Cloud computing platforms and applications are proliferating across enterprises today, serving as the IT infrastructure driving new digital businesses. The following roundup of cloud computing forecasts and market estimates reflect a maturing global market for cloud services, with proven scale, speed and security to support new business models.
CIOs who are creating compelling business cases that rely on cloud platforms as a growth catalyst is the architects enabling these new business initiatives to succeed. The era of CIO strategist has arrived. Key takeaways include the following:
Amazon Web Services (AWS) accounted for 55% of the company’s operating profit in Q2, 2018, despite contributing only 12% to the company’s net sales. In Q1, 2018 services accounted for 40% of Amazon’s revenue, up from 26% three years earlier. Source: Cloud Business Drives Amazon’s Profits, Statista, July 27, 2018.
80% of enterprises are both running apps on or experimenting with Amazon Web Services (AWS) as their preferred cloud platform. 67% of enterprises are running apps on (45%) and experimenting on (22%) the Microsoft Azure platform. 18% of enterprises are using Google’s Cloud Platform for applications today, with 23% evaluating the platform for future use. RightScale’s 2018 survey was included in the original data set Statista used to create the comparison. Source: Statista, Current and planned usage of public cloud platform services running applications worldwide in 2018. Please click on the graphic to expand for easier viewing.
Enterprise adoption of Microsoft Azure increased significantly from 43% to 58% attaining a 35% CAGR while AWS adoption increased from 59% to 68%. Enterprise respondents with future projects (the combination of experimenting and planning to use) show the most interest in Google (41%). Source: RightScale 2018 State of the Cloud Report. Please click on the graphic to expand for easier viewing.
Wikibon projects the True Private Cloud (TPC) worldwide market will experience a compound annual growth rate of 29.2%, reaching $262.4B by 2027. The firm predicts TPC growth will far outpace the infrastructure-as-a-service (IaaS) growth of 15.2% over the same period. A true private cloud is distinguished from a private cloud by the completeness of the integration of all aspects of the offering, including performance characteristics such as price, agility, and service breadth. Please see the source link for additional details on TPC. Source: Wikibon’s 2018 True Private Cloud Forecast and Market Shares. Please click on the graphic to expand for easier viewing.
Quality Control, Computer-Aided Engineering, and Manufacturing Execution Systems (MES) are the three most widely adopted systems in the cloud by discrete and process The survey also found that 60% of discrete and process manufacturers say their end users prefer the cloud over on-premise. Source: Amazon Web Services & IDC: Industrial Customers Are Ready For The Cloud – Now (PDF, 13 pp., no opt-in, sponsored by AWS). Please click on the graphic to expand for easier viewing.
The Worldwide Public Cloud Services Market is projected to grow by 17.3 3% in 2019 to total $206.2B, up from $175.8B in 2018 according to Gartner. In 2018 the market will grow a healthy 21% up from $145.3B in 2017 according to the research and advisory firm. Infrastructure-as-a-Service (IaaS) will be the fastest-growing segment of the market, forecasted to grow by 27.6% in 2019 to reach $39.5B, up from $31B in 2018. By 2022, Gartner expects that 90% of enterprises purchasing public cloud IaaS will do so from an integrated IaaS and Platform-as-a-Service (PaaS), and will use both the IaaS and PaaS capabilities from that provider. Source: Gartner Forecasts Worldwide Public Cloud Revenue to Grow 17.3 Percent in 2019.
Total spending on IT infrastructure products (server, enterprise storage, and Ethernet switches) for deployment in cloud environments is projected to attain a 10.9% year-over-year growth rate, reaching $52.3B this year. Long-term, IDC expects spending on off-premises cloud IT infrastructure will grow at a five-year compound annual growth rate (CAGR) of 10.8%, reaching $55.7B. Source: Spending on IT Infrastructure for Deployment in Cloud Environments is Forecast to Grow 10.9% in 2018, According to IDC.
More than $1.3T in IT spending will be directly or indirectly affected by the shift to cloud by 2022. 28% of spending within key enterprise IT markets will shift to the cloud by 2022, up from 19% in 2018. The largest cloud shift before 2018 occurred in application software, particularly driven by customer relationship management (CRM) software, with Salesforce dominating as the market leader. CRM has already reached a tipping point where a higher proportion of spending occurs in the cloud than in traditional software. Source: Gartner Says 28 Percent of Spending in Key IT Segments Will Shift to the Cloud by 2022.
IDC predicts worldwide Public Cloud Services Spending will reach $180B in 2018, an increase of 23.7% over 2017. According to IDC, the market is expected to achieve a five-year compound annual growth rate (CAGR) of 21.9% with public cloud services spending totaling $277B in 2021. The industries that are forecast to spend the most on public cloud services in 2018 are discrete manufacturing ($19.7B), professional services ($18.1B), and banking ($16.7B). The process manufacturing and retail industries are also expected to spend more than $10B each on public cloud services in 2018. These five industries will remain at the top in 2021 due to their continued investment in public cloud solutions. The industries that will see the fastest spending growth over the five-year forecast period are professional services (24.4% CAGR), telecom (23.3% CAGR), and banking (23.0% CAGR). Source: Worldwide Public Cloud Services Spending Forecast to Reach $160 Billion This Year, According to IDC.
Discrete Manufacturing is predicted to lead all industries on public cloud spending of $19.7B in 2018 according to IDC. Additional industries forecast to spend the most on public cloud services this year include Professional Services at $18.1B and Banking at $16.7B. The process manufacturing and retail industries are also expected to spend more than $10B each on public cloud services in 2018. According to IDC, these five industries will remain at the top in 2021 due to their continued investment in public cloud solutions. The industries that will see the fastest spending growth over the five-year forecast period are Professional Services with a 24.4% CAGR, Telecommunications with a 23.3% CAGR, and banking with a 23% CAGR. Source: Worldwide Public Cloud Services Spending Forecast to Reach $160 Billion This Year, According to IDC.
Anyone failing to escape the swirl of intense hype threatening to destroy everything great about RPA, is probably thinking that these cute products are going to solve all their artificial intelligence needs, providing them with a “digital workforce” that will go way beyond scraping screens, producing scripts and running unattended recorded process loops.
Now don’t get me wrong – I LOVE RPA… jeez I bloody helped create the space when I first wrote about it in 2012. I don’t want to toot my own horn, but this space probably never have would have got off the ground if we hadn’t been curious enough to get deep into it and articulate its value to the world.
RPA creates a genuine experience, where the underlying fabric of decades-old processes can finally be altered
When we released the first “Intelligent Automation Continuum” in 2015, we made it very clear that RPA was clearly the first step in a much broader roadmap to achieve beautifully-automated intelligence across your enterprise. And today, this gateway philosophy has never been closer to reality. RPA, when executed well, delivers a digitally-transformative experience to business operations executives, where they can – for the first time – fundamentally change how a process is designed to process data much, much faster. Suddenly, firms have the chance to make fundamental changes to how they design workflows, instead of persisting with doing things the same old way, but with lower cost people and more efficient delivery models. Isn’t that enough for now? Why does the hype take it to a place where it’s only going to disappoint? If IBM’s leadership already thinks these firms are massively overpriced, are there really others out there which will take the plunge?
When I see executives who previously stared at excel sheets all day (while beating up BPO providers for overcharging for insurance clerks in Delhi) actually getting trained to redesign workflows using scripts and GUIs, it warms the soul. We are actually trying to do thing better... not just cheaper! So why can’t we be content with making this actually work before we get too carried away?
Time for a reality check: RPA is firmly on the radar, but let’s see it become properly industrialized and scaled before we get too carried away
The vast majority of these initiatives are project-based, not scaled – only 13% of RPA adopters are currently scaled up and industrialized, according to new data from 590 enterprises worldwide. Most RPA adopters are still tinkering with projects and not rushing towards enterprise scale adoption:
Suddenly, the whole RPA value proposition, which has carefully matured from the “Oh my God, a robot’s going to take my job” to “OK, I get it now, RPA actually frees up time and fixes process breakages and staves off costly investments” has been injected with some serious hype-steroids, where suddenly these firms are worth billions of dollars, some are actually declaring they are going to deliver their own consulting services (really) and quickly move up the continuum to offer real cognitive and AI capabilities. I’m sorry, but when were the RPA firms going to compete with Google and Microsoft? Am I missing something here?
The Bottom-Line: Enjoy that RPA high a bit longer before you graduate onto the harder stuff…
The real data shows just how not-ready we are to declare some kind of robo-victory – executives must evaluate how all intelligent automation technologies can work together to take us to the promised land. RPA provides a terrific first stop for executives to make real underlying changes to their processes. Once processes are digitized, there is so much more we can do with the data being produced, which is where other automation and AI tech come into play, such as Machine Learning and predictive analytics and sophisticated cognitive computing.
Now it’s always critical to focus on the “what next”, and in the case of RPA the possibilities are limitless, but only when you have mastered how to digitize your underlying mess that has plagued your organization since before the days COBOL was the next big thing. Then it’s about how you reel in the analytics and AI possibilities that truly take your business to a new level of data heaven. But let’s get past the gateway first… let’s not get ahead of reality and mess this one up, folks.
I spent a day at SAP TechEd last week. I was there primarily to meet some customers and execs for interviews for SAP Nation. I knew the theme of “open” would be prominent during the event, but I was not prepared for the extremely wide range of tools and technologies that now define SAP Nation.
