The Platform Chronicles: 10 Questions with David Schmaier, Vlocity Founder and CEO
On building the first multi-vertical cloud company on Salesforce and “industry Ohana”
Welcome to the The Platform Chronicles, a publication designed to introduce readers to some of the most innovative partners that have developed applications on the Salesforce platform.
This issue focuses on David Schmaier and Vlocity’s dramatic growth that’s been fueled by building exclusively on the Salesforce platform.
10 Questions for David
David is the founder and CEO of Vlocity, a Forbes Cloud 100 company and strategic Salesforce ISV. Over his 25-year career in enterprise software, he has held C-suite roles and has led innovation and transformational applications of technology in CRM and cloud.
The following is a lightly-edited transcript of our ten questions for David.
David, you were one of the pioneers in the CRM space having been part of the original founding executive team at Siebel Systems back in 1994. You ran the products and industry organizations until 2006, then spent time after that sitting on a variety of boards and pursuing personal interests. What made you decide to get back in the software game after eight years away?
Here’s the story of my return to running a software company: For years I had followed Salesforce, but I had never attended the now-famous Dreamforce customer conference until the fall of 2013.
I had been on the board of a leading private equity firm where we were focused on acquiring and growing industry-specific software companies. We had acquired 8–10 such software companies. I had also been tracking the success of Veeva Systems, a Salesforce partner in the life sciences industry. It was clear to me that there would be several more Veeva-like companies that would be created. So I decided to attend Dreamforce to find and acquire the next Veeva.
My first Dreamforce blew me away — I was amazed by the size and scale. I knew CRM was a great business having worked in the space for a couple of decades, but this was unbelievable. I was amazed as I walked around the cloud expo. At the time, there were ~3,000 ISV partner companies with every kind of app imaginable — CTI middleware, Incentive Compensation, Configure Price Quote (CPQ), Sales Methodologies, Field Service, etc. Everything you could possibly think of with one exception … there were no vertical software companies! Not a single one that I could find.
After walking around the Cloud Expo for about an hour, it was obvious that there was no company to acquire here. You had to build the company from scratch just as Veeva did. I reflected back on my prior experience building over 20 industry-specific vertical CRM applications and how important the industry vertical was to customer success. I realized that my experience made me uniquely qualified in this respect. I also ran into hundreds of former colleagues from the CRM business at Dreamforce, and realized that I could find and attract similar like-minded, talented people that would share this vision.
So I walked out of the Moscone Center after an hour, and called up my former colleague, friend, and Veeva co-founder Craig Ramsey, and said “What if we started a company that was 100% on Salesforce and built industry-specific apps for verticals like communications, insurance and government?” My message was: “We should build another company like Veeva … only larger.”
“Great idea. Let’s do it,” Craig Ramsey replied. Shortly thereafter, I met with three Veeva founders — Craig, Mark Armenante and Young Sohn, along with former Netsuite exec James Ramsey, and we sketched out the plan to found Vlocity along with our target industries. We officially founded the company in March 2014 and launched the company as a Titanium Sponsor at Dreamforce ’14.
In the nearly four years since starting Vlocity, you’ve become the fastest growing of all of Salesforce’s 3,700 partners. Can you take us through your strategy?
Our mission is simple: Vlocity delivers industry-specific cloud and mobile software that embed digital, omnichannel processes for customer-centric industries. We are the fastest growing AppExchange company because we build our apps to be both native and “100% additive” to Salesforce.
We call it 100% additive because we build on top of the Salesforce app clouds like Sales, Service and Marketing Cloud. We don’t replicate any functionality that Salesforce has, and our product strategy is to use 100% of what Salesforce builds and not replicate anything. We build and extend Salesforce. This is quite different from most other ISVs that build on top of the Force.com lower level platform, which leads them to replicate functionality in the Salesforce app clouds.
We made a contractual commitment to always stay in sync with every Salesforce release, down to every cloud and object. Buying an app that is professionally built and specifically tailored for your industry is much more efficient, faster to deploy and faster to deliver value than custom code built on Salesforce.
Today, we embed industry-specific functionality, best practices and business processes for the Communications & Media, Insurance & Financial Services, Health Insurance, Energy/Utilities and Public Sector industries.
In the last year alone we won over a dozen of the industry’s top awards, including being named to the Forbes Cloud 100, the CRM Watchlist (for three straight years), and winning the first-ever Bolty award at Dreamforce.
Siebel was the clear leader in the on-prem CRM market before getting into the cloud. How would you compare Salesforce’s cloud tools/platform to the tools/platform you used at Siebel?
