Founded in 2001, Sandvine Corp. is the second runaway
success for a talented group of entrepreneurs whose first
company, PixStream, was sold to Cisco in 2000 for $545mm.
When Cisco unexpectedly closed the Waterloo facility the
following year, the founding group of Brad Siim, Marc Morin,
Tom Donnelly, Don Bowman and Dave Caputo started Sandvine
Despite lacking a business plan, technology or target
market, the founding team still attracted $19.5mm in start-up
funding and set off to create yet another innovative organization.
In only 6 years, Sandvine has become a global leader in
intelligent network management software with over 90 customers
in 40 countries. Revenues this year for the TSX listed
company are expected to top $60mm. In September, Sandvine
Corp was named the fastest growing technology company in
Canada with a five year revenue growth rate of 42,120%.
StoneWood Group’s Sal Rocco and Bob Hebert sat down
with Sandvine CEO Dave Caputo to discuss the company’s
Both PixStream and Sandvine were team efforts with
a core of people common to both founding teams. Can you
speak about that team?
We are different than many other startups
which are founded by a single individual. We are a group
of five, a band of brothers if you will, who complement
each other and share the collective load in guiding the
business. Most of us have been together since PixStream
and even Hewlett Packard before that so we know each other
well and more importantly trust each other. When I say
brothers I mean that in both the positive and negative
sense in that we get along, we fight and challenge each
other but we do so with a core respect for each other that
enables it to work extremely well. We also are five people
who bring different, though equally important qualities
and skills to the table which allows each of us to focus
on our core capabilities. That is not to say that we don’t
challenge each other’s domain, because we do, but once
a decision is made we throw all our energy behind it.
Core teams such as ours are culturally self-selecting. We
believe we have a high quality group of synergistic people
and this has allowed us to attract a lot of similar people
who share our values. Together, we have managed to work our
way steadily forward in building the company that Sandvine
What was most important for your founding group
from the outset of Sandvine?
Actually, in our very first meeting we
decided that we were going to build a company that believed
in certain things. We have come to call it the ‘Sandvine Way’ and
these core tenets continue to guide this organization. They
are written everywhere, on key chains, door passes and inside
work folders. We mean each and every one and live them to
the best of our ability.
For example, we understand that as a
start-up, anyone who chooses to buy our equipment is taking
a risk with their career. The reality is that it is a lot
safer for a customer to wait until Cisco or some other
large company comes out with a similar product to ours
than to risk their career on a start-up’s new technology. We recognize and respect
such personal career risk and do everything possible to deliver
beyond our client’s expectations and thereby reward
the risk these individuals took by working with us. This
is what ‘Customer First’ means to us and it drives
how we work with each and every one of them.
We also have very strong views on teamwork,
flexibility, knowledge sharing, and risk-taking. Each of these,
as defined by us, is very important and we talk about them
all of the time. One of the most important things that
we were committed to was a total lack of politics. This has
become a credo here, where even today with 300 employees,
we work very hard to cultivate a culture free of the politics
which most of us have experienced in one form or another
in previous companies.
What this means in practice is individuals
credit for someone else’s work and functional heads
or groups don’t protect or over-estimate budget requirements
to build personal empires or silos. Politics are a
demoralizing drag on both individual and overall corporate
performance so we work hard at ensuring that it does not
creep into our actions and behaviour. At Sandvine we
have created an environment in which everyone is empowered
to make the right decision because the overall success of
the company is the sum of these individual decisions. For
us, it is all about doing the fundamentally right thing not
the most politically expedient thing.
We live by these principles and continue
to build an organization that shares these beliefs with
us. As I said, we strive hard to do the right thing and
to treat each other properly. It has been a big part of
the success we have experienced to date…
Can you speak to the lessons from PixStream that
you were able to apply to Sandvine?
Probably the biggest thing was that focus is the genesis
of strategy and not the other way around. Focus is what you
do not what you say you are going to do. You can spend a
lot of time as a tech start-up developing innovative technology
when in reality success lies in their application to specific
markets and problems. Our biggest breakthrough at PixStream
was the moment we focused on a specific set of customers
and their problems. We became dedicated to solving those
problems and to helping specific telcos enhance relationships
with their end customers. Everything flowed from the focus.
We had an unusual situation at Sandvine in that we started
with $19.5mm in funding and had the luxury of starting from
scratch. We started with 30 engineers and organized ourselves
into four work teams, each with a mandate to explore opportunities
in a different area. These were storage, VOIP, fiber to the
home and internet value-added-services. We had a set of criteria
and looked at each sector carefully. After a few weeks we
eliminated one and then focused on the other three and went
on until some 11 weeks later we had narrowed in on the internet
Focus was critical for us and we have
remained locked on broadband service providers’ opportunities since. That
is not to say that the market hasn’t thrown us a few
curves along the way. For example, initially we were a largely
hardware play and had visions of charging our clients millions
for these big boxes. But the market and competitive offerings
shifted and we quickly shifted into a more flexible software
architected solution. We are still solving specific network
level problems it is just how we do it that has changed.
