Russell McGuire

The Salesforce story may be the most popular one used to describe the process of creating a new industry category. Before Salesforce.com, software was bought as a “product”. Salesforce redefined the industry so that now software is bought as a “service”. The company truly deserves tremendous credit for changing an entire industry by creating a new category, but a big part of why they were successful doing so is that they realized they couldn’t do it alone.

At the beginning of 1999, few people would say that the software industry was broken. Computers and software had fundamentally changed how people and businesses work, especially following the introduction of the IBM PC in the early 1980s. These changes made workers and industries more productive and contributed to increasing quality of life. 

But then the Web happened. Companies like Google and Amazon raised everyone’s expectations of how things should work. You need something? You search for it online and find it in minutes or seconds. Sure, if it’s a physical product, you might need to wait a few days for it to show up on your doorstep, but everything became very simple. If it works that way for websites or books, why couldn’t it work for software?

That’s what Marc Benioff wanted to know. In his book Behind the Cloud, Marc wrote “My vision was to make software easier to purchase, simpler to use, and more democratic without the complexities of installation, maintenance, and constant upgrades.” In 1998 Marc started actively pursuing his vision. He recruited a team to start building the product and wrote a business plan. On March 8, 1999 the three-person team started working in a one-bedroom apartment next door to Benioff’s home. They called the company Salesforce.com to reflect the problem they were solving (SFA) and the new Internet-centric model they were introducing. In July, Benioff quit his Oracle job and focused entirely on Salesforce.

By 2003 the company had edged out from SFA into the broader category of Customer Relationship Management (CRM). Salesforce had successfully created the category of SFA/CRM Software as a Service (SaaS), but it hadn’t achieved Benioff’s vision of completely redefining the software industry. Even as a publicly-traded rapidly growing corporation Salesforce simply would never have enough resources to accomplish that on their own.

Benioff developed a new vision and a new direction for the company. Salesforce would not only provide Software as a Service (SaaS), but also a Platform as a Service (PaaS) on which others could develop software applications. Benioff wrote “creating a platform offered a way to resolve our biggest problem: customers were clamoring for more applications, and we didn’t have the resources to build everything ourselves. Further, we knew that outside developers needed a better way to create applications. There was so much that was truly painful about the process, and the heavy lifting required to build salesforce.com was fresh in my mind.”

Today, I think it’s safe to say that the SaaS category is now firmly established and the industry has been transformed. Perhaps this transition was inevitable, but Salesforce was able to accelerate and benefit from the creation of the broad SaaS category because it chose to collaborate with others. 

Read my full telling of the Salesforce story here.

Are you in the midst of creating a new category? Reach out if you’d like to brainstorm approaches to accelerate and de-risk the process.

Behind the Cloud by Marc Benioff and Carlye Adler tells the exciting story of a high-growth technology startup from initial concept through and beyond IPO, structured in a way that other founders and leaders can easily learn lessons from salesforce.com’s challenges and successes. It’s a fun read and I believe that any business leader would learn something applicable to their current situation by reading this book.

The authors have done a masterful job of melding two different approaches to writing a book like this. The subtitle of the book is “the untold story of how Salesforce.com went from an idea to a billion-dollar company — and revolutionized an industry.” Normally such a “story” book would be written chronologically, telling the step-by-step, week-by-week, month-by-month, year-by-year story of the company’s progress. However, I’m guessing that Benioff’s passion was to tell the story in the form of lessons learned, and such a “teaching” book is more useful if similar lessons are grouped together thematically. Somehow the authors managed to organize the lessons thematically, but order the themes so that the story largely unfolds chronologically as you read from the first theme through to the ninth theme. Doing so maintained the power of “story” (beginning, middle, end (at least as of 2009)) while also delivering the power of “teaching”.