SAP had a series of bins with pins for developers to vote for their language of choice. I walked around the show floor with Brian Dennett, a SAP Mentor and now co-founder of Enable.ai. He proudly showed off his Python pin. I expected most at the event would similarly be showing off their machine learning chops or Java pins. I was blown away the ABAP bin was empty. As ABAP migrates to SAP’s Cloud Platform, the 35 year old language continues to flourish.
We had a meeting with Maricel Cabahug, Chief Design Officer at SAP. The world of UX is mind-blowingly complex. Mobile trends on iOS and Android. Social/collaboration trends driven by Facebook Workplace, Slack and others. Digital assistants like SAP’s CoPilot and many others. Listening to her, you see expectations change dramatically as you move within an enterprise. Customer facing marketers are far more UX savvy and demanding than workers on the shop floor. As you move around the world, you have to reflect expectations of chat and emojis common in China. And yet, you step back and many customers migrating to S/4 are asking for the old keyboard and mouse driven SAP GUI interface that SAP has been maligned for! It makes the user transition easier they say.
AWS, Azure and Google had big booths at TechEd. In Asia, the Alibaba cloud is gaining steam. Many customers are choosing to deploy on SAP’s own data centers. Many of SAP’s outsourcing partners deliver private cloud proposals with their own hosting partners. The matrix of on-prem/private/public single/multi tenant deployments continues to morph.
HANA was front and center at TechEd, as it has been for several years. Yet, SAP’s own cloud acquisitions like SuccessFactors have been slow to move to HANA. S/4HANA today only covers a small part of the enterprise – most SAP customers continue to live with Oracle, SQLServer, Sybase and DB2 in surround applications. It is an open database world in that sense.
There are two ways to look at this variety. You can cringe at the complexity of so much heterogeneity. Or you can admire SAP’s multiculturalism and its “wide open tent” philosophy. The tapestry of different shapes and colors does make for a striking piece of art.
I’ve digitally ripped this post up multiple times. Every time I think I’ve got it down, I have to change something. For the most part, I think I now have it under control. And don’t sweat it, my Dreamforce coverage will be coming. I want to get this one out first.
“That’s where the Adobe and Microsoft partnership is so valuable, because … we think we are actually creating a brand-new category and industry, which is all about digital engagement and customer experience management.”
If this is not just a CNBC sound bite, and I’m pretty sure it isn’t, this is a significant comment whether it is meant to be or not — for two reasons. Both of which I’m going to address in this post.
First, because it is a further declaration of the astonishing partnership that Adobe and Microsoft have forged — and it is truly astonishing.
Second, because Shantanu is speaking about creating a new category and a new industry. I want to address the specific — a digital engagement/CEM category/industry — and address what it takes to create a new category and, how I’m interpreting industry: A new market.
Let’s get this party started.
GAR partnership: Adobe and Microsoft up a tree
At the 2016 Microsoft Ignite conference, Adobe and Microsoft joined in holy matrimony and formed what I think is arguably the closest, most intimately connected, and probably the best executed partnership I have seen in all the years that I’ve been doing this analyst “thing.” It is a paradigm for how to do a GTM (Go to Market, i.e., strategic) partnership. Others take note, please.
I call this partnership the GAR partnership. For those of you unsophisticated in the obscure art of the acronym, GAR equals “Get a room,” which incidentally, is a gigantic compliment.
I’ve waxed enthusiastically before on this here and other places, but there are a few things I’d like to reiterate and one that I’d like to add that makes this an epic partnership and a significant one in the annals of the Big 4.5. For those of you who don’t know who the Big 4.5 are, it’s Microsoft, Salesforce, SAP, Oracle (in no particular order), and the 0.5 is Adobe, which — on their current trajectory of thinking, execution, and earnings — may make that the Big 5 in the not very distant future.
The depth of the relationship continually impresses.
Here’s why:
Adobe and Microsoft are both walking, with somewhat different shoes on, the same path: Around ecosystems and platforms. Three years ago, at the Adobe Digital Marketing Summit (which I presume in 2019 will be the Adobe Experience Cloud Summit) Abhay Parasnis, Adobe’s CTO, announced a significant transformation of the direction of the company. They were going to focus on the integration of the Document Cloud, the Creative Cloud and the Digital Marketing Cloud into a single platform and build what he called an “open ecosystem” that would cover their customer’s needs from end to end. The addition of the adjective “open” to their thinking on ecosystems was important and very specific. When thinking about ecosystems, a company is normally thinking about their customers needs end to end. They are then making decisions about how they are going to fulfill those needs. They can provide those products, services, experiences, and tools that they have built natively. They can provide the products, services, experiences, and tools they have acquired and integrated. They can provide those they have partnered to fill the gaps that existed in the ecosystems. That is the usual norm. Where Adobe took it a step further at least in principle and to some extent in practice in the Microsoft practice, they were willing to forgo their own competitive product if there is a partner or competitor which provided a better version of it. Microsoft was the first true accomplishment in their effort to supply that kind of open ecosystem.
Internally, the evidence shows integration of the Creative Cloud, the Experience Cloud, and Adobe’s AI platform Sensei, but they are showing signs of outcomes of early stages of a genuine platform. I’ve written extensively on this. However, it also shows with the GAR Partnership, too. The integration of Adobe Experience Cloud and the rest of the Dynamics 365 stack extends deeply into the core architectures of the products, solutions, and platform. There are teams of Adobe and Microsoft engineers working jointly to make sure that the integration is at the byte level (metaphorically, of course, though maybe not metaphorically).
This Ecosystems and Platforms approach (something I am ardent about being the focus of where things are going) is also how Microsoft is thinking, especially since the ascension of Satya Nadella to the Microsoft helm. He wants Microsoft to be a mission critical part of all 21st century business infrastructure, as I outlined a couple of years back. Their signs are the GAR Partnership for the ecosystem and continual improvements in the output of their platform around things like PowerApps, a citizen apps builder and the integration and rollup of a lot of Microsoft’s capabilities into Office 365 as a unified communications hub. Progress, not by any means, fully baked yet. But both are following that path — and that aligned overarching strategic orientation is very important to the success of this partnership. Again, this strategic initiative on each of their parts is far, far from complete or without flaw. But it is a solid direction.
The integration of the Adobe Experience Cloud with Azure as their IaaS platform is almost 100 percent — making it a foundation for Adobe’s Experience Cloud portfolio. The reason that I say “almost” is that Adobe Experience Manager is still a managed service in AWS, at least as of this writing. They aren’t abandoning other cloud infrastructure platforms entirely. However, Azure is clearly Adobe’s strategic priority and core to the evolution of both party’s platforms and platform strategies.
The Go to Market (GTM) strategy is in place with sales teams on both sides of the equation compensated for selling the other as part of the overall solution. According to “sources” (meaning people I know who work at both locations), they are working very closely together and apparently, without rancor or competitive jealousy — though I can’t absolutely corroborate that. I just heard it. But the operational facets of what makes a GTM partnership work are in place, including, most importantly, sales compensation.
The individuals who manage the alliances are highly capable — clearly some of the best that each company has to offer. I’ve met more than once with the Adobe representative Dave Welch, who is not only immensely capable but is also a very good guy, with the right kind of personality to get along with Microsoft’s counterparts and still represent his own company’s interests well. He’s the right guy for the job. On the Microsoft side, the reins are in the hands of long-time Microsoft Director of Product Marketing Dina Apostolou who’s “profile” is very much like Dave’s — highly capable, warm, friendly, and knows from whence she comes. All in all, two, who definitely in theory and seemingly in practice, work together well.
A big factor, which is mentioned more in passing than as central but is actually central, is that the two CEOs — Adobe’s Shantanu Narayen and Microsoft’s Satya Nadella — are actual friends. They have known each other for quite a while and, in fact, both went to the same really good high school in Hyderabad. Don’t underestimate the importance of this relationship. We often ignore the “Warmth Factor,” meaning the genuine human relationships and thus trust level that’s involved in these things, but they mean everything. For example, on a different level, how many of you have partnered with a company and were championed by someone, and while that someone was at that company, things went great, then the champion went elsewhere, and things went south? Raise your hands. I thought so. I rest my case. Their friendship is meaningful here. By the way, Abhay Parasnis, the CTO who first mentioned the Adobe transition to ecosystems and platforms ,is a nine-year Microsoft alumnus and he spent the bulk of his time there working on the creation and evolution of Azure.
While I can’t say that this is part of the thinking, since I have no idea what Microsoft or Adobe thinks on this topic, Adobe’s acquisition of Magento, the e-commerce platform, could be highly beneficial to Microsoft, as it’s the one piece that Microsoft is missing natively from its engagement suite. E-commerce, while not a core CRM function, is the transactional center of a larger customer engagement platform or at least, part of an engagement solution. There are some e-commerce players in Microsoft’s partner ecosystem like Episerver (recently acquired from Accel-KKR by Insight Venture Partners for $1.16 billion), and I wouldn’t rule out Microsoft bringing them into their ecosystem at more strategic level. That said, given the Magento acquisition, it would be wise for Microsoft and Adobe to consider enfolding Magento into the joint offering, making them more competitive with SAP, Salesforce, and Oracle.
Adobe’s $4.75 billion acquisition of Marketo announced Sept. 20, 2018 — I was going to say could have a strong, positive impact on the alliance, but I will instead say it will have a strong positive impact on the alliance. See the next section for more on this. It deserves its own stage.
