Ricardo Oliveira is the Co-founder and CTO of ThousandEyes, a Cisco company providing some of the largest brands more visibility into how customers and employees use their networks. On today’s episode, Jon Sakoda speaks with Ricardo Oliveira about meeting his future co-founder in a research group at UCLA and developing a constructive mindset as a first-time founder.
Ricardo Oliveira is the Co-founder and CTO of ThousandEyes, a Cisco company providing some of the largest brands more visibility into how customers and employees use their networks. On today’s episode, Jon Sakoda speaks with Ricardo Oliveira about meeting his future co-founder in a research group at UCLA and developing a constructive mindset as a first-time founder.
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RICARDO OLIVEIRA: And we end up meeting someone that we’re trying to get him as an advisor. And he basically told us that this is never gonna work, that we should go back to school or, you know, join some other company.
JON SAKODA: Welcome to the Decibel Podcast. Today I’m here with my friend Ricardo Oliveira, co- founder and CTO of ThousandEyes. For those of you that don’t know ThousandEyes, it is the Google Maps for the entire internet, giving every company a real-time view as to how their traffic flows through the internet today. The company was an untold success story until it was acquired by Cisco just a couple of years ago. Ricardo has been a founder/advisor here at Decibel and a great friend to many of our founders, and I am very excited ti have him join us today.
Ricardo, it is great to have you, and welcome to the podcast.
RICARDO OLIVEIRA: Hey, everybody. Hey, Jon. Thanks so much for having me on the show. It’s great to be here and share a little bit about myself and the ThousandEyes story, so I’m very excited about that.
JON SAKODA: ThousandEyes was a very successful company, and I know a lot has been written about its history. But I don’t think everyone knows your personal story. So, would you mind telling us about where you grew up and your path to eventually starting a company?
RICARDO OLIVEIRA: Sounds good. So, let’s see. So, I’m originally from Portugal, that tiny country like on the west coast of Europe. I grew up there. My family’s still here. And I did my undergrad there, actually, in electrical engineering. And I worked for a couple of years in the industry as well. But I’m basically from a small town in the north part of Portugal, close to Porto. Porto is like the second biggest city there. I went to school there at the University of Porto there. I did my undergrad in electrical engineering. I spent like five years at the time. Degrees in Europe tend to be on the longer side, or used to be. Now I think they cut them short.
But that’s where basically I started working on networks and computers and all that stuff. Like, we’re talking about late ‘90s. I’m probably dating myself, but, you know, the internet was also becoming more and more widespread at that time and more popular with the Netscape browser and all that. My early journey was almost in tandem with those early days of the internet, which was great.
JON SAKODA: So, you grew up in Portugal and eventually made your way to the US for your PhD. But when did you know that you wanted to become a founder or to become some sort of technical founder?
RICARDO OLIVEIRA: That took a while. So, when I came to the US, I basically wanted to study and research on computer networks and the internet. And that’s how I end up at UCLA. And UCLA had and still has, but has a lot of research on computer networks. It was one of the first nodes of the internet. People don’t usually know this. So, the first two nodes of the internet was Stanford and UCLA. And they actually exchanged a message. The first message exchanged was supposed to be LOGIN, L-O-G- I-N. But only the first two letters went through. And then the system collapsed. So, it’s just L-O, LO. Lo and behold. And the person at UCLA in charge of that was called Leonard Kleinrock. Some folks probably heard about him. He was the person that actually developed a lot of the queuing theory behind the packet transmissions and so on.
But the fact that I was at UCLA and doing a PhD. So I spend a lot of time there—five, six years researching and joined this research group that was very focused on internet routing. And I had to go through this journey of really understanding how the internet routing worked and publishing some papers, and even building some free tools that network operators in particular could use to help them in their daily work. And I need to give some credit to my advisor at the time, so Professor Lixia Zhang. So, she really pushed students to be more applied and participate in this conference called NANOG, North American Network Operators Group. It still exists, but it’s a forum, basically, for professionals that work on telecommunications, network engineers, to exchange ideas and talk about best practices and so on.
