ADHD: Founders are typically filled with boundless energy and curiosity about new things. Curiosity, fueled by energy, is what drives great discoveries. And great discoveries are the lifeblood of successful startups.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing Dr. Charles Fan.
Charles Fan is co-founder and CEO of MemVerge, a startup software vendor, that is a driving force in the disruptive new category of Big Memory computing. Prior to MemVerge, Charles was CTO at Cheetah Mobile, and senior vice president and general manager at VMware, where he founded the company’s storage business unit. Previously, Charles co-founded Rainfinity, which was acquired by EMC, before he established the EMC China R&D Center.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I started my first company in 1998, 23 years ago when I was a graduate student at Caltech, and Shuki Bruck was my Ph.D. adviser. (Shuki and I co-founded our current company, MemVerge.) I was working on a project in Caltech’s Paradise Lab. It was named paradise because we were working on “PARallel” and “DIStributed” computing. Our project was called RAIN, which was an acronym for Reliable Array of Independent Nodes. The RAIN project was funded by NASA and DARPA (Defense Advanced Research Projects Agency) and its mission was essentially to get a group of machines to work in a fault-tolerant, reliable, and performant manner for space shuttle missions.
I was working on a subproject called SNOW (Strong Network Of Web) servers where I was trying to create a cluster of web servers that could work as one, so that they could be more powerful. That’s when Shuki asked me if I wanted to start a company, which would become Rainfinity. I said, “Sure. Why not?” So, it was very accidental and I kind of stumbled into the world of starting companies. We just happened to be working on technology at Caltech that was highly relevant to the trend of the rapidly evolving internet. This fortunate intersection of events led us to further explore what we were working on to see if these technologies could be used commercially.
Back then Caltech was known mainly for fundamental scientific research. It wasn’t known as an incubator for starting companies in the way that Stanford or other schools were. So, we were kind of an exception there, but it turned out to be a lot of fun for me. So, essentially, I decided to stay in the industry track with startups, join larger companies, and then launch startups again, rather than just focusing on research. I stumbled upon entrepreneurship early when I was a student and liked it. And the fact that the technology we developed could help customers in the real world has been very satisfying.
Rainfinity was a success and was subsequently acquired by EMC, and then I worked for EMC and VMware. And even when I was working for those large companies, I tended to enjoy building projects from zero. So, essentially, over the last 27 years, I’ve overseen seven startup projects. At Rainfinity, we actually did two products from zero to market launch. When I was at EMC, I founded their R&D center in China. At VMware, I worked on a database service and founded the VMware storage business unit that developed VMware Virtual SAN (vSAN). While I was working for Cheetah Mobile, I started their U.S. operation. Now at MemVerge we are a true startup again. So, every three years or so, I build up something new from zero.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
I have been working on storage for the last 20 odd years, and I’d always known that the holy grail of storage is NO storage. We could one day store everything in memory. And that was previously not possible, just because the underlying hardware was not available. In 2012, I started to hear about Intel and Micron’s new memory project, but that was just a computational PowerPoint that Intel presented to us when I was at VMware. But I always knew that memory-based storage would be a disruptive and game-changing technology if and when it does come out.
In April 2017, Intel shipped the solid-state drive (SSD) version of their Optane line. The SSD version was not going to be a truly revolutionary product, but for us, that was a defining moment because then we knew the actual underlying semiconductor was ready. So Shuki Bruck, my co-founder of Rainfinity and MemVerge, and I have always been talking. Yue Li, another co-founder and CTO of MemVerge, was also Shuki’s student; the three of us had been talking since 2015 about the possibility of starting another company. But we really hadn’t found the idea that could make all of us jump. That changed in 2017 when we learned about Intel shipping this SSD and we were able to buy one from Amazon.
And so, we bought the SSD, tested it, and it worked. We opened it up, saw the chips, and knew it was for real now. At that time, we thought this could be a big enough game-changer that could open up a whole new architecture and a whole bunch of new opportunities for startups. So that was the aha moment, when we bought and tested that new hardware, and we decided to pull the trigger and start MemVerge
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
That would be Shuki. He has truly been my mentor for 26 years since I started working with him as a student in 1995. I learned a whole bunch of things from him, not only technical things but also beyond technical things. He has helped me learn how to run a company, and how to live a happy life.
Before I met Shuki, I attended a small undergrad school called The Cooper Union in New York City. It’s a free school and I was very poor, so it was a very good experience. When I was applying to grad schools, Shuki was the first one who called me. He interviewed me and made me an offer to join Caltech. So, I took a trip to visit Caltech, Stanford, and Berkeley who had also made me offers. Shuki actually paid for my trip, and he said, “Go find out and decide what you want to do.”