Qui bono means “who benefits?” I love chucking around Latin. Since I know no Latin at all. That way I sound intelligent. Or Roman.
Many of the beneficiaries.
Marketo’s stakeholders benefit big time: That is a helluva price for a company acquired about 15 months ago by private equity firm Vista for $1.6 billion — all on revenues of $308 million, though I’ve heard tell, unofficially, its closer to $400 million.
Adobe benefits by Marketo providing them with a well-known B2B marketing market leader: I’d classify that as “a” market leader, not “the” market leader. Until now, Adobe could offer perhaps the highest quality business to consumer offering in the market, but were missing the significant B2B piece, which is also the most competitive of the marketing automation market offerings. Now, they have end-to-end and with Magento can offer B2B2C when combining various solutions. An ancillary benefit is that Marketo the last two years has been messaging around engagement marketing, which makes it easier for Adobe and Marketo to align their messaging without losing the thread of the corporate narrative.
Microsoft, as I said, will most likely benefit by the acquisition: Adobe Experience Cloud nee Digital Marketing Cloud is the core solution driving the partnership, and Marketo is an addition to that solution. Given the nature of the partnership, I would assume that Adobe will enfold of Marketo into Azure. An additional benefit is that Marketo has had a seriously tight integration with Dynamics 365 for many years.
The sports industry: One that is near and dear to my heart — and, thus, please understand there is personal bias infused into the Kool-Aid I’m giving you to drink. This gives Adobe/Microsoft a great big pair of footprints (feetprints?) into the sports world, since Magento, Microsof,t and Marketo all have a strong presence there. An added GAR partnership bonus. Should they actually take advantage of it, I have some suggestions.
Interesting because there is a desire and a need to find some common data standards that historically have not existed and that’s three very powerful companies who are supporting this initiative. So, why troublesome? Well, this was announced while I was at Dreamforce along with more than 200 other analysts, influencers, and press. While welcoming the idea, It is also concerning because I have this nagging feeling that this wasn’t just a straightforward attempt to define data standards but that it was also a move against Salesforce. I wasn’t the only one. Multiple analysts at Dreamforce had the same nagging feeling, some at a more forceful level, others kind of like me — wanting to believe that this was a good intentioned effort to do something that would benefit the entire industry and its customers, but at the same time, wondering if there was also something more “political” to it. If you view the extant press, the articles range from the positive to the suspicious, and I think are a reflection of how well meant the initiative is though anyone in their right mind would applaud the stated purpose.
But I know how to settle that.
There is an easy fix to this and one that will allay anyone who cares fears.
Invite Salesforce and Oracle to the dance — and then it’s on them to say ‘yes’ or ‘no’
If they say “yes”, well, open means “open” not “open except for…” So, there should be absolutely no problem with that. The initiative can begin more fully supported in earnest.
If they say “no,” well Adobe/Microsoft/SAP gave them the opportunity in good faith, and they chose to not be a part of it. And it can move on to start defining the data standards that hopefully will normalize how we define, interact with, store, and use data. For more on data and platforms, see Esteban Kolsky’s posts on data and platforms here and here.
So, Adobe, Microsoft, and SAP — are you going to invite Salesforce and Oracle or not? If not, why not? Feel free to answer and explain whatever your answer is, here. Or just be smart and extend the invite.
Regardless of the polemic here, if you take Shantanu’s CNBC statement, the interconnectivity of Adobe and Microsoft at the technical, and GTM levels and the public show of support that they are making for each other, it is undeniable that this partnership — GAR — is a paradigm for all companies to follow on how to do something that leads to value for the partnership, the individual companies involved, the individuals at the respective companies and the industry.
Which gets me to the next part, which will be brief, because it’s cautionary.
Creating a new category and a new industry
Shantanu Narayen’s optimistic statement about Microsoft — and them creating a new category and a new industry — which makes me think, though, I could be wrong, that he means new market — is a very optimistic and ambitious statement. Because, here’s the thing: Creating a category and an industry, which from here on out I am going to presume is creating a new market, is hard.
Think about it. First the new category has to be:
Defined: Not just a sentence or two on what it is, but what elements comprise it, what does it literally look like (it is a set of products that do this this and this, or it is a solution that is designed to promote something or another that leads to an outcome)? If a technology, what are the solutions (products, services, experiences, tools) and what do they do?
Justified: Why create the new category beyond the fact that you are doing something that says you need it? What overall benefit is there in creating it beyond helping you sell stuff? If helping you sell stuff is the only reason, you can’t get by through self-serving reasons. However, there is some value in being a category-first mover and early leader. But you have to establish the justification for it. Typically, it’s a market or outcomes-based justification. “Market research indicates a change in how the world works that creates the need for this.”
Validated: The customers have good reason to buy this. Once the category is accepted as legitimate, which takes a ton of work and has some parameters I’ll briefly identify below, you can begin to sell to the category, which is the beginning of the industry/market that has to be clearly defined and a justifiable reason to continuously exist. Not flare in and fade out.
Here’s an example of something that was category (or a subcategory really) for a short time but was never really a market (though I’m sure I’ll get debate from some well-meaning people):
Social CRM
In 2009, I wrote a post that was highly regarded as a definitive statement on Social CRM and what it was. It was when it came to the technological aspects of the discussion and definition called for Social CRM to separate it from more traditional CRM, which didn’t integrate social channels into the sales, marketing, and customer services operational functions. By 2013, it was a moot point. Pretty much every CRM vendor had integrated “social” into CRM, so there was no longer a need to separate the two — and I wrote that about that in a five-part series for Diginomica (parts 1, 2, 3, 4, 5).
Unfortunately, it was accepted as something separate (i.e., a distinct category) from CRM and still is to some extent. Gartner (and other analyst firms) jumped on the ghostly bandwagon and did a Magic Quadrant that was unjustified for many reasons, and the results proved the lack of validity. Salesforce, Jive and Lithium won the leadership position in Social CRM with neither Jive nor Lithium having a single native CRM (sales, marketing, and, at that time, customer service, though Lithium later did get some service capabilities) feature. The bulk of the other players were placed into the lower left — i.e., niche (11 of them) and most of them were non-competitive, too. They dropped the MQ shortly thereafter.
There was neither justification nor validation for that domain — Social CRM — as a standalone category, though there was a definition — which was for explaining the evolution of CRM, not for a separate category. It went really badly let us just say. No MQ or Wave exists for good reason.
What are the “jobs to be done” when it comes in creating a category (and since words do actually matter, please realize I’m just JTBD tongue in cheek, my fellow JTBD advocates)?
First, be cognizant that what you are creating is somewhat self-serving but must be able to serve a purpose beyond your desire to sell “it.” Self-serving here most likely means that you are the first company that you will place in the category or are trying to be the first mover in it, which, by the way, is fine.
Second, you will have to agree that it’s OK if there actually are others doing this. You might think first to exist in the category is better, but when you are creating a category, being alone in it is a lot harder to justify and to validate. It’s the social acceptance of the category that defines its validity. Like, “Oh yeah, so and so call it that, too, and there seem to be at least five or six competitors in the space.” That indicates that it’s more than just you trying to define yourself and that its more than a niche or one-off…
If you are designing a category that you feel that is unique, at least at this point to only you, you’re better off not creating the category but instead using the definition that you attribute to describe what you do or provide. If you insist on making it a category, which if validated makes you the first mover and owner of it — at least for a while — the work is that much harder, because the same rules apply, but there is a lot less external proof of its validity.
The reason that creating a category (or a market for that matter) is not something I particularly advocate is that you have to do a lot more work than create products or services or whatever that fits it. You have to create and distribute the content — what I mean here is thought leadership content — that is necessary to capture mindshare before you can ever think of capturing market share, and good luck on getting buy in from your corporate leadership on that. Sadly, at least in my anecdotal research, the willingness to invest in something that doesn’t do anything for revenue except cost you some of it for awhile is not all that keen. However, category creation requires mindshare, because ordinarily there is no market when there is no category. To capture market share, you have to have something to capture market share.
There is a lot more to say and I imagine I will say it over time, but I wanted to at least reference the parameters, because the statement that Shantanu Narayen made is not trivial, and I’m presuming, because he is a very smart man, that he knows what he is about to put the GAR alliance through if they proceed to try to develop the new category and industry.
But, regardless of the requirements, I do have one problem with the statement and it is this:
Is digital engagement and CEM something they can create?
In Shantanu’s statement, he talks about defining a new category and market/industry, which is “all about digital engagement and customer experience management.” Well, as far as category goes — by absolutely no stretch of the imagination is digital engagement anything new, and in fact, it has been around a long time already. Hell, I just finished a book on customer engagement, which covers mostly digital engagement, and it took me three years to write, and it was a mature well-known category long before I started the book. Adobe’s very own partner, Microsoft, in fact, has been claiming that Dynamics CRM was Intelligent Customer Engagement for years. In the course of writing the book, which is called The Commonwealth of Self-Interest: Customer Engagement, Business Benefit, I built out a custom a engagement technology matrix and identified 29 categories that fit under the meta category of “customer engagement technology. All 29 can (and vendors in those categories already do) claim that they are involved in digital customer engagement and make the argument and never compete with each other. What all that means is that a complete digital engagement technology ecosystem is so big that no one vendor or 10 vendors working together will be able to support the entirety of it. And it means that the messaging around digital engagement and customer engagement is already a major ongoing effort from dozens of vendors in their respective categories. So, at the moment, the ecosystem is still in a protoplasmic stage.
