Benioff: Behind The Cloud

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I just got around to reading Salesforce.com CEO Marc Benioff's book "Behind the Cloud." Ian Howells over at Alfresco recommended it to me.  Benioff tells the story of how he started salesforce.com in 1999 and over the course of ten years, turned it into a billion dollar power house.  Although we take for granted the idea that Software as a Service (SaaS) and cloud-based applications make sense, just a few years back this was radical stuff.  

Of all the CRM implementations I've been involved in during my career, the only ones that were really successful were those that used Salesforce.com. The old model of spending a million dollars and taking a year or more to customize never had a good payoff and salespeople hated using them.  But with the SaaS model, you can be up and running in days.  And its easy enough to use most sales people will take to it with a minimum of fuss.

Benioff's model for making salesforce.com was completely disruptive of the traditional enterprise software approach: It was a proven market, with the incumbents were only catering to the needs of large customers.  So there was an even larger market whose needs weren't being met and could never afford a traditional enterprise solution with all its complexity.  And better yet, the traditional competitors couldn't afford to sell at Benioff's lower subscription prices.

Just five years after he launched salesforce.com, his largest independent competitor, Siebel Systems, was acquired by Oracle, putting Salesforce.com in an even stronger position.  And the rest, as they say, is history.

The book is divided into chapters covering elements of marketing, sales, technology, finance and so on, each with a dozen or so "playbooks" describing a technique salesforce.com used.  Some are short and obvious, but the lengthier entries, where Benioff describes what worked and what didn't at Salesforce, are excellent.  That said, the book's style leaves it in a bit of a no-man's land.  It's not quite the usual biography or behind-the-scenes business book, but neither is it a standalone management tome.

Still, there are good lessons here for any CEO or executive.  And if you're interested in Software-as-a-Service, then this book is essential reading; it's practically a blueprint.


Investing in Disruption

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 I'm an advisor, investor and board member to several startup software companies including Revolution Computing, Pentaho and most recently Erply a new Software as a Service (SaaS) company.  One of the common threads I look for is the opportunity to disrupt a large market.

One of the things that made MySQL successful was its use of open source technology to disrupt the multi-billion dollar database market.  In Silicon Valley, people often talk about disruption, but usually what they mean is they have some new feature or a new way to do things that is 10x faster or 10x cheaper.  Those are good things, but that's not necessarily sufficient to make a business truly disruptive.  

The classic disruption model as defined by Clayton Christensen comes down to 4 important factors:

  1. There's a proven market with large incumbents
    This demonstrates that customers are willing to pay money to solve this problem

  2. There are underserved customers whose needs are not being met by the incumbents
    They may be receptive to a "good enough" product that is easy to access

  3. The incumbents cannot profitably meet the needs of this market
    Ideally, their entry into this market would hurt their core business 

  4. To disrupt market, you need to disrupt all the players, not just some of them
    If there are other players, you need to disrupt all of them

If you have all of those things, then your business could be disruptive.  But typically many startup companies ignore the third point.  It's not enough to do something the incumbents don't do today, you want to do something that they cannot do, because it would hurt their existing business.

In the case of MySQL, the product targeted the underserved web developer market.  MySQL was not only a better fit technically in that area, but due to its open source model, it was a business that was unattractive to the incumbents. (Or it was, until it grew to beyond $100 million in revenue.  Now Oracle will leverage this force to compete against Microsoft SQL Server.)  

There are plenty of great businesses out there that are not disruptive; perhaps you're creating a new market, or you're introducing a new innovation that the incumbents have not discovered.  Disruption isn't the only strategy, but if you can make your business disruptive, you gain a significant advantage in the market place.


Is Talent Overrated?

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Recently, I've been reading Geoff Colvin's terrrific book "Talent Is Overrated." It's an exploration of how individuals (and organizations) learn and innovate.  And in particular, Colvin uncovers several myths about talent. Many consider talent, especially in music or sports, to be innate.  You either have it or you don't.  But studies indicate that that's just not the case.  And more importantly, these lessons also apply in science and business.  Did Anders Hejlsberg or Linus Torvalds just wake up one day and decide to be brilliant programmers?  Or was it because they spent years programming from an early age, learning skills and developing their technical curiosity?  Colvin makes a compelling case that it's the latter.

Instead, skills are developed over many years through what Colvin calls "deliberate practice." That's the focused manner in which people challenge themselves mentally (or physically) to become experts at new tasks.  And not only can individuals tap into the ideas here, they can also be put in place by organizations to foster innovation and creativity.  

The important point is that you have to set up opportunities to continually learn new things and develop new skills, rather than just continue to do the same thing over and over again. That's why some careers plateau and others continue to accelerate over a long period of time.  

