Who Wants to Be a Billionaire?

David Hitz of Network Appliance

In high school, David Hitz built a computer from a kit, but his mom warned him not to think of computers as a career. Good thing he didn't listen. Hitz, 45, founded Network Appliance (aka NetApp) in 1992 with James Lau, 48, to simplify digital storage. The Sunnyvale, California, company that began with less than a dozen full-time employees soared to 6,600 strong and $2.8 billion in revenue for fiscal year 2007, an increase of 36 percent from the 2006 fiscal year. Before age disqualified him, Hitz made Fortune's "40 Richest Under 40" list more than once.

Here he describes the mind-set that helped him build a billion-dollar business, including how he learned valuable management lessons while herding, branding and castrating ranch cattle.

Some people describe you as charismatic, and you've called yourself the loudmouth of the company. Are those traits important for NetApp to thrive?
When a company is little, there's just a handful of you. It's relatively simple to get that group of people to figure out where they are going. As the company grows, one of the biggest challenges is to get all of the people headed in the same direction. To accomplish that, you need to be a loudmouth, and I mean that broadly. You need to talk, you need to write. Writing is an extremely powerful tool. It helps you test your thinking. Writing is also a great way of communicating to lots of people at once. I started a blog and I've written papers that I call future histories, which are my best attempts to describe how I think the world is going to look three years out, sometimes further.

Is charisma one of those intangible qualities that would help someone achieve the success you've achieved?
Maybe charisma is what happens when somebody is doing something they care about and shows passion for the thing they are doing. I really believe it's important to start by doing something you love.

When we went public in late 1995, I was about 32. All of a sudden, I was a multimillionaire. It really [led to] some soul searching. I could do anything I wanted. What is it I wanted to do? I realized I was doing the thing I want to do. There isn't something else.

Before graduating from Princeton, you studied at Deep Springs, a college where students work on a ranch. How did that experience influence you?
Deep Springs is in the middle of nowhere. You're out there doing stuff and you don't necessarily know how to do it. That's part of the point. It's a very make-do environment.

That lesson carries through to the startup world. When you're shipping a product with eight people, you'd better not be having very many fights where people say, "That's not my job because here's the thing I focus on." Whatever it is, you just figure it out and do it. That doesn't mean be stupid about it. Read a book. See if you can find someone who has done it before and talk to them. Occasionally, if it's important enough, you better hire someone to do it. But just dive in.

When you launched this business, how big did you envision it?
Nowhere near as big as it got, I can tell you that. When we put together our business plan, we believed that there was a total market of maybe 700 million.

When did you think this could be a billion-dollar business?
Our original concept in the early '90s was to do storage over Ethernet that would be useful for engineering environments. As the dotcom boom came in, you started seeing companies wonder, "How can I get all my stuff onto the internet?" We raised our hands and said, "Storage out over Ethernet--that's what we do."

It really was the dotcom boom that took us to a billion dollars. We grew like crazy. From 1993, when we first shipped product, to 2001, every year we basically doubled--in revenue and head count.

Your company celebrated its 15th anniversary last April. How do you sustain the business without going flat?
Dan's [Dan Warmenhoven, CEO of NetApp] philosophy of market share is when you reach 10 percent market share in your current market, you'd better think about expanding to something much larger. And then when you reach 10 percent of that next strategic perimeter, you'd better think about expanding again. So you are always the scrappy little guy looking at what big guys you can be fighting against.

When we started, we did storage for small UNIX workgroups. It was a very natural evolution to do storage for larger UNIX workgroups. Then we said we're going to do storage for Windows as well. Later we got out of the market for low-end storage for engineers--storage for individuals at their desktops--and into the market for the kind of storage that companies run their businesses on. That's a whole different zone of storage, and we had to develop whole new technologies. That opened up the market immensely.

How do you stay engaged and interested?
If the issues were all the same as five years ago, I wouldn't be interested. I love thinking about new problems. In 2003 or so, we were a $1 billion dollar company and now we're near three. That's an enormous difference.

Have there ever been moments when you've wondered how to control the tidal wave you've created?
Guess what: If you're doubling every year, you are not in control. You'd better figure out how to get a set of people, all of whom understand, roughly speaking, where you are trying to get to, and then trust them to do the stuff they're supposed to do. Not just because that's the most moral solution or the most fun--I can't imagine another model that will work at those growth rates.

Some people may be surprised to hear you say that.
A lot of people head toward mechanical analogies when they describe companies: "It's a well-oiled machine." I don't feel that way. A company is like something that grows. It's organic. You hire someone, and that person hires someone, and pretty soon there's a whole group of people. You didn't design it. Occasionally you might prune it or change it or rearrange things.

Say I planted an acorn, weeded it, watered it and made sure it was in a sunny spot. Ten years later, there's an oak tree and someone says, "What does it feel like to have built that oak tree?" You participated. You helped. But there was the magic as well. The workings of 100 human minds combined together definitely might as well be magic.

Andrea Cooper has written for Time, National Geographic Online and other major outlets.

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This article was originally published in the February 2008 print edition of Entrepreneur with the headline: Who Wants to Be a Billionaire?.

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