Tom Siebel: Lessons in Leadership
On Tuesday, February 15, 2005, Tom Seibel talked about leadership at Santa Claraâ€™s Network Meeting Center.
Siebel moved from University of Illinois at Urbana-Champaign to Oracle in the early 1980s, when relational databases were more theoretical than practical. For the rest of that decade, he helped build Oracle into a market leader. When he started, Oracle had 40 employees. When he left, it had 12,000. By the 1990s, Siebel was CEO of multimedia pioneer Gain Technology, merging with Sybase in 1992. The next year he founded Siebel Systems and created the entirely new industry of Customer Resource Management (CRM).
Successful people tend to be perfectionists about what they do. They find an opportunity and execute. He observed and took advantage of the opportunities at Oracle, Gain and Siebel Systems.
For CRM, Siebel saw an unexpected opportunity. He says if you have an idea, donâ€™t get talked out of it, just do it. There was a need for customer service applications and that no one else was addressing. Despite the automation of processes like payroll or manufacturing, there was nothing comparable for sales or marketing. Siebel started out with people he had worked with before and $50,000. They leased an office in East Palo Alto for 11 cents a square foot, stocked it with used furniture and PCs. For the next year they interviewed potential customers about their needs, from Amgen to Cisco. They asked if you wanted to do this or that, what would it look like? From that, they developed a prototype from the customerâ€™s expectations. Siebel sees the success of his business as customer satisfaction. Find out what they want and deliver it.
Sounding like Mr. Micawber from David Copperfield, Siebel said the key to success is to make a profit. If you make more than you spend you will succeed. In 1994, the company made $50,000. When he stepped down as CEO in 2004, it made $1.5 billion with $2.3 billion in cash. They grew from that first application to 400 products in 25 languages.
Siebel believes an important part of such success is human capital. Recruit and train the right people. No gadget or technology will solve the problem faster than the right team. To motivate people, reward them with employee ownership. When he started the company, he owned 100%, today only 10%. Giving employees a stake in the company gives them a stake in its success. While he recognizes the contributions of venture capitalists, the right idea with motivated people in a large and underserved market can win. Siebel is perplexed why this has become unfashionable. He is concerned that the current tax and regulatory environment in Silicon Valley does not encourage new business.
He thinks that China and India have enormous opportunities for entrepreneurs. Web Services will be as big as the Internet. As for possible piracy and IP considerations, in the future there are no secrets, so deliver a good product. Your people will make the difference. They buy your products, they want your people.
As for leadership, lead by example. Be ethical, have a strong work ethic and work harder than anybody else. If a customer has a problem, drop everything, find out what it is and solve it.
Siebel had an interesting statistic about market share. When you become market leader with a 50% share, your next largest competitor will have 15% and the next will have 10%. He said he sees this again and again. If the market goes through a normal boom/bust cycle, only the market leader will be making a profit. In some ways, it resembles Jack Welchâ€™s strategy at GE in the 1980s, where he recommended pulling out of any market they were not the leader.
Siebel did not think the Oracle takeover of Peoplesoft would go well. He said it might be worse than HPâ€™s merger with Compaq. He thinks it is hard to motivate people if you say you are going to fire them and kill their product line. When told he was on Oracleâ€™s takeover list, he said he was flattered.
Siebel also explained the urban legend of the Siebel dress code. He believes that when a customer from anywhere in the world shows up at your door, your people should have an appropriate appearance. Part of customer satisfaction is that you should adjust to the customerâ€™s expectations, not yours. This was in stark contrast to the t-shirt and sneakers, bring your dog to work culture of the dot-com boom, but those companies are gone and his has prospered.
When selling, know your stuff and then learn their stuff. The difference between a car salesman and software salesman is that the car salesman knows when he is lying. Eventually, a customer will know too.
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