Cakebread (ninja) joins Xactly
Well that was quick.
Last week I wrote about Steve Cakebread leaving Salesforce.com and said that it was a reasonable thing to do at this point in the business cycle and in Cakebread’s career. I really expected that he’d take some time to rest, relax, get a tan, check out the market—all the things you do between gigs. In short, I figured he’d take a year off. He didn’t need a job.
Instead, he joined up with Xactly as CFO. The announcement just came out this morning. (Now if everyone could spend only a few days between jobs, the economy would be just fine. Hey, Steve, pick up the phone, Obama’s on the line…)
Seriously, adding Steve Cakebread to Xactly’s senior management team says a lot about where they want to go. It will take a couple of years and some luck but Xactly appears to be aiming at an IPO when market conditions improve. A few years ago that could have been assumed but with market conditions as tough as they are, you have to think hard about the IPO route. There is no IPO market today and by the time conditions improve taking a company public might be an arcane and nearly forgotten process. All the more reason to have someone like Cakebread on board.
This was a very smart hire and combined with the recent announcement of Xactly’s acquisition of Centive it presents a picture of momentum building at Xactly. My one note of caution though is that the market for SPM–sales performance management–is not in the $8 billion range Xactly posited in a recent press release. Xactly’s target market could be that big but it makes me wonder what else they’re planning. Stay tuned.
Salesforce lays off three, (yawn)
Late last week Salesforce laid off three executives, or so the story went. Actually two senior sales execs were let go and venerable president and former CFO, Steve Cakebread, just left. Immediately the knowledge-sphere (and I am tempted to write that word without the ‘K’) started rumbling about what dire straights Salesforce must be in.
I write a lot about Salesforce so people were calling me up for comment trying to prove their hypotheses. I posted a comment that I didn’t know the two execs but Cakebread is a ninja and this kind of person tends to spend a career going from one high flying company to the next helping out with the process leading up to the IPO. Cakebread had been a Salesforce for six years and I thought it was time for him to look for the next opportunity.
The trough of a recession is the perfect time to begin the process as it calls for a time to decompress, to survey the landscape and time to work off any non-compete that might have been built into your employment contract.
Imagine my surprise when someone misquoted me saying that the layoffs were a direct result of the recession. What I had written, among other things was, “Three jobs, even executive jobs, at a billion-dollar company is hardly newsworthy except that it gives tongues the opening they might need to wag.” And wag they did.
For the record, I write about Salesforce but I don’t have a seat on the board and on most things people don’t call me up to give me some inside scoop. I receive a steady stream of pre-announcement briefings like any other analyst covering the space.
I suspect that the fortunes of the SaaS community will mirror the progress of the recession though with some differences. I don’t think SaaS vendors will be hit as hard because SaaS is a logical decision for companies looking for cost effective applications. On the other hand, some customers might adjust their seat counts as they adjust headcount. That’s just common sense.
The broader picture worries me. We spent 2008 in denial about a recession that had already started and a housing situation that was beginning to look like bubble gum on a ball player’s face. Now that we’ve caught up with that reality we seem to be marketing the recession as if it was the next big thing. Everything is related to the recession from the scary and real 600,000 jobs lost in January to your kid’s D+ in algebra. Give me a break.
I have seen (and written) too many articles about selling in a recession. Why aren’t we writing articles about selling our way out of a recession? Really, guys, it’s fun to be a prognosticator for a bit especially if you were 12 the last time something like this happened but sooner or later we have to realize that things aren’t going to get better unless we all do something. All of this tealeaf reading and hand wringing just feeds on itself and depresses people and markets.
My last post also said that increasing SaaS uptake could be a leading indicator of recovery forming and I wondered if the feds would ever use it as an economic barometer. That would be useful but what’s not is reading the news about a couple of layoffs and making broad inferences. Public companies are strange beasts and they do things to influence the market for their products as well as the markets for their stocks. We forget this at our peril.
Public companies are always doing short-term things to keep their share prices up for many good reasons. A share price that drops the cost of a company to below the value of its total assets, or book value, effectively puts the company on sale. Smart raiders know a good deal when they see one and would be happy to snap up a good company at a bargain price and simply wait until conditions improve to refloat it. Note the conditional tense of the verbs in this paragraph and remind yourself this is all hypothetical.
So yes, we’re in a recession and yes we will climb out of it if we pull together and act logically and with conviction. The situation is scary in many ways but we need to keep in mind that there is opportunity embedded in the bad news if we know how to dissect it. Finally, the recession might be a fact of life but it is only one factor. It doesn’t tell the whole story or anything close to it. Now get back to work.
Salesforce lays off three executives
Salesforce.com laid off three executives last week, including Steve Cakebread, for non-performance reasons. Cakebread had been on board for about six years most of that time as CFO though the position he left was company president.
The article I saw made it seem conclusive that this was a direct result of the recession. Maybe to was, I don’t know. But I do know that the economy at large lost about 600,000 jobs in January according to the feds and that’s a much bigger concern.
Three jobs, even executive jobs, at a billion-dollar company is hardly newsworthy except that it gives tongues the opening they might need to wag. I don’t have a lot to say about most of this except that Steve Cakebread is a ninja. He’s the kind of guy you bring into a company when you have a nice steep growth curve and a plan for a liquidity event. He’s the kind of person you want as your CFO to give the Wall Street types the confidence to invest in your company. I can envision Steve Cakebread saying to himself, my work is done here.
