Leading a Company Through Acquisition

A conversation with Jacob and Zac Smith, founders of Packet

I’ve known Jacob and Zac Smith, the founders of Packet, for several years. They’re smart, thoughtful leaders and so much fun. I’ve enjoyed watching their journey from scaling the business to selling it to Equinix in 2020. I interviewed Sidney Miller, the former Strategic Sourcing Lead of Equinix a few episodes ago. After that interview, I reached out to Zac. I’ve wanted to share a behind-the-scenes look at an acquisition and was thrilled when Zac said yes. Even better, he invited his twin brother Jacob to come along. In our lively conversation, we talked about their mission, the role their background as musicians played, how to bring the team along after an acquisition, melding cultures, and the mistakes they made along the way.

This interview has been lightly edited for length and clarity.

I've been excited to have this conversation ever since I messaged you Zac asking if you wanted to talk about the acquisition.

Zac: Ever since you slipped into my DMs.

It was a LinkedIn DM, right? I wanted to talk about the journey that you two all have been through.

I'd love it if the two of you introduced yourselves.

Zac: Sure. Absolutely. Well, I'll go first because I think Jacob's on Starlink internet in Vermont. So my name's Zachary Smith, and I live in New York City. I believe, Suzan, that's where we met for the first time at a Hilton or Marriott Hotel lobby in Midtown East or something. That was a very pre-COVID situation. I currently work at Equinix. Prior to that, I founded a company called Packet and had been doing internet infrastructure businesses on and off since I had a failed, quasi-aborted career in classical music.

Jacob: Hey, so nice to see y'all. Hopefully, everything's beaming in alright from my basement in Vermont because of construction, life, and remote working. I’m so glad that you can roll with the fuss in the background. So obviously, I’m Zac's brother, and likewise a failed classical musician, a little bit more successful. I played for a bit longer.

Zac: Significantly more successful.

Jacob: I made a living [as a classical musician] for a while, played in the opera, and found my way into tech because every musician needs a side hustle. Mine was marketing. When [Zac and I] were looking for a business to start years and years ago, we were trying to find something that was not internet infrastructure. We ended up finding internet infrastructure, and I learned a lot about it. So I've been the marketing twin to the infrastructure nerd ever since.

That's so interesting that you were trying not to find the infrastructure, and then you did. So what made you start Packet?

Jacob: Zac, all you, man.

Zac: Well, we definitely were staying away. I had a history in early cloud computing company called Voxel that I joined in 2001 and sold in 2011. And the reason why I sold that business was because we saw the movement of hyperscale clouds kind of running data centers up through databases. And it was a very capital intensive business with these huge competitors and we didn't know how we could survive. 

And so [when looking for a new business to start with Jacob] we kind of avoided the concept that "Hey, there's this thing that I know really well." Me and all my friends had grown up building the fundamentals of the internet. Yet, we're like, "Why would we possibly want to get into that business again? I just barely got out of that business!" 

And then we were inspired by, frankly, a couple of key individuals. A gentleman, by the name of Alex Polvi, who I was friends with. He had started a company called CoreOS around a technology called Docker. It was about making workloads portable for developers. And that to me, plus some interactions we had with a good friend, Dan Kohn, who was early starting the CNCF, just showed that software was going to be super portable. And how could we service that by making physical infrastructure [more consummable]?

And there's a whole other story about that, about why computers are actually not commoditized, and why the health of our planet might actually have to do with turning on and off the right kinds of pieces of silicon. But we felt that the world needed a way for software developers to interact with physical infrastructure. So that's the inspiration for Packet. And Jacob kind of not so subtly told me to stop being scared and said, "Come on. I'm sick and tired of you bitching about this all the time." And we were at a bar. I was pretty sure, but that's an area that you probably remember more clearly than I do, Jacob.

Jacob: I think we were at a beer garden, not a bar. There's evidently less roof involved. We were trying on every business idea, Suzan. We wanted to do a business together because we'd been so wildly successful mowing lawns together when we were 11.

Zac: Crushing it.

Jacob: Crushing it. If we also do your pool...

Zac: The first recurring subscription business.

