Suresh Dinakaran's Blog

All in the family

A meeting at Oracle HQ started a series of multi-billion dollar events. Now it’s come full circle.

Day before yesterday, tech behemoth Oracle agreed to buy fellow cloud software company, Netsuite, for $9.3B, the company’s largest acquisition since it acquired PeopleSoft in 2004.

But this isn’t your typical takeover. Silicon Valley, despite its global reach and constant innovation, still remains a tiny place full of friendships, family, and rivalries.

Back in the late 1990s…

A meeting was held at Oracle HQ in Oakland, California between the company’s CEO, Larry Ellison and 3 key employees: Evan Goldberg, Zach Nelson, and Marc Benioff.

During that meeting, Goldberg, a developer, came up with the idea of software as a service (SaaS), painting Ellison a picture of building an internet version of Siebel, the biggest CRM software maker at the time.

Ellison liked the idea but told Goldberg he’d first need to build finance software, then build the customer software around it. So that’s exactly what Goldberg  did and Ellison personally funded it.

Anyone care to guess what the company was called? Yep, Netsuite.

That means Larry Ellison just bought a company he helped launch and, more importantly, a business where he’s a 40% stakeholder. Carry the 2… that means he just netted $3.5B in cash.

As for the other two guys in the meeting…

They play a role in this, too — Zach Nelson is the current CEO of Netsuite, a position he’s held since 2002.

And as for Marc Benioff… let’s just say he left that meeting with a few ideas of his own. As Nelson tells it, “Benioff called back two weeks later and said ‘I’m going to do that Siebel online thing,’ and that became Salesforce.com.”

Salesforce and Oracle began competing for business shortly after that and the companies remain rivals to this day. In fact, Ellison is dead set on making $10B in revenue from cloud computing before Salesforce does.

So Ellison wants to beat Benioff, and Netsuite helps him do that?

Pretty much, yeah. The move makes plain business sense.

In order to continue growing its cloud market, Oracle had to start playing in Netsuite’s world, selling to small and midsize companies. And, prior to yesterday, there were two possible ways to play the game: Oracle snuffs out the little guy or the little guy defends its turf.

Larry the Cloud Guy decided to go rogue and whipped out the checkbook to create outcome #3: buy the little guy and win the whole f’n thing.

ENDS

Source Credit: The Hustle

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” Loneliness is the ultimate poverty “- Abigail Van Buren, advice columnist

Across the world the family unit is changing. The nuclear family is disappearing. In it’s place, we are seeing various family blends emerge. Indeed, the traditional family unit is becoming less traditional. However, the key trend isn’t families at all, but people living by themselves.

In a supermarket, nobody can hear you scream: ‘ I’m all alone ‘. Indeed, for now, the world is still largely prepackaged for couples and families. Steaks and burger patties come in packs of two and four, restaurant tables are meant for two, four, six or eight and cars are made for two, three, four, five or more.Of course, there are some advantages to living alone. The dustbins don’t fill up that fast and there is enough water for a bath. But is living alone healthy for the planet? In the future, people who live alone might have to pay higher taxes, because doing so means more housing, household appliances and cars. Or, in an increasingly ‘ Uberised ‘ world, will they find new ways of sharing resources through collaborative consumption?

Some notable examples that is defining this trend, in a timeline:

2016: Walmart discontinues ‘ family packs ‘ in the USA

2017: Banks offer 100 year cross generational mortgages

2018: 60% of 30 year olds still living at home

2019: Social networks start to establish physical communities

2024: Social robots in 30% of single-person households

2026: People living alone own 90% of all pets in China

For many, singledom is the preferred state. But, what does it say about a society when we can’t be bothered to engage meaningfully with another person? Is it a sign of narcissism, laziness, perfectionism, individualism or simply people do not have the time to invest in a career and a relationship? Perhaps digitilization and virtualization have removed the need for physical presence.

Is it only me who is thinking like this or do I have company?

ENDS

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Image: io9.com

Out for the Count: Brands and their Salebrity Status!

Let’s begin with the fundamentals. A brand is an amalgamated image of a multitude of assets built in the customers’ mind over a period of time including but not restricted to name, tradition, packaging, advertising, promotion posture, pricing, trade acceptance, sales force discipline, customer satisfaction, repurchase patterns, etc. Clearly some brand assets are more important to product marketers than to service marketers, and vice versa. Some competitive environments put more of a premium on certain assets as well. A brand is a promise, as perceived by prospective purchasers. Enough said.

