Sagi Dudai - CTO at Vonage

(Joel Beasley at 00:00:00) Hello, my friends. Today we are talking to Sagi, the CTO at Vonage, and we discussed the importance of face-to-face meetings to communicate your vision, tips to navigate M&A from both sides, and unlocking your team's potential with radical transparency. All of this right here, right now on the Modern CTO Podcast. Here we go. This is the Modern CTO Podcast.

(Sagi at 00:00:34) Hello. Hi there, how are you?

(Joel Beasley at 00:00:37) Hi buddy, how are you?

(Sagi at 00:00:39) I'm good, how are you?

(Joel Beasley at 00:00:40) Are you calling in from Tel Aviv?

(Sagi at 00:00:42) I am. I am from the office in Tel Aviv. The mic looks so strange on me. The headphones, they look so strange.

(Joel Beasley at 00:00:48) You look amazing.

(Sagi at 00:00:49) I'm so—I'm not sure. I just—it looks normal.

(Joel Beasley at 00:00:55) It looks normal to me.

(Sagi at 00:00:57) I don't know. I can't get used to it.

(Joel Beasley at 00:00:59) Whenever we see people, they join, they'll be in a recording studio or at their office. The headphones are normal. It feels strange at first because we don't have these on in our normal meetings.

(Sagi at 00:01:12) Yeah, exactly.

(Joel Beasley at 00:01:13) But they make the audio sound good, don't they?

(Sagi at 00:01:15) Yeah, yeah they do. They do. Can't do without them.

(Joel Beasley at 00:01:18) What time is it in Tel Aviv?

(Sagi at 00:01:20) 7 p.m.

(Joel Beasley at 00:01:21) Okay. Alright, and you're still at the office cranking away?

(Sagi at 00:01:25) Yes.

(Joel Beasley at 00:01:26) Yes. That's fine. U.S. time?

(Sagi at 00:01:29) I work on multiple times just because we have offices in Tel Aviv, in Jerusalem time zone. We have offices, multiple offices in Europe—London, Basingstoke, Poland, et cetera. We also have East Coast like Atlanta and New Jersey, and then we have San Francisco. So you have to work in multiple time zones. Not every day, but some days you have to just do double shifts.

(Joel Beasley at 00:01:58) Because you make it happen. You just do what's needed to get the job done.

(Sagi at 00:02:02) It's exactly that. You have to do what's needed to get the job done. And sometimes it means double shifts. Sometimes it means crazy flights. I also do that a lot, like flying back and forth. Like going to San Francisco, it's like a 15-hour flight. And then I spend there like half a day and go back, or go to Europe and—crazy stuff like that. But it's what you need to do in order to get the job done while maintaining the same life to some extent.

(Joel Beasley at 00:02:30) Yeah. Because do you have a family?

(Sagi at 00:02:32) I do. I actually have four kids. So whenever I fly and I fly often, I just do my job and get back. I don't hang around, see the cities and stuff. I just do my job and get back as soon as I can.

(Joel Beasley at 00:02:46) Do you have boys, girls?

(Sagi at 00:02:48) I have three boys and one girl. So it's like a boy, boy, girl, boy.

(Joel Beasley at 00:02:53) Oh, nice.

(Sagi at 00:02:54) That's fun. Yeah.

(Joel Beasley at 00:02:56) I've got a little girl and a little boy.

(Sagi at 00:02:59) Oh, that's nice. How old are they?

(Joel Beasley at 00:03:00) The girl just turned two, and the boy is six months.

(Sagi at 00:03:05) Oh, congratulations. Wow.

(Joel Beasley at 00:03:06) So they're small. So your kids are, you know, 20?

(Sagi at 00:03:13) Yes. Eldest is 14 years old, then 11 years old, then eight years old, and then six years old.

(Joel Beasley at 00:03:22) Wow. So they must be loving the technology then.

(Sagi at 00:03:27) They're loving the technology. You know, that's a different generation. Everything is technology for them. So my eldest son is 14 years old. He's already studying computer science in the university. It's a different generation, you know, from my generation. Yes, they're all about technology, so it's very different.

(Joel Beasley at 00:03:50) Now is that the same university that you teach the MBA course at?