There's been a recent study by TechCrunch that reinforces the idea even further.  Despite the popular myth that you're either born an entrepreneur or not, it seems that entrepreneurship can be learned, just like most other skills.  

What do you think?  Can learning match innate talent?  Let me know...

You can read an excerpt of Colvin's book at Fortune magazine.  


It's Not What You Say...

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One of our managers at MySQL recommended the book "It's Not What You Say... It's What You Do" to me as something that he's used in managing teams.  While there's nothing here specifically about open source, the book provides a good "back to basics" approach to management.  Forget the big strategic initiatives in a company, the radical pronouncements of being customer-centric or sigma-six-oriented or whatever the latest buzzword is among management gurus.  The key questions are: Did you set goals?  Was there buy-in?  How much did you follow up? 

My own management style is not perfect, but I try to be very straightforward and objective.  I sit down with my direct reports at the beginning of every quarter and we set 8-10 goals that will matter to the business.  Sometimes there other things people want to work on and there may be more detail that the individual manager will use in managing their own teams.  Sometimes I'll agree to having some items in a "time permitting" category which means I don't really mind if it doesn't get done.  I follow up through the quarter, make sure things are tracking towards completion and determine if anything needs to change.

At the end of the quarter it is a simple exercise of "How did you do?"  If the goal setting is done right, there's not a lot of ambiguity.  The objective either got accomplished or it didn't.  As a manager, I expect my direct reports are getting 8, 9 or 10 out of 10.  If they're getting less, then I have to micro-manage them, and that's not fun for either one of us. 

When setting goals, I try to make sure they are SMART:

  • Specific
  • Measurable
  • Attainable
  • Realistic
  • Timely

The goals have to be in people's direct area of responsibility and they are ideally formulated in an objective quantifiable manner so that there is no confusion.  You need to think ahead about the outcome you want and how you will know if it was achieved. 

Here are a couple of useful links:


The Effective Executive

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The MySQL management team is one of the best I've ever worked with.  It's an interesting blend of European style combined with Silicon Valley "get it done" pragmatism.  When we are discussing complex issues, we often ask questions that come from the works of Peter Drucker, perhaps the most prolific of management consultants.  Many of his best writings are surprisingly basic.  I don't mean that they are simple or dumbed down like "Who moved the cheese?" but they force a manager to focus on the fundamental questions like "What business are you in?" and "Who is the customer?"  A lot of dot bomb angst could have been saved by asking these questions.

In The Effective Executive, Drucker's classic work, he focuses on identifying what makes people effective in managerial roles.  Guess what?  It's not about charisma or style or even being the smartest guy in the room.  It's about spending your time wisely, making decisions and focusing on results.

In the MySQL management meetings we often draw from some of Drucker's key principles:

  • Ask what needs to be done
  • Do what's right for the enterprise
  • Develop action plans
  • Take responsibility for decisions
  • Communicate
  • Focus on opportunities not problems
  • Run productive meetings
  • Think and say "we" rather than "I"

I remember reading Drucker when I was in my 20s and he was old then.  Boy, this guy had impact. Drucker died late last year at the ripe old age of 95.  Few have impacted management the way he did.  He kept it going until the very end.


Soul of a New Machine

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I was talking with a friend of mine recently about how different areas have tried to rival Silicon Valley for influence in high tech.  But the valley's leadership wasn't always so.  In fact, if you go back twenty-five years, the "Route 128" area around Boston was the hotbed for much of the technology innovation around mini-computers with companies like Apollo, DEC, Data General, Wang and others.  And that in turn led to the development of many of the innovations in the early microcomputer industry with companies like VisiCalc, Lotus Development Corporation, Spinnaker Software, Javelin and many others.

Tracy Kidder told the story in his Pulitzer award-winning book Soul of a New Machine published in 1981, describing the development of a new 32-bit platform that would compete head-to-head with the DEC VAX.  Instead of covering the story from the top, by interviewing CEO Ed de Castro, Kidder told the story from the perspective of the engineers who made it happen.  He describes how Tom West, the head engineer, led a skunkworks project that would eventually become the Data General Eclipse/MV minicomputer. 

Kidder captured the spirit of dedication that it took to build an launch a computer system better and with more drama than any other book that has followed.  Data General was around for 30 years with many breakthrough products and was eventually acquired by EMC in 1999 with revenues of more than a billion dollars annually.  If you haven't read this book, you need to. It's a classic.