That goes for customer experience management, too. Ironically, the proof of its “maturity” as a category is Adobe itself. Adobe has long been a leader in providing solutions that allow for the creation of what I call consumable experiences. Customer experience management as a strategy, not a software category, has been around since the 1980s. So, they are not “inventing” anything here. They are a company and a partnership that are defined by those categories. Can they make a case for being a market leader in the category? Yes, when it comes to creation of consumable experiences, Adobe is the best in the business. Again, consumable experiences. Not the broader definition of customer experience. “How a customer feels about a company over time.” The larger idea can’t be enabled by technology — it’s a long-term, changing emotional state. More on the customer experience definitions here if you care at all.
Now, as far as creating a new market or industry, their unabashed ambition, as stated by Shantanu Narayen, is, let’s say , probably overreaching a bit, but there are some things that they can do that can give them likely market leadership in their categories.
Adobe, on the CEM side, if you are willing to accept as your definition of CEM in the technology world as the tools for the creation of monetizable experiences, you are arguably already the market leader already. As I said, there is no way to enable “the” customer experience with technology, but there is a way to create experiences — to manufacture them in a manner of speaking and then monetize them, if you should so choose. Adobe does that with their combination of Campaign, Photoshop, and Sensei, and, of course, Adobe Experience Manager as the framework and toolset for it overall. Microsoft has the operational core with their Dynamics CRM applications. Being a leader in digital engagement and especially “customer experience management” is on the table. I think, however, if I were Adobe and Microsoft, I would dial down the ambitious rhetoric and develop the tools and content to be the market leaders in categories that, despite the claims, already exist. Creating a categories and markets that exist is, by definition, not really possible — and all the evidence points to their existence for a long time. Being among the market leaders via the incredible partnership they have is something that they can achieve.
This was my sixth trip to Vegas this year. Coming from humid Florida, I have a routine for that city. Gallons of water and lotion to compensate for the heat and dryness. Gear to protect against the excess of artificial light and sound. But this time in town for Workday Rising, Vegas felt a bit different. The remnants of Hurricane Rosa cooled it down to pleasant levels. The ceremonies honoring the anniversary of last year’s mass shooting gave the city a bit of humility.
Rising also felt different. CEO Aneel Bhusri justifiably missed the event due to a family emergency. While his executives made up in energy, I missed the annual comedy routine he and co-founder Dave Duffield put on. In many other ways, Rising was different.
Analytics as the third “pillar”
There was palpable excitement about Prism Analytics launched in the last year. Many customers see it as democratizing complex analytics and bringing the wizardry of teams of expensive data scientists and complex platforms like Hadoop to the average user.
Prism was spawned from the Workday acquisition of Platfora. Its collaborative Worksheets grew from the acquisition of Gridcraft. Many other small acquisitions other the last few years have helped built Workday’s machine learning chops. It is safe to say Workday has been building a third pillar of intelligent apps beyond its first two transactional ones in HCM and Finance.
The Adaptive Insights acquisition, Workday’s largest so far, was an resounding endorsement of that third pillar and got plenty of play at Rising. Releases 32 and 33 due next year will heavily feature planning functionality, improve Adaptive look and feel, and importantly expand it significantly beyond its financial planning roots.
For a few years now, I have felt HCM world has been out of touch with the realities of the labor economy. As a result, we have ended up with gross mismatches where 6m blue collar and trade jobs are unfilled, and on the other hand we have too many white collar graduates with $ 1.5 trillion in student debt. Less than 10% of the civilian workforce is on the payroll of F500 companies. The rest are not in the so called gig economy. They are in Tier 1 and 2 suppliers. They are in accounting, advertising, attorney and other service providers. They are on platforms of companies like amazon, eBay and Apple. They are in franchises of companies like UPS and Ace Hardware. Talent management software has missed this transition to a clover-leaf labor model . You have an economy with rapidly changing occupations and skills (the Bureau of Labor Statistics recently expanded their list of occupations). Every occupation is being re shaped by a wide range of automation like robotics, drones, wearables. HR seems vaguely interested in automation trends. Given all this, I was pleased to see Workday announce their Skills cloud – a taxonomy of 55,000 skills based of winnowing down using ML from over a million user defined skills. That is a start to bring rigor to HCM, and hopefully to start to correlate it better to the macro job economy.
The relative de-emphasis of industry verticals
If Analytics is getting plenty of attention at Workday, something else may have to give. In my view, that is investment in vertical functionality.
As I wrote recently I have been disappointed with the pace of verticalization in cloud solutions. Way too many vendors spray paint an industry specific feature or two on top of their horizontal financial, HCM or CRM modules and call that verticalization. My expectations for verticalization are more demanding from two angles
– I want to see a significant industry “book of record” offering. If you say you are committed to retail, I want to see a robust offering and a sizable customer base in the merchandising area. If it is insurance, show me similar around claims processing. If it is utilities, I want to see a billing engine, and one for complex asset management and maintenance. If it is healthcare, show me electronic patient records. If it is oil and gas, show me functionality their geologists consider critical.
– I also want to see contemporary functionality. Show me something customers can plan a serious digital transformation around. So, for example, if you say you are committed to manufacturing markets show me execution support for a modern shop floor with robotics, sensors and wearables. For utilities, show me support for net metering and for plants fired by renewable fuel.
From my more demanding definition, Workday has truly verticalized only in higher education. While it has features which are aimed at specific industries, it does not have books of record. It is increasingly clear it sees a much better path to keep investing in its three pillars. I cannot fault Workday for that focus, just worry its horizontal sandbox is attracting too many other players even as much of the white space in industry functionality gets little attention.
The emergence of Workday Ventures and the Workday platform
At Rising, I was invited to a breakout with 12 portfolio companies in the new $250M Workday Ventures fund. The billing was “The companies in our portfolio solve problems that we don’t solve natively in our Workday applications. Our portfolio companies leverage the latest technologies and have proven that they are ready to serve our enterprise customer. All Workday Ventures portfolio companies are now official Cloud Connect Partners and are using our APIs to build integrations.”
I meet with 3 portfolio companies. Voicera offers Eva, an in-meeting AI assistant. Eva will take notes for you in meetings, or conference calls, or interviews. Indeed as I was taking notes, I noticed Eva was live-transcribing our conversation. I quit writing and asked Omar Takawol, CEO to send me a transcript. I had previously met Omar when he sold BlueKai to Oracle. I have a feeling Eva may play a big role when I write my next book.
Next up was Pymetrics which develops neuroscience games to help companies rethink their talent management strategies. I had previously profiled CEO Frida Polli on New Florence. Suplari provides unified insight into indirect expense spend – contracts, spend across AP, P-card, T&E, POs, and invoices, as well as usage and consumption data. CEO Nikesh Parekh joked the company name has roots in consigliore from the Godfather books and movies. Each of the portfolio companies I met was impressive and I wish I could have spent time with the other 9.
Leighanne Levensaler, SVP of corporate strategy and co-head of Ventures explained their investment philosophy. Their biggest KPIs, beyond a fund’s expectation of investment returns, are Workday customer adoption and embrace of emerging Workday platform technologies. On the first point, she said they had arranged for over 150 meetings between existing customers and portfolio companies at Rising.
I went over to SAP’ TechEd a mile away in Vegas after the Rising event. It gave me a glimpse to a parallel universe we may similarly see emerge around Workday as its own platform evolves. A world of Mentors and geeks who are way more comfortable talking Kubernetes than about building blocks of organization hierarchies in Workday.
Workday organized an analyst dinner at a restaurant with a large balcony. The temperature was pleasant but the noise and neon signs of Vegas bombarded your senses. I looked up and saw the desert sky. It took me to many pleasant memories of shooting stars and the haunting silence my wife and I have enjoyed a short distance from Vegas in Death Valley in CA, Antelope Canyon in AZ and Zion National Park in UT. It reminded me Vegas is a gateway to a whole different world.
Workday is becoming a similar gateway to the rest of the enterprise. While they are moving away from a transaction focus, their analytical and ML chops will open up new insights, and their platform will introduce a new set of developers and startups to the rest of the enterprise. It’s their way of transitioning from a system of record to a system of insight.
Co-Founder and CEO at GoCardless, Hiroki Takeuchi and CEO and Founder at Shipamax, Jenna Brown on their switch from the employee role to the founder role and what they learned along the way. If you’re a current founder, do you agree? What lessons did you learn along the way?
Also, if you didn’t join SaaStr Europa, we’re having it again in 2019. Check out ticket prices and keep your eyes on diversity and inclusion ticket updates. Seriously, who doesn’t want a good FREE reason to fly over to Paris?
Transcript
Hiroki Takeuchi: Thank you all for coming. So I’m Hiroki, I’m one of the co-founders and CEO of a company called GoCardless. What we do is we make it really easy for businesses to accept recurring payments. We’re based in the UK, working with about 35000 businesses, collecting six billion pounds a year, growing about 100% year over year at the moment. I’m joined today by Jenna who … I’ll let Jenna introduce herself in a second but actually used to be an employee at GoCardless.
Hiroki Takeuchi: So I think one of the things that we wanted to talk about today was that transition from being an employee to starting your own business, and what are the questions that come up as you go through that journey. So, Jenna, why don’t you introduce yourself and then we can go answer the questions?
