Paul Sagan The Trick Is to Understand What Customers Want

Paul Sagan: The Trick Is to Understand What Customers Want

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The fact that Paul Sagan is a very smart guy shouldn't surprise anyone. It runs in the family: He's a second cousin of the late Carl Sagan — the astronomer, cosmologist, astrophysicist and astrobiologist. 

A pioneer of the broadband and digital media industries, Paul Sagan is a three-time Emmy Award winning newsman who helped build Akamai Technologies into an S&P 500-listed tech giant. 

He joined Akamai in October 1998 as employee No. 15 and Chief Operating Officer, became President the following year, and joined the Akamai board of directors and became CEO in 2005. He held that post until he became Executive Vice Chairman and was succeeded as CEO in 2013 by Tom Leighton, the company’s Co-Founder and Chief Scientist.

Today, in addition to his role as Vice Chair of the Akamai board, he's Executive in Residence (XIR) at General Catalyst Partners, a Cambridge, Mass.-based venture capital firm that makes early stage and growth equity investments in rapidly growing companies.

From TV to Technology


But that's not all. Sagan is also a director of EMC, VMware, iRobot, Datto and L2, and he serves on the boards of two not-for-profit organizations, ProPublica and Northwestern University, his alma matter. He's a former board member of numerous organizations, including of Dow Jones & Company, Digitas, Maven Networks, OpenMarket, FutureTense, VDONet, Experience and Medialink Worldwide.

Sagan started his career in broadcast news. He held various positions, including news director, at WCBS in New York City before turning his attention to cable TV. He co-founded both NY1, Time Warner Cable's 24-hour news channel in New York City and Road Runner, the world's first broadband cable modem service.

In 2010, President Obama appointed him to the President's National Security Telecommunications Advisory Committee. 

He's a bright, interesting, busy man who also happens to be a friend — and agreed to share some of his thoughts with CMSWire.

Sobel: You and I became friends back in 1991, shortly after you left WCBS to join Time Warner Cable, where you helped launch NY1. Move the clock ahead: You joined Akamai in 1998 as COO, rose to CEO in 2005 and you’re now part of General Catalyst. Can you give a brief overview of your journey from TV news to venture capitalist?

Sagan: I think of it as a career with three very different but connected chapters. One, journalist. Two, tech entrepreneur and executive. And now, investor and mentor to CEOs of large and small tech businesses. The common thread is that I always try to understand what the consumer – the customer – wants and then to work with the engineers at tech firms or the so-called “creative types” at media businesses to translate their big ideas into practical outcomes. When it works, it’s been an incredible experience. Like helping engineers figure out how to make always-on broadband Internet in the home a reality by creating Road Runner, or making the Internet scalable, fast and more secure at Akamai, or making the idea of great local news real on TV at NY1.

Sobel: You were a senior advisor to the World Economic Forum from 1997 to 1998 and, more recently, appointed to the President's National Security Telecommunications Advisory Committee. Can you explain a bit about those two positions?

Sagan: Near the end of my tenure at Time Warner I had an itch to do more on the Internet but also to find a way to give my family an international experience. I knew the founder of the Forum, Klaus Schwab, and he invited me and my family to move to Switzerland for a year to work closely with him and his team on some early projects they’d dubbed “Network Society.” Essentially, it was how pervasive connectivity from the Internet was going to change every business over the course of several decades. They had foresight, as that’s what’s come to pass. My relationship since has been as an executive at a member-company of the Forum, through Akamai.

As for the White House appointment, that came about because Akamai is both very involved in developing Internet security products and integral to the fabric of sustaining the performance and reliability of the Internet. So the President asked me to join his advisory committee to make non-commercial recommendations about protecting our communications systems, including the ‘Net itself.

Sobel: The XIR program at General Catalyst Partners is something very new and unique. Can you explain a bit about the program, how you got involved and some of your current projects or programs?

Sagan: The easiest way to think about what General Catalyst calls an XIR – or others might think of as executive in residence – is to picture a group of former CEOs of large companies, generally ones with more than $500 million in annual revenue, working together to identify great emerging tech businesses that are just starting to hit their stride.

What the CEOs of those firms need most is mentorship from someone who’s “seen the movie before.” And they also usually need some growth equity capital. We come with both. General Catalyst can provide the capital and an XIR can provide operational and strategic leadership and guidance by taking an active role.

The XIR usually joins as chairman of the board of the business. That’s what I’ve done at Datto and L2. The XIR program includes some accomplished former chief executives. To name just two, for example, Scott Griffith, the former chairman and CEO of ZipCar, and Yuchun Lee, co-founder and former CEO of Unica.

