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Establishing a Foundation to Scale – Scaling Success Podcast


In his latest episode of Scaling Success, Sean Cantwell welcomes JD Sherman, CEO of Dashlane, formerly President and COO of HubSpot, to talk about setting a strong foundation to scale. Pulling from his experience at IBM, Akamai, HubSpot, and Dashlane, JD discusses what he’s learned about scaling, growing fast, and the key foundational elements to consider along the way.

About JD

JD Sherman is the Chief Executive Officer of Dashlane, where he leads a 300+ global team across New York, Paris, and Lisbon, supporting Dashlane’s continued commitment to building the best password management service for both businesses and consumers. Prior to joining Dashlane in early 2021, JD served as President and Chief Operating Officer of HubSpot, where he worked from 2012 until July of 2020. JD helped to lead the company through its IPO in October of 2014 as well as its post-IPO growth, reaching almost 4,000 employees worldwide and $900 million of revenue. Prior to HubSpot, JD spent six years as Akamai’s Chief Financial Officer, where he was responsible for finance, strategic planning, and corporate development. During his tenure, Akamai grew from over $200 million to $1.2 billion in revenue, with over 2,000 employees globally, and was added to the S&P500 index. JD also served as the Chief Financial Executive of IBM’s $21 billion Systems and Technology Group. During his 15-year career at IBM, JD held a number of senior executive positions in finance. JD currently serves on the Board of Directors of Citrix. He served on the Board of Fiserv from 2015 to 2019, as well as the Boards of Cypress Semiconductor from 2010 to 2015; 3Com from 2008 to 2009; and AMI Semiconductor from 2007 to 2008. He holds a BA in Economics from Emory University and an MBA from the University of Chicago.


Scaling success episode 04: VIDEo

Full Transcript

Sean Cantwell: Hi guys! Welcome back to Scaling Success, a podcast geared towards entrepreneurs, where we discuss a range of topics that contribute to building a valuable, and long-lasting enterprise. Our goal is to provide our audience with access to experts on a variety of topics that are critical to scaling a successful business. If you’re new to the podcast, please go ahead and follow us on LinkedIn, and Spotify.

We are thrilled to welcome our very distinguished guest, JD Sherman, to the podcast today. JD is the CEO of Dashlane, a B2B, and B2C cross-platform subscription-based password manager. Prior to Dashlane, JD was the president, and chief operating officer for HubSpot, where he worked from 2012 to 2020. JD helped lead the company through its IPO in 2014, as well as its post-IPO growth, reaching almost 4,000 employees, and $900 million of revenue.

Prior to HubSpot, JD spent six years as Akamai’s chief financial officer, and also served a senior financial executive role at IBM. JD currently serves on the board of directors of Citrix, in addition to his role at Dashlane. JD is a graduate of Emory University – Go Eagles! – and University of Chicago School of Business. JD resides in the Greater Boston area and is a member of Volition Capital’s advisory board. JD, welcome to the podcast!

JD Sherman: Thanks very much. By the way, you didn’t say “Go Maroons!” for the University of Chicago.

Sean Cantwell: I pride myself on my knowledge of college mascots, but I reached my limit at University of Chicago.

JD Sherman: Yeah, well, they don’t really have … They have a Division-III team. They used to play … Jay Berwanger, the first Heisman Trophy winner, was from the University of Chicago.

Sean Cantwell: That’s right, University of Chicago. I’m a Notre Dame grad, as you know, and back in the day, that was a big rivalry, back in the ’10s and ’20s.

JD Sherman: Yeah, I remember some of those games …

Sean Cantwell: So, I just gave about a 10-minute intro on your background, JD. You have accomplished a lot during the course of your career. I did a little internet sleuthing in advance of this conversation, and in addition to everything I mentioned, I learned that you’re a big LSU fan. So, maybe give us a little bit more color on your background and your upbringing and path to your role as an established and esteemed tech executive.

