the table, and when, but apart from that, we’ve talked a little about culture. I wonder, as you contemplate that, do you worry about what having to be beholden to Wall Street’s expectations could do to a company culture?

BC: A couple questions in there. First, I’ll repeat something that I said at an all-hands meeting last week. I’ve never been more bullish about Chef, where we’re going, our roadmap, the market dynamics, the TAM [total addressable market] that we see out there. And it doesn’t mean it’s going to be easy. As I said, we’re in a period of ongoing disruption, so we have to continue to drive, continue to innovate, and continue to push for better results with our customers than anyone else in the industry. I’ve said this, and I continue to believe it. Chef has an amazing customer base. It’s not just the quality of names of the customers, but it’s the strategic nature of those projects.

Chef has a real shot to be one of the next big important software companies in this industry, and I would be very disappointed to see us have to sell to another company. So as a venture-funded company, you have two options. One is the M&A path, the other is to pursue public markets. It is my intention and expectation that at the appropriate time we’d pursue the public markets. The algorithm behind that is complex, of course, as you know. Right now, the good news is we’re well-funded. We have a nice amount of capital coming from our customers. So we’re under no real pressure to try to do any unnatural acts to get to public markets. We’ll let that develop over the fullness of time.

X: Barry, you spent some time at Ignition Partners before joining Chef, so you’ve seen it from the venture investor’s point of view. A continuing topic of conversation in Seattle is the relative lack, in terms of number, of venture firms that are based here. How big of a hindrance may that be for the innovation economy?Chef office tight

BC: I’ll speak on both sides. I will say as an entrepreneur, I do not think that being in the Seattle area you’re hindered from lack of capital. There is a lot of capital in this town. Ignition, Madrona, DFJ has a group up here. There’s actually a lot of money. We’ve seen, investors from the Bay Area—Scale—that have come up here, or a Battery from Boston invests here in the Seattle area, so I think we are in a truly global venture-funded [market]. I don’t think that holds Seattle back.

What I’d love to see us continue, and I see the trend heading this way, is where we’re getting more students coming out of places like UW that want to go straight into starting their own thing or working at a small company. There’s been a little bit of bias towards safety in the Seattle area compared to the Bay Area, and I see that starting to break and starting to change, but it’s something that I want to really continue to push. The young people that I work with and mentor and talk to, I’m always pushing them to jump right out. It is really not as risky as you think, jumping on something like that straight out of college.

VJ: I hear complaints about [the relatively few locally based VC firms]. I would never tell the folks that complain, but I think if your idea has a certain level of maturity and quality, I think you can raise funding. It’s really not an issue. And we’re getting investors from China and everywhere coming, and they’re looking for ideas.

The two things which I think we could do better: One is exactly what he said, the mindset of the folks who pick safety first. And I can understand it in many cases. That’s their safety net. The other is we need more company builders in Seattle.

BC: Tied to company builders, people who have that operational knowledge that can go all the way. The more glimmer-in-the-eye of saying, I don’t want a $50 million exit to sell to Google or somebody or Amazon, I want to go all the way. I want to create that next big disruptive thing. I want to see us have more billion-dollar outcomes here in the Seattle market.

X: Seattle is increasingly synonymous with cloud computing, and one of your 2016 predictions, Barry, was large enterprises adopting public clouds en masse and for data centers instead of projects. That’s obviously going to be a big deal here. What’s going on this year inside the organizations you’re working with, and in the public clouds themselves, that underpins that prediction?

BC: We’re starting to see a real shift around cloud. If I look back at the last couple years, the enterprise has been dabbling with the cloud. They had projects going on, or they had greenfield applications that they were doing, running on Web architecture, cloud architecture. One of the things that underpins this is the very fundamental role of IT is shifting. It’s shifting from being an infrastructure provider to being that innovation engine inside the company, so it’s very germane to this discussion. As part of that, the economics, if you can go to one of the cloud providers, whether it’s AWS or Azure, they can provide more functionality, faster, cheaper, probably better security than most companies do. You can free up resources to go work on other things, which is the shift from infrastructure to applications, where the innovation is occurring. And we’re seeing that happen in a very mainstream, accelerated way, not just for these new applications or at the project level, but for core IT strategy and big Global 2000 companies. I stand by that prognostication.

X: Vikram, the UW is moving forward with the Global Innovation Exchange [a partnership with China’s Tsinghua University]. What is that going to mean for a company like Chef, and as an asset to the region?

VJ: We’d love to have Chef as a partner in GIX, just putting that out there.

BC: Let’s do it. What’s the pitch?

A rendering of the Global Innovation Exchange at the Spring District in Bellevue, WA.

A rendering of the Global Innovation Exchange at the Spring District in Bellevue, WA.

VJ: The idea again is we get global business students—they’ll all come in from business, social science, law, and then engineering, hardware as well—and they get to spend 15 months together. The first phase, they just learn to get their skill sets up to a level so they really are T-shaped [having both breadth and deep expertise in a given area]. The next phase is practicing teamwork. And then the third phase is really like a startup incubator, where they have an idea, either they come up with it, or an industry partner comes up with it, and they get to spend time, and they have some mentors, building on that idea.

At the end of it, we don’t expect all these ideas will become startups or even products, but imagine the experience they’re going through. They’re really going through that crucible of creating a product, doing everything possible. And at the end of it, this team could be a great acquisition as a team for a company.

This has sort of been happening. I don’t know if you remember Uber funding Carnegie Mellon. They were funding autonomous vehicles, and then they took the whole lab, 40 people. We were like, that’s nice, but can we do this in a way which is not disruptive in that way.

The fact that China’s involved, one, it gives us access to two cultures, and it’s a top Chinese school, Tsinghua University, rated No. 1 in engineering right now. MIT doesn’t like that. They’re rated No. 1. These guys are amazing coders. They’ll be here. They will learn how to work with American teams, and, in terms of the startup phase, they’re going to be able to look at two markets simultaneously. The American market and the Chinese market. The understanding they’re going to get is going to be pretty phenomenal.

BC: I’d love to participate. The short answer is I’d love to learn more.

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