Being Unapologetic About How Important Culture Is With Phil Tee

Feb 8, 2023

Phil Tee, the CEO and co-founder of Moogsoft, joins Kendra Prospero to tell us why he believed that people in the business are very significant.




One of the purposes of this show is to help founders and entrepreneurs see that we all have a chance to pivot our leadership style to be better. None of us are the leaders we need to be years from now, but we do need to commit to growing. Our guest is a serial entrepreneur who has had unbelievable success over the years, and in 2011 founded yet another company where now he can take all his prior mistakes and mishaps and how he turned the corner to do it right. Phil Tee is the CEO and Cofounder of Moogsoft, an artificial intelligence platform for IT operations. He is unapologetic about how important culture is at Moogsoft and the results are in when employees are happy, everybody wins. Phil Tee, welcome to the show.

It’s great to be here.

I’d love to hear some of your backstory. Tell us a little bit about why did you get so focused on culture in an industry especially that isn’t usually focused on culture as much as you are? Why?

In some senses, the one thing I would contest is that the software and IT business, going back to the origins of Silicon Valley, was about a big culture shift. If you go take a walk through the history down in South Bay, if you happen to be there, it’s interesting. From my point of view, one of the best bits is you walk past the area dedicated to the Xerox Palo Alto Research Center, famous for the invention of user interfaces and graphical works stations.

One of the leading luminaries in that was Bob Taylor, one of the leading lights in TCP/IP networking, the stuff that everything is done by, including how we are talking now. The atmosphere at the park was the collaborative atmosphere. Famously, people would sit around in bean bags, discussing whatever was important. Extremely flat hierarchy, very transparent and open. People turned up as equals. It was phenomenally successful. Revolutionized the world. It was part of how software companies thought about themselves.

Somewhere along the way, it lost its salt. People started making a lot of money and the routes to making money got shorter and the amounts got bigger. It became a little bit obsessed with the glitter of gold and some of this uber collaborative, very flat hierarchy treated populous people went away. The one thing that I would point to as the evidence of how maybe the software industry lost its mojo in that regard, we talk a lot about gender diversity in technology. IT and high technology have a problem with that, to be honest. There are not enough females or at least not enough male in the workforce.

I’m not going to litigate the why and where of that, but your point is right at the very origin of the software business, it was predominantly female. I didn’t know that. Even going back to Grace Hopper and the invention of Basic, and somewhere along the way, we already lost that. It’s maybe a feature of the more modern Silicon Valley, but culture has gone by the wayside. It is something that will come back and is important when it comes back.

How have you seen it over the years? You’ve ebbed in and out of that over the years. What have you noticed is different now with Moogsoft? You are focused so much on it. It’s in every conversation I have heard from you.

I don’t even want to count the number of years I have been doing this, but let’s say I have built two public companies and trade sales. Moogsoft is not my first rodeo. I have been around the block with this. When we started Moogsoft, myself and my cofounder, we looked each other in the eye and we’d worked in all kinds of different businesses. Some of which were great and some of which had fairly toxic culture.

We promised ourselves that we wanted to build a company where if we weren’t the founders of it, we would want to apply to get into it and work there. We wanted something that embodied our values. We started with the culture. We started with we want to build a business that reflects certain core values.

Culture: We want to build a business that reflects certain core values.

Secondary to that was what the company did. I will say it was built around my friendship with Mike Silvey, my cofounder. It is a 30-plus year friendship. He’s one of the family. He’s one of my best friends, without getting icky about it. As he likes to say, he’s been a participant at all of the important parts of my life, from marriage and through the birth of my children. We intrinsically trust each other. I would say that the heart of that, there’s trust and valuing people as individuals. There is the whole wanting to put employees and customers at the center of what we do. From that stems the whole infrastructure of culture inside of Moogsoft.

You weren’t always this way. You had times in your past where culture wasn’t so focused. You weren’t so focused on it.

Some of that is life in a rush. When I started in the industry, I never set out to be an entrepreneur. It was not a burning ambition of mine to own my own company. It wasn’t a burning ambition of mine to make a lot of money or all of the things Silicon Valley entrepreneurs get associated with. I didn’t want to rule the world or to want to own Twitter which I haven’t even invented or any of that stuff. How I got into doing it was almost by accident.

I had an idea for how a particular bit of software should be written, and nobody would listen to me in the company that I worked in. I felt like constructively dismissed into being an entrepreneur. I started a company to embody a bit of technology that went on to become Micromuse, which went public on Nasdaq. I followed that by Riversoft because Micromuse, you can go find the GQ articles on it.