JD Sherman: I grew up in Baton Rouge, Louisiana. That explains the LSU. My best friend as a little kid’s father was one of the coaches on the LSU staff, so we got to go into the stadium, meet the players, walk around the sideline. Ever since then, I’ve just been a huge LSU fan, but I did go away to college. I went north to college, as you said, to Atlanta, to Emory University, and then on to the University of Chicago. My first job ever was actually in Burlington, Vermont … I met my wife up there, so we have kind of been anchored in New England, although we’ve moved around a lot since then.

Sean Cantwell: All right, great. You a big Coach O guy?

JD Sherman: Big Coach O guy. We finally have a coach that doesn’t have an accent [CROSSTALK]

Sean Cantwell: Yeah, right. I hadn’t heard it put that way. I like that.

JD Sherman: Yeah.

Sean Cantwell: One thing that jumps out about your background, JD, and I listed some of your prior stops, is that you have a lot of marquee logos in your bio. I don’t even know if they were necessarily marquee logos, some of them, when you joined. Nevertheless, I’m curious to hear your thoughts about how you’ve navigated your career path and how you considered and weighed different opportunities as they presented themselves.

JD Sherman: I think a lot of that was happenstance. Certainly, when I joined HubSpot, it was a well-known startup, but it wasn’t necessarily a marquee logo. I would say, one of the things that- the pieces of advice I give people is don’t go searching for that title. You don’t need to be chief executive officer of some company that’s not growing, or not scaling, or you’re not going to learn. It’s really like where can you learn?

JD Sherman: I tell you, I spent the first 15 years at IBM, as you mentioned, and I just learned a ton. It was a great place to learn. It wasn’t all wine and roses, obviously. I joined right before Lou Gerstner did. He came in and sort of had to really right the ship, but you learn from those types of experiences. You learn a lot from scaling and change.

Sean Cantwell: It’s interesting, you mentioned your 15 years at IBM, and I think of IBM as kind of the poster child for a big company – big company culture; thousands of employees; international. You moved on to Akamai, also a large company. Then you kind of entered startup world if you will.

Sean Cantwell: You’re one of these folks that’s been successful in a big company and a small company. I’m curious, given your vantage point, I’d love to hear your perspective on the reality of that. People often like to label executives as a big company executive, or a startup executive. You’ve seen both, and I’m just curious to kind of get your perspective.

JD Sherman: They’re quite different, I will tell you. In fact, when I left IBM for Akamai, obviously IBM was 400,000 employees. Akamai, at the time, was about 500, so it was quite small, quite a change. It was sort of a ratchet down. The way I thought about Akamai at the time was it’s in a scale-up mode. A lot of what I learned about what it means to manage at a larger scale at IBM was going to apply at Akamai, but you can’t just simply bring in the big company playbook to a growing scaling company, and so I took a lot of those lessons to Akamai.

JD Sherman: When I left Akamai, we were a billion dollars, and probably 3,000—4,000 employees, I went to HubSpot where is was 200, and it was sort of a similar move. We’ve learned a lot about scaling and growing fast at Akamai that I knew was going to apply to HubSpot. Early on, the most important thing was make sure that you don’t break the culture; make sure that you don’t jerk the steering wheel too much towards conventional wisdom.

JD Sherman: In fact, Brian, the co-founder, CEO, and my boss, after I was there about 90 days he drew, on a whiteboard, a continuum. On one side, it was like conventional wisdom, and on the other side, it was transformational thinking, or I forget what the second word was. He said, “I’m really, really worried that you’re gonna pull us too far this way.” I think that was probably a good awakening for me that I- that would have been my natural tendency. I had to sort of compensate for that and make sure that we were doing the things that worked for HubSpot, and not for Akamai, or IBM.

Sean Cantwell: That’s really interesting. I’d love to dig a little deeper on that because, as I understand it, you were one of the earlier senior external executive hires into HubSpot – a very entrepreneurial, high-growth, venture-funded business. I’m curious how you navigated that and how you managed to find the balance, where you’re bringing to the table a lot of your strengths, and probably complementing the existing team, while also having to recognize, and pay the proper respect to that entrepreneurial spirit.