When we started Siebel Systems, the worldwide market for CRM software was $50 million. Today, Gartner today says that the CRM software market is $30 billion, and is the fastest growing sector of the enterprise application market. So “A LOT” has changed.
At Siebel, we built the first packaged CRM apps that could work at scale across an enterprise. Second, we built the first suite of industry specific CRM apps for over 20 industries. We found that industry-specific was faster to deploy, lower cost, and better.
Today, companies want to achieve faster business agility and time to value from the cloud across digital and traditional channels. Salesforce is the only viable platform to enable these transformations. We are incredible fans of the platform. It works, it scales, it is secure, it is reliable, it is trusted, the tools are easy to use. In my professional opinion, it is the best platform ever built. By electing to build our Vlocity Industry Cloud apps on top of Salesforce, we get all of these benefits for free. We have no servers, we do not run our own cloud. All of our apps run on the Salesforce cloud.
Our partnership with Docusign is a great example of the “Lego” approach. Companies do not have to worry about integrating best-in-class apps, the AppExchange has already done it for them. The platform, combined with the ecosystem, is a one-two punch that increases deployment speed, makes upgrades seamless and “future-proofs” technology investment.
A few weeks ago, a CIO at a Fortune 500 company asked me about the “white space” between CRM and ERP. He noted that Salesforce is moving into CPQ (supporting processes for configuring, pricing, and quoting), contract management, and e-commerce (including order management). When you were at Siebel and I was at AMR Research, we debated whether order management should become part of CRM. How do you see CRM evolving over the next few years?
Leaders across all industries are digitally transforming their strategies and operations around the customer. They are trying to become more customer focused, more customer centric. Yes, there is benefit in better managing your back office applications, but this is an operational efficiency argument.
The old-school CRM acronym today means much more than customer relationship management, just as Salesforce delivers much more than sales automation. The processes you mention such as contract management, CPQ, orders and e-commerce, are really supporting functions to an overall experience, an experience that is omni-channel, that gives the customer control and flexibility, and that empowers the agents and employees that serve and sell to them.
Today, CRM includes AI, IoT, big data enablement, field service, mobile e-commerce, retail next-best-actions and more. I talk to CEOs and CIOs at major global brands every day. Over the next five years, every company in our verticals will have deployed cloud computing to sell to and service their customers. Within 10 years, over 90% of the Fortune 500 will be in the cloud.
Given your role and history at Siebel, your team must love meeting with legacy, on-prem customers who are wondering what to do next. Has this base been an important part of your success?
I have worked in the CRM for nearly three decades, and yes I am meeting many old friends and customers. We are actively replacing aging on-premise software such as Siebel, PeopleSoft, Amdocs, Sterling Commerce, etc., not to mention legacy custom built systems in dozens of deployments as we speak. These customers are crying out to become more agile, more digital. And their old legacy systems are holding them back, slowing them down, not delivering the experience that their customers expect.
CRM is one of the few technologies that delivers an immediate positive impact. In Public Sector, we are helping people find new homes and get back on their feet with industry cloud apps. In Healthcare, we are helping people better understand and shop for their health coverage options. In Insurance, we are helping brokers and agents service their clients and provide protection and security. In Communications & Media, we are improving the service and retention levels for some of the world’s largest telcos. For Utilities, we are helping them navigate deregulation to become customer centric and provide high quality service across digital and traditional channels.
Many of these companies successfully deployed Siebel and benefited greatly from that software. But the world has changed and the Salesforce platform has taken excellence and experience to a new level. We now have offices in 18 countries around the world, deployments in every region, and our software is now touching over 200 million end customers across our five verticals. So we’re thrilled with the progress and to be helping some of our old friends digitally transform to the cloud.
Last month, we hosted a CIO event in Manhattan. Every executive wanted to talk about Einstein and Salesforce’s rapidly evolving AI portfolio. Are you seeing the same level of interest?
Yes, we are seeing this same incredible interest in AI and machine learning.
We are working on a series of AI powered apps with the Salesforce Einstein product team for each of our five industries. We are part of the Einstein incubator, as we see industry-specific AI apps as being some of the most compelling. We can help you recommend new compelling offers, “automagically” resolve service issues, or better target customer segments in marketing.
One of our first examples of this is new consumer Insurance app that we recently delivered called Vella (https://vlocity.com/industries/insurance/vella).
‘Vella’ is a virtual insurance agent that policyholders can access through a user-friendly mobile app. Vella can be configured and re-styled to meet the specific branding and functional requirements of a carrier. Built entirely on the Salesforce platform, Vella combines Vlocity’s deep industry functionality and microservices architecture with natural language processing and data from the Salesforce IoT to offer easy assessment and instant coverage, usage-based insurance, connected protection and real-time alerts, and a conversational user interface. So now large insurance carriers can use the same digital technologies to fight back against InsureTech disruptors.