JON SAKODA: I think a lot of technical founders ask themselves, “Should I go to grad school? Should I get a master’s, and in particular, should I get a PhD before I go and start a company? Would you recommend that founders go get a PhD or get a graduate degree before they start a company, looking back?
RICARDO OLIVEIRA: I can’t say I recommend. I mean, honestly, I think I probably have too much years of education. I mean, you can build a successful company without having a graduate degree. But in our case, it helped a lot because we actually had to tap at the main knowledge and that deep understanding of how things worked. And also, that mentality around measuring things and publishing results, looking at big data and so on. I would say the PhD helps in, more than anything, helping solving problems. So, you’re given a problem, and it provides you training to iterate towards a solution. But it’s a lot of investment also in terms of time, right? Here in the US, you’re looking at five years of writing papers and doing research work. So, I guess if you’re really passionate about what you do, then that might be a good option. But if you’re prioritizing more building a company, then just do it, maybe start doing it and going through the problems. It’s a better way to learn, rather than being five years in a PhD program.
And also at UCLA, by the way, was when I end up meeting my future co-founder, Mohit Lad. So he was part of the same research group. I did publish a lot of papers with him, and I work a lot with him. So, the fact that we realized that we could work well together, we had passion about the subject. So, that planted the seed that we could probably do something significant. And in particular, when we looked at the state of affairs around tools for network monitoring and realized there was a big gap there, because most of the solutions that we looked at were more focused around data centers and local networks. But there were really no solutions out there for internet-wide visibility, so.
JON SAKODA: Since, you mentioned Mohit, I think it’d be great to bring him into the story now. And for those that don’t know Mohit, he was the co-founder and CEO of ThousandEyes. And we’ve also had him on the show. He has famously described himself as somebody who was effectively unemployable until he started a company with you. So, I’d love to get the whole story. When did you first meet him, and what eventually led you guys to start ThousandEyes?
RICARDO OLIVEIRA: Right. So, I think I met him on my second year of my PhD. And at the time, he was already working at the research group I would join. And he was my teaching assistant, I believe, or he was helping the class that I was taking from his advisor. So, that was my first kind of contact with Mohit. And I still remember the first Mohit picture that I have in my mind is someone with a t-shirt and flip-flops—well, sandals, actually, not even flip-flops—and jeans. And he would answer any questions you have about around BGP and explain BGP to people and so on. And also, using chopsticks, which is a technique that I never saw before. So, that was pretty fun.
So, that was the first contact I had with them. And then eventually, I joined the group there where he was working, so we became like peers, part of the same research group. And that was really what started our collaboration that point, because then we started basically publishing papers together, doing research together. And if you look at our list of papers, probably most of them have both of our names there. So, that was basically how everything started.
JON SAKODA: And in 2009, you guys decided to start ThousandEyes. But let’s go back in time. This was a terrible time to start a company. What gave you guys the confidence and the inspiration to do that?
RICARDO OLIVEIRA: That’s a good question. Yeah, and you’re right, it was a really bad time. And not only that, we were in LA at the time, right So, LA is not known for having a very big community around the enterprise space. So, we basically had to think, what can we do to maximize our chances of success, of actually getting some funding and actually bootstrapping or starting the company? And with this said, two things. First thing is, we need to get out of LA and move to the Bay Area. By the way, this might not be applicable currently. So, this was at the time. We’re talking about 10 years ago. And then the second thing is, let’s try the government funding route and go through a National Science Foundation SBIR program. So, that’s a program that basically helps academic projects be commercialized. So, they give you a small grant, and basically, there is no strings attached there. There is a lot of paperwork and red tape involved there.
But those actions that we did, I think, really helped us, because we didn’t have a lot to network here in Silicon Valley, right? So, having the government being our major sponsor really helped there. And then as we moved here, we started definitely building that network and getting to know more and more people here. And then things definitely improved in terms of the ecosystem support. But it took a while to get there.
JON SAKODA: You started ThousandEyes in Los Angeles out of a university in 2009. So, not a great time to go ask venture capitalists for money. You ended up getting a government grant. Looking back, would you recommend that founders consider government grants as a way to get themselves off the ground?