Jacob: I know, right? Why do it one-off when you could get people on a subscription? And so we were looking for a business and we tried on everything. We were going to do a blockchain business in 2014…backed by gold..I think that was the angle there. We had a bunch of other things that we were trying, and we just kept coming back to, "Well, these are all the people that you know, and the circle's strangely intimate."

It reminded me a lot of the worlds I had spent time in when I ran an internet marketing business. I mainly helped sell luxury goods…rare books, rare wine, rare art. Anyone that was about looking for the needle in a haystack. And infrastructure, digital infrastructure, felt the same.

Zac: It's like a fine wine.

Jacob: Like fine wine. It's just noisy servers in a data center. Don't mind the difference! 

But the [trend towards the] cloud really kind of said, "Hey, there's this [generic] thing." And we always made an analogy that cloud was like retail banking…it's good for the 80% of the bell curve...almost everyone. There's one on every corner and there's a free coin counter. 

[Retail banks] are really good unless you need a private wealth manager because you have complex issues. And so what we saw was when we looked out 10-years - you have to look at infrastructure on long cycles - and thought, "Huh, what would that look like?"

And basically, we were thought that everyone's is going to [try and] look like Microsoft, Google, and Amazon…all clouds on the side. But very few are going to have the know-how, the resources, the capital, the physical infrastructure to do it. So [the idea of Packet] wasn't just like, "Can we sell people bare metal servers on the internet?" That was a thing that had been done before, called hosting. It was how could we create an ecosystem approach to make that happen?

I love hearing this story, especially the beer garden part.

Zac: It sounded like a great idea after four IPAs or five. What could go wrong?

So you all built Packet and then sold it to Equinix. But I understand you weren't looking to sell Packet. What made you all change your mind? How did that come about?

Zac: Well, a good friend of mine once said that businesses are not sold, they're bought. And that was definitely the situation. I think building a company and building a capability, we were on a pretty big mission, which was how do we democratize the capability to connect physical technology with the developers of the world and empower the next few thousand digital leaders? That was our mission. And it didn't have really a timescale on it. It was, "Go work on that and figure it out." And so that's why we started the business. 

It was not easy to fund an infrastructure-based startup in 2014 or 2015. It's still not. Infrastructure companies are hard. They require a lot of capital, a mix of venture plus hard assets. I think there were only a few venture-backed cloud companies. There was DigitalOcean and there was Packet …I'm running out of names! So it's really kind of hard to raise that capital, but we had done so. I think it took us 52 no’s to get a yes in our Series A.

Jacob: It was 53.

Zac: Yeah. So it was a lot of no’s! 

We were building a capability set that really did need a large amount of capital. And as such, it was either raise more money or strategically partner and unlock different forms of capital. Luckily, I'd been living in New York City for 20 years. It’s different now but five, six years ago, all my neighbors in lower Manhattan were either bankers or lawyers. And now it's like a bunch of people who work for Amazon and stuff like that. But my neighbors were bankers and lawyers. So I had learned a little bit about securitization, about capital markets just hanging out on the soccer field, talking to the other dads or moms. They're like, "What do you do?" And they’d say, "Oh, I securitize billion-dollar bridges and stuff." And of course I was like, "Oh, tell me more."

So we'd always thought that there would be alignment between infrastructure-based capital intensive businesses like data centers (which at the time were turning into real estate trusts, which had lower-cost capital and the ability to invest billions of dollars in hard assets) with our technology and our ecosystem driven approach. We’d been spending a lot of time with the real estate world, trying to figure out how that would occur. It just so happened that the alignment between us and Equinix really met at a very important time. In arrears, you'd say that was smart, but actually, I think was luck. Charles Meyers, who had taken over as CEO Equinix, I think in what, 2019...Jacob, something like that?

Jacob: Yep

Zac: Charles had a vision of becoming systemically more relevant in digital infrastructure, going beyond real estate into programmable access of Equinix’s global reach. And at the same time, there was a big movement towards the distribution of physical infrastructure...of having it everywhere.