My cofounder there was mad, bad, and dangerous to know, and it was a pretty toxic environment. I left to start Riversoft almost because I was sick of what’s going on in Micromuse. Even that, I was in a hurry. All of this happened by the time I was 30. I’d taken two companies. By the time I was 33, I had built two public companies. I didn’t think about culture. Ironically, in Moogsoft and even at Micromuse, despite the toxicity, there was an incredibly strong bond internally in the business.

People looked after each other, but it wasn’t baked into the foundations of the business. It wasn’t part of the furniture. It was only after those experiences. Seeing the rollercoaster of the dot-com boom and bust. Seeing people who thought they were worth lots of money becoming not worth lots of money. Realizing that the thing that is important are the memories that people take from their workplace. Perhaps, the thing that gives me the most warm fuzz of pride or fond memories is when people say to me things like, “Moogsoft was the best days of my life,” or “I had the most fun I have ever had working at a business.”

The important thing is the memories people take from their workplace. Click To Tweet

We can talk about the Riversoft babies, the folks who met each other, fell in love, settled down, and had a family. That type of stuff, you realize that working in a business is an experience for the individuals, and it’s incumbent upon those who have the power over what that experience is that the experience is a positive one for them.

That is what built up in me over those years as we were coming, like I say, into Moogsoft. Mike and I have been working in an incubator before then. We thought we were done starting companies and when it came time to start Moogsoft, it was like we were going to do it with the employee right at the center.

Tell me about those conversations when you started Moogsoft. You said employees are the center. How did you start figuring out what that was going to look like?

It’s a lot of small things that add up to big things. Remember, this is early-2010s and in Silicon Valley, I remember bumping into one other entrepreneur who’s gossipy, tittle-tattle that you get in the industry. “Have you heard about such and such a company? Did you know employee number seven there is a Michelin-star chef?” The rage at the time was like gourmet lunches and dinners for employees so that they would never go home. There was a lot of that around, but I think that is false employee centrism.

It’s more like you are trying to bribe your workforce into loving you. It’s that straightforward. It’s inverse Machiavelli. The prince can either be loved or feared. “It is better to be feared than loved,” that’s the quote from Machiavelli. I turn you the other way around. Prince can either be loved or feared. It’s better to be loved than feared because people give up their lives out of love. They take yours out of love. Meaning, to go with the love thing. It’s a lot of small things, but let me talk about a couple.

Number one is transparency. I don’t know whether you are familiar with Semco. It was a company in Brazil many years ago. It’s the subject of a book called Maverick. The story goes, if I’m going to recall it correctly, the owner passed away and it was a family business. It went to the eldest son who was a playboy. He didn’t know anything about business.

He turned up in his dad’s corner office and the company started cavitating. He didn’t know what he was doing. After 4 or 5 months of nearly destroying his inheritance, he gave up in a very constructive way. He called the company together and said, “It’s all going to hell in a handbasket. It’s your problem. I don’t know how to fix this. Let me tell you everything that’s going on. You are going to tell me what to do.” It’s a radical decentralization of decision-making. I’m not necessarily suggesting that a way to go. I’m not sure whether that would work in any other business.

I’m sure there were particularities about what went on there, but I will say that transparency is a very important tool in treating your colleagues as grownups, whether the news is good or bad, but importantly, if the news is bad. Good news is easy to share. “Congratulations, Jim. You are getting a bonus. Well done, Sally. You are promoted to senior vice president. Congratulations, team. We doubled our sales target and we are all going to Acapulco.” All of that is dead easy.

I’m on about Jim. “Your performance isn’t good enough. If it doesn’t improve, then I’m going to have no option other than to manage your out. Sally, I know you are a VP, but you are not up to the job. You need to step back. I’m sorry, Tim, we missed the sales targeted by three quarters,” or “COVID hit. We had to do all kinds of things to manage through the process.”

You have to be transparent. You have to share everything and only hold back the stuff that will do harm to the company if it gets into the public domain. If you are ever involved in a situation where the company is being acquired or you are going public, or you are public, you’ve got your quarterly results. There are some things you cannot let out for obvious reasons, respect and confidentiality. Pretty much everything else, treat people like they are responsible colleagues and adults, and they will behave as responsible grownups.

That’s been my experience with my business. I totally agree with you. The more transparent I have been, the more ideas come, and the better the services for the customers. All sorts of things come from that transparency. I will say that there are some employees who lack the maturity to handle that too. That, for me, means they are not a fit for me because I don’t know how to be anything else other than transparent.

