Et Tu Symantec?
Just as we were trying to digest the HP announcement that it would cleave amoeba-like into two distinct entities, Symantec has announced the same intent. This also follows eBay’s announcement that it would spin off PayPal, so says the New York Times. And what do eBay and HP have in common? Meg Whitman. What’s going on here? Healthy capitalism I say.
Look, lots of companies acquire other businesses as they seek faster growth and greater synergies in their markets. Often times the acquisitions don’t work out exactly as the acquirers had hoped. The worst-case scenario is when the acquired company fizzles either because it could not be assimilated or because it was a dud to begin with and of course, there are numerous permutations on the theme. But often enough to be interesting the merged entity continues along two separate paths with both companies continuing to be successful but in their own ways.
So every now an again it makes sense to take inventory and ask if all of the acquisitions or self-generated businesses provide the kind of overall synergy needed. If not, it’s time for spinoffs and we’re beginning to see several as the foregoing paras indicate.
Yesterday I wrote that Oracle might be another candidate for splitting up and old friend Josh Greenbaum heartily agrees so I’ve got that going on. If you read that article from the Times, you might get the idea that spinoffs might be the next big thing in Silicon Valley and beyond. If so, and if the idea gains enough steam, this trend might depress the regular IPO market. What would you rather buy, a start up doing an IPO or a division of a seasoned company with a track record and a culture accustomed to hitting its marks? There are good reasons for both.
I don’t think we’ve ever seen anything like this in the tech sector. Last time there was an opportunity was the end of the mini-computer era and instead of spinning off units, those companies imploded. There was wreckage everywhere and truth be told, the networked PC and server world envisioned to replace it was a little late in coming — recall the year of the network that only took a decade to reach fruition. That resulted in a nuclear winter where no one wanted to buy much because it was all either obsolete or not up to snuff.
That’s not happening this time in part because the legacy products are so embedded in our businesses today and because much of it is paid for already so what’s the cost of keeping it?
Spinning off non-core businesses to concentrate on the knitting is smart for both parties and should result in significant new innovation and entrepreneurship as newly liberated companies take off their blinkers and design and build products for new opportunities in the whole market, even for companies that were once competitors.
Companies as big as Oracle and even Microsoft might benefit from a spinoff strategy and I suspect there are new business models to be tried too. Although the flavor right now is to spinoff an entity to be completely free-standing, I can see situations where more interlocking arrangements can be developed. The Japanese might call these keiretsus though we might think of them as monopolies or trusts as in the Sherman Anti-trust Act.
In the long history of capitalism, this seems to be a phase that recurs when conditions are right — it happened with Oil and Steel and automobiles though it was sometimes called vertical integration. Whatever it turns into I think this week might have seen an inflection point.
HubSpot IPO’s, Culture Code Gets a Bigger Audience
HubSpot founders Dharmesh Shah and Brian Halligan
Kudos to all HubSpotters for their IPO. If there was ever a company to root for this is it, not because they’re from Boston and their IPO shows a certain resilience in the place where the tech sector got started and not because I’m a hometown boy or because I have an investment. Buy high, sell low is my investment philosophy according to my wife and I know all of the jokes.
“How do you make a small fortune in stocks? Start with a bigger one.”
No, this is because founders Brian Halligan (CEO) and Dharmesh Shah (CTO) started from day one to build a company that other people could love.
I suppose lovability is in the eye of the beholder — it’s easier to love a kitten than a porcupine — but HubSpot not only made it their mission but they also made a hard science of it and were phenomenally successful. The secret? The way they treat their people. Treating employees well translates into treating customers well and adds much to the likability quotient.
You might ask how one can make a hard science out of a mission as squishy as wanting to be loved. After all, isn’t literature full of stories about unrequited love and unreciprocated friendships? Yes and yes. But HubSpot’s tailwind has been that it wasn’t trying to be personally loved, only loved in the narrow range of being a company people want to work at and to do business with and at that they’ve succeeded well.
HubSpot’s secret sauce, and ultimately its science of being liked was summarized by Mr. Shah in a slide show that I urge everyone to review here. “Culture Code: Creating A Lovable Company: An inside peek at how we work and what we believe at HubSpot,” goes through the 7 big ideas that undergird the company.
- We are as maniacal about our metrics as our mission.
- We Solve For The Customer (SFTC).
- We are radically transparent.
- We give ourselves the autonomy to be awesome.
- We are unreasonably picky about our peers.
- We invest in individual mastery and market value.
- We constantly question the status quo.
The prime directive that everything else trees up to, to make a Star Trek analogy, is “Use good judgment.” That might sound either incredibly naïve or subversive in many of today’s more buttoned down corporate cultures but it works remarkably well. There’s no huge employee manual and the whole culture has an emphasis on getting things done — using good judgment of course. Shah once told me, “Customers are more easily attracted with a great product and amazing people are more easily attracted with a great culture,” hence the emphasis on both.