We closed the acquisition on March 2nd, 2020, which is when the original lockdowns of COVID happened, which meant it was pretty hard to go and put physical infrastructure in data centers when you couldn't go anywhere. So the timing worked out really well for customers who were like, "Oh my God. Thank goodness you can help do that for us." 

But that led to the opportunity to have a much wider impact on the world in terms of the distribution of technology and how people could access it. That’s what really led us down the M&A path.

Jacob: Yeah. Changing the direction of big companies is hard, right? Transforming. We all say digital transformation and laugh at it, but now we're in it, and it's real. And so to take a company that's successful, that is essentially a place where things happen, and then transforming that to be how to help do it in a more meaningful way is a big journey. 

I had never been through an acquisition before. This was my first time. Zac had been through one. We were always out there trying to, what I like to call, encourage serendipity. You can't get the timing right in deals, whether they're M&A deals or sales deals, or anything else. What you can do is increase your opportunities and hope that those things align, especially when it's not transactional.

With Equinix, we’d talk to other companies. We’d be like, "You know what you should do." We did that a lot. We were like, "You know what I would do if I were you?" Which was, we are not you. And we weren't lots of people. We weren't Intel. We weren't AMD. We weren't NVIDIA. We weren't ARM. But we had a lot of moments where we said, "You know what we see and what might be harder for you to know what you could do about it is…this!" And that worked out for us with our collaboration with ARM and [helping] bring ARM into the data center market. We were just working on the same challenge. And we're like, "You know what you should try is giving some servers a way to people so they can build software on it." And they were like, "Maybe you could do that for us?"

It was a similar kind of conversation we've been having with Equinix although we didn't really know we were having it. We would just every once in a while pop up. It was on our calendar once a year. Like, "Email Equinix what they should do when they grow up," which is a horrible thing to say. But at the same time, as a startup, you're always like, "Let me tell you the future." And that actually ended up really powerful because the timing aligned with thinking and conversations internally [at Equinix], and stimulated the right thing.

Zac: We had an investor who was a mentor of mine, and he really helped. One time I was complaining to him in the early days of Packet, in 2014 or 2015, saying "We have no customers. We have no money. We have no brand. Nobody knows who we are." And he said, "You're so lucky." I'm like, "What do you mean? I don't feel lucky!" 

He says, "No, you're so lucky because 99% of your brain cycles are thinking about the future because you have no now. You have no past. You don't have any customers yelling at you about this or that. You don't have any money that you're counting because of all the sales. You have no past, so your brain is 100% focused on the future." And he said, "One day, you will wish that you had that back again. And so take advantage of it."

So I think that perspective — and this is where startups are relevant to big successful companies like Equinix — is you are so busy servicing the success that you have that it's really hard to suspend disbelief and think about the future. It's hard. And so you have to programatize it. You have to figure it out. You have to buy it. You have to gain access. And so, that I think, is where Packet came in. Being failed artists, we had a predisposition to using the left side of our brains and thinking outside the box and drawing with crayons…it’s was just how we were encouraged growing up.

And part of our, I'm going to call the training of being a musician, was to use a lot of self-discipline to practice creativity and we did that a lot in our journey with Packet. And I think that became useful and aligned with people like Equinix who were like, "Wow. I'm not thinking out five years on what could be if none of this stuff worked this way. I'm thinking about what it looks like based upon all the things sitting in front of me, which is almost a burden sometimes." 

So having that outside-in perspective was useful.

I love that you brought back it to music. As you know, I'm also a former trained musician. I began college composing music and then went, "Oh wow, this is really, really hard.” I switched my major to psychology and sociology. But there's a lot about that, about being able to use different sides of the brain and thinking differently.

So when you started talking to Equinix, was there a moment that you just knew it was the right decision? What was that emotional journey to deciding to sell it like?

Jacob: It's always exciting, to think about that kind of stuff. And, of course, our investors were very excited to talk about it. Investors look for outcomes, right. So when you think you own and run your startup, of course not. You have partners in that journey all the way through. And so you're not the only one in the room. But it's really funny because I remember when we were together in London.