JD Sherman: I think that there was also a balance. HubSpot, the company, and Brian, and Dharmesh, the founders, they also recognized that HubSpot was about to enter a new stage that was kind of unchartered ground. They needed help to figure out how to layer in what I call an operating system to really scale. When they were talking to people, they frankly were looking for somebody that had that, but they were also looking for somebody who wouldn’t just force a playbook; wouldn’t come in with a “This is how you do it,” rote type situation.

JD Sherman: That’s sort of what we did at HubSpot. We looked at what worked for the company and made sense. Then, we also, over time, had operating system version 1.0, version 2.0 based on where we needed to be. My observation was always like, when you’re a growing company, and there’s a huge market opportunity, I would rather run a little loose than a little too tight, to use an auto-racing metaphor.

JD Sherman: We always tried to- I always thought about the systems and practices we had in place. We want to be really data driven, so we can see what’s happening, but we don’t want to put too tight of controls on the business because that would tend to slow us down. We would err on the side of making mistakes and recovering quickly.

Sean Cantwell: As you know, the stage where we tend to partner with companies, and entrepreneurs is that point where product market fit has been established; you’ve got a broad base of referenceable customers, and the entrepreneurs are really focused on putting the pieces in place to scale aggressively.

Sean Cantwell: I’m curious, just based on your experience at a number of stops, what advice do you provide entrepreneurs when they ask that question? “JD, I’m ready to get aggressive. I want to do it in the right way. What are the types of things I should be thinking about and considering, really balancing that opportunity against some of the risks that will likely present themselves?”

JD Sherman: My advice is usually to think about repeatable mechanisms, and that’s very different than process, if you know what I mean. Process means I’m going to have new ways that I’m going to review things, and budgets, and forecasts, and things like that. Obviously, as you grow, you eventually have to be Sarbanes-Oxley compliant, and all the stuff.

JD Sherman: You have to do that, but it’s really the mechanisms that are going to be helpful to you and that you can teach to an organization, you can ingrain in an organization’s culture, and they’re repeatable, whether it’s how you on board a customer … Obviously, your sales acquisition funnel, that needs to become repeatable, whereas before, it wasn’t.


JD Sherman: You have to hone in on what’s going to be repeatable and that you can ingrain in how everybody thinks about the problem because then, you’re going to be able to scale. Not only are you going to be able to find product market fit, but you’re going to be able to really scale because you don’t have to do it all yourself. You don’t have to handhold every customer. You don’t have to personally be involved in every aspect of product management, that kind of stuff.

Sean Cantwell: It’s almost like establishing the baseline of what success looks like so that you can repeat it over, and over, and trying to bring some order to the chaos that often exists in a high-growth company environment.

JD Sherman: That’s exactly right because the tendency is to put processes in place that take away autonomy, and experimentation. You have to fight against that urge a little bit. On the other hand, things have to- you start to have to do things in a scalable, economical way.

JD Sherman: That’s why I think the word ‘mechanism,’ which I got from Jeff Bezos, actually … He talks about mechanisms all the time. That’s just magic, really, if you think about that. It’s like what is the mousetrap we’re going to create that every time this situation comes up, we know we can rely on?

Sean Cantwell: I’m curious, in some of the organizations you’ve entered, and you might even be experiencing this all over again … I’ve worked with a CEO before who liked to say, “If you can’t measure it, you can’t manage it,” which I appreciate, and I agree with that, and I echo that to a lot of CEOs that are really looking to kind of aggressively scale up. I’m just curious, from your standpoint, what are some examples of mechanisms you put in place to help companies measure, and manage output and hopefully start to establish some repeatability?

JD Sherman: Well, it’s an incremental process. What I mean by that is when we were at HubSpot, we were going 100 miles an hour, and then, one month, something would really break; like, “Holy crap! We just totally missed the sales month …” We should have seen it coming. The way we would do it is we’d say, “Why didn’t we see it coming? What was the piece of data that would have been interesting to us that would have helped us see it coming and avoid it?” Then, we would add that piece of data to the stuff we looked at all the time.