Specifically, the book is broken into 111 “plays” — specific things the Salesforce founders and team did, and that others can adopt. These are broken down into 9 thematic “parts” or “playbooks”: Start-Up, Marketing, Events, Sales, Technology, Corporate Philanthropy, Global, Finance, and Leadership. Each playbook contains 10–20 plays. Each play is typically 2–5 pages long, includes very specific stories from the history of Salesforce, and generalizes what the authors learned into a lesson that could be applied by other companies.

No reader will immediately benefit from all the lessons learned, but almost any business leader will find something useful for their current situation amongst the 111 lessons shared. If you’re looking for an interesting book to read that might benefit your ability to lead your business, this could be a great choice.

Read the full review here.

Product Roadmaps Relaunched by C. Todd Lombardo, Bruce McCarthy, Evan Ryan, and Michael Connors is a guide for those involved in new product development, especially product managers responsible for setting the strategy and guiding the development of products. It teaches a more strategic way to use product roadmaps — providing clarity and a common understanding while avoiding over committing or getting into details more appropriately managed elsewhere.

I’ve been involved in product development in one form or another for the past few decades. Managing the process has become more structured and scientific over those years, but the most significant change has been the adoption of elements of design thinking, lean startup, and agile development. While business decision making has become increasingly data-driven and algorithmic, the reality is that what the market wants and needs is still fairly mysterious. Product developers must find a healthy balance between satisfying the desires of decision makers to predict what will happen and when, with maintaining the ability to learn what will actually succeed before rushing a new product to market. Product Roadmaps Relaunched suggests an approach for achieving this balance.

The first chapter of the book is primarily structured around common problems that are addressed by the book’s new approach to product roadmaps:

• Nobody understands why things are on the roadmap
• You are shipping a lot but not making progress
• Executives and customers demand commitments
• Marketing and sales are not selling what you are making
• Customers aren’t excited about your new features
• Your stakeholders and customers expect a firm commitment on dates for your product releases
• Time spent estimating design and development efforts takes time away from actually implementing them
• Your team looks at the roadmap as if it were a project plan listing when features will be released

In the second chapter, the authors define the key components of a product roadmap, including a product vision, business objectives, product themes, high level timeframes, and a disclaimer that all of it is liable to change at any time. The next eight chapters walk through the process of developing this new type of product roadmap. The final chapter provides readers with guidance in how to help their organizations begin to implement this new approach to product roadmapping. 

Read the full review here.

Unlike some examples where an industry giant pulls together a coalition of startups to help establish a new category, the story of the establishment of the 4G category is one where a small startup (Clearwire) pulled together a coalition of industry giants (Intel, Motorola, Google, Sprint Nextel, Comcast, Time Warner Cable, Bright House Networks). 

In 2004 Craig McCaw acquired Clearwire, a collection of assets, most importantly a collection of spectrum licenses in the EBS and BRS bands around 2.5 GHz. One of McCaw’s other companies (NextNet) had already been working on technology to deliver 4G-like capabilities. He made NextNet a subsidiary of Clearwire to focus on building the network equipment the company would need and approached Intel about becoming a strategic partner. 

Intel largely missed the opportunity for its chips to be included in cellphones. However, early in 2003 the company launched a strategic initiative with a chipset called Centrino that would add WiFi to laptops and other mobile computers. The success of the Centrino initiative to establish WiFi as the ubiquitous standard for wireless local area networks encouraged the company to pursue making WiMAX the ubiquitous standard for wireless metropolitan area networks. In October 2004, Intel invested an undisclosed (but “significant”) amount of money in Clearwire and began working with NextNet on deploying pre-standard WiMAX.

During 2005 the company launched service in its first 25 markets covering about 5 million people. In 2006 Intel invested an additional $600M into Clearwire. Motorola became a second strategic partner by investing in Clearwire and acquiring NextNet. These three companies each brought critical elements to the table in making the push for WiMAX to become the de facto standard for 4G wireless. By 1Q2007 Clearwire had signed up 285,000 subscribers. In its initial 25 markets, more than 10% of homes passed had signed up for Clearwire service and many of those markets had achieved cash-flow break even. Those results were impressive and proved the concept of 4G-like wireless broadband, but they were far from significant enough to establish the 4G category. The company would need more help.