Sobel: You were once quoted as saying “My advice for other CEOs is to pick what you are passionate about and figure out how you can get involved." Can you elaborate?

Sagan: There are so many demands on a CEO’s time and that’s a danger. Many CEOs lose track of what they should be doing and pay too much attention to what’s either right in front of them or what seems really interesting off to the side, but is only a distraction.

If you’re running a tech firm, for example, what really matters – once you’ve got a great management team in place and you’re setting the right “tone at the top” about ethics and integrity – is that you focus on technology innovation in your firm and how that applies to what you have permission to sell to your clients.

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You have to be driving a fast pace of innovation. Now you can’t do it if you’re not passionate about that, which means you’re likely to do a sub-standard job. You’re either defocused or in the wrong position. In any business, some passion got you to the top, so my advice is to make sure you don’t lose focus on what’s really driving you, in the tech field or any business.

Sobel: Jumping back to Akamai for a moment, I’m interested to hear your thoughts about this whole notion of a succession plan. How well did you know Akamai co-founder, the late Danny Lewin? What was it like when you found out he was aboard one of the 9/11 flights? Did this teach you anything about the potential succession plan at Akamai, especially when you decided to leave?

Sagan: That’s a heavy topic for many reasons, starting with the fact that we lost not only a colleague but a friend when Danny Lewin was murdered on the first plane on 9/11. He was Tom Leighton’s student at MIT, and they were the first two co-founders of Akamai. I met them in 1998 when they were still in Tom’s lab, trying to figure out how to take their ideas and make a business, a business that became Akamai.

We knew Danny was on the plane within no more than an hour of it hit hitting the first tower. We only learned later that he most likely was killed in mid-air while trying to stop the hijacking. He was a former anti-terrorist commando who was in the wrong place at the wrong time, and outnumbered by the murderous thugs.

There were so many great lessons from Danny’s life, especially around being a great leader. What I think I learned from his death is that you have to be prepared for almost anything. We ultimately faced down the long odds that confronted us when we lost the company’s heart and soul at the same time our business was cratering during the dot-com meltdown.

We knew we had a real business with Danny’s great contributions of vision and technology. Plus we were a determined, and then a very angry lot, so we just didn’t listen when other folks told us we were down and out, and should pack it in. And the rest is history. Danny’s idea is now a multi-billion dollar enterprise touching the Internet in nearly every corner of Earth.

As for leaving Akamai, it was just time. I never intended to be CEO of a public company, let alone one that got as big as Akamai. Someone once called me “the reluctant CEO” and I think that was an apt description. But I had a great mentor in George Conrades, the first CEO. When he retired, he helped inspire me to drive the company forward.

After being a senior executive there for about 15 years, nearly all of that time helping to run Akamai as a public company with all of what that entails, I knew in my gut it was time for someone else to sit in the corner office and make decisions weighted to the long-term. Fortunately, we found we had a great in-house candidate in Tom. I believe great technology companies are best run by either gifted engineering visionaries or by low-ego managers who partner with exceptional technologists in the C-suite to make the big decisions. Tom’s an example of the former, and I hope at least a bit of the latter description can by applied to me.

Sobel: You were involved in a $25 million investment in Datto, a data backup business in Norwalk, Conn. In a blog post, a Forbes described it as going from “scrappy” to a billion-dollar business. Can you explain a bit about how that deal came to be, how it's doing and whether it is typical of the kinds of investments you make?

Sagan: Datto is an amazing company and similar to Akamai in at least one important way: the CEO and founder, Austin McChord, is a passionate and visionary engineer who’s focused almost exclusively on his clients’ needs. He’s essentially invented a new category: Recovery-as-a-Service (RaaS) or maybe Business Continuity-as-a-Service. Let’s call it RaaS.

He’s done it by combining cloud computing and virtualization, two things that couldn’t have happened in this way a decade ago, and he’s made it available to a new class of customers, small- and medium-size businesses. When we met Austin he owned 100 percent of the company, had never taken outside investors, didn’t need capital, and had just turned down an offer of $100 million to sell Datto.

What he was looking for were partners who knew how to scale a great idea into a great company. For me, that’s the great adventure in my new gig, and an honor to be part of it. In a role like this, I think I can draw on what I referred to earlier as the three chapters of my business life to help someone like Austin McChord write his own story of success. At least in business, it doesn’t get better than that. Of course, opportunities like that don’t come along every day, so we have look hard to find more.

Sobel: Any final thoughts?

Sagan: Because of hyper-connectivity, mobility and the pervasive nature of the Internet in our lives now, everything in business is on the table. It’s such an exciting time to be looking at new ideas with great entrepreneurs.

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