Speaker 1: Get in touch with technology with tech Stuff from how
Speaker 1: stuff works dot com. Hey there, and welcome to tech Stuff.
Speaker 1: I'm Jonathan Strickland. I'm an executive producer at how Stuff
Speaker 1: Works and I love all things tech. And this is
Speaker 1: another bonus episode that I'm recording in Las Vegas, Nevada.
Speaker 1: As I attend Sweet World eighteen, you can probably hear
Speaker 1: from my voice that the dry desert air and the
Speaker 1: long hours on the show floor are starting to take
Speaker 1: its toll. Also, it's five in the morning here, but
Speaker 1: that's no excuse. Let's get on with the show. So
Speaker 1: Sweet World eighteen is a big conference that's hosted by
Speaker 1: net Sweet, which in turn is now a division of Oracle.
Speaker 1: But net Sweet did not start out that way, and
Speaker 1: so I want to give you the story of net Sweet.
Speaker 1: Also letting you know this bonus episodes a little shorter
Speaker 1: than my normal episodes, largely because well, there are limitations
Speaker 1: to what I can do with hotel WiFi and getting
Speaker 1: these sound files out to my super producer, Tari. So
Speaker 1: that's the reason for that. But let's talk all about
Speaker 1: net Suite. What is this company? Was it due? Where
Speaker 1: did it come from? Well, it's a company that makes
Speaker 1: products for other companies products and services, so it's a
Speaker 1: business to business enterprise. Most of us would likely have
Speaker 1: no real experience with net suite unless we work in
Speaker 1: some company that is relying on net sweets products. Otherwise
Speaker 1: we don't really have contact with it. It's one of
Speaker 1: those companies that works behind the scenes, and these business
Speaker 1: to business companies often when you start digging into it
Speaker 1: on the service level, they seem really complicated and sometimes
Speaker 1: it seems like there's nothing there in relation to what
Speaker 1: we do in our normal lives. But then when you
Speaker 1: really look in you realize, wait a minute, these are
Speaker 1: the companies that do work that allow the other companies
Speaker 1: that I am familiar with, the ones that I do
Speaker 1: interface with directly to do their work. So you can
Speaker 1: think of net sweet as one of the companies that
Speaker 1: creates those products that allow other companies like retail companies,
Speaker 1: service companies to do what they do, and that's why
Speaker 1: you have the experience you do working with those companies,
Speaker 1: at least on a on a grand level before you
Speaker 1: get really granular. So net sweets story begins with its founder,
Speaker 1: Evan Goldberg. Goldberg was adopted at birth. He grew up
Speaker 1: in Lexington, Massachusetts. As a young boy, he became interested
Speaker 1: in math and uh. By fifth grade he was already
Speaker 1: into programming and he really took to it so much
Speaker 1: so that that became his main focus. He attended Phillips
Speaker 1: Academy and over, and later he attended Harvard. He had
Speaker 1: scholarships with both. He graduated from Harvard with a degree
Speaker 1: and applied mathematics. Very smart guy, and a lot of
Speaker 1: people describe him as being extremely talented when it comes
Speaker 1: to applied mathematics and coding. In fact, there are stories
Speaker 1: about his days at net Suite, even as an executive,
Speaker 1: where he was right there in the trenches with other
Speaker 1: developers working on the code, and many people, many of
Speaker 1: the developers said, well, he codes faster than anyone else here. Uh.
Speaker 1: And he served as chief technology officer for net Suite
Speaker 1: through much of its history. So right out of college
Speaker 1: he got the nod to come and work for the
Speaker 1: Oracle Corporation. And I'll talk about Oracle in a subsequent
Speaker 1: podcast kind of give you the Oracle story because it's
Speaker 1: also very interesting. But in general, Oracle is a computer
Speaker 1: technology corporation that started back in nineteen seventy seven and
Speaker 1: it's one of the largest software makers in the industry.
Speaker 1: It's kind of like right behind Microsoft. One of the
Speaker 1: founders of Oracle, Larry Ellison, played a very important role
Speaker 1: when that suite, becoming its largest investor. Goldberg worked for
Speaker 1: UH Oracle for UM in various capacities for several years
Speaker 1: until he decided then to strike out on his own
Speaker 1: and he founded a web development firm called imbed Software
Speaker 1: and that's m b E D no no uh E.
Speaker 1: At the beginning of that, Goldberg's operation was relatively small.