We don't often travel together. It was always a divide and conquer kind of situation. Zac goes to the West Coast. I go to Europe. Zac goes to Europe or Asia. I go to the West Coast. How do we spread that around? But we happened to be at one of our favorite events, which was the ARM Partner Conference in Cambridge, because who doesn't want to hang out in Cambridge in the summer going-

Zac: Punting.

Jacob: ...punting.

Zac: Punting is amazing.

Jacob: Hanging out at 400-year-old beer gardens, right? We were coming back from that event, which we always found super exciting because it was so partner-focused. A thousand partners gathered together, speed dating, and all kinds of great things happened. So we went together, and we stopped back in London on our way home, and I don't know what we were having for dinner like finding an Indian joint or something, and Zac got a call from Equinix's Corp dev leader.

And I think Zac’s first reaction to Equinix was like, "Eh. I mean, you guys aren't ready for this. I'm not sure it's a fit." Like, "Let's have the conversations. But is this the right timing for both of us to do this?" Leadership matters in the end. The people you're going to work with.

And for us, it was, of course. There's money involved in investors and whatnot. But in the end, it was like, "Is this where we can make the impact that we wanted to do?" And not everyone gets that choice, and not everyone gets to say, "I choose you." As we started to go down that path, we really validated that we felt that was a good fit. Equinix is a unique 22-year vision of being neutral. How many companies are like, "No, it's about you, not me." Well, Equinix is one of them. And that felt in line with our strategy of how do we make more companies more successful by enabling them. And that felt good.

Then there were other things that were very foundational. Hey, we're talking about staying down low. It's so alluring to want to go up and solve everyone's problems, right. And we were able to connect mainly with Charles, but Sara Baack and other people and be like, "Where do you see this in five years?" And that was pretty exciting. The negotiations were hard. Negotiations are always hard. Everything has to make sense. And you hear all the big numbers come out, blah, blah, blah...

Zac: There's a lot of constituents in a negotiation. There's tons of people involved. And you, as leadership, are representing many of them. You're not all on the same team, right. And so there's a lot of three-party, multi-variant kind of things going on, which we certainly struggled with. One of the things I wanted to double click on there that Jacob mentioned, I remember looking at the core values... I mean, I've known Equinix for 20 years, but I went to www.equinix.com/about and looked at the core values of Equinix and compared them to ours. Packet had very, very clear core values. It's like, "Here's the best thing we do in the world. Here is what matters. This is what matters to this company and the people who work for it."

What was really cool is that the core values were almost exactly the same. There were one or two that were different. Packet had some very futuristic things because we were an early startup, and Equinix was more established, but otherwise, the core value system was pretty aligned. And that was very authentic when then we met more with the leadership. And so, I think that was a big part of us going down that M&A path versus continuing building the business and looking for a series C at the time.

Jacob: Suzan, you've been through an acquisition before, and it's an intense period for anyone, right?

Mm-hmm. It sure is.

Jacob: I'd say there are a few things that we did right and a few things that we did wrong looking back. I mean, Zac had been through it before. So one thing we were super disciplined about at Packet was to always have our books closed every month, packaged up, everything documented, data room ready. And that's something that if you're an early founder, you should do. You should do that from the beginning. Not try to do it at the end when everything's happening at once.

Zac: And this is the interesting part about being in the middle of a potential M&A process. You do all the work before anything is finalized. Anything can go wrong at the end and just fall apart. There’s a lot of negotiation that happens at the 11th hour. You're highly invested. You've spent a ton of time, a ton of money, right, to go through some sort of potential M&A. But when you're working with a public company, in particular, you can't share this information with your team.

So you're working internally, maybe CEO, CFO, a few key people who are all moonlighting this work. And at the same time, you're often at a very important phase of your business. So you're growing. You're doing all this kind of stuff. So you're playing already burning the candle at two ends as a startup founder, but now you're doing another job called engaging an entire M&A process.

Mm-hmm. Juggling multiple priorities at once.

Zac: So being ready for that is really important.

Jacob: That’s one of the smart things that we did is we brought in a temporary CFO to help run that process. We paid real money to add someone to our team to say, "You just do this." And that was really important and something that everyone should consider. And then something we had practiced, which I think was good for our business, but was relevant during the M&A process, and even after, frankly, was just being disciplined about writing a monthly management memo, recapping, "What did we do this month? What's happening?" And so we were able when they're like, "Tell us more." We're like, "Or you could just read the last 62 months. Here you go." And that has found its way into Equinix... because once we got acquired, it wasn't done. It wasn’ an exit, it was actually the entrance.