(Sagi at 00:03:54) I actually—it's the same university. I took my first computer science degree, and I'm also a mentor there for the MBA degree. So yeah, it's just the one nearest to our home, which is the Tel Aviv University. We're just living like 15 minutes walk from that university. And I used to study there for multiple degrees, and then my kid now is studying there too.

(Joel Beasley at 00:04:22) So what were you doing at the age of 15 with technology?

(Sagi at 00:04:26) At the age of 15, I was playing video games. Nothing more than that. You know, everyone loved—I mean, all the geeks loved video games, and I was a geek, so I loved video games. I was playing a lot, but nothing—I wasn't programming or anything. I wasn't doing like my kid is 14 years old and he's programming hours. And I wasn't doing that when I was young. It was also much harder to get access, like getting a proper computer or a computer that could run something was more expensive than it is today, so much more expensive. And then no real Internet back then, like 30 years ago, and no real access to tutorials or good enough books. So ramp-up was so much harder. And then so I was playing video games, playing soccer with my friends, and that's what I was doing until I got to the army where they made me sit down for six months, 12 hours a day or more, and then I fell in love with programming and computer science and all that. And that what really kicked off my career because prior to that, it was only just playing video games.

(Joel Beasley at 00:05:42) So then where—so you play video games, you get into university, you start studying, and then what's your first job out of university?

(Sagi at 00:05:49) So actually, it's even prior to the university. When you—at the age of 18 in Israel, you go to the army. It's an obligatory service, but then they choose some of the candidates and then they teach them computer science. So it's a very hard training. It's like six months, 12 hours a day that they just teach you programming. You take programming lessons. It's like a BSc degree compressed into six months where you study so many hours a day. And then six months later, you go into the army and then you start—that's when you start working, right? And they put you in these different projects, and they spend so many millions of dollars because it's real—it's real life, right? It's what the army does. And I started—after that six months, I was—I went to army intelligence, and they have so many resources and so many interesting projects. And then for the next few years, I've done some mostly software-related projects. It's all outdated now. It's like almost 27 years ago, but it was like C, C++, stuff like that. So that was way back.

(Joel Beasley at 00:07:12) So I noticed that your professional journey, you've been at a couple of companies that have gotten acquired, right, which is exciting. One of the questions we get a lot from our community is suggestions for how to act or how to lead when your team is going through an acquisition.

(Sagi at 00:07:31) So I actually—that's very interesting because I also know the other side because in the last five years, we acquired nine companies. So I can tell you how this operates from the other side too, which is sometimes even a little bit more interesting, as it is less well-known and less talked about. So my view is that it's a lot about the chemistry between the two sides, and it's a lot about being open. It's a lot about being transparent. And just, you know, I think companies do not look for the perfect. Sometimes people—startups and startup founders—tend to present themselves as if it was perfect or flawless. And that's a mistake because we know how to dig and find the holes. We just want to see what's going on under the hood, and we're expecting—we are expecting to work together for many years. So we need to trust you, and we need you to tell us the truth. And to me, that's the most important thing, the chemistry with the management team. And the first thing I would advise someone who's in that situation in due diligence or something around that is just be transparent and open and just either there's a match or there isn't a match. But if you'll try to hide some of the challenges, there would definitely not be a match. Because even if you could sell the company, then shortly after, you'd see that—people would find out what's going on under the hood. So don't hide anything and be very transparent and open.

(Joel Beasley at 00:09:09) Are you excited about these recent acquisitions you guys made?

(Sagi at 00:09:14) I am. I mean, I think they have extended our product portfolio. Also, some of them were—or the last one—was Acquihire, so we extended the talent. It was in a very interesting domain. We acquired an AI and machine learning company called Over AI just a month ago, and they have a very talented team and a very interesting technology. So yes, I'm very excited about that. I believe that AI and machine learning are going to be so much more prominent than they are today in just a few years. So the fact that we were able to put our hands on a team of 25 folks, 23 folks, is extremely helpful.

(Joel Beasley at 00:09:56) And so what are your responsibilities today as the CTO at Vonage?