JD Sherman: You start out and- when I first got there, we were pretty loose. A great example was we obviously were generating lots, and lots of leads, but we didn’t know exactly- we weren’t really paying too close attention to how good the quality of the leads were, what their sources were, and things like that. All of a sudden, the leads were growing, but sales were flattening out, and we’re like, “What’s going on? What would help us understand that?” We clicked through that, and we sort of got to the next level of the way we managed our demand funnel.

JD Sherman: Those are the kinds of things that you go … Then, every once in a while, you end up with a management deck that’s like three inches thick, and you have to go back and refactor it and say, “This is sort of ingrained. We have the mechanisms for this now. We don’t even need to look at this anymore.” That allows you to go and think about what’s next in your business. You have to make it ingrained in your culture and ingrained in the way you do business.

Sean Cantwell: That’s great. I think, today, for entrepreneurs that want to build, and scale a SaaS business, there’s a lot of information out there, and you can almost like download, “Hey, here are some metrics, and key dashboards I should use,” to help manage the business and know which levers to pull.

Sean Cantwell: HubSpot was one of the early leaders, right? I’m sure, in your role, there wasn’t necessarily a Google search – “How to manage the finances of a SaaS business.” I’m curious how you went through that process of really understanding what are the key priorities to drive shareholder value, and then how you translated that throughout the business.

JD Sherman: That’s a great question. I always say that if I really understood SaaS economics, I never would’ve joined HubSpot because when we finally figured out how to measure a business … Our churn was way too high. That’s the most obvious thing for any SaaS business [CROSSTALK]. I can talk about that in more detail.

JD Sherman: It is true, back in 2012, it was a relatively new thing. Even in 2014, when we were on the road pitching our IPO, we were having to explain to some pretty savvy investors how a SaaS model worked. I don’t think that’s the case anymore. There are a lot of resources out there that SaaS companies can lean on. We were lucky because we had Sequoia as a board member, and they had a ton of experience about that, and we had David Scott from Matrixx was one of our board members, and he’s kind of a SaaS expert on [CROSSTALK]

Sean Cantwell: He’s one of those folks that publishes a lot of material online.

JD Sherman: He totally does, and a lot of it he learned alongside of us or taught alongside of us like as we developed our methodologies and everything. It was super, super valuable for that.

JD Sherman: The one lesson that I learned –  frankly, the hard way a couple of times – is you obviously look at your lifetime value of a customer, and your CAC, and the thing that you have to be careful about with those is they sound like leading indicators, but you’re measuring them based on the data that you have now, so they’re almost kind of lagging indicators. You’ve got to figure out a way to measure customer success, and customer happiness.

JD Sherman: We did a bunch of different things from the complex to the simple. Simple – measure NPS. I highly recommend that you’re always asking your customers about net promoter score – how they feel about your product – and measuring that. The complex – we started as we got more clever with the data, and got more data – was figuring out when a customer acts this way, they behave this way, in terms of their future as a customer, and building a mechanism to get that ingrained in the way you do everything from build the product, to onboard a customer, to deal with their renewals, everything.

JD Sherman: We created one single-number score that tells us a health check for our customers. That worked until it didn’t. Then, we went on and kept iterating on that. I think the thing that you have to be super careful of, as you scale, particularly as a founder, or whatever, is you have to fight to stay really close to the customer and get ways- get mechanisms to understand the feedback you’re getting from your customers.

Sean Cantwell: Just to pick on one point you mentioned, I think you said when you were looking to join HubSpot, if you had known as much as you know now, maybe you wouldn’t have joined. One of those points was churn … Every SaaS business obviously wants to have the highest retention possible. I think, when any company sets out to build its three-year forecast, they’re showing improvements in that retention over time.