A truly mobile service has to work wherever you go and it has to stay connected even when you are traveling at highway speeds. Fixing these problems would require a lot more spectrum and a lot more money. Sprint and Nextel had each separately acquired EBS/BRS bands in about a third of the country each. The two companies had merged in 2005. In 2008 Sprint Nextel announced the combination of its 4G business with Clearwire to form the new Clearwire. The new venture received Sprint Nextel’s 2.5 GHz spectrum (resulting in a nationwide footprint), and $3.2 billion in cash from Intel, Google, and three of the largest cable companies.

The deal brought more than just spectrum and cash. The third missing component to firmly establishing the 4G category was a marketing and distribution strategy. The new Clearwire would build and operate the 4G network, and Sprint Nextel, the cable companies, and other wholesale customers would sell the capacity on that network to their customers.

By the end of 2010 Clearwire’s network covered 119 million people, their subscriber base had grown to 4.4 million, and revenue had grown to $180M in the fourth quarter alone. Clearwire and its allies had successfully created the 4G category. Within a few years almost no one would consider buying a phone that didn’t have 4G technology. Unfortunately, category making can be hard and expensive. LTE ended up winning the technology war over WiMAX. Clearwire ran out of money and was acquired by Sprint. Sprint itself struggled to survive and eventually was bought by T-Mobile. However, the core capabilities and assets that started in Clearwire continue to provide mobile broadband leadership for T-Mobile. 

It’s impossible to know the “what if’s” around 4G if Clearwire hadn’t led the creation of a powerful collection of tech giants to establish the category. We will never know because Clearwire and its allies did make true mobile broadband available at the same time (2007–2010) that Americans were falling in love with the smartphones that needed it most.

Read the full story here.

Start-Up Nation by Dan Senor and Saul Singer seeks to explain why Israel produces more start-ups and entrepreneurs per capita than other countries. The book tells many interesting stories about the start-up nation that is modern Israel along with technology start-up companies born out of the unique mix of cultural, demographic, military, geographic, and historical factors that shape how Israelis think, innovate, and act. Although the lessons learned may have few direct applications inside of our businesses, the book still gives us much to consider about the world in which we live.

I started reading Start-Up Nation several weeks ago, before Hamas terrorists invaded Israel. As I read the Forward by former prime minister and president Shimon Peres, I was concerned the book would be a “puff piece”, telling the story of Israel in an overly positive manner. I know the issues behind the continuing unrest in the Middle East are far more complex than I can claim to appreciate, but the tone and the claims of the Forward put me on notice that the rest of the book would clearly be told from the Israelis’ perspective.

More than anything, Start-Up Nation has helped me better understand the Israeli experience from the birth of the nation 75 years ago to today. Because the book was written in the language of business, I can more easily understand and appreciate the stories being told. These stories help me understand what I see on the news: the long standing animosity, the geography of the surrounding Israeli enemies, the nature of the Israeli Defense Force (IDF), the close-knit relationships across the country underlying statements that everyone knows someone killed or taken hostage, and the strength of the national identity.

While Start-Up Nation should be most helpful to policy makers who can influence the factors described to increase entrepreneurship and innovation within their communities, others will find the stories interesting and informative, especially in light of continuing conflict in the Middle East.

Read my full review here.

Today we take mobile apps for granted. They are integral to every aspect of our lives. And yet most of us can at least vaguely remember that this wasn’t always the case. In the article linked below I trace the beginning of the mobile app revolution to the early 2000s when a bunch of scrappy startups came together to help businesses start leveraging the power of mobility to improve how their teams worked.

Workers who were constantly moving around but needing to stay connected as a team came to love Nextel’s solution. With a push of a button, they could open a channel to one person or an entire team. The company quickly became the market leader within industries and departments that relied on mobile workers, whether they be blue collar laborers or white collar sales and service reps. Customers’ value of the Nextel service translated into them paying, on average, $69 per month, compared to the industry average of $51. Although it had become a big company, Nextel maintained its scrappy startup culture, constantly challenging the status quo.

