This is an AI Transcription. It’s pretty good, but please forgive any errors.
[00:00:00] Jonathan: Welcome to The Difference Engine, the show for tech founders, investors, and innovators.
Welcome to The Difference Engine and to a series of interviews of European tech leaders brought to you in association with BoardWave. The BoardWave network is a powerful community of founders, CEOs, chairs, independent NEDs, and their investors, representing companies at every stage of development.
[00:00:29] Paul: BoardWave provides easy access to relevant skills, knowledge, experience, guidance, and advice in the belief that Bringing together this powerful group can help each other build stronger businesses here and together shape the long term future of the European tech sector.
[00:00:43] Jonathan: This week we are joined by BoardWave member and patron, Steve Garnett.
A man of many accomplishments, Steve is best known as the former chair of Salesforce in Europe, having built Salesforce's operation in EMEA. A leadership challenge he'd previously risen to with both Siebel and Oracle. He's now a prolific SaaS investor and board member.
[00:01:03] Paul: An inspirational figure, Steve has reached the top of the enterprise software business.
A remarkable feat in itself, but truly remarkable given his Humble start in life. Steve Garnett, welcome to the Difference Engine.
[00:01:20] Jonathan: Born and brought up on Liverpool Council Estate, the youngest of four children, raised by his school cleaner mother after the early death of his docker father. So Steve, can you tell us about those early days in Fizakli?
[00:01:31] Steve: First of all, I'm delighted to be here, Paul and Jonathan, so thank you for having me.
Yes, it was pretty humble. Pretty humble beginnings. It was, uh, we grew up on a council estate in Liverpool. And, um, as you mentioned, and I guess the expectation was pretty, pretty low. It was pretty much every kid in the street would get to 60. The goal was to get to 16, stay out of trouble with the police and get a job.
What job? Didn't matter, but just find, find a job. So there's very little, uh, ambition, if you like, uh, above that. And really there was nobody in the, uh, who I knew who'd gone on to higher education. Nobody in the family, nobody in the street, nobody in the next street. And that was the sort of, um, expectation level I grew up in.
[00:02:18] Jonathan: Given that that was what was all around you. You know, what was it that really made the difference?
[00:02:23] Steve: I think I got lucky. Uh, Nook plays, uh, a large part in life as we all know. But, um, I went to a pretty average school, but I had a maths teacher who was, um, spotted a little bit, a little bit of talent in me.
And started to say, I could go to university. And I thought, wow, you know, I thought university was, uh, uh, if you remember way back, the Bamba Gascoigne days, university was where, you know, posh kids went and super intelligent, who very well read, and we, we didn't have any books in the, in the house to be perfectly frank, do you need?
piece of reading material was the Liverpool Echo. And as good as the Liverpool Echo is, it's not that great. Yeah. So, um, but he said, no, that's not true. You know, you could get to university, you've got the talent. And, uh, I followed his lead and I had that ambition started to, to well in me, uh, to say, wow, wouldn't it be great if I could be the first in family, first in the street to go and get a degree.
And so off I went to. Cardiff University to do, to do maths.
[00:03:25] Jonathan: How did it feel just, you know, arriving in Cardiff at a university?
[00:03:29] Steve: Well, I'll tell you, I chose Cardiff because people often ask me that. I, I just needed to get away from Liverpool. Yeah, wonderful as Liverpool is, I'd never been anywhere. So, uh, I, I sort of drew a 200 mile radius around Liverpool and thought, okay, I've got to get Two miles away, at least.
And, uh, Cardiff offered a, uh, a mathematics and applications, uh, course. And I was always interested in applying maths to, to, to problems. So I, off I went. And, uh, actually interesting, the very first lecture I remember distinctly, it was on computing. I sat in, in this room for two hours and I, understood absolutely nothing.
And I thought, Oh my God, I've come to university. And it's, as I thought
[00:04:10] Jonathan: for really smart kids who understood this. But, you know, you did persevere and you did, you did get that degree, you know, so like, like Balmer and Bryn and Hastings, you know, you're, you're a man with a maths degree. And I guess. A lot of the listeners would have gone, Oh, well, you know, that's, that's how Steve got into the IT industry.
But they'd be wrong. So what actually happened next?
[00:04:29] Steve: Well, it's interesting that computing was part of my maths degree, but it was a subject I was probably weakest at and something I didn't particularly enjoy. What happened next was I didn't really know what I wanted to do. I guess like a lot of us have gone through university, uh, And I looked, I saw an ad in the New Scientist for, uh, to do a PhD in nuclear, uh, nuclear engineering.
And at the time I thought maybe the nuclear industry was the future. It's always been 30 years away. And I think it probably still is today. Um, And I thought maybe getting a qualification in nuclear engineering and a PhD. Wow. How, how, how great would that be for, uh, for my family and for friends and, uh, and myself, of course.
Um, and so I, I went up to Manchester and enrolled on a Uh, PhD course in nuclear, nuclear engineering, it's basically theoretical maths. And it was a, the maths was a little bit hard. So you use computers in the day to, to solve the maths, numerical analysis. And, uh, but those days were punch cards and Fortran and all those good things.
Yeah.
[00:05:30] Jonathan: Look at the size of my stack of cards. Exactly.
[00:05:33] Steve: You'd walk along and the stack of the size of the stack would be how, how clever you were in writing big programs.
[00:05:38] Jonathan: We did meet many, many years later, but we. We're probably, given that we're both postgrads at Manchester University at exactly the same time, we're probably sitting in the regional computer centre with our great big piles of paper doing second generation language programming.
Absolutely. So you were there, you did your PhD, but something else we had in common was by sort of the mid 80s, we're both rather tired of the academic life, you know, what happened to you next?
[00:06:02] Steve: Well, this is sort of 83 ish, I finished a PhD and I, you know, offered to stay in academia, but, um, You know, I, I, there was a lot of very smart people, but I, I just felt there was a lack of drive, ambition, uh, enthusiasm to go and make things happen.
And something was inside me saying, I don't want to be part of this. I'm, I'm going to be, you know, in 20 years time, I'm going to be in my forties. I'm bored, silly. A lot of some very smart professors were churning out the same, the same notes. year in, year out. And, uh, I didn't want to be part of that. So I decided to give it all up, give it, give up science, give up academia.