In the small community of business executives who, like Cakebread, join a company to help get it into orbit, once that job is done it’s time to look for your next project. Also, believe it or not, it’s that time of the business cycle when you disengage from your old job and start looking around for the new, new thing.
You might think that’s a little silly for me to say but follow this logic. You need six to twelve months to decompress, work off your non-compete and re-familiarize yourself with the industry. That last point is important because while you’ve had blinders on trying to make your last company a big success, the world has continued to change.
So the way I see it, this is the perfect time for starting the process all over again. It’s a little like Groundhog Day, really. Phil comes out and either sees his shadow or doesn’t then we have six more weeks of winter. Spring eventually shows up and by then you’ve fully considered your garden and what to plant.
In a related matter none of this should affect a company’s decision to go with a SaaS solution, just the opposite. SaaS is still the low cost solution to computing needs because it lets you purchase fully operational seats of service without any of the lag time or costs of setting up a conventional system. It might even be a great early barometer of the economic recovery, just like Phil. Companies will start buying more SaaS seats before we see an appreciable uptick in the economy. I wonder if the feds have anything like this as an economic indicator. They ought to.
The column nobody liked
Few people were happy with this week’s column on Oracle and Salesforce. Usually the response leans to supporting whatever position I take but last week everyone found something to not like.
In the piece I tried to compare Salesforce and Oracle as CRM companies and I said that Salesforce has great vision and that Oracle really understands sales and marketing. What came back from Oracle partisans was, “Hey, we’ve got vision too!” and the Salesforce supporters said, “What? We don’t understand selling?”
Puhleez.
At this point I’d like to change the subject. How about them Red Sox? Pitchers and catchers show up any day now, right?
Maybe the premise was not good from the get-go. If you’re going to write about how close you think two products are then where’s the story? Journalism 101, I guess.
To be clear, those statements were not supposed to reduce either company to a single dimension. They were an attempt to highlight a strength in each company. And that is not the same as saying an ugly girl has a great personality. Even a casual observer of this market can easily see that.
I think I will stop now because I may have just inadvertently offended ugly girls. See you next week.
Commoditizing an idea
Time’s up. It’s time for a new way to say on-demand, I mean SaaS, no I mean ASP. Whatever.
We get a new descriptor for on-demand computing about every two or three years. Each change in terminology brings a subtle change in the definition. An ASP or application service provider, you might recall, was a company that provided access to conventional client-server software over a private network. The ASP may or may not have been the software vendor and could just as easily have been a third party.
On-demand seemed to be about delivering Web based business applications. It was the first incarnation of what we recognize today as modern software delivery over the Internet. Software as a service (SaaS) seemed to be a distinction without a difference. You might want to help me out on this one but I have always seen the two as parallel ideas.
I am fascinated by the swift change of descriptors as a means of rebranding, though. Salesforce.com is arguably the best at perceiving a trend and conceiving a new moniker. The company has led us through the above-mentioned changes as they have suited its evolution and it has done so again with cloud computing.
Cloud computing is a distinction with a real difference that several other companies with short histories in the software business have adopted. The cloud metaphor implies breaking the bonds of the old industry enabling customers to live their software lives free of the limitations of place bound datacenters. Amazon, Facebook and Google have reputations for other things but are becoming known also as cloud computing companies. But what knits them and others together is the conception first articulated by Salesforce of applications billed by the drink rather than by the bottle.
The shift to cloud computing comes at a good time. The older terms, if not the technologies, are commoditizing along predictable lines. Economists have long pointed out the role of commoditization in bringing new products to the masses and its function at the far end of the innovation curve.
The idea holds true even here in what amounts to a commoditization of terms more than of products. On demand is now being used in a broader context to identify more than the multi-tenant model first popularized by Salesforce, Salesnet, UpShot and many other companies that may no longer exist as freestanding entities.
Oracle, for example, routinely uses on-demand computing to describe any delivery of software functionality as a service. The idea of tenancy is an option in Oracle’s world to be determined by the customer. In some cases Oracle defines tenancy as single or many, which means that it has cleverly put an on-demand skin on its facilities management business.
Anthony Lye, senior vice president at Oracle admits to being a fast follower and the re-working of on-demand to meet his needs is a very good example. There is nothing wrong with it though some on-demand purists in the blogosphere have been in a snit over the term’s commoditization.
To his credit Lye correctly points out that some customers and their application needs do not fit well into the conventional multi-tenant definition. With that Oracle is happy to fill up its data center in Texas with many blade servers to suit the demand for new solutions based on an old model. At the same time, Oracle uses more than a name in configuring its offerings.
While it’s true that single- or many-tenant applications may be less able to take advantage of automatic updates to a single system image, it is equally true that many customers may not care. More to the point, today’s on-demand applications (whatever their tenancy model) borrow a lot from multi-tenant software like operating as a thin client in a browser, Ajax and XML. These borrowings have produced an interesting hybrid that acts much like conventional software without the conventional price tag.
Hybridization and commoditization should not be causes of consternation for anyone. They are indications of where we are in the lifecycle of an idea and a frame of reference for the innovation that is still going on at a rapid pace. For perhaps the first time we need to think hard about the terms we use to describe the ongoing software revolution. All of the terms are no longer equivalent.
On-demand computing has many advantages and the new definition might suit a part of the market that is underserved by what’s currently on offer. Good for them. From now on, though, if you want the latest and greatest in applications and connectivity you’ll need to be in the cloud.
