Your corporate strategy is a prisoner of history (or, why CEOs should listen to their inner revolutionary)
I got thrown out of our CEO’s office and that led, through strategic twists and turns, to our CEO selling our company for $400 million. Here’s the story of that banishment that led to planning corporate strategy for Silicon Valley tech company Keynote, now part of Dynatrace. Today, as the CEO of our next-generation communications startup Onboardify, I’ll tell you why I suffered such an ignominious yet exhilarating fate, and its relation to the reason that Microsoft Office, Twitter, Slack, or Salesforce Quip are building products that are designed for the future, mired in the past, or bridging the past to the future. CEOs, founders, and strategists could recognize the signs of a company strategy being guided by experiences that result in being a “Prisoner of History,” a phrase attributed to Frantz Fanon, a French philosopher and revolutionary.
The Pitfalls of Experience: “We Don’t Do That”
At our previous company, the CEO asked me to start their Corporate Development initiative. I didn’t quite fit the mold of EVP Corporate Development — I was an MIT computer engineer and researcher from the MIT Artificial Intelligence Laboratory, and an early Oracle engineer during its high-growth years. I didn’t have an MBA and wasn’t ever in investment banking. I had worked for the CEO at a previous startup that competed with Oracle and that we subsequently took public. He gave me a role that fit in with my entrepreneurial instincts — the mark of a great CEO, one who believes in people’s abilities, not in resumes. “Always understand what each person is passionate about — and give them the freedom to do it” is what he advised me. I loved the corpdev role. I liked looking forward to where business was headed, and because of my product background, be intelligent about assessing the effort to get to the future.
In my first week, I prepared some ideas for product expansion. They were based on the premise that our market needed to expand, and our products needed to be reimagined for personas newer than the ones our sales team was comfortable selling to. I interviewed as many people as I could, including execs, salespeople, product guys, engineers — people who knew what customers valued in our brand, not just in our product. It took much longer to talk to customers — as an aside, that is still true even today and is the problem that led our Onboardify team to apply its principles of data relationships, analytics and acceleration to the world of CRM. Onboardify is an app for organizing communications with customers. Sign up for free with Gmail for Work or Outlook 365.
I went to the teams at the company to discuss these expansion ideas. The thinking behind our corporate strategy was that the company’s sales teams were selling products to IT teams only, and that we needed to expand our brand to business teams at Internet and e-commerce companies like Facebook, Amazon, eBay, and brand managers at Chase and FedEx — all customers. When discussing ideas about how we could expand from our IT core to the business buyers, I constantly heard these statements from the product teams:
- “That’s not our customer base!”
- “That’s not our culture!”
- “We need to go deeper with our current products!”
- “We can’t afford to lose our core revenue!”
- “Why are we doing things we don’t understand?!”
- “We don’t do that!”
So after a week of contentious meetings with the keepers of the flame, I began to wonder about my newly forming strategy. I let the CEO know what the team felt — that we should go deeper with our product market fit, rather than wider across the organization. His response was incisive. He said “I know what the team thinks. I hired you to be the change agent. To help us think outside the confines of our market today. To come back with new ways for us to expand our brand, products, and sales effectiveness. Now, get out of my office before I change my mind about hiring you!” And so he unceremoniously threw me out of his office — I was not to come back until we had concrete plans on where to take products and sales next, which technologies we needed to build and companies we would acquire to make that happen faster, much faster than building it ourselves.
I realized, then what Frantz Fanon meant about being a prisoner of history. It means being in a state where our past experiences and foundational views imprison us, making it impossible to execute on ideas that belong to the future. That was where the company was because its experience was shaped by their current customers and product experiences — we had too much experience selling to IT. The next few years were transformational, going against the grain of the company’s history.
Our transformation ultimately expanded us from making a technical pitch to IT teams to that of enabling digital transformation, which was pitched to executives and business buyers, rather than systems administrators. To make this possible, we launched new products, many of them from the 17 companies we acquired — small, tuck-in acquisitions that we could digest easily. We experimented — sometimes we failed, but mostly we succeeded, and our brand expanded to being that of a company that could meet the needs of management teams at digital companies, delivering on measuring, monitoring, and improving the total customer experience. We no longer just measured site speed and availability/uptime which was becoming a commodity. From customers that paid us $1,000–5,000/yr on average, we transformed to having 80% of our revenues from top 200 customers that spent anywhere from $250,000 to over $1 million per year. In 2013, we sold Keynote for almost $400 million to private equity firm Thoma Bravo.
It was a success story in corporate transformation, and it makes me think about where companies in the communications business are going today — including Microsoft, Salesforce, Twitter, Facebook and Slack. If you’re heading corporate or product strategy, read on, because it is likely that you’re sailing on the ocean in an ocean liner and changing its course requires not just strategy, but also the realization of which product strategy will fit the needs of the market you want to be in — not just the one in which you are today.