And when I started looking around, there was lots of jobs for could, can you program and can you program in Fortran? So I went and joined a little British software company actually called Logica down in London. So I moved down to London on my own. And And started working at logica wasn't there a rather legendary meeting in the orange tree pub in richmond you're absolutely right so i got a call from somebody i'd work with at logica only for 12 months and said um he joined he he left and joined a startup a startup called oracle corporation.
And, uh, he called me up and said, we've got a headcount for one person and you'd be great here. I said, I'm not sure I want to join a startup, but he said, no, no, come, come and meet the team. Uh, and the team at the training evening and on the Thursday evening in, uh, uh, in the orange tree pub, as you rightly said in Richmond.
Uh, and so I, I went in, I went over there, uh, had a couple of beers and met. Jeff, the famous Jeff Squire, who was for many years, number two to Larry Ellison at Oracle and some of his team that had come out of a company called CACI. And, uh, nine of them had come out. Larry, Larry Ellison had bought out effectively the CACI team by offering them some free software.
And, uh, anyway, I met these guys and thought they're terrific. They're really on top of their game. And, uh, I, it was compelling what they were trying to achieve a compelling vision. And I thought, yeah, I want to, I want to be part of that. So I joined, I was number 25 in the UK and I think there was probably a hundred, 150 people in Oracle corporation.
I think today there's about 200, 000 people in Oracle, something of that order. We were on phenomenal growth rates and effectively Jeff Squire had written to Larry Ellison. Written as in letter, uh, and Larry had agreed to meet him halfway in, in New York. And Larry Olson was impressed with him and said, I want to buy out the whole team, nine people to start Oracle UK.
Um, because we need to start to expand.
[00:08:46] Jonathan: And expand you did and expand at a hell of a rate. I guess people have got long enough memories. We'll remember the Oracle really started as, as, uh, one of the contenders in the relational database business and quickly became the category leader seeing off. Ingress, Informix, others who tried to change from being hierarchical database vendors to relational database vendors like ColorNet quickly came unstuck and became part of the huge computer associates empire.
There was, I think from memory, a mantra at Oracle, which was really growth at all costs. And didn't that actually lead to a few problems by the time Oracle got to the early nineties?
[00:09:25] Steve: It did. But I think one of the things I, that you mentioned there, uh, is one of the lessons I learned is that sales is a very, very important area.
And what Larry Ellison did was he knew that he needed to outsell, often better products, by the way, there was times when Ingress or Sybase or, or Informix were Better products than Oracle. Today, if you look around, none of those companies exist, even though they have better products. So there's also, that doesn't mean to say you can sell bad products.
Of course you can't, but, but you need that, that drive and that enthusiasm and that focus as much on engineering as, uh, as, as you have on. On sales as well. Um, but you're right. It, uh, over emphasis on growth, uh, and on selling without the back of values can lead to problems. And in 91, 92 Oracle nearly went bust and, uh, they'd run out of money.
They ran out of cash. The banks were pulling in the covenants and Europe was actually, uh, very well run by, by Jeff Squire and, uh, Jeff, uh, Larry put Jeff in charge to fix the, the mess. And, uh, they needed a transaction, a nip on steel, would you believe right at the last moment to make the payroll. And Jeff came in and basically said, we've got to get our costs, um, below the minimum amount of revenue, surprise, surprise, basic stuff, but very hard to do, right?
You have to go around, fire entire departments, call a lot of very good people, but we've expanded too fast and we couldn't afford it.
[00:11:04] Jonathan: So what happened? What did Jeff do?
[00:11:06] Steve: Jeff went, uh, and took everybody's forecast and minimum that we were going to deliver, uh, took a conservative view of it and then reduced the costs.
below that. So whole departments were wiped out. Whole teams were dismissed. Lots of good people had to go, but the company couldn't afford it. They'd overhired and overstretched. And, uh, and there was some poor practice as well. There was poor, poor practice, poor sales practices in particular. And lots of customers were, were, were unhappy to be oversold and, uh, the selling, the growth value is very, very important as I touched on, but it needs more, more than that.
It needs customer focus and values behind it.
[00:11:46] Jonathan: Right. There's a lesson there. You've got to run a complete company, not just a sales machine.
[00:11:50] Steve: Correct.
[00:11:51] Jonathan: So Jeff did get Oracle back on track and the company, you know, went on to, to. Prosper. Oracle was the first of the great category leading companies that, that you, you ended up leading.
Um, clearly it was Larry Ellison's creation. What was Larry like to work with? Very
[00:12:11] Steve: demanding, uh, but very inspirational as well. Uh, I saw many leaders, uh, inside of Oracle who were thinking of leaving, uh, and going to other companies would go and spend half an hour with Larry. They'd come back out and say, wow.
I'm not going anywhere. This company is incredible. Yeah, I'm here for the long run. Uh, so he was very, very inspirational, um, very demanding, um, like all, all great, like all great people are. And he hired, he hired amazingly good people around. I'm not talking about myself, but the people he put in place went on to run Silicon Valley in, in, uh, in large parts of Silicon Valley.
But he was also, um, very sarcastic and critical. I remember one time. Uh, we, uh, the European management team, uh, we will, uh, I was sitting on the European management team working for a guy called Luke Vanden Boog. Um, uh, he was the head of Europe and we went to the, went over to San Francisco for a management meeting and, uh, Larry came in and, uh, he said, uh, he said to the, he starts to address the team and give us his, his vision of where we were going and how wonderful it was all was and it was going to be.
And, um, He stopped and said, uh, okay, guys, who's the most important company in the world today? Um, this is 95, 94. And, uh, of course I knew that he really did not like Bill Gates. And, uh, so I thought, well, I can't say Microsoft. And so it's one of those times where you think, I think I'll keep my mouth shut.
And I remember the, uh, the guy who ran France was, uh, was a guy called Michel Rocher. And Michel said, uh, L'Ari, L'Ari, the most important company today. Gee. Gee. And at the time, gee was I think the biggest company by Market Cap and Larry and a harpy turned to him. I dunno where I can swear on this, but I'm going to Larry, and a harpy turned, turned to him and said, fucking light bulbs, fucking light bulbs are the most important company in the world.
