Nikesh on Scaling as a CEO

Nikesh’s Role in Scaling Palo Alto Networks

Nikesh joined Palo Alto Networks as CEO and Chairman in 2018. Under his leadership, the company evolved from being a traditional firewall business into a comprehensive cybersecurity platform, scaling the company’s market cap to over $100B. Prior to joining Palo Alto, he served as President and COO of SoftBank Group and was formerly a senior executive at Google, helping them grow from $3B to $65B in revenue.

1. Scaling As a CEO

Anchor to Your Vision, Not Just Customer Pull

• A common mistake founders will make is getting too excited about customers early on, and being pulled towards building the product your customers want instead of the one you set out to build
  
  • This often happens when serving large customers that try to dictate your roadmap. Focus instead on making a product that’s easy to deploy and consume across a wide number of customers in your target segment 
• It’s rare for companies to be able to traverse across GTM functions to sell to both enterprises and SMBs. Spend time deciding which end of the market you want to serve. 
• Two common CEO mistakes are waiting too long to act on strong ideas and failing to stay close to the technical evolution of the product.
  
  • Nikesh typically conducts deep inspections of technical integration plans — skipping that process may have cost Palo Alto the chance to beat Wiz.

‍

Bring Your Team Along as You Grow

• Good founders often grow quickly themselves, but a common pitfall is failing to develop their team at the same pace. 
  
  • Make it a habit to bring your direct reports into important meetings, fundraising discussions, or decision-making rooms. This allows you to continuously retrain the people around you and gives them the opportunity to grow as you’re growing. 
  • This will also prevent you from taking on too much as CEO. 
    
    • For example, if you don’t allow your CFO to grow with you, you’ll be stuck running fundraising yourself. Make it a habit of always bringing someone with you to meetings.
• If you don’t have multiple co-founders, you need to invest more in teaching and developing your team. 
  
  • Don’t solely rely on equity as a motivator. Actively teach your team how to operate and make decisions through experiences like shadowing. 

‍

Build Teams with Complementary Strengths

• After Nikesh meets someone successful, he writes down what specific qualities made them successful. Often, it’s because people excel in different, non-overlapping ways.
  
  • At his first job, Nikesh would hire people who resembled himself. He figured that if he was the manager, shared strengths meant someone would be successful. 
    
    • This resulted in a team with the same set of strengths and weaknesses. Instead of being able to fill in for Nikesh’s blind spots, no one was able to step in when they needed it most. 
  • To prevent this, he now intentionally surrounds himself with people who are different from him. 
    
    • For this to work, you need to build trust, accountability, and mutual respect across the team. 

‍

Company Culture is a Representation of the Early Team

• The behaviors of your early team (especially the CEO) will shape the company’s long-term cultural identity.
  
  • Nikesh shared how the first company he joined was built around a high-integrity, hard-working team, while a peer company embraced a flashier party culture. Decades later, both cultures have persisted.
• How you show up early on matters – your habits, tone, and priorities will only be reinforced later.
  
  • A lot of early stage companies justify highly competitive, “survival mode” cultures as being necessary in the moment, but then struggle as this behavior becomes ingrained in the company’s culture. Being able to distinguish between decisions necessary for survival and the culture you’re trying to build at your company is key. 
• To understand what Palo Alto’s culture was when Nikesh first joined, the company sent out a survey to all employees that got thousands of answers indicating that the company valued integrity, collaboration, diversity, and innovation. 
• To preserve Palo Alto’s culture at scale, Nikesh holds weekly Zoom calls with randomly selected employees to have informal conversations about their lives and work.
  
  • Every employee is a representation of your company – spending time with junior employees at scale is important, because they are still representations of your brand to the outside world. 
  • Palo Alto also gives out awards every quarter to employees who exemplify the culture well

‍

Build Systems to Fight Information Decay at Scale

• As teams grow, context around decisions often fails to cascade beyond senior leadership. 
  
  • If you only talk to the same 5 people every day, your reasoning won’t reach the 100th person, and they’ll miss the intentions guiding your decision making.
  • This gap creates misalignment and weakens execution — people won’t understand the goals or the intent behind leadership decisions.