Traditional software companies were also working to serve the kinds of mobile workgroups that were buying Nextel push-to-talk phones. What companies wanted, and workers would accept, was a software-based solution that actually ran on the phone they carried with them. But that would require the wireless carriers to make some major investments. Between 1999 and 2002 Nextel and Motorola worked together on four capabilities critical to the establishment of the Mobile Business App category. Those were a true packet data network, a software platform, GPS capabilities, and a business support platform.

I like to describe the value that carriers like Nextel brought to pre-iPhone software developers as being in three buckets: bits, bills, and bags. First, Nextel provided the core data capabilities (bits) including the packet data network, the development platform, and the GPS data. Second, the company provided the business infrastructure (bills) including the “bill on behalf of” capability and frontline customer support. Third, Nextel served as a sales channel for the software companies (bags), both through the download site as well as through the growing Nextel salesforce, many of whom were focused on the specific industry verticals being targeted by the mobile business application developers.

Through the business solutions team, Nextel pulled together a loose coalition of developers to firmly establish the Mobile Business App category. In addition to OpenWave and TeleNav, the team also helped startups focused specifically on business applications including GearWorks, Xora, Digital Cyclone, Trimble, and many more. Nextel became the title sponsor for NASCAR races and would invite car-loving customers to pre-race events where they would hear from a variety of the company’s software partners about how these new applications could dramatically improve the performance of their business.

Read the full article here.

Whatever You Do from Made to Flourish is a thoughtful and thought-inspiring book. Made to Flourish is a ministry focused on helping local churches help their people integrate their faith into their work lives. The book explores how we can pursue integrating our faith into our life through six theological themes: the Bible’s grand narrative, redemption and renewal, personal wholeness, flourishing-minded work, economic wisdom, and the local church. Christians seeking to integrate their faith more holistically into their life will likely find some ideas and concepts here that will help them on that journey. 

Whatever You Do is a theologically-rich book. Three of the six authors are theology professors at major Christian universities. They don’t shy away from digging into theological topics and applying them to the world of work. The book calls us all out, as individual Christians and as local churches, and challenges us to think deeply about how the Bible’s grand story, and God’s call on our lives, translates into our daily work. The book doesn’t try to provide specific answers, but rather helps each of us to think through what we believe and how that should impact the decisions we make every day.

Read the full review here.

One of the highlights early in my career was playing a small role in the creation of the new category of frame relay services. However, if WilTel and its earliest competitor in the category hadn’t made an essential change in their marketing and sales tactics, the category may have never become established.

The article linked below tells the full story, but a few of the key lessons learned include:

1. There’s no such thing as a category of one
2. Early adopters are essential for learning from/adapting and for building credibility
3. Additional entrants, especially if established brands, can accelerate category adoption
4. You aren’t really competing against other category entrants. Focus negative messaging on the status quo.

Click here to read the full story of WilTel’s launch of WilPak, the world’s first frame relay service.

Bottom line, Playing to Win is likely the best book on strategy that I have yet read. It teaches concepts in an easy to understand way, provides frameworks that are easy to use in real world situations, and provides lots of examples to show how the frameworks work in a real company. I strongly recommend Playing to Win to anyone involved in strategy development and strategic decision making.

At the time Playing to Win was published, Roger Martin was Dean of the University of Toronto’s Rotman School of Management and A.G. Lafley was the former Chairman and CEO of Proctor & Gamble. The book’s title stems from the authors’ contention that companies must “play to win” or else they are wasting everyone’s time and investors’ money. Too many companies “play to play” which can appear to work for a time, but in the long run simply destroys value. 