When I went to Stanford, which is, obviously, a great school that has great professors, I met Thomas Cover who is a very well-known professor in the field of information theory. When Professor Cover learned that Shuki Bruck was my prospective adviser at Caltech, he said I should attend Caltech and work with Shuki. Thomas had actually been one of Shuki’s mentors at Stanford where Shuki earned his Ph.D. He knew Shuki was a younger, very active researcher who would be a terrific mentor for me. He was right. I was very lucky to go to Caltech and it became a blessing for me.
What do you think makes your company stand out? Can you share a story?
At MemVerge we don’t settle for just doing something that other people have done before but do it a little bit better. We want to do something that’s completely different from everything that has been done before and be the first one to do so. That’s the MemVerge mission.
Traditionally with most new projects and new companies, you usually start with customer pain points and customer requirements, and then you build a solution to address them. That’s usually considered the right path to take and that’s true 95% of the time if a company wants to be successful.
I think that’s all great, and I’ve done that before, and it works well, but the case of our company, MemVerge, it’s a little different. It’s kind of the wrong way of doing things where we have a solution, and we are looking for a problem to solve. In our case, we are working with an architectural shift where the memory and storage become one. So, you sort of have a gut feel that this is groundbreaking, game-changing, but it was not exactly clear on day one what our key customer use case would be. We didn’t know exactly what specific problem we would be solving.
So, it’s a little bit like when Apple introduced the iPhone. It was a new beast, a new species that came to the market, and their smart phone opened up a whole bunch of possibilities and changed the world in the process. I think MemVerge Memory Machine is similar in that our technology and this Big Memory ecosystem we are creating is a new species that didn’t exist before. People didn’t even know it could exist. Now that Big Memory software is available, it’s going to take a little time for people to figure out what they can do with it. I think a lot of things can be done with Big Memory software, but we are still learning from many customers we see them figuring out their use cases. It’s very unusual and very different from how a normal startup should typically be created.
How have you used your success to bring goodness to the world?
I think everyone has a calling, and I think for me, my calling is to work on technology and, hopefully, work on technology that can bring good changes for the world. That’s my aspiration, and that’s what I’ve been working on the last 20 years; I think MemVerge is a continuation of that.
With MemVerge in particular, we can essentially deliver new types of data-centric workloads to the computing industry. Whether you are talking about genomics, life sciences, or finding cures to diseases that are hurting people, if you can do it faster, that’s of tremendous benefit to the world. Or even in the movie industry we can allow people to do their jobs better and keep creative people focused on doing creative things so that they can bring more joy to the world. Hopefully, we’ll play a little part indirectly to help people live longer and laugh more.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
Number one would be the ability to think. People in a technology field can go a long way if they can have an opinion, a perspective, and a vision on things beyond the average person. I may not be the best at it, but I do enjoy thinking about things and having an opinion on where the world is going, where the world of technology is going, at least.
Number two is the ability to connect with other people. I think as a business leader, you must have a natural tendency to connect with your employees, your colleagues, your customers, your partners, and your investors. I think it is an important trait for a successful business leader. As an introverted person, I’ve had to work on how to connect with people.
I think my four years as an undergrad at The Cooper Union in New York City really helped open me up so I could connect with others. The Cooper Union was a very atypical school, very small, no dorm, no campus. So, I had to find a place to live myself. I shared a one-bedroom apartment with three roommates. It’s obviously a huge metropolitan city with a lot of people, and that environment allowed me to make a lot of friends in the city. And I had a lot of other friends from out of town who would come to the city and stay at my place.
During the summer, there could be up to 12 people staying at our place on the same night. It was an interesting experience. Over a couple of years, there were 62 different people who had slept at my place. We were practically running a free hotel for all my friends. There were all kinds of people around all the time, and I was like the anchor, the manager of the place. I had to organize things and help keep the peace. I think that environment really helped me learn how to connect with people in the workplace.
Third, having a strong technical background has helped me a lot. I have many weaknesses, but I think having a strong understanding of technology is a good trait in my industry. For others, it may be having a deep educational background in your own field. You can succeed where others might fail if you have a better understanding of details than others in your market.
At MemVerge, we have built a product team of people with a very deep understanding of the technology in our space. Their depth of education and technical knowledge has allowed them to tackle tough challenges. This deeper technical background has allowed us to blaze trails beyond “me-too” products and take us where no one has gone before.
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?
My grandma always encouraged me to eat more. Growing up with her, I developed a good appetite. Now it is making it extra hard for me to lose weight. 🙂
Can you tell us a story about the hard times that you faced when you first started your journey?
When I was 17 my parents moved me from China to the U.S. This was in 1989 during Tiananmen Square and all the political turmoil there. My mom decided my younger brother and I should leave China and come join her in Indiana where she was a visiting scholar at Notre Dame. My father stayed in China just so that we could more easily get a visa, and then he found a way to join us a year later.
