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Salesforce.com’s Secrets Of Startup Success

When wildly successful startup companies review history, it can often seem instead like a revisionist history; as if success ever happens according to a perfectly mapped out vision. There are two key distinctions when it comes to Salesforce.com: first, many of its early employees came from Oracle or Siebel or both, so the templates for success (in some cases for better or worse) had been somewhat molded and embedded; second, regardless of any contrived formula, there are phenomenal lessons other startups should ponder.

Dr. Steve Garnett, the chairman of Salesforce.com EMEA, laid out quite a framework for that here at Startup Camp in London and it's hard to argue with the results. Garnett is one of the handful of Salesforce.com employees from the early days of both Oracle and Siebel, and his expertise in Europe has been a major reason for Salesforce.com's growth rate (he said 60%) and $7B market cap.

Garnett talked to a roomful of entrepreneurs about how finding oil wasn't enough; you also need to know how to get it out of the ground, market it, and make money. When he was at Oracle, he said, Ingres initially had the better product, but clearly didn't mine that as well as some of its competitors.

Success hinges on maximizing key cultural values, and one of the most important themes Garnett hit upon was the need to be bold in nearly every aspect of your business. Whether that's Oracle taking on IBM, or Siebel initially starting out with the intention of creating for the front office what SAP had been successful doing in the back office. And for his current boss, Mark Benioff, completely revolutionizing the software market. (Note: Clearly Salesforce.com did not invent the on-demand application model, but they did revolutionize it and they did figure out how to make money at it.)

Part of being bold also means being willing to "punch above your weight class," to be clever when your competitor is bigger. Salesforce.com set out to always get mentioned when the press wrote about Siebel; in essence, using Siebel's marketing dollars as its own. Garnett also noted that ex-Oracle boss Ray Lane would say that Bill Gates was a monocle and a furry white cat away from being a James Bond movie villain -- his way of making Microsoft seem absolutely evil (some may have said the same about the Oracle executives).

There were other particularly good insights, especially about Europe, where you so often hear that every market is different, and that you don’t go into France the same way you have the U.K. Garnett dismissed this notion entirely. Most people told him he wouldn't be able to sell over the phone in countries like France, Spain, and Italy, but that hasn't been the case, with some 50% or more sold in those countries over the phone.

For startups, partnerships are especially important. It could be the quickest way to market. Garnett's advice was to pick only a few and really maximize them, noting that Siebel took 5% of its company resources early on and put them into its IBM relationship, and within a year, IBM had bought more than $100M worth of software. Partners, of course, also can help you fund your marketing programs. Last year's Dreamforce conference had 7,000 attendees and the company's partners loved it so much it became a cost-neutral event for Salesforce.com.

Ultimately, Salesforce.com is the beacon for change in the software industry. Even traditional software companies, if they don't have on-demand versions, pretend to; because they know deep down that this is where the world of applications is going. Others are following that model, but some are latching onto the Salesforce.com gravy train through the AppExchange model -- Garnett says that close to a half billion dollars in VC money has gone into building on-demand apps on the salesforce platform.

Salesforce.com set out to do this chanting the mantra of "No Software," but they were also trying to replicate what Amazon had already created: an approach to complex software that was so simple for the user that there was nothing to download, no documentation, and no training. Now those last few things were quite a stretch and remain largely unrealized, but then you've got to have bold goals.

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