Example: How Nikesh Uses Advocator-Style Reviews to Retrain his Sales Team

• To combat information decay and reinforce a customer-centric mindset, Nikesh started “advocator-style reviews” across the company.
• For 6 hours a week over 6 months, the lead AE would walk through their top deals each week, and spend 15 minutes pitching Nikesh as if he was the customer. In it, AEs would cover:
  
  • Who the customer was
  • What the customer uses 
  • Their angle with the customer 
  • How they planned to cross-sell additional products
• The sessions were open to anyone at the company, and 300–600 employees would regularly join the Zoom calls.
• These sessions built a shared foundation by consistently reinforcing how to present, position, and deploy around accounts. It allowed Nikesh to scale how he pitches Palo Alto to accounts to the rest of the company. 
  
  • Salespeople are survivors — they learn quickly. Over time, employees could repeat and internalize these patterns, whether they were the first or 100th person to join the GTM team
  • Today, Nikesh’s regional sales leaders run these reviews with their sales teams 

Tactic: How Nikesh Prioritizes Contributors Over Spectators in Key Decisions

• Nikesh doesn’t rely on 1:1s. Instead, he has important discussions through group conversations where the team doing the work is involved in discussing it.
  
  • In these conversations, he prioritizes having more pigs than chickens. “Pigs” are the drivers of a project with more skin in the game while “chickens” play a more passive observation role. 
• This creates a culture of accountability and engagement, ensuring the team closest to the work is in the room with you leading the conversation

‍

Scale Decision Making by Defining Company Principles/Beliefs 

• At one point, Nikesh realized his team didn’t understand the rationale behind his decisions. Functions like product and marketing were overloaded with layers (e.g., SVP of Product, VP, PMs) that lacked clarity and weren’t aligned with Nikesh’s vision for Palo Alto. 
• To fix this, he spent a weekend writing a 5-page “beliefs doc” to clarify core principles across orgs, including:
  
  • Marketing beliefs
  • HR beliefs
  • Product beliefs
• These written beliefs were shared with every senior leader in the company to drive alignment and clarify expectations (e.g. “we don’t hire 80% candidates,” “marketing must create experiences, not just run channels”).

‍

Staying CEO Means Staying Engaged

• As your company scales, staying in the CEO seat means continuing to do what the role actually requires — leading meetings, holding 1:1s, driving clarity on vision, making hard decisions, and staying hands-on with the business and team.
  
  • A founder can scale with the company, but only if they’re still motivated and self-aware about where they add value
• If you no longer have the appetite or energy for those responsibilities, it may be time to reevaluate your role and bring someone else in. 

‍

2. Decision Making and Adaptability

A CEO’s Job Is To Act On Incomplete Information, And Adapt Fast

• Nikesh emphasized that the job of a CEO isn’t to always be right — it’s to make the best possible decision with incomplete information, and adapt quickly.
  
  • Unexpected outcomes are fine. What matters is how quickly you realize your hypothesis was wrong and course-correct. 
  • Ask yourself how much you know, how much you expect new information to change or be helpful, and continuously re-evaluate your decisions
• He believes that the absence of a clear hypothesis is worse than acting on imperfect information.

Example: How Nikesh Used Hypothesis Testing to Shape Palo Alto’s AI Strategy

• Nikesh takes a hypothesis-driven approach to leadership: he starts with a belief, acts on it, and rigorously observes outcomes to refine his perspective.
  
  • When ChatGPT first launched, Nikesh rewrote an entire speech mid-flight, calling it the "iPhone moment" of AI. When he returned, he immediately asked his leadership team to share their AI perspectives to form an initial hypothesis.
    
    • After closely monitoring developments, Palo Alto realized AI systems introduced new security risks that weren’t being addressed:
      
      • It was the first time teams had to inspect traffic bi-directionally, because AI models dynamically change output based on input.
    • At the time, most cloud security teams were focused on posture management (protecting systems during setup and deployment), which drove a lot of revenue. 
    • After watching the space closely, his team realized the real risks emerged after systems went live, when AI models and apps were actively running. 
    • Because these AI models are mutable and dynamic, you can’t rely on static scanning; you need persistent red teaming to actively probe model behavior. 
      