The same thing. That’s why culture is a key part of our hiring. I might talk about that in a moment, but I completely agree. I would say that the instances where I have been disappointed in how people responded extremely. I can’t even remember one where somebody has misused information or has freaked out. I don’t know what public transport is like in Boulder. I got a great affection for the town. I love the Boulder Hotel. Great Ghost.

One of my good friends is one of the founding members there and she’s told me all the ghost stories.

Slightly to digress. I stayed there some years ago and was in the bar before I went to bed. The barman was telling me the story about what went on in Boulder. I won’t bore your readers by repeating it, but it freaked me out. I went back to my room and this was back before I moved to the US. My wife was in the UK, so seven hours ahead of Colorado.

I got into the room. It was on the floor where the story happened, not far from the room where the story happened. It was freezing cold in my room and I was totally freaked out. I was on the phone for an hour at 2:00 AM talking to my wife going, “I’m pretty scared about this.” She finally said, “You’ve got a look for the air conditioning.” The air conditioning was hidden behind a painting and it turned out to 50 degrees.

You start with transparency. That’s pretty key. Make sure everybody’s got the information that you’ve got. Honesty, giving feedback in a very clear way. Managing for culture. When we hire, everybody gets screened through HR and one of the things that we shared during that screening is the culture of the business.

Culture: Start with transparency. Make sure everybody’s got the information that you’ve got.

We have it very pristine, fine values, grace under pressure, employee-first, fanatical customer advocacy ideas, and fun. We walk people through what we mean by all of that. Grace under pressure is how I like to think people should behave when stuff goes wrong because stuff does go wrong. It’s the idea that you should execute your way at our problems rather than running around shouting at people, finding blame, and all the rest of that thing.

The employee centricity, we talked a little bit about, it’s commune for mutual betterment. Realize that management is violence. I will talk about that in a second. Understand that every day when you go into the office, your job is maybe as successful. You do all of that. The next people you turn up for your customers because if you bring them inside the tent and treat them like they are valued parts of the community, they will advocate for you.

Businesses are a commune for mutual betterment. Management is violence. Click To Tweet

That’s super important in a business like ours. Ideas. I look my backstories. I used to be a theoretical physicist. I’m still active in the scientific community. We sponsor people through PhDs and Masters, but it’s not nerdy stuff. It’s like, “Please realize every problem deserves a novel answer.” The fun thing is like an appeal to mortality. Sounds very grand, isn’t it? I’m youthful in my age now. I don’t know how long I have got on planet Earth. I’m pretty healthy, but you never know how these things go.

Make every day count. Just have fun and enjoy what you are doing. If you don’t and this doesn’t give you passion, then do something different. Take a jog, buy a dog, climb Everest. Whatever is in your heart, follow your passion. It’s super important. We test all of that by asking at the end of the process for people to go through this panel interview, where what we say to them is 45 minutes, 15 minutes at the beginning is the boring event.

This is where you proved to us that you were listening. Tell us about how you would attack the role, what you’ve learned, and how you would go about it. The 30 minutes afterwards is the interesting bit, because I’m going to ask you to make my team better in 30 minutes. I want you to talk about whatever you want to talk about.

Doesn’t have to be business. It doesn’t have to be Moogsoft, but it needs to be something you are passionate about that you think would benefit the team now. Entertain us. We have a fantastic diversity. How to roast coffee beans? How to be a stand comedian? Unconscious bias training. We are given a lesson in improvisation. How to cook Vietnamese street food? The list goes on and on. How to run a side hustle as a property owner? You get inside people’s heads and it’s almost like you vote people into your gang by doing that.

Do you tell them the question ahead of time so you have time to think about it, or do you spring it on them?

They know that they have got to do the interview. They decide what they are talking about.

What would you do to make this better?

That would make you better. I have not been interviewed. I haven’t met your colleagues. How do I know? Be encouraging and supportive of everything you do. If I was going to talk about what I’m passionate about, I would pull the socks of you. I’m a theoretical physicist. I get off on fundamental theories of space-time and quantum gravity. I’m a fan of West Bromwich Albion. Soccer fan. I’m a very avid skier when I can. I love skiing. I bake breads. Who doesn’t? I have got a lovely family. Two young kids here with me in the US and two other kids in the UK, so that takes up a lot of time. I have no less than four cats. I could do an entire hour on the psychology of cats. It goes on and on. 

