The Big Interview: Cloudian boss on the toughest decision he ever had to make, staying humble and finding success in failure

Michael Tso opens up to CRN on how the financial crisis led him to his current role and the hard lessons he's learned

Every CEO has a quality about them that helps land them that position, whether that is an uncanny knack for sounding out the best new technologies, listening to the markets or hiring the right people.

For Michael Tso, co-founder and CEO of object storage vendor Cloudian, he ended up in that position because of his ability and experience of doing the most undesirable task that a leader has to undertake: letting people go.

"It was awful, really awful," he told CRN about when he was placed in charge of cutting large swathes of the workforce at his previous company Gemini Mobile Technologies.

Gemini was co-founded by Tso in the wake of the dotcom crash in the early 00s and specialised in creating messaging solutions for mobile telcos, rivalling the likes of Nokia and Ericsson. Its market was the 50 largest telcos and an IPO was on the cards until the financial crisis hit a decade ago.

"During that time, everybody stopped buying capital equipment," Tso recounted.

"We had two or three years back-to-back where we were not able to sell anything and we had to live on maintenance and support."

During this time when the business was struggling, Tso was considered the best-placed person to make decisions about reducing staff and was promoted to COO.

"At Gemini, I was CTO and always hands-on," he explained.

"We had to cut back, so I became the COO because I was the only one who - as COO and CTO - had a really good idea of everybody's technical capability and what technical skills we needed to both maintain the existing customers and to build the new stuff that we wanted to build.

"What that unfortunately meant was that I also knew who the people we could lay off were and who were the people that we had to keep - that's a terrible position to be in, it really is.

"I personally struggled with that for months and months; I had the knowledge, I had a list and I had a plan.

"I didn't share it with anyone for a long time because it meant that if we went ahead with the plan that meant we were going to have to let a lot of good people go into a very difficult market in which it was very hard to find a job."

Gemini ended up letting go two out of three employees in order to keep it afloat.

Worse than letting go of friends and colleagues was disseminating the news to customers, according to Tso.

"What was harder than laying people off was the next day having to go visit my major customers and tell them that ‘oh, by the way, we now have laid off two out of three people in the company, but don't worry, you're still able to trust us'.

"And it doesn't just end there. Three months after you do the layoffs, some of your key engineers leave.

"Then you go back to your customer and say ‘by the way, that key engineer that fixed your last set of problems? He has just resigned'.

"Everybody - when they look at our history - they think that it happens in a moment, but it doesn't. It's messy. It's very messy."

Raising Cloudian

Tso co-founded Cloudian in 2011 with Hiroshi Ohta who is its current head of the Japan market. It was born out of Gemini "hitting a wall" due to the financial crisis.

"We had to decide 'are we going to keep doing this and hope that when everything recovers that people are still going to want to buy large-scale messaging systems, or should we do something else?'" he explained.

"We decided that everything was going towards the cloud and we wanted to become a cloud company."

Cloudian's technology is similar to that used by Gemini for its messaging service, and Tso said the natural step at the time was to move into object storage.

"Because we were doing the mobile messaging, we already were able to store huge amounts of data; once people got smartphones, they stopped deleting the messages and just kept them forever," he said.

"The first thing that we recognised was that data was growing at a rate much faster than you're able to deploy a wide area network bandwidth.

"So we had a bit of an advantage because we spent so much time in the wireless industry in the previous decade and we knew bandwidth was always a premium."

Cloudian essentially subsumed Gemini by buying its assets, but Tso stressed that the new company is a completely new entity, organised and funded in a different way to its predecessor.

Where Gemini was self-funded, Cloudian sought out investors and bases itself in the Silicon Valley, and instead of focusing on messaging systems, Cloudian specialises in object storage.

Tso was installed to head Cloudian from the beginning and his experience at Gemini has definitely influenced his leadership style, he said.

He developed a work ethos he calls "The three Ms and three Hs" and, which he has built into the company's values.

The three Ms stand for ‘my product, my client, my company', meaning that everybody is a part of the one organisation and is responsible for the good times and the bad, regardless of what department they are in or what title they hold, he explained.

The three Hs part of the values stand for ‘hunger, humble and honest', which was directly born out of Gemini's struggles.

"At that time, I thought ‘the only way that this is going to be worth anything is if we make whatever comes next hugely successful' because otherwise, the layoffs would be for nothing - that's the hunger for success," he elaborated.

"[Letting people go] taught me to be very honest with myself, with my people and with my customers.

"I became very humble. In building up Gemini on our own without major funding from external sources, we felt we knew what we were doing.

"Then when everything was falling apart, I realised all the good things happening were not all due to our brilliance. Stay humble when things are going well."

The Cloudian boss personally trains new employees into this ethos. He also makes a point to have investors, board members and advisors sit in on these seminars so that everybody involved knows its backstory and goals.

"It's important for everybody to understand what makes Cloudian and how we do business, and how we behave," he explained.

"I think it's very exciting for employees to be sitting there and they're seeing this senior guy from Intel sitting in the same room with them and they're all being trained the same way."

The reluctant leader

Tso admitted he was "reluctant" to take on the CEO mantle at Cloudian, as he has always enjoyed technical roles which utilised his computer science background.

Born in China and raised between Hong Kong and Australia, Tso studied computer science at university in the US.

He initially wanted to be an architect, until a compulsory week of work experience during secondary school made him realise "[he] was never going to be happy" in that career.

"Towards the end of the week, I spent some time with the civil engineering people who were doing design calculations, and I really liked what they were doing," he said.

"I was always very good at maths, and computers seemed to be the area where all the new stuff was happening, so I thought I should study computers."

So what is next for the man who originally wanted to be an architect but ended up being the reluctant CEO of a global cloud storage vendor?

"I'm very happy doing what I'm doing here; There is no other job I would want right now," he declared.

"For the first few years of Cloudian's life, we always had to rationalise to people why we should exist and now we don't have to do that anymore.

"You wouldn't believe how many people I talked to, that said to me ‘Mike, I really like you, you're a smart guy, but you're wasting your time doing this private cloud stuff because everything is going to go into the public cloud'.

"But now everybody's coming to us and saying ‘we want to buy an object store'.

"It's actually just getting to be really fun right now."