Speaker 1: He didn't have a whole lot of people working for him,
Speaker 1: maybe like fifteen or so. But even so, he found
Speaker 1: it challenging to operate the business successfully. And one of
Speaker 1: the things that frustrated him was that unlike big companies,
Speaker 1: which had access to very complex software kits that allowed
Speaker 1: them to do things like track customers and do pay
Speaker 1: roll and all this kind of stuff, he found that
Speaker 1: small business owners didn't really have those options there. There
Speaker 1: weren't a whole lot of assets out there that they
Speaker 1: could use, especially ones that would be affordable to a
Speaker 1: small business. Most of the solutions out there were meant
Speaker 1: for big, big companies, and therefore they cost a lot
Speaker 1: of money. So your typical small business couldn't really afford
Speaker 1: to invest in those software kits. And so he thought, well,
Speaker 1: wait a minute, there's actually an opportunity here. You could
Speaker 1: create a solution for these small to mid sized companies
Speaker 1: that is more cost effective for them. So he called
Speaker 1: up his buddy Larry Ellison in and he pitched the
Speaker 1: idea of creating a customer relationship management or CRM product
Speaker 1: for small businesses. Now, Ellison reportedly told Goldberg that it
Speaker 1: might be easier to start out with a financial based
Speaker 1: solution for small businesses, so essentially accounting software, start with
Speaker 1: that and then grow from there. And further, he made
Speaker 1: the suggestion of making the product web accessible, meaning it
Speaker 1: would become a software as a service offering. And I
Speaker 1: talked about that in the cloud computing episodes. But software
Speaker 1: as a service is this idea that you don't go
Speaker 1: out and buy a software package to live on your computer. Instead,
Speaker 1: you pay a subscription to allow you access to software
Speaker 1: that lives on another computer, the provider's computer, and you
Speaker 1: can take advantage of the software. You can use it
Speaker 1: all you like, but you don't have it living on
Speaker 1: your computer. Now, this can bring the cost of the
Speaker 1: software down on a per month basis. Like, if you
Speaker 1: look at how much the software costs up front, it
Speaker 1: might be thousands of dollars for these enterprise solutions. But
Speaker 1: if you can bring that down to a smaller amount
Speaker 1: per month, while over the lifetime of your use of
Speaker 1: the software, you're likely to spend more money than if
Speaker 1: you were just to buy it outright. Uh, the monthly
Speaker 1: cost is much lower than the upfront one time cost
Speaker 1: of buying the software. Plus you don't have to worry
Speaker 1: about the software going out of date and then having
Speaker 1: to buy an upgrade because is the software is being
Speaker 1: operated by the provider and they're making all the updates
Speaker 1: on the back end. You get to enjoy that without
Speaker 1: having to do it yourself. So Ellison was really forward
Speaker 1: thinking here. This is when software is a service really
Speaker 1: hadn't become a thing yet. So Goldberg followed Ellison's advice
Speaker 1: and he launched a company out of San Mateo, California,
Speaker 1: towards the end of nine and he called it net Ledger,
Speaker 1: And he also took some of Ellison's money, actually a
Speaker 1: lot of it, ultimately more than a hundred million dollars
Speaker 1: of it. So Larry Ellison was a major stakeholder in
Speaker 1: this private company. After making that large startup investment and
Speaker 1: a couple of subsequent investments, Goldberg gathered a team and
Speaker 1: built an accounting software solution that had a web based interface,
Speaker 1: and it was ready to go in early nine. The
Speaker 1: starting price for using it when it first launched was
Speaker 1: four dollars and ninety five cents per month, So and
Speaker 1: you figure that out, that's you know, around sixty dollars
Speaker 1: a year. For sixty dollars a year, you can have
Speaker 1: access to this accounting software. When the actual if you
Speaker 1: want to go out and buy like an enterprise level
Speaker 1: accounting software kit, it might cost hundreds of dollars. So
Speaker 1: for some companies this would make a whole lot of sense. Now,
Speaker 1: the early net Ledger application started to leverage Oracles database technology.
Speaker 1: That was one of the parts of the deal that
Speaker 1: was made early on. Another sign that the two companies
Speaker 1: were rather tightly coupled. At that point. The company announced
Speaker 1: it was working on additional features right out of the gate.
Speaker 1: So even when they were launching this accounting software, they said, hey,
Speaker 1: this is not the only thing that we're ever going
Speaker 1: to offer. We're going to include other features, and they're
Speaker 1: all going to be integrated together. So it's not just
Speaker 1: that we're going to have a software kit for one
Speaker 1: aspect of your business or another. We're gonna have an
Speaker 1: integrated approach of solutions so they all work with each other.
Speaker 1: This was looking at another problem that companies were having,
Speaker 1: which is that you would typically get one type of
Speaker 1: software to handle one part of your businesses operations like accounting,
Speaker 1: and you might have a different software package to handle
Speaker 1: something like payroll, and you might have a different one
Speaker 1: to track sales, and a different one for customer relationship management.