We plan to deliver similar Einstein powered apps across all of our industries in the future.
In my analyst days, I always liked debating cool, emerging technologies with you. What are some of the technologies that interest you?
We see incredible interests in chatbots like Vella from our customers because of the ability to create great, new user experiences.
Staying on the theme of new, enriched experiences, let me talk about two personal favorites — Tesla cars and the Peloton bike. Tesla has changed the driving experience as the entire car uses a touchscreen interface for you to operate the car. No longer are there cryptic buttons and controls and crummy modal software in the dashboard. Now you have a large flatscreen that is touch-enabled to open the sunroof, listen to music, operate the phone hands-free. It changes the driving experience in a very customer-friendly way. I even received a message from Elon Musk in the dashboard when I first started driving it!
My new favorite for the holidays is the Peloton bike. It is an exercise bike that is targeted to disrupt spinning classes like SoulCycle. Now you can have a personalized SoulCycle-like experience in your home. It is a perfectly designed bike with a large flatscreen not unlike the Tesla. Your bike is hooked up to the Internet and now you can take classes on demand or alternatively participate in live spinning classes delivered virtually on the half hour. This is truly the connected exercise bike.
You can pick the style of music you like. You can choose the class duration for you. I save the half hour each way to get to the spinning class studio, and I can easily track my personal performance, compete on a leaderboard for each class, and track my progress on the Peloton mobile app. Truly amazing. I completed a class yesterday, and was happy that I was racing against other participants in their 20s and 30s. While I did not win, it is well worth the effort!
We need to think more about building and delivering enriched customer experiences.
You’re currently the leading Salesforce solution in five major industry categories. You would fit well in other verticals, too. Any chance we’ll see you in Consumer Goods?
Cloud is now a strategic imperative for customer-centric companies. You know the industry went from on-premise starting in the 1990s and then to the cloud a decade later, thanks to Salesforce. Now the market wants the industry cloud. I call this Cloud 2.0, the new, faster and better way to do cloud. Other industries such as consumer goods and hi-tech will all move to industry cloud because it is an obvious evolution: if you have the choice of industry-specific cloud software versus the alternative, why wouldn’t you pick the one better tailored for your industry? I see that as a natural progression of this business and it’s very very exciting to work with Salesforce in our current verticals, and future ones too.
We do see Consumer Goods as a potential opportunity for us as that was our very first industry app at Siebel, but nothing to announce today on this front.
Our most recent industry is the Energy/Utilities market. We see this as an incredible opportunity. Vlocity Energy is the first compelling Salesforce ISV app in this market, and from our prior experience, this is incredibly similar to the Communications & Media market. So all of the advancements and investments we have made to Vlocity Communications are 100% applicable for our new Vlocity Energy app.
From a CRM point of view, the industries are quite similar. Whether you are selling the quad play in the telco market, streaming Netflix in the media market, or turning on electricity or natural gas in the energy market, you are turning on a specific service at a specific premise/location, with a usage based billing system running in the background.
You’re currently the leading Salesforce solution across key,major verticals. Do you have any plans to develop horizontal apps like loyalty management that could be deployed across industries?
This is a good question that we ask ourselves frequently.
One area we are very excited about is Loyalty. We see that loyalty systems are an integral part of a next gen digital CRM system. So stay tuned on this front.
Another area we are excited about is Order Management. We introduced our Vlocity Customer Order Management product for our Communications industry vertical this year, and now have a number of very large customers for the product, and are now seeing broad interest across our other industry segments such as Insurance and Healthcare.
Last question: What would you like Salesforce to do with its platform to make life easier for you and your customers?
Our advice to Salesforce is “keep doing everything you are doing today.”
Keep communicating openly with both your customers and your partners like Vlocity — we are big advocates of the Trailhead initiative as there is so much to know about the platform and the Salesforce clouds.
Keep focusing on growth and customer success, as we are. Continue your storied track record of continuous innovation, and continue to advance the causes of equality and giving back. This is the Salesforce Ohana that we are a part of — we call it “Industry Ohana” here at Vlocity. Ultimately the vision and values of the company will lead to the success and achievement all customers and employees seek.
About Vlocity: Vlocity builds and delivers industry-specific cloud and mobile software for the Communications & Media, Insurance & Financial Services, Health Insurance, Energy/Utilities and Public Sector markets. Company revenues have grown over 300% for several years, and Vlocity plans to surpass $100 million in revenue by the end of 2018. In its first four years, it has grown twice as fast as public industry cloud company Veeva (ticker: VEEV).