Jenna Brown: Yeah. So let me kick off. So I’m Jenna, I’m the CEO of a company called Shipamax. We help companies in the bulk shipping space, which most people don’t know exist. Ships that carry grain, coal, iron ore. Yeah, as Hiroki mentioned, we’re kind of really stage and now very curious looking at everything GoCardless is doing. Because I think since I left, it’s made quite a big transition into a lot of people. So let’s kick off. We last spoke quite some months ago when I was having some employee problems.
Hiroki Takeuchi: Yeah, sounds familiar.
Jenna Brown: We kind of made that traditional mistake of hiring let’s say someone who was quite exceptional but was taking up a lot of my time, personally monitoring them. They were probably having a net negative impact on our team. So I guess the question is how do you handle it when you’ve made that mistake?
Hiroki Takeuchi: Yeah, so I think that it’s one of the mistakes that seems to be unavoidable. We’ve definitely made that mistake many times before. I think that what I’ve found is that there’s kind of two patterns when you have people that are exceptional in many ways, becoming actually sort of a net negative impact on the team. So the first is when the team member effectively creates disfunction.
Jenna Brown: Yeah.
Hiroki Takeuchi: So I think that the example that I think we were talking about in your case and I’ve seen it a bunch of times before, is where you have an employee that kind of can’t commit to decisions that are made. So help and on being right and often is right, but can’t go along with the decisions that you make. That kind of dysfunction can really create a lot of tension and issues.
Hiroki Takeuchi: Then the second is, as the company scales, people that were great at one stage, not necessarily being the right fit for the next stage. That can also, could create issues as well. So yeah, so those are the two types I’ve seen. But I think one of the things I’ve definitely noticed is that it always seems like it’s going to be worse than it is to actually make the change. Either get someone to leave or make them really change their behavior.
Jenna Brown: Yeah, So I guess kind of picking up on that, have you got … You know, you’ve hired someone, it’s not worked out, you need to let them go, how do you kind of handle that without demotivating the rest of that team?
Hiroki Takeuchi: Yeah. Well, I think the thing I’ve always been surprised about is that when you kind of make those changes, you think it’s going to be really negative and really horrible experience, but typically the team are a little more in tune with these things than you are, right? So I’ve generally found that when that kind of thing happens, the team are kind of already aware and they’re kind of happy that it’s happening. Because it means that you can focus on the thing that matters, which is building the next stage of your business.
Jenna Brown: Yeah, it makes sense. Going back, any tips on how you can actually avoid making those hires in the first place?
Hiroki Takeuchi: I’m not sure your mic is working.
Jenna Brown: MY mic is gone. Hello? Now it’s back. So yeah, how do we avoid that happening in the first place?
Hiroki Takeuchi: Yeah, so this is something that I think for us we’ve definitely found that over time we’ve had to really think about what makes a great hire in a bit more of a structured way. So I think early on you can go with your own gut a lot more, and especially as you’re hiring everyone yourself. You may not have a super structured or formalized way of accessing people, but you kind of get a good sense of what good looks like. But I think as the team grows and you’re no longer involved in every hiring decision, you need that structure. So for us, I think that there’s five things that we look at to assess whether our hire is going to be good or not.
Hiroki Takeuchi: So the first is do they have the right experience for the stage that you’re at and the task at hand? You know, you don’t necessarily need to have that experience in every case, but if you don’t you need to be explicit about not having it. You know, making sure that you’re supporting the person around not having that experience. The second is … I know in many, I think this is the most important one, is attitude, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: It’s like how do you think they’re going to actually operate and how much they care about what they’re doing. The third one is what sort of trajectory that you think this person is going to be on? So how quickly are they going to get from where they are today to where you need them to be, to be successful in the role? Often times that trajectory can be very fast. So you might want to hire someone with less experience but with a very strong trajectory. The fourth is the values. SO I think that it’s really important to have those values as a company, and when someone doesn’t fit with those values, that’s when the culture really gets impacted. Then the final one, is like how driven are they? Right?
Jenna Brown: Yeah.
Hiroki Takeuchi: Like do you think that this is someone that’s going to really push and give it their all to make things successful? Which in an early stage company is super important, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: You’ve got really little resources, very few people, a get to get done. So that’s a super important one as well.
Jenna Brown: Yeah. So let’s kind of dig into that, that kind of core values piece. We actually, about maybe even last week, started thinking about what are those top things we want to work harder than anyone else as an organization, to be great at? When you started defining your values, like how did you practically define those for you?
Hiroki Takeuchi: Yeah. We’ve been through a few iterations of values I think. So the first thing I’d say is that I really wish that I’d done earlier on. So when we first started the company and I think it’s really easy to fall into this sort of trap of thinking, Okay, this isn’t the most important thing.” I think it probably isn’t in many ways but it’s also something that is much easier do to in your earlier stage and have fewer people in the company. So we did our first values probably when we were about 30 people, and I think that was around when you were at the company.
Jenna Brown: Yeah.
Hiroki Takeuchi: Right? The problem we had was that we took a really like collaborative and so firm. A really collaborative approach to it and did it by consensus. I think one of the things that I reflect on about the values that we ended up with them was that we ended up with fairly models of values that no one sort of disagreed with, but at the same time no one was really passionate about. In particular, I wasn’t super passionate about them, if I’m being honest, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: So I felt like it was really hard to champion those values and shout about them from the roof tops when you didn’t really have that strong sense of ownership around them. So we definitely got that wrong the first time.
Jenna Brown: Okay. Who was it? Was that you and the other founders, was it management team, the whole company? How? What do you-
Hiroki Takeuchi: I mean, it was kind of a little bit like the whole company. I can’t remember, were you at the company when we did this?
Jenna Brown: I think I joined just after.
Hiroki Takeuchi: I think we might have done it just before. Yeah, we did it jut before you joined and like we literally got the whole company involved. We thought that’d be a really good idea because we wanted to get a true reflection of everyone in the team. I think in hindsight that was probably a mistake.
Jenna Brown: Okay. So as you kind of started to do that second time round, like what did you do differently?
Hiroki Takeuchi: Yeah. So one of the things that I’ve definitely personally struggled with a lot in building a company is that transition from being a sort of a merry band of fellow peers, they’re kind of working towards a mission together. It being really like side by side to the team being more structured, having to have more leadership in place, having to take more of a leadership role myself. I think one of the things that is really important when you go through that is you have to get comfortable with the idea that you’re going to set an example or you’re going to make it. Something that you decide rather than something that you’re deciding together.
Hiroki Takeuchi: So one of the things that we changed when we did the next set of values, which is the ones we have today was the … I kind of embraced that idea of, “Okay, well, like these need to be values that I personally really believe in.” Staring that, using that as a staring point, and obviously getting feedback from there, people, and stuff. But really being much truer to myself and then being able to sort of embed that into the company. It’s been a lot easier as a result.
Jenna Brown: What was the kind of … I think you mentioned you got a kind of consultant to help to launch some of the … Yeah.
Hiroki Takeuchi: Well, it was a coach actually.
Jenna Brown: A coach.
Hiroki Takeuchi: I was working with a coach, this guy called Ren who … He was like fantastic. He’s coached like founders of Airbnb, and like a bunch of companies in Silicon Valley. He was super strong on that idea of like the founder narrative, which I felt was cringy and like American. But I kind of figured like … He took me round to embracing that and I think that it’s definitely been something that I still I don’t think I feel fully comfortable with it, but I’m trying to embrace it a bit more. That definitely helped me to take that more of a sort of selfish approach I guess to saying those values. I think we came up with a set of values that were more authentic as a result and definitely easier for me to sell, because I really believe in them.
Jenna Brown: So I guess, just to kind of take a couple of practical pointers from that, what were the kind of one or two questions that stuck in your mind that Ren asked you, that helped you dig down to what those values would be for you?
Hiroki Takeuchi: So what I actually did was he encouraged me to basically write my sort of personally journey and-
Jenna Brown: Did that feel weird?
Hiroki Takeuchi: Yeah, it was like really dreadful. It was really awkward. I sent it to very few people but what I did was I kind of thought about what are the things that I care about through the lens of what I’ve learned through my life. He was fascinated by my Japanese side and the fact that I have Japanese heritage, so he kind of encouraged me to dig into that and things like that. Then I sent that to a few people I really trusted in the company, and got them to sort of try and turn that into a set of values that reflected both my personal point of view but also what we felt was true to the company as well. Then we kind of used that as a starting point.
Jenna Brown: Okay. That group of people, was it management or people you thought like really reflected those things the best or?
Hiroki Takeuchi: No. I purposely made it, and no one on kind of the management team.
Jenna Brown: Yeah, okay.
Hiroki Takeuchi: It was all just people that I felt like really reflected the values that I believe in, in the company. So yeah, all across the company. That was really important, was having representation from not just one area but across the company, overall.
Jenna Brown: Okay. I guess spinning back to early days and GoCardless. When I joined, certainly, it was full of young kind of smart but relatively inexperienced people. I think at the time, I personally assumed you could just exponentially figure stuff out as you go along. But we definitely had a quite a few breaking points. What were the kind of problem signs for you? Like some examples of when you realized we actually need to come and hire some experience?
