A week in summary: Changing the game of fashion and finance
- Business Of Fashion (BOF) the influential fashion media company that also runs an annual forum held court this week. Tuning in, I found it interesting that although some popular retailers like Primark are estimated to have lost £450 million due to store closures from lockdown, their post-lockdown traffic is booming and even having some stores open 24/7. On the other side of fast fashion, Jennifer Hyman, the CEO and Founder of Rent the Runway is bullish about a digital transformation in fashion and “closing the consumption loop”.
- Real life skins blend with in-game skins. In 2020, the average person spent 13 hours+ per day on technology and media which is a significant increase from 2019 where the average was 12 hours and 9 minutes per day. Unsurprisingly a huge amount of that usage is spent on social media, streaming and gaming. At the Business Of Fashion, there was talks about a multiversal self. Online communities in games having more influence than real-life experiences for young people. The Kering group (owner of Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen etc) are at the forefront of this change. Balenciaga’s creative director, Demna Gvasalia is pushing for a more digital format of fashion. They will debut their next clothing collection on a video game, Afterworld, which they dropped the trailer last week.
- Akon, the R&B and Hip Hop tunemaker of songs such as Smack That and Lonely is building Akon City, a $6 billion smart city in Senegal. The Wakanda-like city, will be run on the ‘Akoin’ cryptocurrency which launched on the Bittrex exchange on the 19th of November. Since then, other rappers like Lil Yachty are planning the same with Yachty Coin where owners of the coin gain certain access privileges to the man himself.
- Stripe is teaming up with Goldman Sachs and Citigroup to offer checking accounts and other business-banking services. Stripe will soon be offering its customers the ability to offer insured, interest-bearing bank accounts, debit cards and other cash managed services. One of the early adopters of this service will be Shopify who will offer Shopify Balance Accounts. Whilst Apple has yet to roll out their Apple card internationally, Google Pay has done a relaunch with plans to also allow users to open checking and savings accounts.
- 20 people won South Africa’s national lottery, the combination they used? 5, 6, 7, 8, 9, 10. Each of them won the equivalent of $372,094. One mathematician claimed that picking consecutive numbers could be a good strategy as fewer people choose it - but he's not in this instance in South Africa!
- Rather than push back further film delays, Warner Bros will release all of its new 2021 movies in theatres alongside HBO Max. Planned releases include Tom & Jerry, Suicide Squad, Dune and Matrix 4. It’s a pivot in the producer-cinema relationship and one where the content producer and distribution network may have some strained relationships. I guess they aren’t also afraid of the illegal streaming sites that would reproduce the HD version as soon as they release online.
The Rise of Salesforce - Good Marketing
Earlier this week on Tuesday, Salesforce announced its purchase of Slack in a $27.7B megadeal. Interesting conversations have popped up on what this purchase could mean. It is perhaps a signal of more technology companies who have benefited economically during COVID-19 relative to other companies, that they may be consolidating a bundling ‘monopoly’ through acquisitions and bundling their services. Tae Kim, offers a fantastic opinion piece on why the play may not be worth the risk.
But what’s the story behind Salesforce? Who is Marc Benioff the CEO?
Salesforce was founded in 1999 by Marc Benioff. A man who has been described as having the mind of a fox and the body of a bear.
He’s also a kind of marketing genius.
He captured opportunity through learning from experiences and leveraging media.
Born in San Francisco in 1964, he was 13 when Atari came out. As a maker and not a bad hustler, he built and sold his first Atari game How To Juggle shortly. At 15, he founded Liberty Software where he created and sold games such as The Escape from Vulcan Isle. By 16, Benioff was earning royalties of $1,500 a month which was enough to pay for his college tuition.
During college, Marc tried to build games for the Macintosh computer but ran into problems with the operating system. He complained to the Mac team that “he put his life savings into the Macintosh to write software and it didn’t work”. He received a response in the form of an internship to work with the team and meeting Steve Jobs in 1984.
Whenever Jobs passed by his cubicle, Marc would try to muster the courage to speak to him. Over time, Jobs became a kind of mentor to Marc and they kept in touch even when Marc left Apple.
The interactions with Steve Jobs deeply impacted and influenced Marc. When Marc was later a leader of a growing Salesforce, he went to Steve for advice on what to do. This conversation led to Marc patenting ‘App Store’ and creating ‘The App Exchange’ which has formed a major component of Salesforce’s dominance. Coincidentally, the conversation so valuable Marc later gifted the patent of the ‘App Store’ for free to Steve Jobs. In Marc’s own words,
“Steve helped me understand that no great innovation in business ever happens in a vacuum. They’re all built on the backs of hundreds of smaller breakthroughs and insights—which can come from literally anywhere.
Building an ecosystem is about acknowledging that the next game-changing innovation may come from a brilliant technologist and mentor based in Silicon Valley, or it may come from a novice programmer based halfway around the world. A company seeking to achieve true scale needs to seek innovation beyond its own four walls and tap into the entire universe of knowledge and creativity out there.”
When Marc graduated from university, his professors convinced him not to initially pursue an entrepreneurial endeavour. So he went off to take a Job at Oracle’s call center. Despite being the fourth largest software company, Oracle was relatively small with only 200 employees and this gave Marc the opportunity to become acquainted with Larry Ellison, where they bonded over the Macintosh.
This bond provided Marc the opportunity to pitch Ellison the idea that the Oracle database should work for Macs. Ellison agreed, Marc became in charge of a new division. By 23, he was making over $300,000 a year and at 26 became the youngest vice president in Oracle’s history. After 13 years at Oracle, he told Ellison that, “I really don’t feel good. I am having trouble getting up in the morning. I just am not enjoying my job”.