Sean Cantwell: I will say, just from my vantage point as an investor, it’s easy to put it on a spreadsheet. It’s really hard to actually improve that over time. I’m curious, it sounds like, at HubSpot, you guys were able to put mechanisms – to use your word – in place to really improve retention. I’m curious if you can provide our listeners with some examples of things you guys did to really move the needle on that front.

JD Sherman: One thing is you tend to want to find the silver bullet on retention, like, “Oh, it’s a product problem, or pricing, or something like that.” Maybe it is sometimes, but very rarely, if not never, is it just one thing.

What we had to do at HubSpot was we kind of said, “Okay, there are seven, or eight aspects of our business. There’s sales, there’s marketing, there’s customer success, there’s product, there’s engineering, and everything … Everybody, what we’re going to focus on as our number-one priority is customer retention.” Then, you have to think about it differently because if I just put 100 percent of my effort on customer retention, what would I do differently as a sales organization?

So, as an example there, what we said was, “Wow, the sales team is signing up customers that are not necessarily great fits for the product.” They don’t even have a website, for example, in some bad cases. You’re not going to have much success with HubSpot if you don’t have a website. So, we changed the way we compensated sales reps, so that they were compensated better when the customers had great retention. That was a simple one.

The leads – I talked a little bit about the lead scoring. We figured out how to qualify leads based on projected lifetime value versus likelihood to close. The onboarding – we actually required customers to buy onboarding, which was obviously adding a lot of friction in the process. We changed our pricing to have a second tier, so that you can- so that customers who did stick around would grow with us as their business grew.

Everything, every part of the business had to improve for us to get that done. I would just say, if churn is your problem, get on a whiteboard, write down every aspect of your business, and write down what that part of the business would do differently, if their number-one goal was reducing churn. By the way, that’s a pretty good number-one goal because that’s also like customer happiness; perfectly 100-percent correlated

Sean Cantwell: So, JD, across your stops, you’ve seen success in a number of different places. One of the questions I get asked a lot by entrepreneurs thinking about raising money is they’ll kind of go through the Volition portfolio and say, “Hey, what did those really successful companies have in common?” I’m curious, from your steps, if you’re able to draw out any commonalities from your different stops that you think were really key contributors to driving a successful outcome?

JD Sherman: That’s a great question, actually. I should probably give it more thought. As I think about it, there’s one super high level of commonality, and then maybe a couple of smaller one. The super high level one is you can rally the company around the mission that you’re after.

I’ve seen that not only in companies that I’ve been lucky enough to be a part of, but the ones who are super successful … If you went around and talked to every employee, they would understand what the mission is. It’s hard to believe that that really matters, but it really matters. We’re mission-driven human beings these days, and I think if you can get people to rally around that, that makes a difference.

I think the smaller ones are like- the ones that really talk about customers, and measure customer success, and everything, they tend to do better than the ones who sort of let that drift away. I think Akamai was a great company, great example of that. I think we drifted a little bit away from that.

We got led by our very biggest customers, and that might have been a little bit of a mistake. Obviously, Akamai has had great success, but I fault myself, as the CFO, for pushing the company away from that thought process a little bit. I think that’s a big one.

I think it’s also just discipline. There are some companies … A sports analogy is like some teams, they have tough years, but they still eat their way to the playoffs just because even when things get tough, they like bear down, and they get it done, and some teams totally blow up. You just have to have grit as a company, I think.

Sean Cantwell: I think a lot of the comments you just made kind of tie back to culture, and culture is one of those things I’m sure you think about now, in your role as a CEO at Dashlane. Culture is one of those things that’s hard to define. I’m curious how you think about culture perhaps, in part, reflecting back on past experiences, but also your current role. How do you think about building culture that’s really aligned around a mission that ties people together?

JD Sherman: It’s interesting because I just went through the exercise with my new team at Dashlane to sort of relaunch our values, and our culture. As we talked about it, as a team, we kind of borrowed the analogy that we used at HubSpot, which is culture is like a product, in so many ways.

