Insights and musings about customer service and managing a SaaS software company.
Archive for the ‘Running the Company’ Category
December 4, 2011 by Yuval Brisker
Right on the heels of my previous post – SAP announced that it is purchasing SuccessFactors, the second most prominent pure-play SaaS company after Salesforce.com, for $3.4B.
The most amazing aspect of this deal is that it represents a 10.3 multiple over this year’s revenue of $330M (a 63% premium over Friday’s stock price) and 8.5x over next year’s projected revenue of $400M (a 52% premium)! For comparison - most legacy on- premise software vendors are trading at 2-3x (4X at the absolute most).
This is the biggest transaction of its kind to date and represent the most significant validation of the transformative nature of SaaS and Cloud-based software.
Clearly, by paying a rich purchase price, SAP is embracing what it’s co-CEOs have stated publicly: that it must evolve quickly to be a Cloud-based software company in order to assure a long-term future for its business (and extrapolation – for any business).
Coming after last month’s purchase of RightNow Technologies by Oracle for an equally attractive multiple – it is clear that SaaS and Cloud-based software is truly coming into its own.
We agree!
Let’s just hope these companies integrate and invigorate their purchases not squelch them. The news the Lars Dalgaard, SuccessFactor’s founder and CEO is going to manage the company as a separate SAP subsidiary, be on SAP’s executives board AND be in charge of all their Cloud-based initiatives bodes well for this.
Forbes analyzes the deal.
May 12, 2011 by Yuval Brisker
Today, TOA announced that it raised $17.2M in a Series D lead by Sutter Hill Ventures with the participation of Tim Draper, Fort Washington and existing shareholders Intel Capital, Draper Triangle Ventures and private investors.
It’s an exciting moment for us - as we look at the rapidly evolving technology market and see only opportunity at every level and I want to talk a little bit about that.
First and foremost this is about extending TOA’s leadership in cloud-based on-demand enterprise Software-as-a-Service – or what we call “eSaaS“.
Secondly – it’s about maximizing the potential of mobile internet and mobility applications.
And third – it’s about taking advantage of the opportunity of the awakening global market for mobility applications for mobile employees – a previously sleepy market that has been undervalued and underinvested in to date.
1) eSaaS – TOA has near perfected the art of enterprise SaaS. Enterprise SaaS is NOT just about a web-based solution or producing software that’s accessible via a browser – Enterprise SaaS or eSaaS (as I like to call it) – is about something completely different. It’s about:
- integration – and the availability of the sophisticated tools to allow for the complex interweaving of SaaS with legacy software systems with ease. Emphasis on sophisticated and ease! Without these – there is no chance for a SaaS solution to be viable for the large enterprise.
- flexibility – the ability to provide a solution that has the kind of malleability to literally morph with the clients’ business and respond to the ever changing business and technological environments that is the reality for most enterprises – definitely OUR clients and their businesses.
- reliability – as we witnessed a few weeks ago with amazon web service big event – providing a system that is 100% there for the enterprise is NOT easy and doing so is a huge responsibility and needs a high degree of expertise. This is not easy to come by or easy to deliver. Don’t let anyone fool you. TOA does it with expertise.
- scalability – the ability to support huge distributed businesses with high volumes, and to continue to support their growth into the long term
In 2004 – when we launched TOA and the first version of ETAdirect, we took enormous inspiration and even guidance from Marc Benioff – we bet our future on many of the ideas he espoused and beyond. We knew that it would be risky to go after the big enterprises with SaaS and that many IT departments would look at us and think that we were out of our minds to try and provide a system for them from outside their firewall. But the tide of technology is relentless and things have definitely moved in our direction. SaaS is here to stay and more – 10 years from now – it’s going to power the majority of businesses – not only small but medium, large and extra large. We made the right decision at the absolute right time back then to bet on SaaS. Betting on eSaaS as the next frontier was betting beyond SaaS for the SMBs – and it has given us the experience, the expertise and the track record a software company MUST have in order to successfully sell to large enterprise IT. We are excited about the many amazing new things that we are doing and will be unvaling in the coming months and years.
eSaaS is different from regular SaaS in very many ways and as software is delivered more and more via the SaaS model – the needs for eSaaS solution to replace the old legacy enterprise software solutions that run businesses today and in the past – will only grow and become dominant and only way – and TOA is well positioned to expand to meet the challenge and the opportunity.
2) This is about mobility and the Mobile Internet – maybe if you were living in a cave in Tora Bora (which obviously you weren’t) you might not be aware of the real revolution that is happening in people’s lives. Everyone is connected in multiple ways via multiple devices and many channels. The smart-phone and the tablet is in its infancy as a business device and TOA is well positioned via its early adoption of the smart-phone / iPad as THE platform of choice and a completely browser-based application to take advantage of many new developments that are here and coming soon. Mobility is king and device and platform agnostic apps will lead the way to the many platforms we intend to make the most of our early leadership providing eSaaS via the mobile Internet to millions of users worldwide who do work in the field. Those users are the same users who have iPhones and Androids and use them addictively in their personal lives. They expect nothing less from software when they go to work – and yet in many (or most) cases they are still using antiquated systems on antiquated platforms on antiquated devices. Opportunity abounds.