Now let’s look at a scenario which is very commonly applied by brands including (sadly) category pioneers and market leaders which puts pricing at the fulcrum of everything. Effectively, what is communicated to customers and prospects is an unabashed submission by the brand that it will be brought if and only if it is discounted, not otherwise. Unfortunate! As they say, the guilty are afraid. A relentless tirade of communication(most often very badly created and looking very similar to other category players- you see we are birds of the same feather), shouting from the rooftops(and from every nook & corner of the city and all possible media platforms both offline and online) claiming Year End Sale, Beginning of Season Sale, End of Season Sale, Warehouse Sale, Everything Must Go Sale, Festival Sale, Birthday Celebrations Sale, Sale for the Sake of a Sale, Store Opening Sale, Just Felt like offering a Sale, Other Brands are on Sale so Why should we not be on Sale blah blah blah; offers a sorry commentary to what conventionally used to be an occasional indulgence for brands, carefully thought out and more the exception than the rule.

Quality is a belief, often difficult to articulate, held by the collective mind of users and prospects. It is a judgment made within the context of the consumer’s experiences and predispositions. The range of commitment ranges from unshakable to firm to flimsy. Central to brand image is its value versus competition. Value is, of course, the relationship between quality and price. Unfortunately for the brand, price is more easily tampered with than quality. Price, on the other hand, is rock hard. It is not an impression built up over time. It is a number printed right there for the world to see.

So for product managers, prices are temptingly easy to change, especially compared to perceptions of quality or product formulations. Virtually no lead times. No costs for retooling or new packaging. And what the hell, it’s only going to be for a short time so we can make our numbers for the quarter. No one will notice. And then we will re invent the wheel the next time around, spend as much, if not more money on advertising and promotions, remain steadfast in our  obstinacy to let history repeat itself, only to realize continued erosion of market share, brand equity, margins, loyalty and goodwill. So, get ready to write yet another chapter in the Brand Loyalty v/s Price Loyalty saga.

So whether it’s the herd following the leader or the leader following the herd, it does not matter. As purists, you may have never heard anything of this nature, but then, who cares?

Good luck to brands and their omnipresent salebrity status! I, for one is already out for the count.

ENDS

Image Courtesy: money.cnn.com

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Departing from convention: If marketing research had it’s way….

Analysis paralysis is a reality. There is a famous saying by Akio Morita, the founder of Sony – “ The greatest assistance I had in building my company was the total failure of nerve on the parts of Western businessmen to move without research”. Sony went on to become one of the most iconic brands achieving global dominance.

Another legendary business Richard Branson has a similar attitude. He says at Virgin they continue to explore a lot of things. And if something excites them, they go ahead and try it. Understandably, a lot of them are failures. But about 20% of what they try out is a massive success. And obviously they had no clue before they ventured into doing it, which amongst the things was going to be the super successful one. So, they try them all. Because if they tried to avoid having the failures,they wouldn’t have the successes.

And probably the Big Daddy of them all Steve Jobs, had a similar view. He didn’t believe in research. He said, ‘ It’s not the public’s job to know what they are going to want. It’s my job to know what they are going to want’. This approach helped Apple become the apple of millions of consumer eyes.

It’s not about the logical West or the superstitious East. Business and brand success can be attributed to ‘ predatory thinking ‘ where myths are busted, convention is disrupted and logic is questioned’. In the process competition is outwitted. If you want to be a game changer, don’t look elsewhere,begin by trying to be the game itself! There are enough examples(some of them shared above), that can and should inspire us.

Image Courtsey: research-methodology.net

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Thought Leader Brands and their After Thoughts? What are they thinking?

As a brand, you are already on a very high pedestal. You fall in the revered, ‘looked up to in awe’ (literally) category. You are the brand that sets industry trends, disrupts the category and expected to be the game changer. You lead while others invariably follow. You, the brand can do no wrong. Carrying the title Superbrands with aplomb. And then the drop of this bomb!

