Tomorrow San Francisco will get crazy with OOW’ers. I’m excited to be there for two reasons:
1- To share more of the Sun systems integration story and to talk publicly about our work at Oracle Applications Labs
2- To witness the unveiling of a project we’ve kept under wraps for quite some time @ Larry Ellison’s Wednesday keynote
The OOW event is so gigantic now it is hard to fathom. I think attendance is around 50K and there will be another 100K online.
See you there!
I’ve been back in the saddle for a little over 3 months. The Sun acquisition is moving along & we are up to our ears in interesting challenges. I wish I was in a position to share more. One item I can share is Oracle’s improvements on the environmental side – from 100% compostable containers for food, auto double-siding printing, etc etc. It’s fantastic.
After getting Coupa off the ground many of my friends and colleagues predicted I would return to Oracle.
They were right.
I loved working at Oracle the first time around. And now that I’ve co-founded my own enterprise software firm I feel I have much more to contribute.
It should be interesting to watch how Oracle navigates the disruptive on-demand software movement, how “Fusion” is received in the marketplace, and how their first foray into computer hardware fares.
But I will do more than watch. I’m ready to roll up my sleeves and help.
Is any software company out there truly deserving of being called “high” tech any more? What happens etymologically when upstart high tech companies compete over the span of decades & commoditize space after space after space. At some point shouldn’t we stop associating them with the “high” part of high-tech? And when do software firms in those spaces sink down low enough to be called “low” tech? (If you’re thinking CA, you’re not alone) :)
Wordplay aside, doesn’t it seem like the price of many types of software technology is headed towards zero?
A friend of mine in the venture community argues yes. He summarized his view this way: “It’s really hard to build new software technology and then convince people to ascribe value to it. These days, it’s better to instead use software technology to sell people things they already ascribe value to.”
I’ve been wondering whether there is data to support his point of view. In fact, the first few paragraphs of this post have just been sitting in WordPress while I looked around.
Just today I stumbled across an analysis of SuccessFactors that was worth a quick look. Here is a link to the article, entitled: Success Factors: Going for Break-Even Rather than Revenue Growth?
The assertion the author makes is “Increasingly, it looks like SAAS providers will have a tougher and long winding road to sustainable profits and continuous top-line growth.” I hope it will turn out that newer enterprise software vendors will find a path to profitability through reducing the cost of customer acquisition. But the days of being able to claim “it’s a land grab, take share now & profits later” seem to be drawing to a close in this particular software technology space.
Because the cost of developing software is racing to zero every bit as fast as some markets commoditize, it does seem possible to find nooks and crannies of high margin businesses. But these businesses, it would seem, will be more and more specialized & therefore the prospective markets will likewise be smaller.
There does seem to be another path to profitability besides the choice to serve niche markets: outsourced services.
More on that later.
Well, the news of my separation from Coupa has begun to circulate.
I imagine anytime a founder leaves a company it’s tough. It certainly was for me. But as Steve Jobs once said, if you wake up too many mornings in a row not feeling passionate about what you are working on, you need to change what you are working on!
I continue to have confidence in Coupa, its product, and its mission. I’m very proud of what the company has accomplished over the past few years. I believe in Coupa’s management team, respect Coupa’s investors, and think the Coupa solution is the best on the market for automating and controlling indirect procurement for the mid-market.
As for what’s next for me, it just may be a very long (think Forrest Gump) bike ride. And after that, we shall see..
A few years ago, Linux appeared to be headed towards dominance in the server OS market. At the same time, MySQL “broke out” and seemed on its way towards making databases free. At layer after layer in the technology stack, open source was cool & moving forward.
So much so that vc-backed companies formed and grew taking traditional enterprise software or technology areas and professionally building and running open source project versions.
Here in 2009 the scene has changed. It feels very different.
For open source software companies expecting customers to choose to “pay” for “free” software, the bait-and-switch mindset which was so inevitable is more exposed. Imho, this is a good thing, as it frees the open source movement from a moral gray area where companies offered products for free but were incented to somehow cause those products to need other services or support to make them complete & functional.
Microsoft’s server OS seems to be faring better than expected vs. Linux. And Oracle has been very active, acquiring InnoDB (the jugular of MySQL), offering enterprise support for RedHat Linux (exposing the lack of intellectual property in RedHat’s business model), and then swallowing Sun to take Java & MySQL in full.
This leaves us in an interesting spot, where we seem to have only 2 viable technology stacks left – one from Microsoft and the other from open source + Oracle / IBM. IBM has growing gaps while Oracle seems strengthened in the enterprise.
As a fan of Ruby on Rails and other script-based languages, it will be a telling 2010 to see whether the market will consolidate around .Net and Java or whether choice continues & the tools market remains fragmented…
It’s been interesting to monitor profits for public SaaS companies over time. Ever since Bruce Richardson’s 2008 research report “SaaS and the elusive path to profitability” I’ve been looking for examples where gross margins look like they will trend towards the 40 points that so often seem the target for the wold’s best software businesses.
So far, I haven’t seen it.
It’s possible that the reason is that these businesses are simply viewing today as “land grab time”. When operating in that mode, a SaaS business may be willing to spend 1.5-2 times the annual recurring revenue to acquire business, especially if they have direct evidence with 90+% renewal rates.
But once the mindset takes hold that profits aren’t a key measure, you end up in an interesting predicament. Whenever you adjust (and it is inevitable) towards a profit-motive in the business, employees and outside parties tend to view the adjustment as a capitulation that growth has slowed and will continue to slow.
Until the big SaaS players can “show Wall Street the money” we should all be skeptical that the business model will prove as lucrative as its’ “on-premise” predecessor.