Facebook and Slack: A Future-First Product Strategy
Communications technology companies have seen a massive surge recently, long after Facebook and Twitter‘s first generation products appeared. Recently, SMS messaging company Twilio and consumer chat company Line went public and are valued at over $3 and $5 billion respectively. Giants in communications products like Microsoft Outlook and Google Apps have been threatened by the rise of Slack, now valued at $3.8 Billion.
Let’s take a look at Slack’s product strategy, which is what I call future-first, i.e., it is designed for users who have no interest (at least, at first) in bridging to the past.
Like the Spanish general Cortes, who commanded his troops to burn their ships so they would never have a way to return to Spain, Slack also went all out to win territory in the new lands. Slack’s team explicitly wanted to move away from legacy technologies like email. In fact, Slack has almost zero integration with your company’s email. Slack’s email integration consists of defining special email addresses that your team or customers and external businesses would use — and those come into a Slack channel. Requiring customers to email a specific email address when they want to contact you — ex. email@example.com — is not a great experience, but then it’s not Slack’s strategy (yet) to bridge with older communication platforms. Slack’s strategy to capture intra-company communications is working because that doesn’t require email, as analyst Christine Aguilar wrote in an incisive article about How Slack Grew From 500K to 1.7M Daily Active Users.
This future-first product strategy has its benefits because it is possible to move faster with new communication formats, like chat, which have less structure. Email is centered around the very personal conversation — streams of messages with private and group membership and conversation threads whose members morph constantly. Looking at the streams of email coursing through companies is enough to make your blood curdle. Stewart Butterfield legendarily saw an opportunity to introduce an intra-company communications tool centered on chat and bypass email — and the rest is…history, as they say.
It remains to be seen if Slack will be a prisoner of its own product history — being pinned by the legacy of unending chat. Each Slack channel is a stream of consciousness, and that stream has a beginning but no end. The purpose of Slack is to increase communications within an organization, and this it does through the streams of events — chats, alerts from monitoring systems like New Relic, and notifications of tasks created in Trello. Yet, the cacophony that emerges as dozens of systems integrated with Slack collide can drown out the ability for a team to get things done. Slack’s CEO Stewart Butterfield tried to purchase a company that turns email into collaboration, but, instead, venture capitalists gave it the investment it needed to fly solo. When Slack does go in that direction, it can truly become enterprise-oriented, where you need to bridge from the past (email) to the future (messaging). Meanwhile, companies like ours — Onboardify — have seized the moment and built email, messaging, and chat so that businesses can collaborate with customers across old and new media of communications.
Future-first communication products like Facebook and Slack must move beyond their own past of being simply a messaging app — Slack for business teams and Facebook for everybody else. A message — very much like the ones that were written on paper thousands of years ago — begins and ends, and its purpose is to get delivered, redelivered, labeled, and stacked. Compared to Slack, Facebook is working to move faster past its history of the social network by delivering new services for businesses like Facebook Pages, tied to new consumer chat tools like Messenger. It does this by integrating Zendesk’s customer service software to power Facebook Pages — a bold move that other consumer companies, like Twitter, have not yet been able to do. Mikkel Svane of Zendesk, of course, thought ahead and purchased several companies to give them these capabilities; building it would have taken too long because of the prisoner-of-history syndrome in customer support.
Twitter: A Past-Perfect Product Strategy
Twitter is a communications company, first and foremost — intended to be the place where conversations start and fan out to the rest of the world. Its communications model is centered on broadcast. After all, its goal is to replace the traditional media companies — which it does tremendously well through a public broadcast technology — #hashtags, lists, and followers. Much has been written about the challenges Twitter has, yet I believe that Twitter is poised to reinvent itself for the future. It appointed Bret Taylor, former Facebook CTO, to its board. Bret is a consumer-first technologist who is well-versed in the art of communications, and he himself is leading Quip, a company destined to compete against Slack, Google Docs & Drive, Trello, Asana, and other communications tools. And it just got acquired by Salesforce for somewhere between $582-$750 million.
The opportunity that Twitter has is to provide the backbone for all business-to-consumer conversations. The Twitter app and network is legendary in its simplicity and reach, respectively. Yet, when an inquiring iPhone buyer sends a question to Apple’s @apple handle, Twitter delivers the message to Apple, and then Apple must take and manage that communications stream, turning a public conversation on Twitter to a private one within Apple. The Twitter brand hence dissipates in the mind of the consumer once that tweet crosses the boundary between Twitter’s public domain to the private domain within Apple. This is an opportunity for Twitter — a reinvention of Twitter’s communications missions would be to provide the customer service platform that enables the brands to continue that conversation with the consumer in a way that is Twitter-friendly, letting the consumer use Twitter to power that conversation.