(Sagi at 00:10:01) So I run the entire technology and engineering teams. It's a distributed team of around 700 people. It's distributed around the location I've mentioned earlier. We do research and development and QA, and we roll things out to production, and then we keep production running. And then it's the whole life cycle of software development, and that's kind of most of my job. And then there's kind of the laying out the vision of the technology, the technology vision for that relatively large team, which is my other part of the job.

(Joel Beasley at 00:10:42) And so how do you do that? Like, how do you communicate the vision?

(Sagi at 00:10:47) So a couple of things I'll say there. A is I fly a lot, and I visit the different offices. And I talk to people, and I get a lot of inputs. And then I share my vision or the company's vision, the company technology vision with the different teams face-to-face, in person, or in video calls. But often I would just do all hands or something around that. And that's key because it's a large enough organization that you can't meet all the people every day. It's a distributed enough organization that you can't meet the people every day. And when they hear things that you told others—like, in every organization, there's some hierarchy, and then people might have heard stuff from others who have heard stuff from others, et cetera—and there's nothing like direct communication, right? Just sitting with the team, answering their questions, sharing the vision. That's so important.

(Joel Beasley at 00:11:49) And so how has it changed since you first started? Because you've been there for what, about seven years now?

(Sagi at 00:11:54) It's changed completely. When I joined, I think we were as a company around 900 people. My organization was 40-ish people. Now my organization is around 700 people, and the company is 2,300 people roughly. Revenues are so much bigger. EBITDA is so much bigger. Company have progressed in so many ways. We acquired nine companies. So we expanded and scaled and progressed in many different ways since—in the last seven years.

(Joel Beasley at 00:12:34) That's exciting, right? So what was the big takeaway for you growing from these 40 to 700?

(Sagi at 00:12:41) So I think—I've read this tweet from Werner Vogels, the CTO for Amazon, the other day. When you're smaller, when you are VP R&D, I think he said, is that the first thing that you do, you focus on teams. Just build the right team. And that's actually what I did. When you're bigger, when you become a CTO and the organization gets bigger, you focus on what enables the business. What's the simplest technology? What's the simplest solution that enables the business? And you trust your VP R&Ds that they pick the right team for the job. You already picked them earlier, and now they do what you did earlier. So I think it's a combination of both.

(Joel Beasley at 00:13:29) So do you spend a lot of time with your C-level counterparts understanding the business and what they're experiencing?

(Sagi at 00:13:35) Absolutely. Just came back from an off-site, from a management off-site with all my peers. We also obviously meet regularly both on a team level and then in one-on-ones. So yes, I think I spend a significant portion of my time with my partners and peers and also with customers. Just directly. We have customers across the world, and we have customer events where there's an opportunity to meet not just one or two customers, but 10 or 20 customers and have face-to-face conversation with them. So that's a great opportunity. Also talking to analysts and people like you who know the industry, and that's another opportunity for me to learn more about the industry.

(Joel Beasley at 00:14:22) No, I'm excite—the industry is growing so much. I'm very excited. Now what's the culture like within your organization?

(Sagi at 00:14:30) The culture that we cultivate is—have you read the book Principles?

(Joel Beasley at 00:14:36) Oh, Dalio. Yeah.

(Sagi at 00:14:37) Exactly, yeah.

(Joel Beasley at 00:14:38) Yeah. It's on my bookshelf. I love it. Yeah.

(Sagi at 00:14:41) Radical transparency and all that. So we try to get there. I don't think we're as radical—we're as transparent as described in the book, but we try to make sure that the best ideas win. That's the important thing. It's not about the ego. It's not about anything else. It's about the best ideas win. And in order to do that, you need to have a lot of courage and also be very transparent and honest with yourself, but also with others even if it creates frictions at times. But that's one of the core values that we believe in.

(Joel Beasley at 00:15:15) Yeah. You know, there's a guy named Elon Twigg, and he has a company called TripActions, but he's from Israel. Do you know him?

(Sagi at 00:15:23) Of course. We work together. This was maybe 20 years ago in Mercury. You can ask him about me if you talk to him, but definitely we work together.

(Joel Beasley at 00:15:31) I'm actually going out to visit him in a couple weeks. No. But he's been great. I met him a couple months ago, and we've been texting and developing a friendship back and forth. But yeah, he—we were talking about transparency and culture and how things are different in Israel and the different ways that his company's been growing really fast just like yours. And so we were just talking a lot about that. And transparency and direct feedback, that tends to be something that's essential in the hypergrowth situation.