Hiroki Takeuchi: Yeah. I mean, there’s plenty, we’ve made a lot of mistakes. I think there’s also two types that I’ve seen. So the first is when we’ve tried to reinvent functional experience. So how do sales work, how does marketing work? Trying to like figure that out from first principles. When we try to do that, what we typically find is that we throw a lot of energy and effort into it and get very little output in return.
Jenna Brown: Yeah.
Hiroki Takeuchi: Then I think the second type is more the kind of scaling experience. We definitely have had teams where we had the kind of relatively inexperienced leadership in place. As a result, you’d kind of cap out a certain stage, for example, for our product development, we couldn’t hire more than like 25 people. It seemed like every time we got to 30, we’d lose a few, and then we get back down to 20, and then we’d kind of bandy around, about then. That was super restrained because there’s all these things that we wanted to do as we were scaling the company. We were only really able to do one thing at once, and so I think that’s the other type of experience that we’ve started bringing now. Especially is more experience of having gone through that scaling journey. Yeah.
Jenna Brown: What was kind of missing or what have you seen since you’ve made those hire, that you’ve seen kind of really step out? What have been the core things that you look for?
Hiroki Takeuchi: Yeah, so that’s something I’ve been thinking about recently. I think the thing that I really noticed the difference between is two things. So one is their ability to team build. So we hired a guy at the beginning of last year to lead our product development team. Within a year he’d build that team from like 25 people to about 100. So we hired like more engineers in that year than we had in basically the whole history of the company. So I think that that kind of team building element is really key. Then the other is being able to take really ambiguous problems and create a huge amount of structure to deliver solutions around them. That’s the other thing that I think I’ve really noticed amongst those. There’s more experienced operators that they really deliver.
Jenna Brown: Yeah. If you would kind of go back again. When is it that you think, for each of those core hirers, would you have looked to kind of slot them in the company? Are there rules you should follow?
Hiroki Takeuchi: I’m not sure I’ve like noticed the hard and fast rules for that. I think broadly it probably falls into like two kind of categories, right? One is like when you’ve had like product market fit and you’re trying to accelerate functionally, that’s probably when you need to start getting in that kind of more functional experience. So hiring in marketers that have done that before, or sales people that have sold before. Then the other is like when you’re really trying to scale the team, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: And build the team quickly. I think the important point is to get that balance between still having young, hungries of not … Somewhat naïve, in a good way, people and matching them up, people with a lot of experience. If you have too much of one or too much of the other, I think that’s where the problems come. So I think it’s about finding the balance at every stage rather than necessarily been like hard and fast rules.
Jenna Brown: Yeah. Would you want to kind of mimic that balance as well in your management team, having a bit of a mix of both or kind of experience only? What’s been the best kind of mic for you?
Hiroki Takeuchi: Yeah. I think that’s something that evolves over time and hard to say.
Jenna Brown: Yeah.
Hiroki Takeuchi: Because you’ll get to be tested much but the … I think in the leadership team you generally probably need to skew more towards experience.
Jenna Brown: Experience, yeah.
Hiroki Takeuchi: Especially as you get in … So once the team cross about maybe 100 people, then it becomes more and ore important I think. Because some of those scaling challenges become quite common across every function.
Jenna Brown: Interesting. I guess actually an interesting point, and kind of, who is I guess your kind of first time founder even though it probably doesn’t feel like it now? Who do you lean on for that kind of support on how to tell you how to do your job?
Hiroki Takeuchi: Yeah. I talk a lot to my co-founders. So they’re no longer in the business but I still talk to them a lot. So I think there’s an element of like peer kind of … Actually the other thing I’d say is, one of the good things about hiring people that have gone through that scaling journey is that they have a lot more experience than you, right? So actually I feel like I learn more from the people I’m meant to manage now than they probably learn from me. Right?
Jenna Brown: Yeah.
Hiroki Takeuchi: So I think that’s the other area that I get a lot of support from, is the exact team that I’ve hired.
Jenna Brown: Yeah. Moving a bit on to kind of transparency and it kind of ties in a bit with the kind of culture and values you were talking about. A lot of people say they would like to have fully transparent organizations, but as a startup you’re going through a kind of a big and bumpy journey. Where do you kind of draw the line on how much you’re sharing, and how does that change as you’re growing the company?
Hiroki Takeuchi: Yeah. I think it has to change quite a bit, right? Because like when you’re five people, 10 people, you all kind of sat around the table, then it’s really easy to be very transparent. Naturally, in many ways it’s hard to not be transparent, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: Because you’re talking to each other every day. Everyone knows what everyone else is working on. Everyone kind of dips into everything, so it’s a lot more fluid. That’s something that we struggle with though, is that you want to try and maintain that transparency as much as possible. But then what I start noticing is that as the team grows that transparency becomes increasingly expensive. From the perspective of sort of taking people on the sort of emotional journey that you on with a lot of things, right? So take something like fundraising, you go and say to your team, “Okay, we’re kicking off fundraising.”
Hiroki Takeuchi: When you’re 20 people, it’s kind of impossible not to notice, so every one knows anyone. But then when it’s a bigger team and you’re going to have short meetings, you’re going meetings where you feel like it’s going really bad there, or that you wonder whether you’re going to be able to raise it all. Taking people through that, I’m not sure how helpful it is, right? Especially though I think that as the team grows, like the new ones gets lost very quickly when you’re trying to communicate at large scale. So you can very easily end up communicating actually the wrong thing, right? Even when you’re trying to be transparent.
Hiroki Takeuchi: So I think what we try and figure out is … I’m not sure we got this right yet, but how do you maintain the sort of aim of transparency but do it in a way that is actually helpful and productive to the team, right? So making sure that you don’t communicate stuff until you’ve actually kind of formed the decision, or you have a clear process to forming a decision. Or being clear about how … The level of clarity that you need about the decision that you’re making, you can’t just sort of iterate on that like you do when you’re eight, ten people.
Jenna Brown: Yeah. Actually, I guess let’s take an example of that. So you talked about kind of fundraising and everyone knows in the media, if you raise a seat, you’re most likely to go on and want to raise an A. Not always true, and your team is kind of going to be wondering when you’re doing those things. So comparing the two situations, early stage when you’re 10, 20 people, like when would you make that announcement, and then how would that change now you’re kind of 250 plus?
Hiroki Takeuchi: Yeah. So I think one of the things I’ve noticed is that actually like as the team grows, the team becomes less of influence than focused on fundraising. So it felt like when we were early days, almost all what anyone cared about was when the next fundraise would be, which is not … I don’t kind of get that vibe as much anymore, so that helps, right?
Jenna Brown: Yeah. So for example now, like I don’t need we really need to talk as a whole company about when we’re next going to fundraise. Because it’s I think there’s a certain level of assumption that you’re managing the business to make sure there’s enough cash to actually do the next thing. I think that probably the changing point is around like 50, 60 people. Up until that point I felt like it was much smaller and a lot easier to kind of explain the nuance behind how you’re thinking about fundraising. Actually it can be quite helpful, right? Because I think that … You know to answer your question about the series A, right?
Hiroki Takeuchi: Yeah.
Jenna Brown: It’s like, “Well, what do you need to deliver to actually justify the next raise?” Saying that as the target that the team aligns around can be really something that everyone … Motivates everyone, right?
Hiroki Takeuchi: Yeah.
Jenna Brown: So there’s ways to use it in positive light as well.
Hiroki Takeuchi: Yeah. Kind of another point on transparency and this might be related to fundraising, it might be kind of any other thing. When you’re wanting to I guess deliver kind of bad news to the team. How do you do that in a way that doesn’t … Maybe you have to pivot, maybe the fundraising didn’t go well, whatever it is. How do you kind of keep people going?
Jenna Brown: Yeah, I mean, that’s always a tough one, right? I think what I’ve found is that actually the team always really appreciates it when you’re honest. So trying to sugarcoat over the things that aren’t working well, I don’t think actually ever works, right?
Hiroki Takeuchi: Yeah.
Jenna Brown: People know when things aren’t working, right? If you haven’t closed any deals in a few months, then people will notice. So I think that actually it’s better to be really open and honest, and transparent about those sorts of things, and it’s more about being clear on what you’re going to do about it, right?
Hiroki Takeuchi: Yeah.
Jenna Brown: What you’ve learned from the experience, that it’s important, right?
Hiroki Takeuchi: So I think that especially as you grow, you can’t do it in steps. You can’t say like, “This isn’t working and I’m going to tell you what I’m going to do about it in X months, or X weeks, or X days.” Like you need to sort of deliver the message together. So I think it’s more about the form the communication takes rather than what you’re actually communicating necessarily needs to change.
Hiroki Takeuchi: But I think that generally speaking, if you have that level of honesty and transparency around the things that aren’t working well, that can help you to sort of embed your values depending on what they are. Also, I don’t think it’s really telling the team anything they don’t already anyway. So it can actually be something that makes people feel more comfortable.
Jenna Brown: Yeah, makes sense. So turning to the last one, and this is really all about focus. So I think when you get started out in a new company, it’s very exciting, you have a kind of a blank stare and you see how many things were maybe done not as you would have liked before. But there’s a kind of opportunity cost of redesigning those. So how many things can you really focus on designing, redesigning from scratch?