You sold PixStream
while electing to take Sandvine public. How have the
two rides been different?
PixStream came to an abrupt end shortly after its sale to
Cisco. It was the right thing to do and no one could have
foreseen the dramatic change in environment with the Internet
and Telecom equipment market meltdown.
Sandvine on the other hand has been driven by an intense
curiosity in the founding team to see how far we could go
in building a company. Our objectives, our goals are different
in this organization and we are building it for long-term
sustainability. We really see Sandvine as having a terrific
future and want to see that through.
The other big difference is simply that PixStream remained
private throughout while we have gone public. The pressures
are completely different. I thought I understood the demands
of serving shareholders when we were private but those demands
are nothing compared to those placed on us as a public company.
And it is everything from the frequency, quantity and unrelenting
nature of those demands. It has been a fun learning curve.
Many will say that what gets
a firm to $10mm doesn’t
get it to $20mm and what gets it to $20mm certainly doesn’t
get it to $100mm. Can you talk about your observations
of how the leadership requirements change as a business
Thus far we have worked hard to remain
guided by the fundamental question of what is the right
thing to do to get to the next stage. We have built a solid
team who work well together and we face the challenges
as they come along. As mentioned
above, we believe that people have to feel empowered to make
the right decisions. If you have the right people in
place along with the right culture then you need to trust
people and empower them to make the right decisions. We
start from the premise that no one sets out to make the wrong
decision. We foster an environment that encourages
risk taking – we prefer that people do the right thing
3 out of 4 times instead of 2 out of 2 times. Such
an environment can only arise where people feel that they
will not be punished if they make the wrong decision.
There is no doubt that as we grow the business, it becomes
more complex and the demands on all of us increase. But we
have tried to anticipate them and make the changes that we
believe are the right ones. So far so good.
Can you talk about how you personally
have had to evolve as your businesses have grown? How
have you managed that? Are you proactive, do you
have a mentor etc??
Learning is very important for me and
everyone here. I do a number of things to remain current
and to learn from others. For example, I am a member of
the Young President’s
Association (YPO) which I believe is a superb organization.
I get to meet regularly with groups of CEOs who have similar
issues and we hash them out in a supportive environment.
I am also a member of Communitech here in Kitchener-Waterloo
and more specifically their 20/20 peer group of CEOs who
also get together on a regular basis to discuss issues. I
attend conferences and am not shy about asking others for
advice. Just last week I ran into the COO of RIM who had
some wonderful insights into the challenges of managing high
Finally, our board of directors has been transformed in
the last couple years from predominantly investors to a majority
of operationally focused individuals. This has been a natural
evolution from VC backed startup to public company , because
our growth issues are operational and we wanted people who
had lived these in their careers and could share those lessons
In speaking to young entrepreneurs, what counsel
do you provide them? What mistakes or wrong assumptions
do you think people bring to the start-up game?
Well, there are a few things. First, get the team right
because everything flows from the team. Hire the very best
people that you can find and then trust them. We are a perfect
illustration of such a team. Trust is difficult for a young
entrepreneur and I remember myself as quite the micro-manager
when I was first leading teams. But few entrepreneurs can
do it all and you have to involve and entrust others if you
are going to be successful.
Second, I would say focus on the one
thing that you have a chance to be most successful in.
Too many early stage companies start off as technology
plays looking for the right problems to solve. This is
so dangerous as resources are almost always limited and
to spread them out across multiple market initiatives is
dangerous. While the temptation to try to hedge one’s
bets by pursuing multiple paths is understandable, in my
experience it is a rocky and curvy road to nowhere.
Third, I would say that once you have picked that one thing
that you can do, you have to become unwaveringly execution
and customer focused. Talk to customers, listen to them,
work with them to develop an imaginative roadmap going forward.
The first few customers are key and you simply cannot work
hard enough to make them successful and those relationships
And finally, have fun. You have to do this because you love
it and you have to infuse that into others. You are going
to work long days and the attitude you bring and exude will
energize or wilt those whose Herculean efforts you need.
Can you provide advice to start-ups on navigating
We simply do not have enough early stage investors in this
country and so you have a limited pool to leverage.
All I would say is keep the ball in the
investors court. By that I mean, if you want funding and
they have questions for you, get them the information as
soon as possible, get rid of objections, and put the ball
back in their court by asking them if they have everything
they need to make a funding decision. You need a response,
and time is never your friend so make sure you always have
the ball in their court.
Do you see yourself as a serial entrepreneur and
if so what is it about you that is attracted to this life?
I am thoroughly enamored by the life I am living at this
time. It is exciting, challenging and tremendously rewarding
in so many ways. For me it is such a thrill to build teams,
watch them grow and do amazing things. We started from nothing
here and have built a community of wonderful, bright, committed
people all pursuing the same goals. Building a company is
all about the journey. There are no endpoints. The ride itself
is the thrill.
Finally, I would say that when you have a chance to work with
friends, your best friends, then it is not really work is it?