(Sagi at 00:15:58) So yes, absolutely. And a, send my regards to Elon, and b, we go from the same school. School in the sense that Mercury Interactive, we both work for Mercury Interactive. By the way, the CEO for Mercury at the time was Gal Almish. He's now the CEO of Clarizen, I think. And he was—you know, this culture came from him and others in the company, and we all took it in many different companies. So yes, there's a lot of common roots.

(Joel Beasley at 00:16:32) That's good. Because great leaders produce great leaders and cultures and ideas, all these things spread. So for you right now, as you've been growing and improving, what do you look for within your top leaders? Like, what's a trait that stands out that you say, I want to invest in that person and they have a bright future?

(Sagi at 00:16:53) So I'm looking for three different traits in my leaders. First, they need to be super talented, right? I mean, you can just get regular folks, but if you get the 10x developer, there are books about that, right? So I'm looking for those 10x superstars. So that's one. Secondly, I'm looking for very passionate people. Sometimes I see people who are very, very smart or very, very talented, but they lost the spark already. They're not as passionate, and I'll just pass. The third thing I look for is just the team spirit and team play. I believe there's nothing beats a team, right? There's no individual that can beat the team. So combine those three attributes or those three traits, and you get a super powerful team. And I believe I'm blessed with a super powerful team.

(Joel Beasley at 00:17:52) I love it. That's who you want to be with. You want to go in there and have a culture that attracts super talented people, and then it can amplify and grow. Now, if I'm listening to this, let's say there's people listening and they said that's my culture, that's my style, I'm interested in a career at Vonage. How would they learn more about it, on the website or message you directly?

(Saghi at 00:18:15) Absolutely. So there's a website which is pretty extensive because we have so many open positions. So I think that's the best way to get more information. Obviously, people text me all the time on LinkedIn and in other ways, so I get texts every day, which is great, which is great, by the way. I love the direct communication.

(Saghi at 00:18:36) Sometimes they go and ask me some questions, which I then just point them in the direction of the website, which is easier to get all the answers. There's an FAQ, et cetera. But generally, I mean, I would go there. Either way, either way works.

(Joel Beasley at 00:18:51) So we could post the website in the show notes. People can find that pretty easily. And I like that you put a lot of information on the site because that's really useful. They can figure out if the opportunity is right for them.

(Saghi at 00:19:02) Absolutely. Yes. I agree with that. We have, I think we have a pretty good website with a pretty extensive list of open positions, which are great opportunities for people who are interested in joining that culture, that talented group. So definitely would recommend taking a peek at that.

(Joel Beasley at 00:19:23) So we have some questions from the audience. People write us and they say, hey, when you find a great leader, ask them these questions. So I'm going to ask you a couple of those. Is that okay?

(Joel Beasley at 00:19:32) Absolutely. So what tips do you have for getting the most out of your technology teams and making sure that they live up to their potential?

(Saghi at 00:19:38) One tip. I mean, it's not, I'm not going to come up with something that you never heard about. But I'll give you just one or two if you'd like. First I'll give you is we talked about radical transparency and honesty. Be honest. Embrace feedback. Embrace criticism. There's not enough of it. I mean, the more feedback you get, the more criticism you get, you can only get better. You can only grow from that.

(Saghi at 00:20:14) So that's one. The other thing I'd mention is embrace failures. Because if people are afraid to make mistakes, they just get paralyzed. And if people understand that making mistakes, we all do mistakes every day, and we get better and we learn from that. If people understand that they can make mistakes, then they just do the best they can. Time to market and speed is really important in our industry, and they shouldn't be afraid. They can't be afraid or they will lose, we will lose. So they should be bold. And as managers, we should allow people to make mistakes. As long as they learn from it, and they learn from it quickly, we iterate, we get better, we improve.

(Joel Beasley at 00:20:59) Yeah. That's important. Because if you're scared to fail, then what are you doing? You're going to stand still?

(Saghi at 00:21:04) Exactly. Yeah. Exactly.

(Joel Beasley at 00:21:07) So how do you mentor your team? Like, how do you mentor your leaders and grow them?