JD Sherman: Think about what the ways are. It has features. The features are like the values that you establish as a company, and say, “We are going to do this, and we’re not going to do this,” kind of stuff. It’s kind of open source; everybody commits; everybody adds to it, and impacts it, and stuff like that, so you have to be thoughtful about all the hiring you do, all of the coaching, and the way you do performance management. All that stuff has to play there.

JD Sherman: Every once in a while, it needs to be refactored because you change a lot as a company. One of the things … HubSpot had, I think, a fantastic culture because we spent a lot of time on it. We wrote it down. That’s really important. Then, we wrote it down in an aspirational way rather than trying to codify the current state.

JD Sherman: The fact is, HubSpot is very different than when I joined, and it was 200 people. The executive team, early on, were mostly startup folks, and some, it was time for them to move on. They knew it because it’s not their deal. Now, it’s a 5,000-person company with a totally different thing. The underlying culture has to stay the same, but you have to sort of continually refactor it.

Sean Cantwell: That’s great. I’m sure culture is one of those things that’s a top priority item for all CEOs. Another question we get a lot, at Volition, from entrepreneurs who are thinking about raising capital, and they want to help position their company to achieve new heights, they’ll ask you a question like, “What do you think are the key roles of a CEO, and how do you define a good, and successful CEO?”

Sean Cantwell: I’m curious to get your perspective because as I kind of trace your career history, to use a sports analogy, you’re kind of the five-tool player. You came up through finance. Then, at various points in your career, you had responsibility over just about every functional area in the organization, which I’m sure, in no small part, has informed your view on what a good, and effective CEO is. So, I’m just curious, how would you answer that question?

JD Sherman: It is funny because the progression, for me … When you’re a CFO, or in finance, you think, “I could run this place. How hard could that be, right? I have all the numbers. I am a business guy. I can run this [INAUDIBLE] officer.” To really own the number, if you will, you have to actually make things happen. It was a huge leap, and you had to learn a lot about that.

I got my feet underneath me, and I’m like, “Yeah, you know, CEO … How much harder can that be? Whatever …” It is another huge leap to be the CEO because not only do you now have to keep an eye on how things are running, but you have to set the vision, and the culture for the company. There’s a lot riding on that, on your shoulders.

It’s very rare to find somebody who’s really good at that aspect, as well as the operational aspect. I think that’s probably why Brian brought me in at HubSpot is he wanted to focus more on the vision, and the external, and the strategy, and the culture, and lean on somebody like that, and that’s probably my skill set.

As I think about it, as a CEO, obviously, I have to develop that, but what I would say to CEOs is figure out where your blind spots are. One, you have to over-index on them a little bit, but secondly, you’ve got to ask yourself, is your team well positioned to fill in the blind spots for you?

I think about my role as a CEO, and even as a COO, I’m not really a product person. I didn’t grow up in engineering, or product. I grew up in finance. So, I have to make sure that I have a really strong product team, and I’m testing, when I’m talking with my product team, as much about customer needs, and are they doing that as … Even more so about what they’re thinking; what their thought process is. Is it working? Can I count on this team to deliver for us?

Sean Cantwell: One area that is probably more in your comfort zone, just given your finance background, is just capital allocation, and how to think about the budget. Another question that I’m sure you get from entrepreneurs is, “When should I raise money, and how should I think about that?” What are the pros, and potential cons of raising capital?

JD Sherman: There are definitely cons. It never fails. You guys have probably seen this as much as anybody. It never fails, when a company does a big raise, for a short period of time, they kind of go sideways. It happened at HubSpot when we did that. It happened at Dashlane. I’ve seen it so much at any company because-

Sean Cantwell: No, everyone’s focused on buying the logo-ed Patagonia vests.

JD Sherman: Yeah, that’s probably what it is. It’s certainly distracting. Also, it may tend to make you lose focus. I joked, if I were going to raise $100 million, I would put $75 million of it in a certificate of deposit that I couldn’t touch for two years because you just have to be careful that you don’t lose focus, now that we’re so well capitalized. Are we still driving for what we want?