Shah also told me he didn’t see a need for a lot of rules filling up the employee manual because, as he put it, “Just because someone made a mistake years ago doesn’t mean we need a policy. We don’t penalize the many for the mistakes of the few.”
Not surprisingly, though, the company has a succinct definition of what good judgment is in this context. It comes in three parts.
- Favor your team over yourself;
- Favor the company over the team; and
- Favor the customer over the company.
What? Favor the customer over the company?
Yup.
Acting in the customer’s interest is acting in the long-term self-interest of the company so there’s no disconnect. In fact, the long-term interest of the company is to delight customers, which includes a raft of corollary ideas that keep everyone focused. All this inevitably leads to hiring (see point 5).
Use good judgment also means adjusting your schedule to optimize your life and your contribution to the company. HubSpotters, like people in many emerging companies, work whenever, wherever but they also understand the importance of interacting. Part of the culture code is the belief that creative magic happens when quirky humans randomly connect — so much so that from the beginning people have been required to change desks every ninety days, just to mix things up.
And so it goes as Vonnegut once said. HubSpot is a public company today but they’ve always acted in a way that public companies ought. So it’s not surprising to me that they’ve reached this pinnacle — just another milestone in a progression that builds a company people love.
Thoughts on OOW2014
First, products
From an overflowing hardware stash to its Java middleware, apps, and various cloud, SaaS, hosting, and infrastructure options, the company looks like a python that just devoured a pig — I say this with love. The pig in a python metaphor came to me in one of the general sessions when I was still trying to understand it all. Oracle gave me a lot of help to understand too. I had meetings with executives, briefings from leaders of major CRM groups, and attended a few breakout sessions that drilled into the nitty-gritty. In the end it was too much but again, I say this with love. Too much is a high class problem as they say.
The truth is that after a late start in cloud computing the company has come roaring back with a blend of in-house developed and acquired software that will keep it in good stead for a while, hence my original point. Implied in that point is something more urgent, however. While Oracle has stepped up to cloud computing, it has not fundamentally rethought its messaging, in my opinion. They still seem to sell or offer their stuff as products like they always have rather than as the services and solutions that the market wants as implied by the move to cloud. Selling ROI doesn’t help either. ROI is a consequence, not the thing you buy.
That Oracle is still in a messaging mode right out of the first Bush administration is not surprising or at least it shouldn’t be. In Larry Ellison’s keynote Sunday night, he waxed a bit philosophical which surprised me. At one point early in his talk he discussed his company’s commitment to its earliest customers more than thirty years ago and he circled back near the end of his speech to say that Oracle would stand by its customers with their on-premise applications for as long as they wanted to use those apps.
Never mind the logic of moving to the cloud to save money by making software an operational expense rather than a capital one or the promise of greater functionality and improved user experience of cloud apps. Legacy apps are still on offer, still serviced, supported, and enhanced, but so are newer cloud versions. Customers do things for their own reasons and Oracle is not about to insist that they make big changes to their businesses.
There are plusses and minuses to this approach. It will hopefully engender brand loyalty for the eventual upgrades and it provides Oracle with a graceful conversion from a license vendor to a subscription vendor. But it also leaves Oracle straddling two dramatically different worldviews and that can’t be cost effective. Some critics are observing that Oracle is not shifting its business fast enough because of its commitment to the legacy base but in Oracle’s situation, I don’t know of a better approach.
Overarching theme
Now back to messaging. Oracle is a dynamic enterprise and a very big one too. While it has assembled a wonderful cadre of innovative approaches to big data and IT in general, it needs to do a better job of communicating to the marketplace. Here are some ideas.
My big issue with Oracle is that its communication is too tactical. The company focuses on selling products by their features rather than best practices and in a situation where there are loads of products, some better indication of how it all works together to support specific business processes would be useful. Of course some parts of the organization are better at this than others. For example, the social apps and CRM in general have relatively good messaging though the pride of abundance can be seen in CRM too. Regardless, “hardware and software engineered to work together” misses the point by a country mile. It’s a heterogeneous world and customers expect their hetero systems to be well supported — the time when Larry Ellison could tell the market to install and use his products without modification is long gone.
Now, that said, selling features when describing new hardware makes sense. Speeds and feeds are what hardware is all about. Even when discussing database and middleware it makes sense because speed is what makes everything else possible. But the application space is the new battleground and when feature discussion bleeds into apps all you get is an incomprehensible pile of attributes and a less than clear understanding of benefits.