(Saghi at 00:21:13) A lot of face-to-face conversations. We also have offsites regularly. This could be with my direct reports as a group or with some of them as a subgroup. We also use external mentors, people who just have the experience, but also the capacity to do that on a regular basis. These are kind of the most frequent techniques that we use.

(Joel Beasley at 00:21:44) So can you help describe what an offsite will look like for your team?

(Saghi at 00:21:49) Yeah. So I think offsites usually for my team, they have two different tracks. They would be an offsite. I know it sounds trivial, but they would not be in the office, rather somewhere which is remote enough, not too remote so that people can get there conventionally, but somewhere outside, maybe a different atmosphere, maybe more rural atmosphere. Then the other thing we would do is it's probably 36 hours, something like that, two days. You can go back at night if you don't want to, go back home. If you want, some people go back home. Some people would stay at a hotel nearby. And then we would usually have two different tracks. One track would be more professional, I'd call it. What are, for example, I'll give you, what are next year's goals? What is the strategy for next year? What is the vision for next year? And then double-click on some of these areas and be more specific about that. The other thing, the other track, is around team dynamics. How do we, as a team, work better? And how can we get even better than that? And what are our faults and what are our blind spots and so on and so forth?

(Joel Beasley at 00:23:12) I like that. I really like the format of that.

(Saghi at 00:23:15) Thank you.

(Joel Beasley at 00:23:16) So right now, the most exciting thing that's happening, like, what's really amping you up in the mornings to get out of bed and to come into the office?

(Saghi at 00:23:25) In the last few weeks, it's all about the acquisition. We've been very focused about the Over.ai acquisition. And now that we acquired Over.ai, it's about integrating, integrating Over.ai. It's always a little bit underestimated, the amount of work. People always think about the due diligence work and how much time and effort is put in until you buy a company, but it's actually only the beginning. Once you buy a company, integrate it into the mothership, so to speak, and do that successfully is more of an art than a science. I mean, there are things you can formalize. There are things you know already from experience, but it's also a lot about the people. It's a lot about the culture. So it's a lot of art, more art than science.

(Joel Beasley at 00:24:18) So that's it. You bring up an interesting point because due diligence is something that, like, it's a huge topic of conversation. Everybody's always talking about it, what to look for. But then the integration, you know, that's probably the thing that's talked about the least because you have to actually go through it and have the real experience to talk about it. So what are your big takeaways from integrating?

(Saghi at 00:24:42) Well, I'd say that if we try to generalize, I would say that it's actually different from one to another.

(Joel Beasley at 00:24:52) Okay.

(Saghi at 00:24:53) There are different scenarios, different use cases, different people, different culture. You cannot, I mean, if there's one thing I've learned, you cannot apply one template on all acquisitions. The other thing I'd say, which is very common and sounds very easy, but it's not as easy, is it's all about the people. If you can get the people on board, if you're very mindful to the team, then other things would work out too. If you can't get the team on board, and this starts with the management team, this is, if you go back to one of my previous answers, this is why we look for chemistry. We look for, in many startups that we look at, the founders are just looking to exit. And then we don't buy those startups because they're looking to exit and then exit the company. We are looking for long-term relationships. I think it's extremely important that there's a long-term relationship between both companies. And for that, we need the founders to be on board, the management team to be on board, and then it's easier to onboard the rest of the team, which makes it so much easier for the integration to succeed.

(Joel Beasley at 00:26:05) I really like that first piece that you said about you can't apply one template to all acquisitions because that is so important. That's what everyone's mind's like. What's the perfect template? How do I make this perfect? And your first thing is, well, your acquisitions can be very different and still be successful.

(Saghi at 00:26:21) Exactly. Exactly.

(Joel Beasley at 00:26:22) I like that. So as we start to wrap up here, if you were to go back in time, right, to your 15-year-old self playing video games and soccer with your friends, what advice would you give yourself for your professional career? As like an overall, just one piece of advice that would last you for the rest of your career, what would that be?

(Saghi at 00:26:43) If this was just one piece of advice, I would say go with your passion. Sometimes when you're younger, you start making these, you have these thoughts in your head. How can I progress my career, and how can I make more money or stuff like that? That's all nonsense. If you go with your passion, that's what's most important to do. Everything else falls into place. That's the advice I'd give people.