From that perspective, Twitter was once a future-first product, but today is has voices inside the company that prevent it from reaching its full potential — ”This is who we are: a consumer company,” or “We want to be the central place for conversations that consumers have.” As a result, it stays focused on its core, but its core is really being acommunications company, not just a consumer communications company. Jack Dorsey does recognize it — remember when he famously wanted to move beyond the 140-character tweet? That’s why he got Bret Taylor on his board — a sign of Jack’s thinking about reinvention. Twitter can quickly move beyond its consumer-oriented past-perfect product strategy. One way to do this is to bridge its consumer communications with new social tools for managing communications, sold to the same brands that purchase its ads, but also to many new companies. That’s how new markets are captured incrementally, and it works — just like it did for us at Keynote and will for Salesforce.
Microsoft and Salesforce: A Tale of Two Cities
Satya Nadella and Marc Benioff are remarkably similar. They are both networked thinkers. When Satya was appointed Microsoft’s CEO, he met with the division heads and said that they were missing the ability to interconnect their customers. He told the company’s 200+ corporate vice presidents: “Each of you is thinking deeply about the silo of your market — Dynamics CRM, Office productivity, Windows. And you are missing the ability to make all divisions at our customers to talk to each other — through interconnected experiences”. Right there is the reason Microsoft bought LinkedIn.
Mark Benioff at Salesforce built Chatter way ahead of its time, with a vision to connect everybody at a company — he didn’t quite get to execute Chatter’s expansion well because his company was also a prisoner of their CRM history. The product teams there were run for many years under the dictat: “Don’t build anything the customer doesn’t ask for.” Therefore Marc looked outwards for inspiration — and acquired RelateIQ for $400 million and Quip for a reported $750 million, acquisitions that reflect interconnectedness. This is why Microsoft tried to purchase Salesforce in mid-2015 — the CEOs think very similarly. Both future-first product strategists, they are moving ahead to a connected world while the rest of us are still going deep. Salesforce’s acquisition of Quip is enormously significant to the CRM industry. It’s not just “Salesforce buys word processing app Quip for $750M” as reported by Techcrunch — that’s a surprisingly narrow view of Salesforce’s corporate strategy.
If you are a CRM company CEO, it’s likely that your employees will insist on a narrowing of thinking when discussing the Salesforce/Quip acquisition. They will revile the product and its creator Bret Taylor (“We’re an enterprise company, not a Facebook!“). It’s hard for most to understand that a CRM company just made what may be its most brilliant move, one that will have repercussions on customer relationships for the next decade. It’s not because of “The Living Document” that Quip has developed, sort of like Google Docs on steroids. It’s because Quip got started in 2012 by a Facebook-inspired vision of interconnecting people, data, and communications in a way that Salesforce wants to harness — to dramatically change how businesses communicate with their customers. It is your job as the CEO, founders, and management team to move strategically. The first three months after an acquisition is completed — LinkedIn by Microsoft, Quip by Salesforce, and NetSuite by Oracle — is the time to regroup yourself. Post-acquisition, 90 days is the time when strategy is discussed and teams are integrated. Conference rooms are filled for days with planning meetings, product prototypes are hammered out, pricing models are analyzed, and decisions are made. After that, everybody at Microsoft and Salesforce know the direction in which they are headed, and they race towards it. The clock has started and you have three months to steal a march. After that, the market begins to listen to the new strategy.
So what about those employees who tell you that these acquisitions don’t matter? if you’re the CEO, I’d advise you to do what was done unto me — banish those people from your office. Or, if you are a smart employee, figure out how to drown out the noise, and state your case for an interconnected, networked business world. You might get acquired for a 49% premium from its valuation in the public market like our previous company did.
Disrupt yourself before anyone else does.
And truly understand what Frantz Fanon wrote:
“I am not a prisoner of history.
I should not seek there for the meaning of my destiny.
I should constantly remind myself that the real leap consists
in introduction invention into existence.
In the world through which I travel, I am endlessly creating myself.”
– Frantz Fanon in Black Skin, White Masks, 1952
About Vik Chaudhary
Vik Chaudhary is the CEO of Onboardify (http://www.onboardify.com). Onboardify is an app for organizing customer communications, no matter where it happens, with zero disruption to the ways you already communicate. Based in San Francisco, Onboardify is helping business professionals, business owners and teams around the globe intelligently sync their customer communication channels and organize documents, tasks and more. In his copious spare time, Vik — well — asks CEOs to listen to their inner revolutionary. Sign up for a free Onboardify account today.