RICARDO OLIVEIRA: No. Not this day and age, no. I mean, look, it’s certainly an option for some projects, potentially, if they’re very academically rooted projects. But I think there’s easier ways currently to get funding besides going to the government. But in our case, obviously, it was very instrumental, the SBIR project. And we actually had a very good project manager on what used to be our site that we still keep in touch with these days. But I think today, there’s probably better options for a founder in terms of funding than SBIR, because it is a lot of red tape and bureaucracy. I mean, the pro, I guess, is on the equity side, you have your cap table clean. You don’t need to sacrifice equity. But the amounts also are not—especially for the current markets—are relatively small, right? Our first tranche, I think, was about $150k. So, in the current day, that’s not a lot. They probably have updated it over time, but I’m pretty sure still not compared to anything you can get from the public sector.
JON SAKODA: So, let’s go back to the early days of ThousandEyes. So, you started the company in a recession. You have the government grant. Walk me through some of the highest highs and the lowest lows looking back.
RICARDO OLIVEIRA: Well, the first customer was definitely one of the big highs I can remember. And that happened, I believe, in late 2011. I remember I was in the airport going back home from Christmas, and I got a call from Mohit. And he basically shared the news that we had closed Verisign, which was our first customer. And that was really exciting, just the fact that you have one customer that is willing to actually pay you money for your product. I don’t know if Mohit shared this story, but this happened even before we had a product. So, we were just talking with a lot of people. We had just moved to the Bay Area. We were trying to grow our network, and we were just meeting a lot of people. And we ended up meeting someone that we look up to and were trying to get him as an advisor. And we were trying to explain to him what we were trying to do and so on, the concept. And he basically told us that this is never gonna work, that we should go back to school or join some other company. And I remember coming back from that meeting, me and Mohit, and we were really depressed, looking at each other. And then that was one of the lows I can remember.
But then the funny story about that is that that exact person later on became a sponsor in one of our customer’s companies and became really an advocate of the company. So, that was interesting, to see that trend there. That’s one of the lows there. But there’s always cases of things that don’t go the way you want, or surprises, or problems that happen.
JON SAKODA: You know, I want to go into the details of that story. Many founders try to get validation from outsiders or mentors, or people that they respect. A lot of people are very honest with founders. They’ll say, “This is gonna be hard,” or “It’s not gonna work,” or “It’s gonna be a complete failure.” How did you deal with some of those objections when you were looking for validation or confidence, but instead got honest feedback that, “Look, a lot of startups don’t make it, and this one might just not make it.”
RICARDO OLIVEIRA: Yeah. It’s hard to deal with it. And honestly, I do think you need to be very good handling rejection as a founder, and especially in the early days, because you don’t have a product. People might not know you. And lots of folks you’re trying to pitch or convince to join as an advisor or convert as a customer, they’re just gonna say no, right? So, you’re gonna get eight no’s, or nine no’s for every yes that you get, right? And I think the most important thing is trying to understand what is someone trying to say, like why is someone not believing in your vision, and try to take some lessons from there. Is there something something you can improve on based on the feedback of the person, or maybe the customer is just not a good customer at all, because the problem you’re trying to solve is not relevant for that customer. So, having that constructive mindset, I think, is very important. And learn from rejections, basically. Take that as positives.
JON SAKODA: You started a very technical company. You had to recruit very technical employees. And you sold to a very technical buyer. I think because of that, you had to take a slightly different path than a lot of people who raise a lot of money and try to spend a lot of money on sales and marketing and recruiting in order to get big fast. Talk about what it takes to build a company more methodically in an era where perhaps capital is more freely available, and everybody thinks that you need to grow at all costs.