JD Sherman: The question I always ask is what’s the catalyst you’re trying to ignite here with this? Is it that now I need to turn on the hiring because I’ve got- my funnel is way too efficient, and I need to start pouring gas on that, or now, I need to double down on the engineering? How much money do you really need for that, to drive that catalyst? What is the thing that’s going to drive you there?

Sean Cantwell: That’s great. When you raise money, then, all of a sudden, you have a board you’ve got to report to.

JD Sherman: That’s right.

Sean Cantwell: There are folks that have expectations about financial performance. Sometimes, the companies we invest in, they’ve never had a board before, until they choose to raise money. I’m curious, just given your experience as both an executive, and as an independent board member, I think it’d be helpful … Maybe demystify, for our listeners a little bit, the board of directors. What is its role? What does a good, high-functioning board look like, and how can they help advance the cause of the business?

JD Sherman: That’s a great question, actually. I’ve seen a company- like executive teams that get a little bit intimidated by their board because if you’ve raised money, you’re raising money from all these fancy investors, like you guys at Volition, and other people [CROSSTALK]

Sean Cantwell: Super fancy.

JD Sherman: Super successful. When a board says, “Boo!” everybody’s like, “Oh, man, I ought to be scared because this is the advice …” The relationship you have to establish with the board is a little bit more different. I wouldn’t say- advisory might be a good word.

JD Sherman: The other thing I would say is I’ve obviously dealt with VC-led boards, and small company/startup/growth company boards, and I’ve been on public company boards, and it’s very, very different. I think about the early-stage startup boards. You’re basically- you’re hiring- you’re putting people on your board that are going to be consultative, and advisory to you.

JD Sherman: You’re going to ask them – if you do it right, in my opinion – to be willing to roll up their sleeves with you and solve some problems that you’re trying to get your arms around. That’s how a board is super valuable. In fact, one way you – I’m sure you guys would agree – you pick your investors, a little bit, based on their ability to help you achieve that.

JD Sherman: It starts to change a little bit when you get to a public company, where boards are more about, I would say, guidance, and guardrails. Sure, the board has lots of experiences, but they’re not going to help you run the day-to-day operations. For the most part, they’re going to help you understand if you’re getting really close to some guardrails that are dangerous and maybe give you some guidance.

JD Sherman: For the kinds of companies that you guys are investing in, and that, I would say what you want is to establish a relationship where you trust the board enough, where you can say, “Here’s a problem I’m dealing with. Can you come in and help me do that?” Then, also, that relationship has to be trusting enough to say, “Hey, I appreciate it. I don’t think that’s what we’re going to do. We’re going to go the other way. I’ve listened to what you’ve said, and we’re going the other way.” We did that many, many times at the HubSpot board. The board members were appreciative, and helpful, and they also would buy in on it when we did. They would disagree, and commit – to steal another one from Jeff Bezos, and Amazon.

Sean Cantwell: As someone who sits on the board of a bunch of companies we invest in, you always want to have that back and forth, and just because a question is being asked, that’s not a statement of fact. I think most investors welcome the pushback because the executives are the ones on the rock face close to the issues, and problems, and they-

JD Sherman: The red flag for me, with an executive, is if they’re defensive. That’s a red flag. As a board member there, I try to pull that executive aside and say, “Do you think we’re not on the same team here? Do you think we’re not trying to get to the same good result? If so, then we should talk about that because that’s sort of a fundamental issue. I think we are, and therefore, there’s no need to be defensive here. There’s a need to be collaborative.”

Sean Cantwell: That’s great. I think, right now, we’re in this unique window of time where there are a lot of companies going public. I can tell you, after 20 years of being in this business, I think the conversations around, “Hey, should we consider an IPO, or a SPAC?” are just happening with much higher frequency. As a result, there’s a lot of entrepreneurs out there really trying to understand what does it mean to be a public company?

Sean Cantwell: You’ve been right there on the front lines in a few public companies, both as an executive, and as a board member. What advice would you provide for entrepreneurs who are considering a public offering amongst, perhaps, other options? When do you think it makes sense versus not?