Of course they're not. It's Microsoft, but here's how we're going to outmaneuver Microsoft. And off he went. Yeah. Wow. Those were fucking light bulbs. , .
[00:14:26] Jonathan: So you, you went on for a few more years at Oracle. And, you know, you just mentioned that, that Oracle was a great, uh, developing ground for those people that would end up leading the Valley.
So there was a time in the nineties, um, when you got approached by somebody who had been very senior at Oracle, um, about starting up in Europe.
[00:14:50] Steve: Yeah, I was on the European management team at Oracle and, uh, uh, Larry brought, Larry Ellison brought in the next leader of Europe, a guy called Pier Carlo Filotti, who's sadly no longer with us, but, um, Larry felt we needed some more gray hairs and the company was getting bigger.
And, uh, anyway, that was his decision and that's what happened. I didn't think that was a great hire for the first time ever. I had. sort of really disagree with what Larry was, Larry Ellison was doing. And at that time, Tom Siebel, who had been working for Larry had decided, had gone to Larry Ellison and said, we should be building applications on top of the Oracle, uh, technology layer.
And Larry wasn't that passionate about it. It wasn't that committed. Uh, he felt that the world was about grabbing the data and managing the world's data. And that was what his passion, his personal passion was around. And so Tom said, right, I'm going to do it myself. I'll, I think I can set up a company that could be.
The next PeopleSoft in a, as PeopleSoft had done in HR, could we do that in, in the category of CRM, Customer Relationship Management. So Tom had started, Tom had started the company in the US and, uh, he, he knew me from Oracle. Not very well, but he called me and said, um, do you want to come and head Europe for Siebel?
And, uh, at the time there was two or three people in the, in the team. Had you got to the office in Windsor by that time or was this even before the office in Windsor? You've got a good memory. Yeah, the office in Windsor was fantastic because we, we had to stop any sales calls at 11 o'clock to let the band go by.
Because otherwise you couldn't, the customer couldn't hear what you're, the prospect couldn't hear what you were talking about because the, uh, the marching band would go past at 11 o'clock every morning. Um, that wasn't our best office, but yes, we had, we had a couple of people just started in that office, which is, uh, um, uh, which is where I went and I remember leaving Oracle and I had a couple of thousand people in the team and somebody saying to me, so how many people have you Going in, uh, in Siebel, I said, two, and they said, uh, well, you must be mad.
You must be mad. You know, why are you giving up Oracle to go to Siebel? But, uh, you know, we'll come on this, uh, this team, uh, keeps, uh, uh, reoccurring this compelling vision that we could build something special here. Might not be as big as Oracle. But who cares? We could build something special. I could be head of Europe, I could have a share in the company, and we could make something special happen.
And you did? And we did, and we did. And what I didn't know at the time was, uh, just what, uh, a character Tom Siebel was to work for. He was, uh, he made Larry Ellison look like a, a pussycat, you know.
[00:17:21] Jonathan: But he, he managed to, what, drive it to about 8, 000 employees? 60 billion dollar market cap? Yeah.
[00:17:27] Steve: We hired, we hired 8, 000 people in four years, and 60 billion market capital.
Company, unbelievable growth rate and hiring that number of people. And I saw some arrogance coming. I remember sitting in a management meeting once and Tom, uh, you know, I was there for his head of UK, uh, head of Europe, and it was the head of America's and Asia and product development and all that on and, uh, Thomas said, right, you know, we're, we're going so great.
Let's just make sure our hiring standards, we increase them. So we're only going to hire people from Harvard, Stanford, MIT, Oxford, Cambridge, and they all have to have second degrees. And I'm going to put my hand up saying, well, I wouldn't get in, uh, here. And we went around the table and I think there was only one person, a guy called David Schmeier, who's now at Salesforce, uh, would get in.
get into the management team. And Tom wouldn't have gone in himself. So we thought maybe that wasn't a good idea. So we dropped the standards back down again. There's something
[00:18:23] Jonathan: about Groucho Marx there, isn't there? I wouldn't want to be a member of any club that would have me. Exactly. Yeah,
[00:18:28] Steve: yeah, yeah.
[00:18:29] Jonathan: For all Siebel's faults, which we might come, come back to, um, he, he was absolutely clear about Category leadership, you know, the idea that the leader is going to get has to have at least 50 percent of that marketplace.
The second might get 20 and the rest are only going to get single figures. So you actually built category leadership in CRM at the time.
[00:18:51] Steve: And that mantra exactly as you cited, the number one will take 50 percent share. When, when, when the markets all settled down, it's a new category, but when it settles down, the number one will typically take 50 percent share, number two, 20, as you said, and number three and everyone else fights for single digit.
And he, like Larry was, was determined not to be in that third category. And so again, it was growth, it was, uh, enormous focus on, on sales, on growth. Missing targets was just not, it was just unacceptable. So huge pressure on
[00:19:25] Paul: the sales, uh, and distribution business. Obviously, maybe the clues in the name, you name a company after yourself.
You're a man of not, um, insignificant ego, but, um, you know, and obviously he's gone on to do C3, et cetera. Can you, can you share with us maybe the soft and cuddly side of Tom Siebel?
[00:19:42] Steve: Uh,
[00:19:43] Paul: well,
[00:19:43] Steve: anybody who knows Tom Siebel would never use those, those, uh, adjectives to, uh, in the same sentence, actually soft and cuddly, do not, uh, marry with Tom.
But he was a very strong, uh, businessman, but super aggressive. I, I'll share with you one amusing story if I may. We, we, we were in a management meeting and Tom had a, uh, so again, there was, you know, obvious was head of Europe and there was head of Americas and on and on. We were all sitting around and we used to have this rule.
Whereby we discuss a problem and then rightly so we would try and consolidate what we're going to do, what the actions were, and then Tom would say, right, that's it, no more discussion. We're going to do this, this and this, and let's move on to the next problem. Perfectly good, uh, uh, management practice of, of meetings.