Hiroki Takeuchi: Yeah. That’s one of the things that’s actually really interesting. Because you think that the answer will be like the bigger you get, the more you can focus on, but I’m not sure that’s true. So we definitely made a lot of mistakes early on on this, right? So like when we were first starting, we thought like we could reinvent everything. We thought that everything that everyone else had done before us was stupid. It turned out that actually we were stupid. So we build our expense management system, we like build our own phone system. These were all things that were like really great in the sense that it was just like born out of passion, and people just wanting to do as much as they could to make the company successful.
Hiroki Takeuchi: So on the one hand, it’s kind of tricky because you don’t want to … You want to celebrate that, but I think that what we found was that over time, there’s a reason why expense management is a whole company. There’s a reason why building a phone system is a whole company. Well, I think we kind of underestimated the cost of doing those things in the first place, and so over estimated the cost of getting them in from externally. But also, I think that what we didn’t realize at all was like the maintenance cost, right?
Jenna Brown: Mm-hmm (affirmative), yeah.
Hiroki Takeuchi: That’s the issue. So I think that initially we basically have this mindset of we were literally going to reinvent everything. Overtime I think that what I’ve at least come to the conclusion of is like actually you need to be very, very choosy about the things that you’re going to reinvent from scratch. They generally should be things that are going to benefit your customers, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: So how are going to reinvent the products or the operations in such a way that you can deliver something to the customer they can’t get anywhere else? There’s actually very few things that you need to do there to be successful, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: If you can just one or two, maybe three things, then you can create huge amount of value for your customers. I think that that’s really the key thing early on. Is lie identifying what those one, two, three things are going to be, and then focusing all of your efforts on those.
Jenna Brown: I guess the kind of framework or digging deeper into how you actually figure out what are those kind of core things?
Hiroki Takeuchi: I think it has to start with the customer, right?
Jenna Brown: Yeah.
Hiroki Takeuchi: You have to kind of figure out, well, what is the problem that I’m solving for the customer? What’s the value that I’m providing them? Then what are the things that are going to be really key to delivering that value? Is it that you’re going to be 10X cheaper than something else or 10X faster than something else, or whatever it is, and then you kind of work backwards from there. I think that’s really where it has to start.
Jenna Brown: I guess coming back to the kind of practical side of things. It’s very nice to say, “Let’s focus on this.” But then you’re managing people, they might come up and say, hey, I spent my weekend on this, isn’t it great?” How do you kind of not demotivate them but push that energy back into?
Hiroki Takeuchi: Yeah. I mean, yeah, I’m not sure I’ve got the answer to that one, but I have to say it’s challenging. I think it’s probably more about energizing around the directions that you care about, rather than discouraging people from going I directions that you don’t care about. Right?
Jenna Brown: Yeah.
Hiroki Takeuchi: So going and saying, “Why did you waste your time on this.” It’s not that motivating.
Jenna Brown: It wouldn’t go down well.
Hiroki Takeuchi: What’s better is to kind of focus on, well, these are the three things that really are going to make a difference, and trying to get people to focus on those instead.
Jenna Brown: Oh, perfect. Well, I wish we had this chat two years ago but hopefully it sets in the right direction.
Office printing, a key part of any business’ IT strategy, is slowly declining mostly due to better printing options. Better, higher capacity printers, networked throughout an organization are often cited for small declines in printing activity in part because taking printers off desktops causes people to consider whether a printout is worth a trip to a printer.
That’s more or less organic decline and the question is why print at all? Are there ways to avoid moving information from computer to paper only to return new information back to a computer?
Keith Kmetz, program vice president, IDC’s Imaging, Printing, and Document Solutions research says, “Print remains a huge and very relevant piece of an organization’s overall IT strategy,” which seems to imply that printing will be important until it isn’t. In other words, the emphasis still seems to be on printing but printing more efficiently when the need is increasingly to avoid printing all together.
Strategies for avoiding printing, like locating printers away from users so that they have to walk to pick up their papers, are qualitatively different from moves to eliminate printing completely through process redesign. The latter can have bigger impacts on a business beyond savings in printout supplies.
Business processes that avoid printing are different in that they remain in the digital realm rather than committing information to paper. Digital processes operate at computer speeds while the same process involving printed matter becomes a prisoner to the speed of manual transport.
For instance, a process that captures a signature, perhaps through the mail, is relegated to the speed of the postal system. In contrast, the same process mediated by an eSignature paradigm operates much faster even when considering that such processes are often asynchronous meaning the people on each end of the transaction are not necessarily waiting around to receive a document.
So why print at all when digital processes are so attractive? There are many reasons, some social or psychological but none of them stand up.
Force of habit. Some employees will just print documents regardless of whether they have more efficient technology at hand. For them a walk to a printer might be a motivator for changing behavior.
To have a “hard copy” in case, you know, the system goes down, or just to have. Advances in IT have made this reason obsolete when compared with the costs of printing.
To take to a meeting. Lots of people still print documents for evidentiary purposes but the arrival of good, fast corporate Wi-Fi and portable devices from phones to tablets to laptops, means any document can be available anywhere in the building. And for meetings at remote locations, often the same is true but certainly sometimes people just need the hard copy. But using hard copies should be much rarer than it is today.
Some employees lack the necessary software to access and save documents electronically or to circulate them for signatures.
The last item deserves some comment. Document management or productivity has long passed the point where it could be considered optional in a host of industries that live on documents like healthcare, insurance, and finance. While virtually all employees in these industries have access to office productivity software like word processing, many still lack access to document management systems. The irony is that these employees can create documents, but they can’t effectively manage them once developed. So, the papers grow.
Organizations determined to do something about their printing consumption find that they can’t simply press a button or flip a switch. There’s a bit of process re-engineering to do before the business can change paradigms. Usually change management is one of the most important jobs associated with changing the print paradigm. But the effort is highly worthwhile.
Businesses that implement document management for all find they can recoup the cost of their new systems based on drastically reduced printing costs and improved employee productivity and morale. Just imagine how much more productive anyone can be without taking trips to a remote printer. And even if one has a printer on the desk, avoiding printing means higher productivity, lower costs, and more engaged personnel.
There’s never been a better time to fully engage in document productivity. Even businesses that bought productivity systems decades ago are finding that costs of automation are now much lower and that it’s practical to ensure all employees are covered by the technology.
The key to successfully transitioning isn’t simply picking a software or hardware vendor any more. It’s picking a vendor that understands change management and that can put a plan in place that automates your specific processes and gets your users engaged and active. There will still be employees that prefer to print but they make up a small percent of your population. Over time even they will see the benefits of working digitally over dealing with printers and supplies.
Some books are almost too honest. Some books give you too much information (TMI). Some books can be hard to read at times. Lost and Founder is all three. But it’s one of the best looks I’ve seen when it comes to giving the reader a realistic look at the inside of Silicon Valley startups.
In an industry obsessed with the 1 in 10,000 decacorns and the stories of high-flying startups and their bigger-than-life founders, Lost and Founder takes a real look at what it’s like to found, fund, work at, and build a quite successful but not media- and Sand-Hill-Road-worshiped startup.
Rand Fishkin, the story of founder of Moz, tells the story of his company from its founding as a mother/son website consultancy in 2001 until his handing over the reins, in the midst of battling depression, to a new CEO in February 2014. But you don’t read Lost and Founder to learn about Moz. You read it to learn about Rand and the lessons he learned along the way.
Excerpt:
In 2001, I started working with my mom, Gillian, designing websites for small businesses in the shadow of Microsoft’s suburban Seattle-area campus. […] The dot-com bust and my sorely lacking business acumen meant we struggled for years, but eventually, after trial and error, missteps and heartache, tragedy and triumph, I found myself CEO of a burgeoning software company, complete with investors, employees, customers, and write-ups in TechCrunch.
By 2017, my company, Moz, was a $45 million/ year venture-backed B2B software provider, creating products for professionals who help their clients or teams with search engine optimization (SEO). In layman’s terms, we make software for marketers. They use our tools to help websites rank well in Google’s search engine, and as Google became one of the world’s richest, most influential companies, our software rose to high demand.
Moz is neither an overnight, billion-dollar success story nor a tragic tale of failure. The technology and business press tend to cover companies on one side or the other of this pendulum, but it’s my belief that, for the majority of entrepreneurs and teams, there’s a great deal to be learned from the highs and lows of a more middle-of-the-road startup life cycle.
Fishkin’s style is transparent and humble. While the book tells a personal tale, it is laden with important lessons. In particular, I love his views on:
Pivots (chapter 4). While it’s a hip word, the reality is that pivoting — while sometimes required and which sometimes results in an amazing second efforts — means that you have failed at your primary strategy. While I’m a big believer in emergent strategy, few people discuss pivots as honestly as Fishkin.
Fund-raising (chapters 6 and 7). He does a great job explaining venture capital from the VC perspective which then makes his conclusions both logical and clear. His advice here is invaluable. Every founder who’s unfamiliar with VC 101 should read this section.
Making money (chapter 8) and the economics of founding or working at a startup.
His somewhat contrarian thoughts on the Minimum Viable Product (MVP) concept (chapter 12). I think in brand new markets MVPs are fine — if you’ve never seen a car then you’re not going to look for windows, leather seats, or cup-holders. But in more established markets, Fishkin has a point — the Exceptional Viable Product (EVP) is probably a better concept.
His very honest thoughts on when to sell a startup (chapter 13) which reveal the inherent interest conflicts between founders, VCs, and employees.
His cheat codes for next itme (Afterword).