Ellison, who considered Marc a good friend, encouraged him to take three months off where he travelled to Hawaii - which has served an inspiration for Salesforce’s embracement of Haiwaiiwan culture today. On returning, Ellison thought he needed another three months off and Marc went to India. Here, he was inspired by Hinduism and meditation. During this time, he became interested in the Customer Relationship Management (CRM) software space.
Taking a Risk, Killing the Golden Goose
Whilst Marc had ideas around the CRM space, he wasn’t the first mover in the space. The leading company for CRM at this time was Siebel Systems. Founded in 1993 by another former Oracle employee, Thomas Siebel, Siebel was being used by the big corporations.
This was a slight challenge.
Marc was also an early investor in Siebel. In 1996, when Siebel Systems went public, Marc’s stock prices rose significantly. This became worth around $20 million USD. Inspired by another former Oracle employee, Evan Goldberg, who founded NetSuite and pioneered the idea of Software as a Service (SaaS), Marc decided to sell his stock and build a better CRM software than Siebel.
Putting up $6 million and getting another $2 million from Larry Ellison, Marc started Salesforce in 1999. Alongside Parker Harris, Dave Moellenhoff, and Frank Dominguez the team began to work on their first version of Salesforce’s CRM. By the end of the year, they had 40 employees and their products allowed sales reps to be able to track opportunities, manage contacts, create reports, and compare themselves against other sales reps.
How To Slay Goliath
With the first version of Salesforce and a strategic product vision to differentiate themselves from Siebel by building on the Web, Marc aggressively went after Siebel. Marc pitched Salesforce’s CRM as software which didn’t require a CD-ROM install unlike Siebel Systems. This was exactly what he marketed. Marc portrayed Salesforce as bringing CRM software to the ‘masses’. Whereas Siebel provided enterprise software which was only affordable for big companies, using the SaaS model, Marc could offer his product at a starting price of 10% of Siebel’s.
Salesforce did not need to bother with costly custom integrations or compatibility issues (from different versions), as all the customers had to log in through a web portal and were on the same version of software. This allowed Salesforce to call for the ‘end of software’.
One year into starting Salesforce, Marc and team went to the Siebel conference and hired some mock protesters to picket outside the Moscone Center chanting, “software is obsolete!”. The ‘Channel 22’ TV crew rushed to the scene to cover the protest. The channel doesn’t exist and was hired by Marc. He then called the police and a big news story was born.
It was a success in getting Salesforce a tonne of free media coverage. This was great for a company that had just started.
Bloomberg wrote that Salesforce was an ant at Siebel’s picnic. In their article, they wrote that Salesforce had “but 150 customers to Siebel’s 1,000”. The senior vice-president for Siebel’s products, David Schmaier, remarked that, “Web applications are a compelling story for small startups. But for big companies like General Motors and Microsoft--no way."
Within two weeks of this coverage however, Salesforce signed up 1,000 new organisations.
In Marc Benioff’s 2009 book on how Salesforce became a billion dollar company, Behind The Cloud, he shares that “Journalists will use your metaphor in their story because they can't come up with one on their own. It is a hard, not trivial, thing to do. And I spend hours and hours on this, because I think it is so crucial to getting the message out”.
This wasn’t the only time where he went up against Siebel.
When Siebel had a conference in Cannes, France. Marc knew that most attendees would fly into Nice. He rented all the airport taxis and used the 45 minute drive for pitching Salesforce.
Market oneself as an underdog
Marc didn’t want to end software. He only wanted to portray this as a strong marketing message. What Marc wanted was to deliver software through the internet browser. He portrayed the same marketing message when Salesforce faced Oracle and later Microsoft too. The positioning portrayed Salesforce as a revolutionary versus the dinosaur companies, Oracle and Microsoft. Gaining more editorial press and market share in the process.
In 2010, when Marc Benioff was invited to speak at Oracle’s OpenWorld conference, he used his stage time to mock Oracle. This was to get a reaction from his old pal, Larry Ellison. The reaction was quick. In Oracle’s 2011 conference, Ellison cancelled Marc’s keynote address and in his own keynote, used the time to mock Salesforce’s public cloud infrastructure.
This has only helped Salesforce grow to $208 billion today and has helped Marc’s Salesforce eclipse his former boss’ company ($180 billion).
The Last Lecture by Randy Pausch - Achieving Your Childhood Dreams
Professor Randy Pausch was an American Computer Science professor at Carnegie Mellon who received a terminal diagnosis in August 2007 of pancreatic cancer. He gave an upbeat lecture in September 2007 and offered an inspirational lecture on childhood dreams. He explored the notion of childhood dreams, sharing his own and enabling the dreams of others.
How Spotify and TikTok Beat Their Competitors (by Jason Davis and Vikas A. Aggarwal)
In the digital economy, imitators who turn out to be more agile and creative can beat even the most successful first movers. Think TikTok and Spotify’s success versus Uber’s struggles. Davis and Agarwal shares insights on the three companies as case studies and also how existing giants can be competitive.
The New New Rules of Business: Fast Company’s Advice for the Next 25 Years (by Stephanie Mehta)
The Fast Company Impact Council - an invitation-only group of forward thinking corporate and nonprofit leaders, provide insights on what they believe business leaders should consider. The tenets are: (1) Bring democracy to work, (2) Invest in community, (3) Define your purpose, (4) Be authentic, (5) Curiosity is currency and (6) Change is constant.
Five Minutes with Hamid Ekbia and Bonnie Nardie (from MIT Press)
Ekbia and Nardie explore the computerisation of the economy and everyday life, how they have been transformed by the division of labor between humans and machines. They explore heteromation, a phenomenon of an “invisible extraction of economic value from human labor without acknowledging or rewarding it”. They provoke the conversation of “what are the right forms of compensation for this new type of computer-mediated labor?”