(Joel Beasley at 00:27:13) So if you work hard and you go after something you're passionate about, then luck will happen a little bit and things will fall into place?

(Saghi at 00:27:21) I think things will fall into place. Luck, sometimes yes, sometimes no. But you'll be happy. And when you'll be happy, it's like a magic cycle and things will fall into place. Just because you're passionate about things, you can get so much more productive. People notice you when you're more productive and you're happier. And I just believe in karma. Do good things and good things will happen. I still believe it today. I believe in this all my life. So I think that's, to me, that's the important piece.

(Joel Beasley at 00:27:55) Now if I'm passionate and I'm going after my dreams and I'm working hard, are things still difficult?

(Saghi at 00:28:01) Yes. Definitely. Things are still difficult. I'm actually, I mean, I don't know if I'm, I hope I'm not discouraging anyone, but things are mostly difficult.

(Joel Beasley at 00:28:10) Yeah.

(Saghi at 00:28:10) I know. It's not like, I mean, you read these books and these articles. It's like when you look on Instagram, everyone looks beautiful and happy. Right? But in real life, it's maybe that's a fraction of the real experience. And the same thing about technology and startups and high-tech, it's challenging. But that's, I mean, if you don't like challenges, then just pick a different job. There are other jobs with less challenges. What I like is the challenges, and I like solving those challenges. And I like, it's like growing. Right? I mean, you get better just because you are able to win and make yourself so much better. And up until you get to the next challenge and you get, you need to do that enough times until you just like it.

(Joel Beasley at 00:29:03) That's where I am at. Right? Like, things get difficult. You realize, okay, it's going to be difficult. And then you get good, you get a little bit of skill at doing difficult things, and you don't want it to go back to easy because then it's just boring. Exactly. You know you can go over here. You know you can push yourself. You know you can grow and become something better, and then you just get in that, like, addicted cycle to how far can I go in this life? How hard can I push? How much can I expand and learn? And then as I started to do that, you know, because I started as engineer, software engineer, then leader, and then leader of leaders, then entrepreneur. And so as I began to do this, I realized that life is about bringing value to other people. Right? You can only get money two ways. I can either steal money or I can be useful to someone and they give me money in exchange. Yeah. And then I found some books like you mentioned. You've got to read a lot about value and how to bring value to the marketplace. And then I just became obsessed with, like, how can I be very, very useful to other people and then while growing myself? And then now I'm just on this momentum ball that you build too. That's why you're up at the top as CTO of Vonage. And so it's like, how do we get that momentum, and how do we keep growing? And you're still doing things that are difficult every day. Right?

(Saghi at 00:30:19) Absolutely. I'm with you 200%. I mean, I think you're spot on. It's the challenges. It's getting better, and then the new challenges come. I mean, if you're afraid of challenges, just go do something different. It's not the job for you.

(Joel Beasley at 00:30:34) Yeah. I love it. No. We're very similar. Next time you go to, you said you have some East Coast stuff in Atlanta. Right?

(Saghi at 00:30:41) Exactly. Yes.

(Joel Beasley at 00:30:42) Yeah. Next time you fly to Atlanta, just send me an email, and I'll fly. I'm only like an hour flight from Atlanta. I'll bump up to Atlanta, and we'll have lunch or something.

(Saghi at 00:30:49) Let's do that. I'd be more than happy to do that. Yeah.

(Joel Beasley at 00:30:51) I'll be excited because I like your personality. I like your style. I like how you like to solve hard problems and grow. And then I'm on a call later this week with Elon that I'm flying out there in two weeks, but I'll let him know that you say hello. It'd be exciting.

(Saghi at 00:31:03) Absolutely. But yeah, I'm looking forward. I hope to see you there.

(Joel Beasley at 00:31:07) We did it, my friend. We made an episode. We made a podcast.

(Saghi at 00:31:10) Woo-hoo.

(Joel Beasley at 00:31:11) You have a good time?

(Saghi at 00:31:13) Absolutely. Love it. Love it. Thank you so much for the opportunity.

(Joel Beasley at 00:31:16) Thank you so much. Have a great day.

(Saghi at 00:31:18) You too. Bye-bye. Bye.