Acquisition isn’t an exit. It’s an entrance into something new.

This is an entrance into an opportunity that you're all trying to do together. And some people are transactional and "Hey, I'm just here for a year, then I'm gone," and that's not our mindset. Our mindset has been, "We're on a journey, and this is a great place to do it." And so, bringing... sitting down with 10,000 employees is not possible to say, "Tell me what you know that we could learn from." And so having the discipline to write it down and write it down regularly and maybe even... I joke about it a little. But in a big company, and this is my first time in a big company, you show the right PowerPoint to enough people you can get anything done, and that's crazy, but it's true. Helping to communicate within a large organization is critical.

So things like assets, that monthly memo that says, "Here's how the business is going," or the various tools that you, maybe, practice as a startup founder when you're maybe trying to get VC funding. Those are relevant once you're within a bigger company. It's just your audience is internal. And I always tell my marketing team... I run a whole bunch of stuff in addition to marketing, and to all of them I say, "The first audience is internal. If we activate them properly, we're unstoppable. If we just focus on getting outside people alone, we're leaving so much on the table."

Internal audiences are so important. I also want to go back to what you said Zac about how hard the M&A process is. You're doing a couple of jobs at the same time. You’re taking care of the business while finding a new entrance for the future.

Zac: Sprinting a marathon.

Yes, that’s how it felt. Afterward, I was like, "Wow, what was that?" The other hard thing is you can't talk about it.

While you were going through that process what were some of the biggest challenges you faced not just as founders but as leaders because you're also leading people in the company, which, I think, there are some differences in those roles.

Zac: Quite a bit. Yeah. I was juggling several things. I was juggling the right thing for our employee base. And them being stockholders as well. We were very, very focused on making sure that people who worked at Packet were also equity owners in Packet. You want to be on their behalf, which is people who have joined a startup. Maybe they do or do not want to work at a 10,000-person Fortune 500 company, but they're also shareholders. Plus all the risks of like, "Well, I wonder if we're going to be able to raise our next funding round, and I wonder…" So you're kind of working all that stuff in your brain. Then you’re working with your board, which, your board is usually there to support you but is not always aligned, right? They may want a return. They may want different things.

We had two strategic investors on our board. They were very hard to manage. SoftBank was one of our investors. Dell Technologies was there as well. They just had different reasons beyond... I'm going to call the easy one where the financial investors are like, "Oh, I see. You want money out of this." Other is like, "Well, I don't know exactly what SoftBank wants out of it." And so those were kind of hard relationships to navigate. And then your own personal management team and related. 

So balancing all that was a lot. I really encourage founders to have an outlet. Luckily I have Jacob. We have each other as identical twins. We've been trading our most intimate thoughts and ideas with each other for 42 years. So we have some practice there. But giving that off to your spouse or your friend, that's a lot, to unload onto somebody late at night. All the things that are going on.

So Jacob and I invested in having a coach and effectively a therapist to walk us through these issues. You just need somebody to talk to about it, right. And sometimes that's your board. Sometimes it's not. Sometimes it's your management team. Sometimes it's not, and that can get pretty isolating.

Make sure that you have a support structure, especially when you can't talk to your friends about the public company acquisition that may or may not be happening. We found that having a coach or some sort of outlet for just talking through is really valuable.

Jacob: Yeah. I think also just change is sometimes really comforting or exciting to people and others it's really discomforting.

Zac: Scary.

Jacob: I think a big focus for us was collectively working on and putting creative energy towards how do we help people feel, so that in those moments where you share information (we're always very transparent in the startup) how do people feel? That's important, and it carries people through all kinds of hard things. Do they feel supported? Do they feel excited?

Zac: Do they feel valued.

