Lars Dalgaard isn't your typical Silicon Valley CEO. For a start, he's a 6ft 4 inch Dane who's managed to pull off the trick that's eluded so many European technology entrepreneurs – he's founded, grown and runs one of the fastest growing firms in the technology market, Cloud Computing business application provider SuccessFactors.
He's also phenomenally outspoken -with a 'colourful' turn of phrase - and clearly sees nothing wrong with keynoting at a high profile Valley venture capital and investor conference only to tell his audience of start-ups and entrepreneurs that they're wasting valuable time turning up in the first place!
“If I was going to do a Top Ten list of things to do as an entrepreneur, my number ten would be: don't go to conferences like this!” declares Dalgaard. “You shouldn't be wasting time on things like this. This is just an excuse, it's just a crutch. You should be building the product and selling it You shouldn't be going to conferences until you've got a $100 million run rate. If you tracked how many conferences I went to in our first ten years, you'd find I didn't do one.”
What Dalgaard did do in that all important ten years was to get SuccessFactors up and running. The firm has origins in the performance and talent management sectors, addressing primarily the HR customer community, but has expanded its footprint to address the wider category of corporate Business Execution.
“What we do is business execution in the Cloud," explains Dalgaard. "It's about what happens when you have a strategy, but you don't get it done. That's what we help with. We estimate that around 80% of companies have a strategy that they are happy with, but they don't execute on it. Only 20% of companies can execute on their strategies. There really isn't a company that doesn't need what we do.
"We continue to shock the world by driving SaaS into large enterprises. We have a customer with 300,000 employees at one of the world's biggest retailers. We have Siemens, where we threw out SAP among 30 other vendors to run business executions apps for 420,000 employees.”
It's still a case, says Dalgaard, that there are those - even in the technology space – who do not believe that Cloud Computing firms can support those sort of numbers of users. “Someone from one of the largest companies say me down for lunch and said to me: 'When you do SaaS for those super-large companies, you don't really, do you? You do it behind the firewall really, don't you?'. I had to sit there for a moment or two and check I wasn't on Candid Camera. It's in the Cloud. It's all on one database. No other company in the world has as many employees in one database – we have 6 million employees in one database.”
This is a key differentiator for SuccessFactors, he argues. “If you're going to build a business online, then think about the scalability needs. Are you going to be able to ramp up to accommodate more and more customers without a degradation of quality of service. “Salesforce.com has done an outstanding job, but it doesn't scale efficiently,” claims Dalgaard. “We have 150 servers and we can manage 3 times as many users as Salesforce.com. If you're building a Cloud company, then don't focus on your hardware, focus on the software. Hardware is just expensive; software can fix problems. When we meet with the world's largest retailers they tell us they've never seen a firm with software as scalable as ours.”
Obnoxious old guard
Dalgaard's view of the old guard of the software industry is not particularly high. “I started SuccessFactors in part because I hated working with SAP,” he reveals. “I had been asked to house-sit an SAP project and it just felt so obnoxious that we were spending 15 times the price of the software just to get it working. That model of computing is now completely broken. I wanted to start a company where we could do things differently.
“You have to focus on building quality. When we started SuccessFactors, we had a rule that when were doing job interviews, if anyone asked when we were going to IPO then they literally didn't have a chance of getting the job. If you thought like that, then you weren't for us. You build because you want to make a change. If as the CEO of a start-up you're only building in order to make money, then you're in the wrong seat. That attitude will catch up with you. Your customers will see that you haven't built it right. If you don't have all your stuff figured out, then you have got nowhere to hide. The customer must win. You have to truly make that your commitment and take personal responsibility for your customers success.”
So what does Dalgaard think the next generation of Cloud CEOs should be doing with their time if turning up at conferences to listen to him is off the agenda. Well, action first is the order of the day, he argues. “People focus on having breakfast meetings and lunch meetings. Don't focus on that, it's BS,” he says. “[Cisco's] John Chambers said once: 'While we're sitting in meetings, there's a start up out there closing deals'. Get your priorities right. I found a mug in our company kitchen from the early days. It had on it: 'If the customer doesn't give a sh*t, don't waste your time'. That's right!”
One way not to waste time is to get your basic 'elevator pitch' right, says Dalgaard, then the boardroom doors will open for you. “Our Business Execution message says you can close deals faster and complete projects 67% quicker. It's about getting sh*t done!,” he declares. “Now, who doesn't care about that? There is no CEO in the world whose attention you can't get if you can claim that you can give them a 67% improvement. You don't have their attention forever, but you will get 30 seconds to kill them.”
But to kill them you need to get your product right in the first place. You need to ask if there is a genuine need for what you plan to offer? If not, why are you doing it? “People say 'oh we must have workflow in our software', because everyone in Silicon Valley has workflow,” argues Dalgaard. “But people don't think in workflows. They want all the information in one place and be able to move it around on a page in front of them. They want it in one place and be able to do things right away. That's what they need. That's what we do.”
Ideas bankruptcy
While now a successful entrepreneur who sits on various VC firms himself, Dalgaard was once a senior executive with Unilever and his experience with the inner workings of an established global giant provided valuable lessons when starting his own firm. “The lessons you learn from Unilever are like the lessons you learn when you look at SAP and Oracle: they are completely and utterly ideas-bankrupt!” he roars (literally!). “They have no ideas. They have nothing to tell their customers or their employees. Will those firms continue to perform well? Yes, of course they will. They'll continue to buy other companies and shoot them.
“But if you want innovation, you're going to have to go to smaller firms and start-ups. Innovation isn't about producing a bunch of sh*t that no-one wants to buy. Don't waste the VC's money! If you want to build a legendary long term company, you need to ask if you truly innovate. You don't launch things that nobody buys. The whole industry sector you're in can get excited about something but did it sell? Something like the iPad will sell. I went to a wedding recently and everyone had an iPad. They were all holding them and showing them off.”
It's also useful not have all your eggs in one basket, however innovative that basket might be. “It's important to think about what your expansion strategy is going to be,” explains Dalgaard. “The reason we got through the economic crisis was because we had a hedging strategy with lots of different avenues for us. But if you want other horses to ride, again you have to make sure that you launch stuff that people want to buy.”
It's one of Dalgaard's proof points that SuccessFactors revenue stream has become diversified from its talent management origins through performance management to its current broad Business Execution pitch. “At SuccesFactors, some 62% of our sales come from modules that we didn't have when we started. Other companies still make 95% of their revenues from their old sh*t,” he says. “Salesforce.com has launched a ton of new stuff, but have they sold it? No, 95% of the business comes from sales force automation. Google still makes 95% of its revenues from search. Everything else is not making a difference.”
For his part, Dalgaard says that as SuccessFactors heads toward its first decade in business, he still has a sense of a job not yet finished. “My plans are based on the idea that we are really only getting started,” he says. “It really now feels like we're on a mission that's almost evangelical. I won't be happy until I can walk into a non-biased selection of customers anywhere in the world and go up to an employee and aks what the top three productivity tools are in that organisation. If the receptionist says SuccessFactors, then I will be able to say that we are getting there. The quest to build elegant and outstanding business software has only just begun.”
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