In recent weeks, we read the news about Hollywood actress Jennifer Aniston being appointed as the brand ambassador of powerhouse iconic global airline brand Emirates. It’s certain, considering its pedigree, that the brand has thought long and hard about this strategy before becoming friends with the high flying Friends star. But, what stands to bemusement is that this comes just a few weeks after another major airline brand Etihad launched a multi media blitz with another Hollywood biggie Nicole Kidman as brand ambassador. Is there more to it than meets the eye or is it a case of birds of the same feather flocking together?  Amidst all this, lets not forget that the first salvo was fired by Emirates when it used football legend Pele as brand ambassador. What is the thought here? Who is following and who is leading? Definitely begs the question!

Would the strategy of using Hollywood celebrities as brand ambassadors get the Gulf based carriers more attention (and more passengers)? Time will tell. In the meanwhile, lets think who would be the next carrier to join the bandwagon!

ENDS

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Image Source: www.guisemarketing.com

It was Rome of the First Century. An innovative glassmaker created vitrium flexile, flexible glass. Proud of his invention, he sought an audience with Emperor Tiberius. The emperor threw the drinking vessel down to the ground but it did not shatter. At the time all drinking vessels were made of gold and silver, which tainted wine with a metallic taste. Considering the glassmaker’s creation, Tiberius realized it would completely disrupt the Roman economy. If goblets were no longer made of gold and silver their value will diminish immediately. Tiberius asked the man if anyone knew this secret formula. When the man took a solemn oath and replied in the negative, the emperor had him beheaded.

Today it’s not so easy to thwart disruption.

Some years ago there was a website by the quirky name of Tune In Hook Up. It was designed by Chad Hurley, Steven Chen and Jawed Karim (all former PayPal employees) to disrupt the world of online dating. Most dating sites then featured still images of prospective partners but the trio thought that showcasing dating videos would be much better. While the dating site was a failure, Hurley, Chen and Karim all realized that people really enjoyed watching the uploaded videos. So abandoning the original dating site concept, the team pivoted and renamed the site YouTube which was eventually sold to Google for US$ 1.65 billion in stock(that when YouTube was yet to make any revenues).

Sir Richard Branson founded Virgin as a record store but very soon realized that the real value was in creating not just selling records. The most successful disruptor in history, he has created billion dollar companies in eight different industries.

Lowell ‘Bud ‘ Paxson deconstructed the value chain of his failing Florida Radio station. When no one would advertise on his station, he bought surplus goods and sold them on his station instead of running commercials. The idea was so successful that he transformed his local station into the billion dollar retailing empire now known as the Home Shopping Network.

More than a century ago, Joyce Clyde Hall was going broke selling penny post cards, until he killed his big idea of people wanting to write home to loved ones. His realization  that most people are not so good at writing made him fill out the postcard for them. With just one flourish of the pen he created Hallmark and the entire Greeting Card industry.

The 40 Billion US$ music industry was born of one invention- the gramophone– and comfortably relied on one business model for almost a century of profits. Then disruption came from another technology-the Internet. Disruptive digital services such as Napster, iTunes, Spotify killed the mighty album, created a market for single downloads, eviscerated the music label’s revenue model; and shot the industry dead. In the wake of digital distribution, EMI-the 100 year old company that invented electric recording, the company that signed Beatles, Caruso and thousands of mega artists-just ceased to exist.

In the twenty first century, billion dollar industries can be disrupted and waylaid virtually overnight-no sector of commerce or government is immune to that threat. A century ago, having a few thousand customers for your product made you a national household name. Now, over six billion potential customers are just one click away from becoming customers. Cloud computing, Internet of Things, 3-D Printing, wearable technology may be abstract concepts today but the kind of impact it will have on your career and fortune is inevitable. There are fortunes to be made by identifying and exploring the smallest aspects of these seismic shifts in technology and business organisations.

Lets take the obvious example of email. Email was able to disrupt the distribution link in the value chain of postal mail by enabling people to send and receive messages instantly and directly, rendering the postal service redundant in all matters of daily communication.

To thrive in the era of disruption, you don’t have to invent anything new. There is no need to discover anything the world has not seen before. Rather, there are riches to be found simply by capturing the value released through other people’s disruptive breakthroughs. There has never been a moment in time when upward mobility has been so equitably disbursed.

 So, what are you waiting for? What are you going to disrupt?

ENDS

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Image Source: www.embracedisruption.com & www.rachelbotsman.com