Speaker 1: And many of these software packages they might be from
Speaker 1: different providers, which means they're not necessarily uh compatible with
Speaker 1: one another, that it's not easy to share information across them,
Speaker 1: which means you have to generate reports out of all
Speaker 1: of them and then compare them and then figure out
Speaker 1: what your best approaches and do a lot of data
Speaker 1: analysis of your own. And so the promise net Ledger
Speaker 1: was trying to make was saying, what we're gonna do
Speaker 1: has come out with a suite of programs, a suite
Speaker 1: of features that all are designed from the beginning to
Speaker 1: be interoperable so that you can easily share information across
Speaker 1: different functions of your business and make it easier for
Speaker 1: you to be able to do what you need to do,
Speaker 1: especially as you get bigger. And again they're kind of
Speaker 1: marketing this too small to midsize company, saying, why should
Speaker 1: you have to struggle when large companies have been solving
Speaker 1: these problems for years with very expensive software packages. Let's
Speaker 1: set this up. So the company announced it was working
Speaker 1: on UH features like linking e store transactions directly with
Speaker 1: accounting software, so, in other words, there'll be no need
Speaker 1: to have two tracking systems, one for the sales that
Speaker 1: you're making an e stores and then a separate one
Speaker 1: for accounting where you'd have to port over the results
Speaker 1: from one to the other. The whole approach would be integrated,
Speaker 1: which sounds pretty standard today, but again at the time,
Speaker 1: that was pretty revolutionary for these sized companies. Meanwhile, Mark Bennioff,
Speaker 1: who was another former Oracle executive, got a similar idea
Speaker 1: to Goldberg right around the same time. In fact, and
Speaker 1: about a month after net Ledger launched, he launched salesforce
Speaker 1: dot com, and salesforce dot com did have customer relationship
Speaker 1: management as its primary focus. The thing that Goldberg had
Speaker 1: suggested when he called up Ellison, and you could argue
Speaker 1: that net sweet was the first real cloud computing company,
Speaker 1: the first real commercial cloud commuting company out there was
Speaker 1: pretty much net suite, but salesforce dot Com ended up
Speaker 1: making the bigger impact. It grew faster, it got a
Speaker 1: lot more attention. If you look online for stories about
Speaker 1: the history of cloud computing like I did, Salesforce dot
Speaker 1: Com pops up way more frequently than net Suite does
Speaker 1: for those stories. Oh and uh, Ellison also invested money
Speaker 1: in salesforce dot Com too, so spreading your bets back
Speaker 1: to net Ledger. Gradually, Goldberg and his team began to
Speaker 1: add in other features in addition to accounting, and again
Speaker 1: they were all meant to help those smaller businesses managed
Speaker 1: various operations through a more centralized approach, and it follows
Speaker 1: into a category of products eventually, at least one of
Speaker 1: the offerings called Enterprise resource Planning or e r P,
Speaker 1: in which a system allows business operators the chance to
Speaker 1: get kind of a holistic view of what's going on
Speaker 1: behind the scenes of their companies. I'll talk more about
Speaker 1: the ARP a bit later and go into greater detail
Speaker 1: about what that entails, but it's really big stuff. I mean,
Speaker 1: it's stuff that's when you try to wrap your mind
Speaker 1: around it, When you just start to consider how complex
Speaker 1: it is, you realize that a tool that automates this
Speaker 1: could be really, really useful if it's implemented properly. Now,
Speaker 1: Oracle would end up licensing that Ledger's product under the
Speaker 1: name Oracle Small Business Suite for a short while, but
Speaker 1: that experiment didn't last terribly long, and eventually they kind
Speaker 1: of dropped that branding. In two thousand one, s Net
Speaker 1: ran a review for Oracle Small Business Suite seven point oh,
Speaker 1: and at that time, net Ledger wasn't just accounting, it
Speaker 1: was also handling, sales tracking, customer inquiry, us saying, and more.
Speaker 1: But the review concluded that the then price of nine
Speaker 1: per month was pretty steep for the small businesses that
Speaker 1: the company was targeting, and that unless a business needed
Speaker 1: all the features that were offered in the suite, it
Speaker 1: would make more sense to stick with smaller software packages
Speaker 1: like quick books. So essentially, what sen was saying was, sure,
Speaker 1: if you need all these features, then maybe a month
Speaker 1: makes sense. But if all you're looking for is the
Speaker 1: accounting side, then just go out and get accounting software.