Playing to Win is mostly structured around the Strategy Choice Cascade. Proctor & Gamble examples are used throughout the book to demonstrate how the framework works in real life. The Strategy Choice Cascade is a series of five questions that define a company’s strategy:

• What is our winning aspiration?
• Where will we play?
• How will we win?
• What capabilities must be in place?
• What management systems are required?

Chapters 2 through 6 each deal with one of the questions in the cascade. The chapters often include tutorials in basic concepts of competitive strategy such as market segmentation, customer needs research, generic strategies, differentiation, etc. Each chapter includes detailed step-by-step case studies from P&G, a list of “dos and don’ts”, and often a story from either Martin or Lafley (or both) to share their personal experiences (sometimes painful) that helped them learn the key concepts covered in the chapter. There’s a lot of detail in these chapters beyond what the simple questions in the cascade might imply. Anyone involved in the kinds of hard strategic questions any business (especially a large one) faces will be able to relate to and learn from the many stories told and lessons taught.

Chapter 7 is titled “Think Through Strategy.” At the beginning of the chapter the authors point out that the cascade is helpful, but in the real world leaders will ask: “But how and where do you start? And how do you generate and choose between possibilities at each stage?” They offer another framework as a starting point. The final full chapter in the book introduces yet another framework to help with strategy development. The book closes with a short Conclusion titled “The Endless Pursuit of Winning” which ties the three main frameworks from the book into what the authors call a “playbook” for strategic management in a dynamic competitive world. 

Read my full review here.

In 1985 Roy Wilkens was serving as president of Williams Pipe Line, a division of The Williams Companies in Tulsa, Oklahoma. An electrical engineer by training, Wilkens had risen through the ranks in the energy industry and now was leading one of the country’s largest petroleum products pipelines. Little did he know that he was about to jumpstart an entirely different industry.

From a regulatory perspective, the Department of Justice had just ordered the break-up of AT&T, leading to the emergence of dozens of new long distance competitors. From a technology perspective, fiber optics was emerging as a viable means of transporting telecommunications signals with high reliability and low cost over long distances. Roy and his team recognized the opportunity to build and operate a new kind of pipeline — one carrying bits rather than BTUs.

Many of the new long distance competitors were ambitious entrepreneurs who saw the opportunity to sell long distance voice services to homes and businesses. Each of these startups raised enough capital to buy a long distance telephone switch and then connected that switch to all the Bell operating companies that had been broken out of AT&T. The closer they could connect into the Bell networks to where a call was originating and completing, the lower their cost. The scary situation for these startups was that the only company that could sell them the circuits to make all of those connections was AT&T, the very company they were competing against. 

One of those entrepreneurs was Clark McLeod. He started Teleconnect by taking out a second mortgage on his home and raising money from friends and family. McLeod had been in talks with six other entrepreneurs, each of whom had raised enough funding to build a regional fiber network, but none of whom could afford to build a nationwide network. Although competing with each other for long distance customers, the seven carriers decided to band together to solve the longhaul interconnectivity problem. They formed the National Telecommunications Network (NTN). Rather than build its own fiber network, Teleconnect contracted with Williams to build a “midwest cross” from Minneapolis to Kansas City and Omaha to Chicago and connect it into the NTN network. 

The partnership was a huge success. The companies interconnected their networks and figured out the operational details for provisioning a circuit across multiple networks. NTN’s president, Martin McDermott in Washington made sure everything operated smoothly and directed the lobbying efforts to protect the rights of the emerging competitive communications carrier industry. Each company immediately had the combined reach of its brethren, cutting their costs and improving the quality of their calls. Williams remained a carrier’s-carrier, not competing for retail long distance customers but selling circuits to all the other long distance carriers and some very large business customers. 

Through the combined efforts of all, long distance prices continued to come down and the market grew. Eventually long distance calls became so inexpensive that they were bundled into unlimited cellphone and broadband offers. Without the collaborative efforts of the NTN members, it’s impossible to know what would’ve happened, but if AT&T had successfully crushed the nascent industry it’s likely we would not have seen the innovation and falling prices that we have all enjoyed.

Read the full article here.