That’s a great way to get into the minds of your incoming staff and see that they are passionate about the other things. I find that some developers, especially, are quite one-dimensional. They are not that interesting to be around in many ways.

This is a shame because the IT revolution is perhaps one of the most impactful changes in the human journey. I was born and brought up in the Midlands in the UK. A stone’s throw away from Ironbridge Gorge, which was built in 1774, 100 years from the birth of Einstein. It was first mass-manufactured at Ironbridge and it’s where the industrial revolution happened. 10 miles up the road was Josiah Wedgwood, 20 miles down the road was the Walton Bolton factories and all the rest of that stuff. That’s where the world changed. The last time it was a significance in the IT revolution. These software engineers should appreciate that they are changing the world. They are creating one of these dislocations where you may not understand what your grandchildren do for a living.

Culture: The IT revolution is perhaps one of the most impactful changes in the human journey.

You think with ChatGPT coming, too, it’s going to change everything about the way work is done. Not just work but everything when that takes off.

There are a bunch of innovations right now that are quite game-changing. ChatGPT is an artificial intelligence technique called GANs or Generative Adversarial Neural Nets. The big thing about GPT-3 is it’s huge. The technology itself is not dramatically different from other neural net technology, but nevertheless innovative.

Quantum simulation computing, as opposed to quantum computing, graph-based computing, the merging of graph and quantum computing could be very interesting. There are some huge changes. If it doesn’t make the IT a genuine artificial intelligence, it probably will make it routinely past the Turing test and be effectively intelligent.

Where will humans fall with all that? What will happen to our employees, do you think?

I don’t know. Do you remember that comment about what your grandchildren do for a living? I think that’s the truth of it. There’s other stuff as well. There’s a problem in computer science called P versus NP. Are there algorithms in finite time for any problem that you can think of? Things like traveling salesman and all the rest of it will change the world because that could be one route to getting genuine artificial intelligence. It will revolutionize security.

My guess is that what computers will never do is replicate humanity or humanness. I said a little while about management is violence. What I mean by that is when you are in a decision-making position, you are exercising power of the people. You have the power to do good things and bad things. Firing somebody is never pleasant when you are doing it. It’s a lot worse if you are on the receiving end of it. It’s a violent activity from an emotional perspective, and hopefully, we should try very hard, but sometimes you do.

If you think about the perfect AI, ultimately, what you are building is a decision-making machine, but can you build a machine that can make decisions and execute them in a human way? It’s often held up as one of those areas where AI could help make life and death decisions, but when you are holding the hand of a dying person, that is not an intellectual decision. That is an act of humanity.

The last time I checked, my computer might get warm when I ask it questions, but it isn’t warm in the human sense. Human beings will ultimately end up providing the coating around some of this technology and the technology will assist rather than replace the presence of the human. All of that being said, there are some jobs that we hold out as the preserver, very well educated, and erudite people that will go away. The law, for example, large tracks and what takes a human being to work out whether or not something is legal or illegal. Maybe that can be done better by a computer.

Yes. I’m married to a lawyer. I hope that happens. On that note, I feel like maybe the way to end this is to remind everybody that humanness is what’s going to make us survive. Treating people and remembering that humanness is ultimately the essence that’s most important in our business. Thank you so much for your time. This has been fantastic. I’m looking forward to seeing where you end up taking this company too, and what you end up doing with all this emerging technology too. 

Thank you very much. Let’s stay in touch on that.

We will. We’ll check back in with you in a couple of months.

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About Phil Tee

Phil Tee is the CEO and co-founder of Moogsoft, the pioneer and leading provider of artificial intelligence for IT operations (AIOps). Phil is a serial entrepreneur, inventor, and expert in IT service assurance — a category he was instrumental in shaping through his invention of Netcool (acquired by IBM) nearly 25 years ago. 

Within 5 years of graduating from Sussex, he co-founded Omnibus Transport Technologies Limited (OTT) to build and market Netcool/Omnibus. Since then, Phil has led numerous companies to successful exits, including RiverSoft (IPO) and Njini (acquired by Riverbed). More recently at Moogsoft that he co-founded in 2011, he invented the technology that supports over 200 customers worldwide, including SAP, American Airlines, Yahoo!, Verizon, Outsystems, BNYM and HCL Technologies.

Moogsoft has 72 patents and more than two dozen peer reviewed publications covering the technology, many of them authored or co-authored by Phil. Phil holds a PhD in Informatics and is also a Royal Society Entrepreneur in Residence.