Uh, anyway, we had a new guy who's running professional services who said, well, excuse me, because Tom had then said, you know, let's stop discussing this. And, and, um. This guy, uh, I won't, I won't mention his name, um, but he was doing professional services and he said, Tom, I'm sorry, I, I disagree. Uh, I think that's wrong.
And so Tom looks at him, uh, you know, and says, um, I'd say his first name, Dave. Dave, come with me. And we thought, Oh my God. You know, so he walks out, goes to the elevator, goes down in the elevator and we think he's going to fire him. Um, he's going to take him outside and fire him. Cause that, that was not uncommon for Tom.
And apparently he took him outside. We, we found out later, he said to, he took him outside and said, what does that say on the building? And he says, Siebel Systems. He said exactly, so when your effing name's on the top of the building, you can tell me what to do. So now get back, get back in and shut the hell up and get on with what we're doing.
That was Tom's subtlety around, uh, getting people to conforms to his processes.
[00:21:32] Jonathan: So I guess eventually there must have been a time when you thought, maybe I, I should move on from, from this company. one presumes the relevance of this pace was something to do with it, but you, you must have also, uh, at that time, Start to get an inkling that there was a real paradigmatic shift coming in computing and Siebel was very much stuck in the on premise computing model.
[00:21:55] Steve: That's right. We, I did five years with Tom and I was really burnt out. It was, uh, it was 60 hour weeks, nonstop pressure. Uh, and, and that's what it takes to build these companies, right? I'm not moaning and not complaining. It is just, Totally, totally consuming. And I needed a break and, and I took some time off, but you're right.
The, the Siebel model was very much the, uh, the 2000 user deal type. Uh, if it was a million pounds software, it'd be 3 million pounds of Accenture consulting. It was big, clunky implementations on premise. And of course, it was at the time of the dot com boom and times were changing. There was a new way, which is now called cloud computing, had all sorts of names at the time, on demand utility computing and so on, um, which, which was coming along.
I, I took six. Six months off, and then, uh, I got a call from, uh, a guy called Mark Benioff, who had also worked for Larry Ellison, and had also been at Oracle, who I also knew, not very well, and he called me and said, I've got an idea of, uh, we are going to be basically take over Siebel's space because they're stuck in the old world, and we're going to be the, uh, the new guys on, uh, in cloud computing in the CRM space.
[00:23:17] Jonathan: So for the second time in your life, you got a call from the Oracle alumni network. I think our understanding is, is that Mark Benioff, very different character to Tom Siebel.
[00:23:29] Steve: Uh, very different. Similarities, you know, compelling vision, drive, enthusiasm, very smart, but, uh, a whole new side of caring about the people who work there.
So his employees were very important to him. He looked after them. Uh, the customer, he put the customer at the center of all, all processes. Um, Uh, uh, uh, a thorough profe professional experience of a lifetime to work for Mark. He's, he's a thoroughly decent guy, uh, smart, charismatic, driven, but a really top, top guy.
In the early days when I joined, we only had a couple of customers and our, our promotional, uh, marketing material. This is, uh, again, an interesting idea for, uh, for startups is if the room could take 10 people, we'd only have it eight chairs. If it could take a hundred people, uh, if the room could take a hundred people, um, we'd make, we'd make sure we had 120 or 150 in there.
He wanted to create, he was great at creating an atmosphere. This is important. It's driven. If you really wanted to get Mark upset, you'd have a room for 200 people and only have a hundred people in there. Uh, you know, 'cause it would kill the atmosphere. And so in the early days, we'd, we'd, uh, we'd have, uh, take a handful of people, put one or two customers in and pull the salespeople out.
And let the customers talk to the prospects and that was a, that was a winning formula because the product was good. It was easy to use. It was simple. It wasn't like Siebel, which was a competition. You didn't need, you know, consultants or large amounts of consultancy to get it working. And we used to go around, uh, our mantra at the time was, if you remember, the end of software, which also was a very catchy, um, And, uh, we were the sort of Amazon for business.
And one of the things I often criticize people today when I, uh, or one of my critiques is that, you know, what is it that you're doing? What's your, what is the business help explaining really, really quickly. Um, some, some, uh, some people struggle to really. articulate what's the business problem they're solving and why you should buy it.
Salesforce was very, very good at getting a message across. Yeah, so
[00:25:49] Jonathan: Salesforce presumably developed a very compelling point of view, uh, in, in that way as, as we'd advise any company that's going to be a category leader to do.
[00:25:57] Steve: Towards the end of, uh, my, my tenure at Salesforce, uh, we were then reinvesting in the ecosystem for, for, Uh, for companies who were building on the Salesforce platform.
And we were so frustrated with getting people to give you the, as the Americans say, the elevator pitch, what is it, what's the problem you're solving and how are you going to do it? Why is it compelling for me to listen more to what you're doing? We had 10 companies that we were looking at investing in, um, and we had 20.
Candidates. And so what we actually did was in, in Salesforce Tower in San Francisco, Benioff would get in on the 24th floor, say to the CEO, he'd get in the, in the elevator with the CEO of the, of the company that was looking for funding. Are you ready? He pressed the, the ground floor button and by the time he got to the ground, the, the, uh, the CEO would have to get his message across.
If he hadn't that, that's okay. And then he'd get the next guy in and go off to the 24th floor. And at the end of that process, he picked the 10 people.
[00:26:55] Jonathan: Yeah, so the term elevator pitch was a real thing at Salesforce.
[00:26:58] Steve: Literally elevator pitch, literally elevator pitch.
[00:27:01] Jonathan: So it sounds like this was a really a company worth working for.
I think so much so that you lasted, I think, nearly 15 years there. What made you think, You know, I've done everything I can do now here. It's time to move on to the next chapter.
[00:27:14] Steve: I think, uh, a couple of things. Size becomes, um, an issue. You know, I think one of the reasons why the world is exciting is small companies can catch big companies.
And these, as Uh, innovative as Salesforce are, when you start to get 60, 70, 000 people, you have large HR departments, you have large processes that have to come in and the whole thing becomes more, I call it corporate cholesterol starts to build up. And Salesforce are one of the companies that are super lean, but most big companies build up this corporate cholesterol where it's hard to get stuff done.