Andy Hertzfeld

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I've always regarded Andy Hertzfeld as the quintessential Mac programmer.  He was on the original Macintosh team back in the early 1980s, wrote much of the user interface code, wrote the first task-switching program, founded Radius, General Magic, and then later became involved in open source through a commpany he founded called Eazel. 

To commemorate the 20th anniversary of the Mac, Hertzfeld created a collection of stories on the early days at Apple, which he published at www.folklore.com under a creative commons license.  He also made the underlying software available under an open source license.  For those who remember fondly the days of the early Mac it's exciting to relive those old days.  The stories were later published by O'Reilly as the coffee table book called "Revolution in the Valley." 

Robert X. Cringely does a great interview with Hertzfeld on NerdTV covering his history with Apple, working with Steve Jobs, the importance of open source, and how the code to MacPaint is getting open sourced.  If you're into the Mac or want to get a perspective from a top notch developer, check out these links. 


Jay Pipes: MySQL Pro

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Jay Pipes, co-author of "Pro MySQL" published by Apress joined MySQL recently as our latest community guy.  Jay is an excellent fit for the company.  He has a terrific "can do" attitude and has been out writing and blogging about MySQL for ages.  Not only is he a MySQL expert, he's also a great speaker and keen to help out on community projects.  Soon enough we'll be letting him loose speaking at conferences including our own MySQL Users Conference in April. 


Informix & Phil White

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I can't say whether Steve Martin's book "The Real Story of Informix Software & Phil White" is the real story or not, but it is an interesting read for those who are curious about the rise and fall of Informix.  Steve Martin was one of the bright shining lights at Informix helping to propel the company to revenue growth from $100 million to over a billion and a market cap of five billion.  However, as almost everyone knows, Informix unraveled in a series of blunders ranging from the acquisition of object-database technology Illustra to allegations of fraud, re-stated earnings and a revolving door of CEOs who failed to get the company back on track. 

Steve Martin takes you behind the scenes to get his perspective on the inner workings of Informix and the environment that founder Roger Sippl and CEO Phil White created.  Despite Martin's involvement at Informix, the book is balanced if not completely objective and includes a good interview with Phil White in the weeks before he was sentenced to jail time on criminal charges. 

While the book is about an earlier era of the software industry, it does a good job showing what can go wrong when a CEO starts believing his or her own PR and when employees start cutting corners in order to make their numbers.  There are good lessons here for any rapidly growing company, whether open source or not. 


Dan Woods Open Source for the Enterprise

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I had dinner with Dan Woods, CEO of EvolvedMedia Network and author of "Open Source for the Enterprise" along with a few other folks from the Eclipse foundation and Stephen Walli from Optaros at the Gartner Open Source conference in Orlando last week.  Dan gave the closing keynote presentation at the conference.  Not only was Dan the best dressed presenter (admittedly, not hard to do at an IT show) but his presentation was very well thought out and had a lot of practical suggestions for IT organizations who are new to open source. 

For those who have been in the open source world and have seen how far it has come in recent years, we sometimes forget how open source is different from mainstream IT.  One of the key points Dan Made is that because of how open source technology is developed, there's often a gap between what an IT organization wants and what the open source community creates.  Dan presented the gap this way:

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He explained that there sometimes isn't the fit and finish on open source products as required by IT organizations.  To an IT audience, that appears to be a "Productization Gap", meaning it's missing some capabilities or is still rough around the edges.  To the open source community, however, it's often just seen as a "Skills Gap", meaning folks should be willing to figure out how to go change the code, add in whatever features are missing, recompile it, and so on.  Neither group is wrong in their view, but it depends on the perspective. 

More importantly, this gap actually defines how people can make money in the open source business.  It is precisely because of this gap, that there are commercial offerings, whether they are services, like Red Hat Network or products, like SugarCRM, that build on an open source foundation.  Dan made the point that if Linux was perfectly productized, then there'd be no reason for Red Hat to exist. 

This thinking is exactly what has driven our work at MySQL on our own MySQL Network.  We know that our software is used and loved by millions worldwide.  Yet we also know from our corporate customers that they actually have even higher expectations.  Yesterday we closed a very significant deal with a mainstream Fortune 100 company who will be deploying MySQL Network to hundreds of servers.  For them, the software is just a starting point.  But what really drove adoption in their company was knowing that they could get the additional value of our service offering, including 24x7 support, software advisors, indemnification, knowledge base and more. 

Commercial open source companies bridge the gap enabling mainstream IT users to gain the freedom of open source while maintaining their comfort with a trusted provider.

If you haven't seen Dan Woods speak, I encourage you to seek him out or pick up a copy of his open source book.  Dan's also an expert in the area of corporate use of wikis, so look for his additional books also.