SM: Who finally funded your dream? LD: David Strohm from Greylock.
SM: How did you get to David? LD: He was involved in one of the companies, and he was the most skeptical, and that is why I liked him. I don’t like people you can win over easily. He just sat there and looked at me like, “Who the hell are you and what do you know about anything?”
SM: You probably didn’t know anything about anything. LD: I didn’t, and that is exactly what I said to him, and that is how he tells the story. He just says, “OK, I will give you a million and you see what you can do with it. That’s it. You are never going to get anything more if you don’t do something incredible with it.”
SM: Then what happened? LD: We launched the product three days after 9/11. That seems to be the theme of this company. We went public when the markets were down 9% more than they had been in five years. We are just used to it now.
SM: Were you able to funnel in all of the ideas of aligning arrowheads, doins appraisals, etc. into the product? LD: Yes. That is what I am most proud of in my career. We have truly built a product where people can say, “We can see everybody’s goals, and everybody knows what they are supposed to do.”
SM: Is that the value proposition of SuccessFactors? LD: A big part of it, yes. Another aspect of it is that you get employees engaged at a level they never have been before. We have found that drives top line performance 2-3%. It is incredible, but it is so simple. Have you heard of the band Dire Straits?
SM: Sure. LD: He has a song, “Industrial disease.” It is like this industrial disease that you do not care about your employees anymore and it is OK to not care about them. First of all, that is pretty inhuman not to care, but aside from that, it is a dumb business decision. Why would you not focus on these assets which are 70% of your costs? Why would you not sit down and look them straight in the eyes and say, “Are you part of the future? Are you in? Because if not please go somewhere else. Otherwise let’s get together around this.” It is such a basic principle but companies have allowed themselves to stop doing it. Bad companies certainly have.
SM: You are now taking your solution to companies and helping them with this rather key alignment function that nobody else does. LD: That is right. From that, we drive 360 degree reporting, succession planning, a very nice interactive org chart where you can see who is at risk of leaving and who wants to be promoted. You can put in, “I want to go here, I want to go there.”
You can actually manage your team. You can determine which people go on which seats on the bus … that is a new product we built three years ago which has had a lot of success. In fact, Goldman Sachs and Healtheon both started with that product before they went to the alignment products.
I am always confused what to answer when people ask if our value proposition is only alignment. That is where the company started, but some of these other products have gotten real traction and are a real percentage of our sales.
Another one that a lot of companies start with is compensation. The compensation product was very hard to build, but it is something that I had in my very first product in Lotus notes where if you do your goals you are probably going to ask what you are going to get out of it. I will tell you what you are going to make if you meet your goals, what you are going to make if you exceed your goals, and what you are going to make if you fail on your goals. It is really simple. I am not that money hungry, but I always told my bosses that I want to know what I am going to get paid. You are going to be extremely clear to me what I am going to make. You would be amazed how many people do not know how much more money they can make on bonus.