Personally, I don't like that. Uh, it's not. Uh, my cup of tea, I much prefer where you can move the needle on the dial and, uh, your own personal actions can, can, can, can change things significantly as opposed to being part of that. Um, but, uh, yeah, and I also, you know, to be honest, I spent the first day of my life getting educated the second, third building.
you know, uh, working hard. And if, if I get a final fit that wants to do some of the things I want to do, as opposed to, you know, the 60 hour weeks and, and in these companies, you can't be half in and half out.
[00:28:28] Jonathan: I gather that, um, Benioff was, was, was gracious when he decided to move on, but he, he came up with a, a quote from a certain Eagle song to describe the, the impact of actually working for Salesforce.
Tell us about that.
[00:28:42] Steve: Yeah, he did. Indeed. He said to me, yo, well, Steve, you know, you've been part, you know, the founder of Salesforce in Europe, uh, and, uh, I don't want you to leave, just, just do stuff. And I said, well, you know, I can't do that. If I want to go, I've, I have a house in the far East. If I want to go off to my house for a month or whatever, I can't just come back.
It's, it doesn't work as, as you guys and everybody listening will know you can't dip in and dip out of a business. You're either in or you're out. And, uh, he said to me, well, you know, I don't care, you know, just do stuff and just stay with us. And I said, yeah, but I care. It's a professionalism, uh, thing. You can't, you can't do that.
And I said, so I, you know, sadly I need to leave. And he just said to me, well, you can check, you can check out anytime you like, but you can never leave. So I still hear from him. He still pings me every now and again, but not so often these days. I think he's moved on to, uh, his friends with Elon Musk and, uh,
[00:29:38] Jonathan: So there you are, a short overview of what it feels like to go from entry level in the IT industry to the very top, where it is indeed tough.
But like New York, if you can make it in IT, you can make it anywhere. So let's find out in the next section, what Steve did next.
So, as you might have noticed, I haven't actually used the word retire so far. Um, I'm not even sure it's in Steve's vocabulary. So Steve, you did eventually check out of Salesforce, but didn't entirely leave the company's ecosystem. As you started to invest in tech and became a board director and chair of a series of software startups.
These included 1E. Who's founder Samir Khairi was a previous guest on a different tension. I think like one, a, who actually sold to Carlisle, you've also had some other successful investments and exits. Can you take us through some of those?
[00:30:38] Steve: First sale is, was something that was, uh, uh, amusing actually, uh, how we got that started a friend of mine, John Tilney, uh, who's sadly no longer with us.
But John came to me one day and said, uh, Hey, Steve, he said, you're, you're a software guy, aren't you? I said, yeah. So I've met this guy called. Colin Cooper. He said he seems really smart. And, uh, I asked him what he was wanting to do in life. And he said, well, I'd love to write the next generation of, of, uh, HR software.
And John had said to him, Oh, well, why don't you do it then? And Colin had said, well, I've got no money. I'm a consultant. I, but I've got no money to take time off to start to write the software. And. John had said, John was a metals trader, very successful metals trader and said to Colin, well, you know, I'll give you, I think it was 50 grand, uh, 50, 000 pounds.
And, um, and Colin said, Oh, fantastic, you know, that will give me enough money to get started. So I can start writing the software. So John had come round to see me the day after. I didn't know him really well and John had said to me, uh, you know, Hey Steve, you're a software guy, aren't you? I said, yeah. He said, well, I've just agreed to give this guy 50k.
He said, but I don't know what I'm doing. He said, I don't know about software. He said, but this guy seems pretty smart. Will you have a look? And I said, sure. So I met Colin and, uh, I said to him, I really liked him. I said, I'll tell you what, if you build that on Salesforce platform, if you're going to build it on premise, I'm not interested, but if you build it on the Salesforce platform, I'll give you 50 grand.
And he said, well, you might be biased because you're obviously in my Salesforce connection. And so he went away, did his due diligence, came back and said, no, I think you're right. I think Salesforce platform, uh, the undercarriage, uh, would be, would be great. And so Colin Cooper started the company called FirstSail and 10, 11 years later, we sold it to Sage for 150 million.
I think it was.
[00:32:36] Jonathan: And another one I think that has also recently exited is, uh, is Kimball applications and they were in the professional services automation business.
[00:32:44] Steve: Yeah, they were ex, uh, ex Oracle guys. And Sean Hoban, who's the CEO founder there, um, chatted to him and a similar, similar story. Actually, he, they come from the tech industry though, and, uh, wanted to build an application that being consultants.
And I had realized the problems of running a consultancy business using spreadsheets and, uh, or various other tools and Word and what have you. And I thought there's an opportunity to build applications in this space. And again, uh, Sean, good, uh, a good guy and somebody who's impressive. So myself and some others, um, are seed investors in, in Kimball and, uh, Uh, I can't remember exactly how many years, 12, 13 years later, they sell it to Axel KKR, again, for around 150 million,
[00:33:38] Jonathan: something of that order.
Yeah, and very interesting watching Axel KKR bulk up that company. I mean, I think they merged it with Mavenlink, which is another cloud based PSA survivor. And then that's been renamed to Kantata. Again, I think they were, they were also built on Salesforce, were they not?
[00:33:55] Steve: I think they were, yeah. Because, you know, Salesforce were building the platform anyway for their own applications.
So they needed the 7x24 uptime, the security features, the language support, and on and on and on, you know, running on different platforms, uh, uh, uh, iPads, iPhones and Galaxies and so on. And so that's what every other application needs. So Salesforce licensed their platform effectively. So these companies,
[00:34:21] Jonathan: I know you've invested in other companies such as as cloud apps, but I think another one that's certainly worthwhile mentioning is full circle and the client lifecycle management space.
And that's recently exited too, has it not?
[00:34:34] Steve: They have. Andrew, Andrew Yates, who's the CEO founder there. Uh, Andrew tells a story that I, I told him, I'd give him 50k if he stopped bothering me. Ha ha ha! Is 50k the magic number for you, Steve? I think, I think maybe, I think, uh, I seem to recall giving him a lot more than that, actually.