JD Sherman: There’s a lot of sort of conventional wisdom around that, and it’s mostly correct about the way to think about public versus raise, and everything. A couple of observations I have on it, though. First of all, like I said before, I always thought about, when you fundraise, what’s the catalyst you’re looking for?

JD Sherman: A public raise can be a catalyst. It can really be a tailwind for your business, just being in the public market, and in the public eye. Certainly, we saw that, and felt it at HubSpot. From that standpoint, that was an intangible of doing our basically Series E as a public IPO, the way we thought about that.

I would think, and I wasn’t at Akamai when it went public back in the dotcom days, when there was- it had really no business being a public company at the time. I think there probably is a stage at which it’s too early for your company to go public, and it’s going to be dangerous, and damaging to the way you want to run the company because there is quite a bit of necessary overhead of being a public company because you have to- you have a responsibility to your investors.

As a private company, it’s easily manageable because your investors fit in the same room, whereas it’s different when you’re a public company, and they all have … The way you communicate with them is in earnings calls, and 10-Ks, and 10-Qs, and everything. There’s definitely a responsibility to investors. You have to ask yourself, am I ready to take that on, or is it going to be damaging to the company?

At HubSpot, we waited as long as we possibly could, honestly. When we went public, we had literally zero net dollars on our books, and we were into our line of credit because we wanted to make sure we were ready to be a mature public company. Then, we also wanted to make sure that we had set it up so that the company wouldn’t feel differently to our employees. We still had that sort of- those mechanisms that I talked about, they would still work; our culture wouldn’t be damaged; that kind of thing.

Sean Cantwell: That’s great. There’s a lot of wisdom in those words and in hearing your perspective. What’s next for JD Sherman? You’re CEO at Dashlane right now. Maybe tell our listeners a little bit about the company, its offerings. I know password protection is probably relevant for everyone, to some degree. We’d love to hear a little bit more about the business and what you’re hoping to accomplish.

JD Sherman: I think it’s a really interesting business. Dashlane started as a password manager for consumers, as many of the password managers did. You download it onto your laptop, or you download it onto your phone, and it helps you manage all the passwords that – normal human behavior – you write them down, and you’re not careful with them. It does it in a way that makes your life easier. It solves some of the headaches, every time you’re logging in, and things like that. Super interesting business.

Our observation is there’s a huge opportunity for password management on the B2B side. If you think about the cybersecurity problem, you have all these tools, and technology that people bring to bear, whether it’s firewalls, or intrusion detection, or endpoint management, all this kind of stuff. Building walls around your infrastructure, there’s a big gate, and it’s your employees. Employees are only human, and they’re going to do silly things.

80—90 percent of breaches of your data infrastructure happen through that gate, through bad password management, and everything. So, if we can make a password manager that’s easy to use, easy to buy, easy to deploy; get your employees using it, and not behaving like they are tending to behave, as sloppy human beings, which you can’t blame them for, then I think we really close the loop on cybersecurity for companies. That’s really, I think, a big opportunity for Dashlane, and what we’re focused on.

Sean Cantwell: I think there’s like an education component. I saw a tweet you sent out about you’re an LSU fan, and you thought LSU would be too simple, so it’s “ELESHU” spelled out as a password. I think we can all relate to that on some level, so I think putting tools in the hands of your employees to maybe be a little bit more responsible, and careful with passwords is just good business sense.

JD Sherman: Oh, yeah, it definitely is.

Sean Cantwell: Well, JD, thank you so much. We covered a range of topics today. I know our listeners have a lot to gain, and benefit from, just in terms of hearing your experiences on a broad range of topics that I often get asked about. I know folks will really enjoy listening to this and learning from your experience. Thank you so much for joining us today.

JD Sherman: Great. It was my pleasure.

Sean Cantwell: Thanks so much, JD. Take care.

JD Sherman: Take care.

Volition Capital

Sean Cantwell

Managing Partner

Sean Cantwell

Managing Partner


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