I started high school in Elkhart, Indiana and I spoke very little English. I was the only Chinese kid in the high school, and I couldn’t understand a thing in class for a few months. I was “fresh off the boat” with no language skills and no money. I needed part time work but was having a hard time finding a job. I tried McDonald’s, Target, and others but no one would hire me because I didn’t speak any English. Eventually I found a job as a paperboy at the Elkhart Truth. I was the oldest, biggest paperboy at 17 while all the others were only 12 or 13 years old. The money was really poor, especially at first, but it became my first business experience.
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
As I said, being a paperboy paid poorly, but I didn’t give up. You got a neighborhood, and you tried to get more clients so you could earn more money. The newspaper would pay around $8 a month to start, and we paid the paper around $6 a month, so you make a margin on that. It was important for me to look for a way to maximize my pay — the only money you made was on that margin. So, essentially, I became a salesperson, knocking on doors to increase my customer base. I was learning about computers at the time, so I even created my own little CRM software database where I could see all my customers, how good they were, and how well they were paying every month. Even though I didn’t speak much English, I didn’t let that hold me back. Until my English got better, I could communicate with customers by smiling and using body language. I kept that paper route for a couple of years.
The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder”?
When we started Rainfinity in 1998, we were developing a firewall load balancing product called RainWall, which was based on my SNOW project. For three years that was going well; we had built up a few hundred customers. Then a few things happened around 2001. The internet bubble burst, and our biggest partner became our competitor. They introduced features that competed with our product. So, it became clear that our product was not going to take us to the promised land and our investors were all hit hard, so they were reluctant to put in any more money. We had an existential crisis at the time whether we should continue or not.
Eventually our two best engineers and I started working on a new concept related to storage virtualization, which is completely different from load balancing for a firewall. But we identified a new opportunity. The three of us started talking to a lot of customers.
I was basically working as a front-end sales guy, a sales engineer, and the other two guys were the developers. So, in the next nine months, when we only had enough cash for another year, we were able to create a new product and close big customers such as Broadcom and Qualcomm. At the beginning we said, “We must ship our product on August 12. Remember that day.” And we actually shipped on that day. We got three POs on that day, and that basically saved the company. Then we got more money from investors and continued to start our second line. That was one of the toughest challenges and yet one of the happiest moments that I’ve experienced as an entrepreneur.
Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
I think it depends on the financial situation of the founders. Generally, if you are not wealthy, just a young entrepreneur, I think you should get funding as soon as you can. If you have nothing, no one will fund you. But once you develop your idea, if there are people willing to fund you, I think you should consider taking the funding.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.
I sometimes joke that you must be “sick” if you want to be a founder or CEO of a startup. By that I mean you typically possess five conditions, or qualities, that allow you to drive a successful startup. They are:
- OCD: You must have a maniacal focus and commitment to your vision and objectives. Startups have a limited window to succeed. Your company is running on borrowed capital, tight budgets, and limited time. You are in a race to reach revenue milestones before your next round of funding. You can’t afford to be distracted and lose focus on what matters.
- ADHD: Founders are typically filled with boundless energy and curiosity about new things. Curiosity, fueled by energy, is what drives great discoveries. And great discoveries are the lifeblood of successful startups.
- Paranoia: You find yourself constantly worrying about what’s around the corner. You are always trying to anticipate “what if” obstacles that could halt your company’s progress, while also looking over your shoulder to counter the next moves of your competition.
- Infection: The whole is truly greater than the sum of its parts. Everyone on the team needs to be passionate about the company’s mission. As the founder or CEO, you need to naturally infect others with the same passion and disease that drives you every day.
- Thick Skin: Finally, you must be unfazed by failures, setbacks, and criticisms from the masses. These go with the territory. You must determine how you move on and find solutions to the next set of challenges.
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
When I started my first company, Rainfinity, I really had no concept of the market size, and I was essentially a technical founder. It’s often easy to focus on the goodness and coolness of the technology, and less so on the market potential. Rainfinity’s first product was a cool technology, but the market size was limited so our success was eventually limited. The size of the market is really important, especially for a technical founder.
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
If someone knows, they should tell me. I think that comes with the territory, unfortunately. You must have the right personality to be a startup founder. It can be quite demanding physically but even more emotionally. You can get burned out quite easily. So, you just have to be able to deal with it. This lifestyle is not for everyone, and thankfully there are other career options out there.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Right now, people in the world, and the U.S. in particular, have becomes so polarized. I think it’s partly because of the internet, social media and all the echo chambers. There’s less compromise and tolerance, and everyone is unhappy with people who might have a different opinion. The internet has brought us a lot of great things, but I think it has had some side effects. I wish I could contribute to a movement somehow where we could limit the side effects and just have people be happier with each other, even if we have different opinions.
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
Steph Curry. I am a big fan. Steph has won 3 NBA championships and is arguably the most phenomenal 3-point shooter of all time. He should break the all-time record this season. While he is unbelievably talented, his work ethic and dedication are no doubt also a big key to his success. He once made 77 consecutive 3-pointers in practice! Steph is down-to-earth, egoless, and a great teammate who leads by example!
How can our readers further follow your work online?
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!