But, um, uh, that's what he told me recently. And, uh, he, he did a great job at building the company. And, um, yes, they sold very recently a few. Few months back actually to nCino, which is the American, uh, uh, banking company, also built on Salesforce, by the way, as, as out of interest. Um, and
[00:35:12] Paul: so yeah, Andrew's a, again, again, another top quality leader and, and I, I guess I'm privileged enough to to know some of those people you're talking about.
Certainly worked with Colin and Nick Scott at Fair Sale. That was, that was, uh, fun watching them do all of that. Andrew Yates is again exceptional. leader, very driven individual, um, northerner. We like that. What are the traits that, you know, some of those people also know the guys that IntelliSense, another amazing company.
Um, what are the traits that you're looking for in these European entrepreneurs and how would you contrast them with, you know, the, the, the Americans that you previously dealt with, you know, what are the subtle differences, if any?
[00:35:47] Steve: You're, you're looking for that, um. That drive, that compelling vision, um, you're looking for somebody who you think even if, even if the product isn't quite right, if they're really good, they'll get it right.
And if they're not so good, they'll make a, they'll make a mess of it. So you're looking at, uh, what I look for is first of all, the people, you know, when somebody comes along and Pitches an idea to me. I'm looking more at the person is to say, do I think this person can scale? Do I think they're likely to be able to build a business?
Um, obviously. Secondly, I'm, I'm, I'm very quickly looking at, um, what's the problem that they solve? You know, cause sometimes people will pitch you on technology. You think you've been talking to me for 10 minutes and I still don't know why I'd buy this, you know, what is it? Okay. You tell me about all the tech that all the cool tech it uses, but what's the business problem it solves.
Uh, and then I look at, uh, you know, who you're going to sell to, to be honest, I stay personally, I stay well away from, uh, B2C models. I just think it's, they generally are too expensive to fund. Um, before, you know, you've got success, whereas if it's a B2B model, you can say, okay, who's the customer? Is it the CIO, the CRO, the CMO?
Okay. Could I take it to a CMO somewhere, chief marketing officer and make that presentation and think that they would, would they buy? Um, so that's what I'm sort of looking for. Somebody who's got that passion that you think I'd like if I was. 30 years younger, I'd join you. I'd join you on that, on that, on, on that trip.
I think to your point on the differences in, in European and American, uh, approaches, the ones I've come across, obviously I've gone for big horizontal markets and that takes a lot of, a lot of dollars. It takes a lot of commitment, a lot of funding. Um, I mean, to be fair, Ellison did it without that, but it was a much slower pace, uh, I think to be fair when he, when he built up, uh, the consultancy business to fund the relational database development, and he was taking the, uh, the, the blueprint off, uh, IBM and published the blueprint for that in, in a day, um, Benioff, uh, had about 5 million, I think, to get started, which is a big chunk of money to, I think.
To start from, you know, from zero. Um, so, uh, the Americans tend to go with bigger
[00:38:26] Paul: horizontal models and take bigger chunks, bigger risks. Yeah. And you think we can't do that in Europe or you think that's opening up a little bit now?
[00:38:32] Steve: You know, we touched on earlier on about the number one, if it's a horizontal market, uh, in particular, we touched on earlier on that the number one will take 50 percent share, number two, 20 and everyone else fights for single digit.
To become number one in any category, uh, horizontal category, you need to dominate the U S it's just, just, that's where the, that's where the spending is. They also tend to be more, um, or less risk, risk averse. They will adopt new technology. This is my experience anyway, of running European businesses. Um, and so you've got that consistency, uh, people who, uh, across states, so you've got one language, one contract, you can move much faster in the U S than you can in Europe still.
You know, you still need French law contracts. You still need French speakers to sell in France. You need Italian speakers to sell in Italy, German speakers and German law and on and on, that is a impedance. to growth, whether you like it or not, it's an impedance to growth. In the US, it's much easier just to set up an office in Chicago, the way you go, or one in, uh, in, in Minneapolis or wherever.
And so it's much easier to, to, to, um, to move the business along at a faster pace.
[00:39:51] Jonathan: You know, we talked about Fair Sale and Kimball and Full Circle, um, and so on. And, you know, as we like to talk about category quite a lot, you know, it strikes us that those companies were sold before they could achieve category leadership.
I mean, could you take us through any of the thoughts about why you decided to exit at that time with those firms?
[00:40:14] Steve: Yeah, I think, I think there's probably three, three things I'd pull out with, with the likes of, uh, uh, Fersay and Kimball. Um, as I touched on speed and size, um, If you can't get to be the category leader and totally dominate the, uh, the space, then, you know, that's a, that's a threat.
Cause you don't want to be enough necessarily in that third bucket that we talked about single digit growth. And of course at first sale, we, um, we, we had lots of us. Uh, competitors coming in, the traditional guys, uh, the, uh, the oracles of this work, uh, well Workday and so on. Zero. And other people starting to, uh, come in with much bigger pockets, much bigger, um, uh, um, revenues that could potentially squeeze us down into, uh, into insignificance almost, um, to dominate the, the second, so, well, I was concerned about other competitors coming in as not just me, but the, the team.
Secondly, the ability to dominate the U. S. as a, as a European company is difficult. I think the only company that's really done it well in the, in the, in the software industry is, uh, SAP, who then almost became, had to become a, uh, an American company to do it. I think the third thing, which is probably perhaps the most important of all is the, the desire of the founders.
If you can get to a hundred people and a 10 million revenue and sell it for a hundred million and the founder makes 10 million or whatever, a lot, a lot of the, these companies, and I think, uh, Colin and Sean and Andrew would say, you know, I was very happy with what I made at Oracle and at, uh, um, Siebel and also at Salesforce, Mark Benioff was already making billions.
So was Larry Ellison. In fact, I used to walk into meet Larry and I couldn't, I've never met anybody who just lost a billion or made a billion in a day on his stock price. You know, it's like, it's unbelievable. You wonder how you could function if you just lost a billion the day before, because the stock had gone down, you know.
[00:42:21] Jonathan: It's okay when it becomes pocket change, doesn't it?
[00:42:23] Steve: Yeah, exactly, but this wasn't important to them anymore, you know, it wasn't, it was, that, the money, the money side was not important. They had long Past that, uh, that issue. And now it was about building something great and a legacy and all sorts of things.