Finally, in a Silicon Valley where failure is supposedly a red badge of courage, but one only worn after your next big success, Fishkin has an unique take on vulnerability (chapter 15) and his battles with depression, both in this long, painful blog post which was written the night before this story about a Foundry CEO summit from the book:
Near the start of the session, Brad asked all the CEOs in the room to raise their hand if they had experienced severe anxiety, depression, or other emotional or mental disorders during their tenure as CEO. Every hand in the room went up, save two. At that moment, a sense of relief washed over me, so powerful I almost cried in my chair. I thought I was alone, a frail, former CEO who’d lost his job because he couldn’t handle the stress and pressure and caved in to depression. But those hands in the air made me realize I was far from alone— I was, in fact, part of an overwhelming majority, at least among this group. That mental transition from loneliness and shame to a peer among equals forever changed the way I thought about depression and the stigma around mental disorders.
Overall, in a world of business books that are often pretty much the same, Lost and Founder it both quite different and worth reading. Thanks, Rand, for sharing.
As Workday Rising kicks off in Vegas, it is time to also recognize two other HCM resources which allow us to keep annual tabs on the changing face of HR
HR Executive magazine announces their annual list of top products
“This year’s winning products represent the full gamut of priorities facing HR leaders: from employee financial wellbeing to learning and development to talent analytics. As was the case in the last few years, a number of leading solutions are in the area of talent acquisition and screening. The 2018 winners also illustrate the increasing prominence of artificial intelligence and machine learning in emerging HR technologies.”
The Sierra-Cedar 2018–2019 HR Systems Survey White Paper, 21st Annual Edition focuses on strategies, processes and vendors in six primary categories and 54 individual application areas.
So we’ve been putting on events for a while at SaaStr. It started off by accident — we did a meet-up in 2013 as an experiment, with no content. And almost 400 folks came! Then we did a second meet-up in 2014 with a little content, and it went well. Then 2015 was the first SaaStr Annual, with ~1000 folks on site (more on that here). Fast foward to today, and we’re planning the 5th SaaStr Annual with over 12,000 attendees. It will be the largest non-vendor event in the world for business software, by far.
But it was an accident, and personally, back in 2013 and 2014, and even 2015, I knew nothing about events, other than as an attendee. I knew what I liked about Dreamforce, Boxworks, etc. — and what I didn’t. So the first plan was to do try to somehow do better than those events.
A look back at our first big (and back then, pretty non-diverse) event, SaaStr Annual 2015:
So what have we learned? Here our out top 10 secrets. Some aren’t really secrets. But most events don’t do these 10 things. Do them, and you’ll probably have a great event.
Secret #1: most moderators are truly terrible. Start there. A great moderator can turn an OK panel into a very good session. This part is hard. Just putting on an event is hard enough. Picking keynotes is hard enough. Then you have to make every panel interesting, too? Yes, you do. Otherwise, panels will be the most boring thing in the world. But there’s a hack. Start with a great moderator. She or he will know how to make the panel interesting. Even if it isn’t full of all-stars. Even better — pick a great moderator than knows 1 or 2 of the panelists already. That rapport will make the session even better.
Secret #2: most CEOs do not want to be interviewed by their VC board members. Those are generally low rated. This took me a while to figure out, but most successful CEOs do not want to be interviewed by their board members. Well, they don’t mind, it’s just they are … guarded. These are almost always our lowest-rated sessions, even if the CEO is super popular herself. Very early angel investors sometimes are OK. But being interviewed by your “boss” is just awkward, not done right. Most VCs don’t see it in themselves, but they are a bit patronizing in their relationships with CEOs they invest in. You want a fireside to be relaxed. Try to skip the Board member as the interviewer, where practical. 1 or 2 is OK.
Secret #3: everyone >wants< to be on “the main stage”. But want they >need< is to be on a packed stage. If you are going to have more than one stage, you have to load balance. I know every speaker wants to be on the main stage. But if the session isn’t > 60% full … it will feel empty. No one likes that. Better yet, have no main stage. Just have 2 stages. Try to get folks to pre-register for sessions, and just put the more popular speakers on the slightly bigger stage. But don’t make a big deal out of it. Nothing saps the energy from a room more than a half-empty set of chairs.
Secret #4: you >can< build a diverse set of speakers. Start early. Ban Manels. Tell panel leaders they have no choice. No diversity, no panel. It took us a while to figure this out, but in 2018, we had 60% women and diverse speakers, and we are on track to match that in 2019. Start early. Set clear goals. And don’t compromise. Especially on panels. When we baned Manels in 2016, we got a lot of pushback. But that faded in 2017. We don’t get any No Manel pushback anymore.
Secret #5: a smaller event that is packed is much better than a larger event that isn’t. Much, much better. This is almost error #1. A bigger event is not better, unless it is clearly better by being bigger. We had our first SaaStr Europa this June in Paris with 1,600 registered. Yes, that’s big, but much smaller than the SaaStr Annual. And yet — it was our highest NPS event ever. ~90 NPS from speakers, sponsors and attendees. That’s way hard to do. Bigger is not better, unless there is a clear reason to do it. Your event does not have to grow each year. Instead, just make it better. Don’t get sucked into needing attendance numbers to grow each year. It will overwhelm your team, fatigue your ability to deliver enough content, and exhaust your attendees. They just want to network, have fun, and learn a few new things. That’s enough.
Secret #6: for smaller sessions, ask the speaker what they are most passionate about. just have them talk about that. OK this is my personal #1 secret. Want to avoid boring sessions? Ask a speaker what they are most passionate about today. Absent a better idea, have them speak on that. Make them, in fact. No matter what, that’s a better idea than the boring product commercial or other thing they had in mind before you asked.
Secret #7: have a shorter event. No one wants to go to a 3-day event, or even a 2-day event, with rare exceptions. This goes hand-in-hand with Secret #5. Have a smaller event, and importantly, have a shorter event. Very, very few events need to be longer than a day. Add an extra half-day as you scale, so there’s a reason to come in the day before, and that’s usually enough. Grow from a great half-day, to a full day, then maybe to a 1.5 day event. But you aren’t Dreamforce. Cross the 1-1.5 day line, and your NPS will likely fall. Your costs will go way, way up (multi-day events get much more expensive per attendee). And no one will get more out of it. A great half day or 1 day event is a wonderful thing. See Paris Europa 2018, above, as a perfect example. It was one full, long day. It was great. It will be 1.5 days next year for 2,500 folks. And that will be enough.
Secret #8: if you think you’ve already heard that speaker before, so has your audience. Maybe search wider. Everyone tries to get the same speakers, for a variety of reasons. One is everyone wants the popular speakers. But the other reason is a sort of laziness. If Linda spoke at another industry event, well, yeah, you may be able to get her, too. But look harder. We are all bored of hearing the same speakers again and again. At SaaStr now, we make speakers wait 2 years to speak again (with some narrow exceptions), and we don’t allow recycled content. Going with recycled content and recycled speakers can be the path of least resistance. It’s the easiest way to program an evnet. Resist.
Secret #9: if you think it’s a cookie-cutter event, so will they. Events are exhausting to produce. They are expensive, you can’t slip a date, and it’s hard to find veterans that have done it before. So what happens is, folks revert to “check-the-box” mode. Just get it done. The same boring venue. The same turkey sandwich. The same birds-of-a-feather. The same hotels. It’s so hard just to produce even a cookie-cutter event, that you’ll find it hard to do more than that. Intertia will push you to a mediocre event. Don’t let it. Because if any element feels cookie-cutter to you, it will to the audience as well. You can’t mix everything up. But pick at least 2 or 3 elements in each event and make them special. Make them yours. Make them authentic.
Secret #10: never let anyone talk about their product on stage. If nothing else in speaker content, follow this rule. And it’s hard. Every speaker will want to talk about their product. No necessarily themselves, but their product. Nothing is more boring, generally speaking. At least, make them talk about the impact of their product. Or make them bring up 3 of their own customers or partners on stage with them. Or talk about the early days. Or the tough times. Anything but a product commercial. Anything. Again, intertia will be your challenge. It will a lot easier to get speakers to come to talk about their own products and companies … than other things.
Good luck! Events are hard. At scale, they may be the most tiring thing I’ve ever done. But push through. Because there are way, way too many events these days. Too many meet-ups. Too many of everything. Push through and do something special. At a minimum, use this checklist. It will make your event better. It’s what we’ve learned the hard way.
Cloud computing platforms and applications are proliferating across enterprises today, serving as the IT infrastructure driving new digital businesses. The following roundup of cloud computing forecasts and market estimates reflect a maturing global market for cloud services, with proven scale, speed and security to support new business models.
Two HCM institutions
By Vinnie Mirchandani on October 2, 2018
As Workday Rising kicks off in Vegas, it is time to also recognize two other HCM resources which allow us to keep annual tabs on the changing face of HR
HR Executive magazine announces their annual list of top products
“This year’s winning products represent the full gamut of priorities facing HR leaders: from employee financial wellbeing to learning and development to talent analytics. As was the case in the last few years, a number of leading solutions are in the area of talent acquisition and screening. The 2018 winners also illustrate the increasing prominence of artificial intelligence and machine learning in emerging HR technologies.”
The Sierra-Cedar 2018–2019 HR Systems Survey White Paper, 21st Annual Edition focuses on strategies, processes and vendors in six primary categories and 54 individual application areas.
(Cross-posted @ Deal Architect)
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