Jacob: If not, they feel confused and angry or upset. So the acquisition closed in March 2020. We became Packet an Equinix Company. At first, we were Packet an Equinix Company. Almost immediately we knew we had to become part of Equinix more fully. We just had to help people see where that was going. And so we rebranded as Equinix Metal, and it wasn't a "Hey, just change the name thing." It was like, "get everyone excited."

We had very little attrition during that time. But it involved really thinking about bringing people forward versus sort of living into the past. And I think that that's been really important work and I valuable to all sides of the transaction. 

Equinix is a real estate company. It's done a lot of acquisitions. Most of them for buildings. Very few where people were the focus, and in the end, we were a tech company. There was certainly IP, and there was stuff, and we had customers, but mainly we had people. And so, figuring out how to land people as part of an asset transaction is a whole new ball of wax.

Right, after an acquisition, there's often huge attrition. It's a perilous time for leaders. How do you walk people through that? Because we want people to stay on board. We still want this mission, and we want those people to help us move that mission forward.

Zac: Yeah. And Jacob had a big focus on that, and building community. And also our customer and employee experience were the same, in our mind. You needed to kind of get that virtuous cycle with both your employees and your customers. And I think that Jacob's focus on how we moved that forward was super important because what can be a trap is like, "Well, I want what we had at Packet, which we had built so much about around our culture, around what it meant." When you're a startup founder, you are convincing people to come on this journey with you. This is a big thing. And then to transition that to something else is difficult while still honoring what people have become a part of. Why they might have joined you in the first place.

Zac: So transitioning that was very purposeful. We spent a lot of time on it. But I think, overall, it was successful. It didn't work for everybody, which is fine. But I think looking at it from the outside in that was a key point. And I would encourage other founders or people who go through M&A, especially with robust successful companies. 

The last company I sold was really trying to save themselves. We were acquired by somebody who was trying to solve a really big problem. Equinix was not trying to solve a problem. They were trying to take advantage of an opportunity. And so when Raj Dutt and I had sold our last company, Voxel, to Internap, it was like, "Oh my God, the barn is on fire, and we need to get to the Cloud and solve these things."

Zac: And so people were strangely more open to just grabbing onto anything. At a big successful business like Equinix, it has been more, "How do you add to this?" versus "Oh, wow. What is this startup doing? Let's try and take that." It’s more like, "How does this add to what we're doing, which is already super successful and going in the right direction." So a different kind of approach.

I think for any startup founder, going through an M&A, having a people plan, having an approach to building that brand and community identity, you really gotta spend cycles on that.

Yeah, absolutely. It's really interesting, when you all were acquired, you were around 140 and Equinix was 10,000 or something. I don't know if I have all the right numbers right?

Zac: That's about right.

That’s a huge spread.

Zac: Yeah. We were little. Tiny, tiny.

How was that transitioning from being a founder of Packet, and leading to then to moving over?

Zac: Well, I always used the “Of Mice and Men” analogy with Lennie and the rabbit. I don't even remember the full story, but Lennie loved the rabbit, loved the rabbit, and then killed the rabbit because he loved it too hard. Big companies can crush you on accident. They don't mean to. It's like, "We're here to help. We're here to help with our 17 different specialist finance people." My calendar went from spending 80% of my time with customers to spending 80% of my time on cross-functional meetings just responding to people who wanted to help.

Mm-hmm.

Zac: So we did some work there around kind of quasi ring-fencing our business because it could be very easy to get crushed through the process, where people are really just trying to help. And so that was purposeful. We had a concept around certain numbers, and it was basically like, "Let's get to this stage, milestone, and then we'll reevaluate." And that worked well for the broader company, where naturally 10,000 people are like, "I'm super interested in that. How can I become involved?" And that can be just a strange dynamic. So we kind of progressed from milestones to build that infrastructure.

The other thing is, we had in Packet, probably very true with a lot of startups. We were lean, and that was on purpose. It wasn't just that we were lean because we wanted to save money or use our capital efficiently. In addition, it allowed us to move very quickly. So agility, remote-first culture, asynchronous communication, ultimate decision rights, blameless culture. Like, "Go figure it out. And if you mess it up, fix it really quick." Right? And that made us a pretty lean business.

