Sramana: What did you do after Loudcloud?
Michael Mullany: My experience at Loudcloud led me directly to VMWare. I joined them in 2002 after I was contacted by an engineer there whom I had worked with prior at Loudcloud. He told me that this technology was great and that the engineering team was phenomenal. I went there and met some of the co-founders, and I thought what they had was incredibly special. I learned a lot from Diane Greene about how to run a company. She taught me far more than any MBA program could.
Sramana: What positions were you working in?
Michael Mullany: At Loudcloud I was a product manager and ran the product marketing group. At VMWare I was the director of product management and eventually moved up to run global product marketing for the company.
Sramana: How long did the VMWare stint last, and what was the next step?
Michael Mullany: VMWare was a three-year stint from 2002 to 2005. We took the company from 25 million in revenue to a $200 million run rate. That was a very exciting ramp. It was the fastest infrastructure ramp that had ever taken place. It was a combination of magic technology, the x86 virtualization, and the packaging and positioning. Not many people know that the first year of the VMWare Server strategy was essentially a flop. There were features missing, the distribution strategy was not right, and we had diffused positioning. Once we fixed those three things, we started ramping a lot faster.
Sramana: I did three years of startups followed by 10 years of consulting. The most money I made in consulting was fixing people’s shoddy positioning exercises. What was wrong with VMWare positioning?
Michael Mullany: They had the same problem that a lot of engineering centered companies have, which was technology out rather than customer problem in. The technology positioning when I got there was focused on virtual machine software that did 15 things really well. It was marketed as something that helps you control your resources in your data center, it helps you be more agile, it helps your test and development, it was a better way to manage your servers, it would help you consolidate, it would help you save money, and the list goes on. Once you get past the second benefit on that list, people’s eyes would start to glaze over.
The first thing I did was go through sales force and examined our existing customer base. I found that all of our existing customers bought VMWare for server consolidation. People have server consolidation projects and a server consolidation budget. We actually had the best server consolidation solution possible. It worked and it saved a lot of money. The first year there, all I wanted to talk about was server consolidation and why we were the best solution for server consolidation.
The takeaway from that is when you are a startup you need to find the demand. It is very expensive to start your own parade. It is expensive and risky to educate people about something new. If you can find the way to get in front of a parade that someone else is sponsoring, then you will find success. The cost of educating a customer about why they should buy something has already been born by somebody else. This is particularly true if you have a better product. The cost of marketing and sales in that case is far, far lower.
Sramana: One of the things I preach is the need to talk to customers and find out what their problems are. You need to know what they are trying to solve and found out what people are buying and why they are buying it.
Michael Mullany: It is important to talk to the right customers. Before VMWare Server was launched, VMWare sponsored a focus group where the consensus was that VMWare Server was not an interesting product and that nobody would buy it. That is now a $2.5 billion product line.