Speakers
We’ve been beating around the bush on this one for a long time so in an effort at clarity I will be blunt though this too is said with love. Many of the speakers who took the stage at OpenWorld were terrible. They lacked rhythm, pacing, and the ability to tell a story — as a matter of fact story telling is the first casualty of a decision to talk about features. When you sell features, your speeches sound like recitations of the phonebook in a congressional filibuster. However, I also question how much rehearsal some of the speakers committed to and also wonder how some of the most senior executives for Oracle as well as its guest speakers could rise to their positions without being trained to be effective on the stump. (Mark Hurd is not in this group he is fluid and precise while being personable and his press conferences are good.) Perhaps it’s the venue. The airplane hangar styled Moscone Center and monolithic slabs of PowerPoint on the walls are not conducive to conjuring an idea of an intimate conversation.
Where’s the Wi-Fi?
Speaking of the hangar, why is it so hard to provide working Wi-Fi in that place? Nothing says we understand the modern wireless customer reality better than good access to the Internet. It is a subliminal message that cuts both ways — when the Wi-Fi is bad credibility lags, it just does. I know many people who skipped some sessions because they could watch on streaming media from the comfort of their hotel rooms bathed in connectivity. That’s a terrible way to “attend” a conference.
Paradoxically, sometimes the Internet service is OK at Moscone, but at other times it is not and the vendor renting the space doesn’t seem to matter. So, this is an engineering problem for the landlord, one that ought to be taken care of once and for all and the owners of the hall need to step up to it because it makes zero sense for a major showplace and venue in San Francisco to have this kind of problem.
Note to the landlord: Can you guys figure this out before Dreamforce?
My conclusion
There was a lot to like at this year’s OpenWorld. Oracle is a company in transition of its product line, its customer base, and its business model. It has done a lot of the hard work in building and acquiring new products but it needs to now focus more on how it presents its products and services to reflect the more social and mobile marketplace it is selling into. This shouldn’t be hard, but for an engineering company this might be very unfamiliar territory. The difficulty and opportunity might be summed up in a punning phrase that began circulating at OpenWorld featuring the names of the new co-CEO’s, Hurd and Catz. Say that three times fast.
Dreamforce Preview
No need to speculate about all of the Salesforce announcements expected to emanate from Dreamforce next week in San Francisco. The company is providing an assist to the news starved — and the news weary — ahead of the event.
They’ve unveiled Sales Cloud1 and Service Cloud1 as reimagined application sets that better address the times which automatically means mobile devices and more intimate service capabilities. I see a pattern.
First Sales Cloud1 has seven new apps to help sales reps work smarter according to the press release. They include, Today, Tasks, Notes, Events, Sales Path, Skills and rewards, and Sales Data. You can read the PR for details but the names are adequate descriptors.
Two things strike me about Sales Cloud1. It is very much oriented toward sales process and best practice. You can certainly use it tactically like many sales reps will likely do but the power of this new alignment is in its strategic process orientation. I have recently been noodling on process and concluded that when process is innate to the rep it is a good thing but when the attempt is to impose it from above resistance can be fierce. So this re-imagination of Sales Cloud is interesting because it is insidious — it seduces reps into better processes by offering a path with less work. You have to like that.
Service Cloud1, like its mate, is completely developed on the Salessforce1 Platform, which is to say very little, since all Salesforce apps have forever been built on their platform. But the emphasis is worth noting because it carries the subliminal message that you can tinker with it, add functions, workflow, and objects, and generally make it your own for –- watch this — your specific internal processes.
My favorite aspect of the Service Cloud1 product, and there are tons, is the ability to embed an SOS button in your service apps to presumably bring a helpful person running to your encounter when you need one. This points the way to better and more efficient customer relationships in the future. Vendors will be better able to be in customer moments of truth and because there is an aspect of customer self selection, vendor resources will be applied to situations where they are expressly needed.
On the down side, the Service Cloud1 release still talks about “consumers” which for me is a no-no. We are customers. We have relationships. Consumers need no relationships because they simply consume whatever is available but there is an element of choice in the concept of a customer. And if you look at all the contortions businesses are making to address the very real fact that people do have choices and vendors desperately want to be the chosen ones, then you see that consumer has no place in modern CRM.
Also, I am cold to the name of the “SOS” button because it connotes danger and calamity as does it’s progenitor “Mayday.” Customers are not calamities that we need to run to with fire extinguishers. They are half of the vendor-customer relationship and should be treated with the respect of that position. It starts with the term that recognizes the rough equality between the two instead of the hierarchy inherited from last century’s business paradigm. The button ought to be seen as an opportunity to be in a customer’s moment of truth and to strengthen the relationship but I digress.
So over the last few weeks we’ve seen announcements about sales, service, and at the ExactTarget Marketing Cloud conference in Indianapolis, we got an eye-full of marketing. What’s left for Dreamforce? Well, something about partners, something about developers, with a soupçon of wearables thrown in, and perhaps something about reports and analytics is my guess. That’ll keep us busy. See you next week.