[00:42:47] Jonathan: This is the moment on the Difference Engine when we ask our guests to summarize in five minutes or even less, what decades of experience in the IT industry has taught them. So Steve, given your extensive experience of building and funding tech companies in Europe, what are the key lessons you have learned?
[00:43:03] Steve: Oh, wow. Uh, trying to condense it down to a few lessons is tough, but I would, um, I would say The most important, uh, lesson is that revenue solves all problems. And I mean, all problems. It solves your, your love, your love life, your golf game, your weekends, because if you're ahead of your revenue goal, you can hire people, you can fix problems.
You can invest in development. You can, uh, take on new office space. If you're behind your revenue goals and you're, and you're losing money or whether it may be you're depressed, it may affect your weekends. It affects your personal life. It's to grow businesses. You have to get that focus on the revenue side of the business.
And one of the. Things I sometimes find in in UK and in Europe is this word of sales is almost viewed is not that important or not that, uh, not a real profession. It is just as important as as as development. If you don't have any sales, you don't need any developers, you don't need any HR people, any accountants.
And so we need to. Break that shackle of selling is really, really important. So revenue solves all problems would be my probably, uh, first point. Um, secondly, what I've learned particularly from, um, from Benny off is, uh, and Ellison also. is to have a compelling vision, something that excites you that says, wow, we could do this, we could really bring it off.
It's not some stargazing, you know, nonsense that, you know, anybody could write. It's compelling of how we could make a difference and solve a real category problem. Why is that important? Well, it allows you to attract great people and you need great people, which is almost a subset of the compelling vision.
If there's no compelling vision, great people won't join you. Um, But if you got that, then you'll, you'll, you'll, you'll be able to hire great people. A subset of that is, by the way, you have to, you have to fire poor performers. And this is not having a hire and fire culture, but great people won't stay with you if you've got a lot of poor performers that they're having, having to carry.
So compelling vision, uh, uh, with the associated hiring, hiring and, uh, pushing out both performances would be my point two. Point three. Put the customer at the center of everything you do, you know, are you going to make this sale? Well, hang on. Can we make the customer successful? Not sure. Don't make the sale, you know, don't sell something where you can't see the customer being wowed by it.
If they're wowed, you get, if you get great customer success, they do three things. They buy more from you. They, they, um, they recommend you to friends, colleagues in the industry. And if they move jobs, they'll buy from you again, bad customers, uh, customers who are disappointed in you will do, uh, will cause you a lot of, uh, a lot of damage.
[00:46:06] Jonathan: So I'll ask you a little bit about that compelling, compelling vision. You know, most people think of a vision as something which is, you know, way. Over the horizon, but I think you, you, you have a pretty strong opinion that the vision should be very achievable and actually comparatively short term.
[00:46:20] Steve: Yeah.
Yeah. You're right, Jonathan. And, and, you know, one of the things we did, I think very successfully at Salesforce was, uh, we put, we, our vision would be for 18 months. 18 months is not that far. Uh, and why 18 months? Well, it's far enough out that we would say, what would we be delighted with achieving in 18 months time?
18 months is that far out that it's, it's a stretch, but you can almost smell it, you can almost touch it, and we'd write, we'd basically spend a lot of time saying, you know, what would we be thrilled with in 18 months time if we achieved it? We all get excited by it, and then go make it happen. If it's too far out, You know, the bumps in the road throw you off course if it's too close, then, you know, that that's next quarter, right?
Uh, so that 18 months is, is, is it's compelling. It's, it's, you can smell it, you can touch it, you can feel it, and it drives everybody on to make it happen.
[00:47:25] Paul: Steve is going to talk about this, but, um, I actually had the privilege of sitting in a board meeting with him at one point. The topic happened to be pricing. It was about cloud subscription pricing. And I witnessed Steve coach a team of Brits exactly how this was going to work and I could see their eyes light up I think that's a great example of what you are bringing from your history at Siebel and Oracle, etc I'm bringing to Europe.
So you're actually bringing the know how. It really impressed me.
[00:47:53] Steve: I think the general Context around pricing is an interesting one. You know the traditional Software model of, shall I say, days gone by was every time you create something new, here's a great way of tweaking the customer. We can get some more revenue for, for that.
So we've got a new feature. Fantastic. Let's, you know, call it out and charge our customers more for it. One of the things we did at Salesforce, which I think helped, uh, us win the, uh, the status that we've achieved was we said, no, let's not do that. Let's not tweak the customer. Every time we have a new idea, um, let's give them more for free.
Or more for their subscription that they're already paying. Why? Cause it makes them stickier. They stay with us. They're delighted. They think, wow, every other software company charges us for this. Let's not do that. But then when you come to renew the contract, the customer says, yeah, sure. I want to renew because I'm, I'm getting more.
more value from you. And so we, we spent a lot of time on what we should show. I don't mean, I don't mean being totally naive. Of course, you've got to also make sure that you're making your revenue numbers and, and the customer's paying a fair price. But what I was, uh, what I was alluding to is that you, you look at it from the customer point of view.
What is fair for the customer? Let's not do what everybody else used to do, which was give the customer a hard time. And So we, we, we did a lot of that at Salesforce. We also did, um, something that I, I learned, uh, which was customers will buy what they want and not what they need. I'd often say to a customer, I think you should have the, call it the gold version.
And they'd say, but You have a platinum version, which is even more functionality. I said, I know, but you don't need it. You only need the gold version. That'll be, I want the platinum version, Steve. I do not want the gold version. We only buy the platinum version. So sometimes you can create a category for your customers and the big guys will often say, I only buy the best.
Even though I don't need it, I'm going to buy the best. So we have lots of discussions around pricing and,
[00:50:12] Paul: uh, you know, the do's and don'ts around it. Just one example, I think of the sort of know how and the knowledge that you brought in to European companies from your experience in the States. Um, but, but people do think, you know, these days in EMEA that it's.
You know, there may be other things that we could learn. Could you perhaps tell us what grinds your gears about people thinking that, you know, Europe's just one single business entity.
[00:50:36] Steve: I think it should be one single entity with a few caveats. Uh, I remember when I was setting up Salesforce in Europe, uh, in Europe, I said to Mark Benioff, I will build Salesforce in Europe, I will not build.
