Jesse Rothstein, Founder of ExtraHop Networks: Pulling Off The High Speed Pivot

Jesse Rothstein is the co-founder and Chief Technology Officer of ExtraHop Networks, a cyber defense platform that uses cloud-scale AI to help enterprises respond to advanced threats. ExtraHop was acquired by Bain Capital and Crosspoint Capital Partners for $900 million in 2021. On today’s episode, Jon Sakoda speaks with Jesse about selection bias for entrepreneurs and how some of his lowest moments as a founder were actually blessings in disguise. 

1. Searching For Satisfaction [5:19 - 7:17] - Jesse didn’t always know he wanted to be an entrepreneur but he started to feel the itch to prove himself and his ideas. A conversation with his wife about happiness, or lack thereof, helped him to begin the journey to becoming a founder. If you are constantly thinking about how to solve the problems around you, listen to learn more about what pushed Jesse to found ExtraHop.
2. Pulling Off The Pivot [12:56 - 20:40] - Jesse believes product market fit to be transitory as dynamic markets enable you to find product market fit and then, sometimes, lose it. As the market started pulling ExtraHop towards cybersecurity after years of success in network performance management, the possibility of a pivot seemed risky. Listen to hear how Jesse navigated this choice and invested to get the flywheel going for this new market opportunity.
3. Navigating The Paradox Of Loyalty [20:57 - 25:08] - According to Jesse, there is nothing harder for a founder than watching a loyal employee, who has been with you since the beginning, lose stage fit as the company scales and outgrows them. Stage fit applies to every position in the company and finding the balance of developing existing employees and hiring for this new scale is critical. Listen to learn what questions you should be asking yourself as your company shifts into a higher gear.
4. Recruiting a Professional CEO [25:31 - 29:57] - While Jesse believes no one is more committed and knowledgeable about the company than the founder, he discusses reasons a board may be ready to make a leadership change. When it came time to recruit a professional CEO for ExtraHop, Jesse focused on establishing a good working relationship, facilitating a productive transition and respecting boundaries. For founders looking to bring on a professional CEO, listen to hear how to minimize friction during a leadership change.
5. The [Exit] Road Less Traveled [30:08 - 34:00] - While looking for additional capital to invest for growth, Jesse and ExtraHop identified an opportunity with Bain Capital. The private equity investment, while not as common, can prove beneficial for founders looking to increase capital, enable liquidity for early investors and employees and maintain control. Listen to hear Jesse’s thoughts on how this transaction has performed vs goals, so far.

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