RICARDO OLIVEIRA: Yeah. So, I think it’s important to think about it by milestones, right, especially when you talk about capital raising and spending. Think about what do you want to do with the capital that you have, right? Do you want to get to 10 customers, 50 customers? Do you want to get a certain amount of revenue? So, it’s important to have that very well-defined, and then raise enough such that you get that milestone. Because the problem of raising too much, obviously—or valuation is
also gonna increase, potentially. And then as you raise different funds, you’re gonna need to be able to sustain that growth of valuation. And for stock options in particular, then this becomes very expensive to exercise them for employees, for example. So, having an overblown valuation has its own issues, right?
So, just think about company growth in terms of milestones, and having the right structure and financials for that phase of the company. And each phase, you’re gonna need different funds and different spending, and different ways of spending the money, right? Often, I see cases of folks just boasting about valuations and unicorns and decacorns and all that stuff. But I do think it’s very important to keep in mind what type of company you’re creating and be a sustainable business, right? And to be a sustainable business, you need to have things balanced in terms of revenue and in terms of expenses, obviously.
JON SAKODA: So, I want to ask a question that is really important to a lot of our listeners. So, if you go back to your younger self, the 20-something-year-old that is a graduate student that is thinking about starting ThousandEyes, what advice would you give to your younger self?
RICARDO OLIVEIRA: This is a weird question because it’s like the Back to the Future kind of problem. You go back in time, and I tell myself not to do that, and then I’m in the ending to a time paradox. And then I end up not existing, ThousandEyes or myself. But...
JON SAKODA: Only a PhD student can get caught up in answering the question. But I do understand where you’re coming from.
RICARDO OLIVEIRA: No. But look, I think if I give an advice to my younger self, it’s be patient. Growing a business takes time. In our case, it took almost 10 years to the M&A event, right? So, it’s a long time. And you need to be patient and things will happen. And the important thing is to solve the problems that you face. I mean, if you’re confident that you’re solving the problems and making progress, and you’re improving, I think that’s the most important thing. And having also like a co- founder or someone that can basically go through the problems with you and be there on a journey with you all the time, I think that’s important. Because if you’re by yourself, it’s hard because you might not have someone to talk to if you’re down. There’s no other person to bring you up. So, that’s always tougher. But yeah, coming back to your question, I think in my case was just be patient, and things will happen.
JON SAKODA: When a founder calls you today and they have an exciting idea, and they’re ready to take that leap, and they’re gonna start a company, and you know deep down inside just how hard it is, what do you do? Do you encourage them? Do you caution them? How do you respond to those friends that now reach out?
RICARDO OLIVEIRA: Yeah. I’m very positive overall, so I think I tend to encourage them. I mean, it depends, obviously, on the idea as well, right? But in general, I tend to be more constructive and positive, because I know that for me, it was good, to some extent, not also—that element of not knowing. And yes, there’s gonna be problems that we’ll overcome. But it’s very important to have a positive attitude and mindset overall when you’re starting a business because you’re gonna have a lot of problems you need to solve, and a lot of rejections and all that. And it’s gonna take a lot of energy.
JON SAKODA: So, I only have one last question. I know a lot of founders, after they’ve had a successful 10-year run, feel like they want to take a little time off. Maybe they also have a little PTSD. Maybe that’s your case. But maybe deep down inside, they also wonder whether they would like to do it again, and maybe even are excited to do it again. Do you think maybe you’d start another company?
RICARDO OLIVEIRA: I think I would, yeah. I think I would, definitely. I do think it’s rewarding to start a company. And by the way, it is not gonna be the first time, right? I learn a lot from the previous time. So I think all those learnings and all that baggage is definitely gonna help in not making the same mistake twice, or in speeding up the construction of the company. So, in that sense, I think I’m definitely interested in doing something else. It’s very rewarding, the early days when we were creating the team, creating the product—that’s almost magical, those moments. And those are the moments that you’re gonna remember as the company grows. So, definitely, it’s something that hopefully we’ll go through again. Let’s see.
JON SAKODA: Ricardo, I can’t thank you enough for being a guest on our show today. You’ve been a great friend to me and many founders here on the podcast. And it was really my pleasure having you on the show today, so thank you so much for joining us.
RICARDO OLIVEIRA: Thank you, Jon. This was great, and I hope this was helpful for folks listening. And thanks for having me.