Salesforce Europe and that's a little bit of a play on words, but a lot of companies will say, well, I need a different set of processes in France. I need a different. Set of processes in Germany, again, in, in the Benelux, uh, and the managing director of those respective countries will have the authorities to say yay or nay about a product launch or a marketing promotion or whatever it may be.
That just makes life so slow and it just grinds everything to a halt. So we have to decide that we have to move fast. So when we, when we launch a new product, we launch it everywhere. When we got a new marketing campaign, it's going everywhere. Now that creates, uh, some tensions, right? Because if you think you're the managing director of the UK and we are launching this across Europe, you may say, well, I'm not, I don't want to do that in the UK.
That's too bad. Because we have to make it happen and we have to move fast. If you're, you're building a company that has to negotiate with every single country, negotiate with a small N about when and where, when and how we launch a new marketing campaign or a new product becomes available or on and on.
It just makes you vulnerable to competitive threats where you're moving too slow. I'm obviously not talking about language translation, of course, and local, uh, contractual issues. So what am I saying? I'm saying that you have to move fast across all of Europe. You can't allow your individual countries to negotiate back with you to say, no, I don't want to do what you're suggesting.
It's too slow.
[00:52:32] Jonathan: It strikes me. A lot of people just look through the wrong end of the telescope and they should. Start with the customers. And what is it that customers need? Because, you know, frankly, you know, in running businesses, the customers are really the only thing we exist for.
[00:52:44] Steve: Correct. And a lot of people just talk about customers, right?
They will tell me anybody who doesn't say their customers are important. But one of the things we did really well at Salesforce is that we would, as I mentioned earlier, put the customer at the center of the process, but what does that mean? What are you specifically going to do every single day of the year around those customer values that you, uh, that you're
[00:53:04] Paul: espousing to?
Just to bring us right up to date and slightly controversially, it looks like there's a lot of change going on in Europe at the moment and Europe versus America, the two, uh, sort of continents that we're talking about, um, specifically with tariffs and the potential trade wars. Is it time to coin a phrase you'll be very familiar with, Steve?
Is it, is it time for Europe to walk alone through the rain, do you think?
[00:53:26] Steve: You know, I, I don't think it's, uh, your listeners who are all building companies are at different stages of building companies. If anybody ever came through the door, uh, my door and said, you know, there's a recession happening, 9 11 is happening.
Actually 9 11 was a little bit different, but, um, You know, there's a recession, uh, recession code. It was a little bit tricky, but I don't think we've got COVID. I don't think we've got 9 11, uh, at the moment, but if anybody came through, you know, uh, to the door saying, Oh, there's a recession. My customer's not buying.
I mean, that was a big red flag to me to say, I've got a really poor salesperson here. Most companies are not touching the boundaries. You know, maybe if you're Microsoft or you're Google or somebody of that stature, Apple, maybe then. Economic and trade wars are affecting your ability to sell and build product.
I don't believe anybody of the sort of size of companies who are listening to, to this, uh, uh, podcast are in any way affected by, by these things. And anybody, any sales or any, any sales function saying we can't make his own numbers because of tariffs, trade wars. You know, Trump
[00:54:38] Paul: issues, that's nonsense.
That's just excuse. Great. So, right. You heard it here first guys. Um, this is a man who's built not one, but three category leading firms all across EMEA. Um, and he led by treating EMEA or Europe as a single entity, not a collection of fiefdoms or, or other stuff that that's going to slow down the business, all about speed, all about approach, all about vision.
Thank you.
These days, it seems academia and tech entrepreneurship in Europe are much more closely linked. And as we mentioned, we really had, uh, recently had Hussein Kassai, um, the ex CEO of Onfido, uh, talk about his new startup Quench AI on the show. Now his new initiative, aside from his commercial activities, is something called the London AI Hub, and that brings together academics and business founders.
And it seems much more acceptable because of the. Theoretical foundations of large language models to blend the two. Steve, you came from academia and made a massive success in entrepreneurship. Do you think things have changed? And what does a young Steve Garner of today have to move to London and have to leave?
Academia to have a great tech career.
[00:55:53] Steve: Um, I certainly think it's more socially acceptable to start a company now because, you know, there's more if you like shoulders of giants that you can that you can point to that we're standing on who have gone out and build and built amazing companies. Then when, uh, I, I left in the eighties, you know, there was only a couple of really IBM dominated everything.
And now of course, there's lots of, uh, category leaders and, and very successful ones and rightly so. So I think it's more socially acceptable to, um, to have a goal, come out with a greater, doesn't diffuse from some of the things I said earlier about, you know, having a compelling vision and being able to articulate what's a business problem you're solving.
But assuming all that said, it's then more socially acceptable and easier to find, uh, um, uh, early stage funding from a mostly for me, uh, uh, angel funders, the VCs tend not to go to early stage. Um, That said, one of the things that, uh, uh, certainly helped mold my, um, uh, success, or whatever you think you could call success, was living through some of the processes that work.
And oh, and oh, by the way, lots of things that go wrong. You know, there's lots of things that, you know, we've, we've talked about, uh, uh, the good stuff that's happened, but I've got lots of investments that didn't go so well. And we made lots of mistakes at Salesforce, lots of mistakes at Oracle. Um, so sometimes you, you know, you learn a lot from your mistakes as well, and just starting out, you know, obviously, um.
That's, uh, that's still a challenge, but some of the companies I, I, I mentor, I just give them confidence that as they are making a mistake or they're seeing something that they're challenged on, say, that's not, that's not a problem. We've seen that before. And it gives them confidence that they're on the right track and it's not, uh, um, they're not going down a dark alley.
[00:57:50] Paul: Brilliant. Well, I think you are the ultimate blend of academia into. Tech success from a European perspective. And I think those words would be very inspiring for some of our listeners. So I just want to say, thank you so much for being generous with your time. This contains some very valuable lessons that people can take and use in their own careers.
Well, thank you for having me. I've enjoyed it.
[00:58:13] Jonathan: Thank you for listening. If you want to learn more about category design, head to becategorical. com. If you need help designing and dominating your category, then get in touch. Contact details are in the show notes.