Well, when we got into a bigger company, which had more scaffolding around it, frankly, even basic things like participating in the monthly governance processes related to X or Y meant spending, I don't know, 10 hours preparing PowerPoints each week. That’s not a problem if you had built scaffolding around interacting with a large governance process. But if you didn't have that, it was just like suddenly 10 people throughout our tiny company were tasked with spending 10 hours of every week preparing PowerPoints to communicate with their internal constituents. And it is like, "Wow." So that took us a while. And that was kind of the great thing about the milestones, was it allowed us to…

Jacob: Push back.

Zac: Push back a little bit, say, "We're a little bit different. That doesn't mean we don't care. We just need to build some things, or we don't have the same IT systems. So as such, this is really hard for us to do or whatever." And then allow us to kind of grow into that a little bit. People get to know each other, and that was probably the other thing we can all talk about is we were acquired in March 2020. Packet was a remote-first business. So we were quite comfortable with onboarding remote employees and whatnot.

But here we were coming to a company that was not a remote-first business. It was a distributed business, but it was very in-person heavy. And so, navigating that together was really challenging because we didn't meet any of our colleagues. Jacob and I did very quickly and when the deal was announced in January, some people came out to New York...but then nobody got to interact and build those human relationships. I think Equinix grew by 4,000 people during the pandemic so far and those are all people who haven't had in-person relationships, which was a really strong part of building the culture of Equinix.

So how do you meld cultures during that time? We had to over-invest in that as well. So A, building that scaffolding and space so that you can kind of scale up a little bit, give yourself some time and milestones. And then B, figuring out how you can build those relationships in a distributed asynchronous world. Those were big challenges for us.

Jacob: I'm going to just tag on one thing, Suzan. Looking back now, perspective is really helpful. And I think something that we've learned throughout this process is that, like when Zac said, "Companies are bought, and we are part of a bigger company." And yet the goal, the strategic goal is to evolve that company, is to strengthen that company, accelerate that company. And that's why we're here. That's why we're all together. And so you need to kind of decipher the culture.

It's kind of like your psychology degree, right. You need to ask... "How can I work with this?" And some of that, in the end, was helping to find the words. First of all, shared language is super important and not assumed. We would say things like, "We're growing, and everything's on track." And to us, that was directionally correct, and we're totally going to figure it out. And other people, working at a Fortune 500 public company, they're like, "We will be reporting that to the street." And you're like, "No, no, no, that's not what I meant!”

Zac: No, no. We just meant it was basically going okay.

Jacob: We were really confident it was going to be good.

Zac: I love the other one, which was like, "Oh, we should release that quickly." And we were like, "Tomorrow." And some of our colleagues at Equinix were like, "You mean like in Q3?" And we're like, "Huh."

Jacob: Q3 feels very far away! 

So shared language is important, and then understanding that basically most of our company, Equinix, is in the performance zone. It's in optimization mode, right? It is a scaled business that knows what it does, and it's working to drive efficiency. And the part that we're focused on is new, and it's all about learning.

And so by carving out space, it wasn't just like, 'We're so important." It's was more like, "We are pursuing something for the business called learning. Let's practice this and then scale it. Let's experiment here and then integrate" because that's just smart. That gave us a way to do the thing we all want to do. And instead of saying, "Don't touch us. Don't mess us up," which wasn't actually the point, right?

I mean that we're not that special. My dad always says, "There's a lot of irreplaceable people in the cemetery."

Zac: Sounds super morbid, Jacob.

Jacob: I guess if you want to make a point. (chuckles) But we're all replaceable, and we're not so special even though, "Yay. Big acquisition. Yay. Big deal." Understanding how to land that.

It’s getting that shared language around what we are trying to do, that's leadership. That's a leadership job, and you had to pivot it from being sort of like, "Let me convince you that the future is great to let me help bring you along this journey." The person who joined from Packet, the person who's 19 years at Equinix, and the person who just got hired to work in the data center yesterday.

It strikes me as so many different constituents and groups and people that you're working through the whole process. Get them on board before the acquisition, but then also during it. And then how you make them gel and bring them along the journey.