      • This informed Palo Alto’s shift to focus on dynamically red-teaming runtime every two weeks to protect models as they’re in use.

‍

3. Building an Enduring Company

Customers Buy Feelings, Not Products

• While CMO at T-Mobile, Nikesh learned that experiences drive perceived value more than price or the product itself. When customers make a purchase, they aren’t just buying product quality, they’re buying the feeling associated with that product. 
  
  • For example, Nikesh recalled two water delivery businesses: one with budget trucks, and one with premium branding. Even though both companies were both selling water, the former company sold at $25 vs. the latter selling at $75 because of their difference in experience. 

‍

Don’t Mistake Product Momentum For Long-Term Durability

• Founders often confuse early traction with long-term defensibility. Nikesh believes it takes 4–7 years to build a truly great, differentiated product. Even if you're growing fast at a company like Uber or Google, early product-market fit within 18 months doesn't mean you've built something durable.
  
  • A strong feature set is not the same as a strong product. Early growth doesn’t guarantee long-term differentiation.
• Incumbents have a distribution advantage — they’re already embedded in customer workflows, with pre-allocated budget and existing customer trust. That makes it easier for them to maintain their position, and harder for new entrants to break in.
  
  • This extends to the category you’re selling into: it’s easier to sign customers in established categories where budgets are already allocated. If you’re creating a new category, customers often haven’t set aside budget, making it harder to win deals.
• This means if your product is only slightly better, it’ll be hard to wedge into existing budgets or displace entrenched systems – incumbents can and will catch up to you soon enough. In AI especially, unless the product is dramatically better and an obvious solution, customers will hesitate to rip out what they already use.

‍

Build A Moat by Embedding Into Workflows

• Figure out the moat you are building and invest in it over time.
  
  • AI companies can benefit from replicating and meaningfully improving legacy management processes. At Palo Alto, product documentation still starts with manual video recordings that can take up to eight weeks to fully explain each schema and use case.
  • For example, even though Salesforce is an outdated and expensive piece of software, it’s incredibly difficult to remove. This is because what they’re selling isn’t just a part of the data stack, it’s an embedded business process that over 6000 sales people use daily at Palo Alto. 

‍

4. Enterprise Strategy and GTM

Enterprise Is A Grinder-Takes-All Market

• The difference between enterprise and consumer is that consumer is mostly a winner-takes-all market, whereas enterprise is grinder-takes-all. 
  
  • Nikesh’s approach to competing with hyperscalers is to sell harder than them. This is why even though Microsoft takes security seriously, their browser only has 8% market share against Palo Alto. 
• In enterprise sales, you need to engage every layer of the customer hierarchy — from executives to end users. 
  
  • Find ways to make your product’s end users feel close. For example, Nikesh builds executive relationships through golf, while also hosting RSA events specifically designed for junior security engineers at the same company.

‍

Design a GTM Motion That Scales with Marginal Effort

• In enterprise, R&D is a meaningful cost center, but the majority of remaining spend goes to sales and marketing. Gross margins are typically 70–80%, which means driving revenue efficiently is critical. 
  
  • This means if you’re operating with thin or zero margins, you’d rather close one $100M deal than chase 100 $1M deals or 1000 $100K ones
• You should want your distribution to scale with minimal marginal cost and become a durable advantage over time.
  
  • Selling fragmented product experiences where multiple products don’t talk to each other forces every deal to be sold from scratch and weakens your growth. Instead, look for ways so the adoption of one product increases demand for others. This will compound your distribution over time.

‍

Leverage M&A Strategically to Fill Gaps and Remain Competitive

• Nikesh views M&A as a superpower for companies that know how to leverage it, especially when internal capabilities are falling short.
  
  • Timing and intention matter for M&A. If you’re falling behind on key platform shifts (e.g. agentic AI, browser-native agents, etc.), strategic M&A may be the only viable way to catch up.
  • Acquihires can make sense if you need talent or a faster time-to-market, but be mindful of the price you’re paying. 

‍