3) Lastly, this is about the needs of the global market of mobile employees – the mobile workforce management software market has been around for a long time but has been, to date, underserved and undervalued – the convergence of many of the trends that I described above provides a real inflection point for a market that has seen little change in the past decade. TOA’s solution has a patented predictive technology and an approach and completeness that provides relevant and transformative value to the many satisfied customers and users it serves. We want to bring that to every enterprise that has people working in the field. They all deserve the best. The market of mobile employees is huge and they deserve TOA and we intend to bring it to every corner of the globe.
Thanks to Andy Sheehan from Sutter Hill Ventures who showed immediate and unflagging enthusiasm for us and our vision- I know he sees what we see. Thanks also to Tim Draper for his great intuition and continued inspiration. A big and special thanks to our long term supporters at Draper Triangle Ventures, Early Stage Partners and Intel Capital, as well as the private investors and friends who saw the vision from day one and have stuck with us from the start. Lastly – I want to thank our immensely dedicated employees and our great customers – this just validates what they already know.
As Jeff Bezos says: It’s Always Day One!
Stay Tuned!
May 10, 2011 by Yuval Brisker
As usual Fred Wilson hits the nail on the head with Competition – The Pros and Cons.
Yes – we are pained sometimes by the existence of competition and we wish they would just go away and let us win already… but the truth is, as Richard Alden, TOA’s EU President (and former CEO of ONO) says – “You need a villain! You always need a villain”.
Richard says that when he as CEO of ONO bought Auna, the other Spanish cable company, removing his most potent and relevant competitor from the marketplace – something was lost.
Why?
Because competition gets our juices flowing, because competition spark so much creative energy in us, it makes us think and motivates us to excel and frustrates us – it makes us reach into the primal depths of our nature – those animalistic survivalist mechanisms that are the warrior in us and helps us fight the excellent fight.
I can’t say that I LOVE the competition – but I can say that I am glad that they are out there – they keep us on our toes, keep us from getting complacent, rally around our brand – and many times they make us look real good.
Many times they help us see our weaknesses better and focus on where we need to get stronger. Like any dialectic, they are that necessary doppelganger that highlights the differences between what is good and not good. And when we see them emulating us and even effacing us – they are another important data point to validation that what we are doing is right!
December 18, 2010 by Yuval Brisker
A reminder that nothing is for sure… is this story from TechCrunch. Sad is the only word that can be used here.
Yahoo!, once the icon of the New World of the Internet that it helped create, is now only a mere ‘holding company for Asian Internet assets’ according to Michael Arrington. Ouch!
You have to wonder what happens when a company with so much promise and so much vibrancy, a company that seemed to have it all – loses it all.
And in this case there is really no doubt. They had it all. And there is near consensus that they’ve lost every bit of the “all” they ever had. Every head-start, every property they ever bought, everything that they ever innovated and developed. And from the heights of the high… they are now only a shell. And as a business leader, you have to ask yourself why and how?
How could it be that a business entity with so much promise, technological might and financial strength could just so completely lose it?
Some ideas:
1) Replacing the Founders: Those whose vision created the company were removed early – and that neutered the company from its heart and soul. And by the time the Directors brought Jerry Yang back 3 years ago…he was so far from “The Source” of his own inspiration, that it was basically like bringing on another professional CEO. Except he wasn’t one. Along the way they went through one CEO experiment after another, each CEO trying to inject his own vision, his own agenda and, ultimately, his (or her) own ego-driven behavior, contributing to loss of direction. It’s OK – they are all still rich!
2) Greed and Gluttony: Instead of using its new found riches in a strategic thoughtful way – Yahoo’s CEOs used it to recklessly buy everything that moved without thinking. Many a millionaire and billionaire were minted on that decade long buying spree. But without a premeditated strategy – all that was bought was quickly lost. Geocities, Broadcast.com, Flickr, Delcio.us and many more. Focus and minimalism, which at the end of the day, have been the hallmarks of Google, would have served Yahoo! well. But there was little of either.
3) Vision and Leadership: You could say that the two above observations are all about that…but still I am calling Vision and Leadership separately as the number one reason for the decline…Leadership at the Board level, leadership at the management level – and the glaring lack of it. A lack of understanding of technology and its potential, a lack of understanding of what was bought and what to do with it – no cohesive thinking and and no vision – all dependent on one man or woman who wasn’t. The CEO that really never was … was the responsibility of the Board… so everyone was at fault…
Without a clear visionary leader who doesn’t just know how to dream, but how to manage to that dream, takes the company nowhere. As we saw with Apple in the non-Jobs days, even a company with amazing roots will stray far from the source and go in one of two directions: either become just a rich, pedestrian entity – a cash cow with no vision (as a friend of mine once called it) - making a lot of money for shareholders, but not inspiring, like IBM, or the post-Gates Microsoft, or even Research in Motion (the maker of Blackberry) or the other option – just wither like Yahoo!
Sad. But I believe fundamentally avoidable.