Jacob: I have to say I’m really fortunate. That's probably been the most exciting thing for me in the end. Aside from the rush of making a difference by growing a startup that was relevant and makes sense, was figuring out how to have a front-row seat for a Fortune 500 transformation and to be a meaningful part of it. That's really, really special and a great learning opportunity for me personally. A lot of growth. It's not just a transaction.

Zac: Yeah. Well, the other thing that I was going to mention about the big company, small company thing. I have an analogy from Raj, my old founder at Voxel, and he's like, "Startups are like sharks. If they stop swimming, they die." Right? And another one is just like, "We're always just running out of oxygen."

That builds in a constant, healthy fear in a way. Like, "Well, we only have X amount of dollars, and it's currently burning down. What do we track as our number one metric? Number of months of cash left." Right? And that was something we were always just watching carefully, making sure that we were managing towards being obsessed about as it were. That drives a lot of behavior.

That is just not the scenario of a public company. You're not like, "Oh my God, how many months of cash do we have before we go out of business?" So your whole concept of time compression and speed and what matters…it's just different, right. 

And I had a good friend of mine, Raul Martynek. He said to me once, because we were making fun of Verizon, I think, it was. Yes, it was Verizon. We were doing some business with them. I'm like, "Man, these people are awful. They don't even call their customers back." And he's like, "Zac, stop being so stupid." And I was like, "What are you talking about? It's like they don't even want the business." And he's like, "That's correct. They've already decided that they're going to churn this market. They are focused on winning the next market. You're still playing one-dimensional chess, and they're playing two-dimensional chess."

So having that time scale of not going to go out of business soon, not having to figure out the next thing, means that you get to think about things differently. But that kind of cultural thing, Jacob says shared language, also just pace and priority in a startup when we would prioritize agility over almost anything else, speed over almost anything else. That is actually not the priority that we found when we started working with our colleagues at Equinix.

It wasn't all about agility and speed first. It was about scale first. How do we make sure that this can make a meaningful impact on a $7 billion business or whatnot? And we're like, "Oh, well, I guess now that you get to think about those things." But that was not a native habit. So everything that we had built around meeting times, priorities, and empowerment just had to shift in a way. So that was new learning for me.

This is so incredible. We are almost out of time.

Zac: That never happens, by the way, with me and Jacob when we talk with other people. (laughs)

Jacob: You have to ask Zac what he messed up. What did he do wrong? What would he do different? We got to do that.

Zac: Jacob. What did you mess up? I was going to brag about my whole list ready for you.

Jacob: Oh, okay. I'll do it. I mean, it seems, again, like hindsight. I thought we had a good approach to people, and a lot of people benefited from Packet, and we thought a lot about how to bring people onto the equity cap table and lots of good things. But we failed at diversifying our leadership team. And that was not just about optics. We would've benefited. And that was always like, "Oh, we're going to get to that soon. Let's hire the people we know." And that's just bullshit. And in the end, we should have done better there. And there are plenty of other warts like that, I think.

We paint a very black and white culture in startups. In the end, there's humble pie to go along with the success, and it's not just, "Hey, we won, and you lost." It's really just about what do we learn? What can we do better? What kind of impact do we make?

And that's something that I've had to mature a lot about. When you're in a more visible position in a bigger company that values, like Zac said, not just agility, not just penetration for your goals. You've got to also think about will this build a culture that's scalable? And real stuff for real people.

Zac: Yeah. I was actually going to mention the same thing. I think, actually spoke about this maybe when we first met, Suzan. One of the things that we both prioritize that is so important to our business, which was around the culture. Yet, we had no senior leadership who represented that. If I would go back in time, back in 2014 or 2015, I would've hired a people leader from the beginning instead of in 2019, which is when we finally got somebody to actually take that as their stewardship.

So for me, it would've been about that because I could see how we would've been applying our values more purposely. How we would've handled performance management. How we would've helped have the right people together in teams that would've meaningfully changed our trajectory and outcomes.

I could have talked with these two for days but time was up. As you can imagine, I loved ending on this note. Many startups and scaling startups take this path. Adding an experienced Head of People to your leadership team early on can make a huge difference. They bring a skillset that’s different from the rest of the team and highly valuable.

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