Speaker 1: Don't bother with going with a sweet approach. The review
Speaker 1: also criticized the speed of the application, saying that desktop
Speaker 1: based software was generally faster. Not a big surprise that
Speaker 1: a web based UH offering was slower than a desktop one,
Speaker 1: especially when you start considering things like internet speed and
Speaker 1: bandwidth and things of that nature. So seen Ne gave
Speaker 1: the product seven out of ten, so it wasn't exactly
Speaker 1: a disastrous review, but it didn't really do net Ledger
Speaker 1: any favors in those early days. But the team kept
Speaker 1: working on improving features and later reviews were a little
Speaker 1: more positive. They had a lot going against them at
Speaker 1: that time. The cloud computing business strategy was largely unproven,
Speaker 1: and to make matters worse, they launched right at the
Speaker 1: very beginning of the period we call the dot com crash,
Speaker 1: in which multiple web based startups had launched and then
Speaker 1: fizzled away, mostly after failing to prove they could operate
Speaker 1: as a revenue generating business, in other words, that they
Speaker 1: could actually make up profit. There were so many startups
Speaker 1: that people were excited about in those early days that
Speaker 1: had not a come up with an effective business plan.
Speaker 1: They had big ideas of what they wanted to do,
Speaker 1: but they didn't really have a way of managing it,
Speaker 1: and certainly not growing and scaling the business in a
Speaker 1: way that was managed that that was sustainable. And so
Speaker 1: as a result, you had a lot of these companies
Speaker 1: flash on the get a huge amount of investment money
Speaker 1: poured into them, burn through that investment money in ridiculous
Speaker 1: amounts of time, and then collapse in on themselves. So
Speaker 1: a lot of companies failed. Two of them that didn't
Speaker 1: wear net Ledger and its rivals Salesforce dot Com. They
Speaker 1: were both able to survive that era, but lots of
Speaker 1: other companies weren't so fortunate. Now you can listen to
Speaker 1: some of my older episodes about the dot com crash
Speaker 1: and the companies that did not make it if you like.
Speaker 1: There are tons of them in the Tech Stuff archives,
Speaker 1: and they are interesting stories, filled with useful warnings about
Speaker 1: startup behavior in general. In fact, a lot of analysts
Speaker 1: like the point to the dot com crash and say,
Speaker 1: do you remember when this happened? Maybe we should be
Speaker 1: a little more cautious with these unicorns they're popping up
Speaker 1: in Silicon Valley. Now I've got a little bit more
Speaker 1: to say about net Suite, actually a lot more, but
Speaker 1: first let's take a quick break to thank our sponsor.
Speaker 1: In July two thousand two, Zack Nelson joined the net
Speaker 1: Ledger team as the CEO of the company. Nelson had
Speaker 1: also worked with Oracle in the past, so continuing the
Speaker 1: Oracle association with net sweet but he had worked at
Speaker 1: other places too, including McAfee, Sun Microsystems, and Motorola. Interestingly,
Speaker 1: Nelson's degrees aren't in business. He attended Stanford and earned
Speaker 1: degrees in biological sciences and anthropology, and then became a
Speaker 1: CEO of a cloud based tech company. Wow, I'm just
Speaker 1: saying I've got an English let degree if you want
Speaker 1: to make me CEO of a multibillion dollar company, although
Speaker 1: I doubt I could do nearly as good a job
Speaker 1: as Zach Nelson did. In September two thousand three, net
Speaker 1: Ledger officially would change its name to net Suite and
Speaker 1: would become the company that we now know, although now,
Speaker 1: of course it's a division within Oracle. The company had
Speaker 1: been offering a product called net Suite already. Uh that
Speaker 1: was essentially the same sort of offering that was the
Speaker 1: Oracle small busy in a suite, and this indicated that
Speaker 1: they were really going with software as a service beyond
Speaker 1: just accounting. That they didn't want to have net Ledger
Speaker 1: indicate that they only were interested in accounting, that they
Speaker 1: were doing other things. So at this point the company
Speaker 1: services could also handle marketing department needs in addition to
Speaker 1: the other ones that already talked about, and gradually net
Speaker 1: Suite was adding in all the standard processes and departments
Speaker 1: you would find in mid sized businesses. Now that sweets
Speaker 1: value proposition was that it could offer up all the
Speaker 1: services that a company might need, eliminating the necessity of
Speaker 1: investing in those different products for various functions. So again
Speaker 1: they were saying, here's a holistic, integrated approach that you
Speaker 1: can use that will make everything much more streamline. That
Speaker 1: was what they were trying to sell to customers, and
Speaker 1: that you could easily share stuff across departments. You could
Speaker 1: increase the interdepartmental communication within your business so that you
Speaker 1: have someone in one department saying, well where are the
Speaker 1: numbers of UH sales, so that we can plan our
Speaker 1: our our strategies, like if it's marketing and sales. All
Speaker 1: of this would be integrated so that if you were
Speaker 1: using the net suite tools, you could call up the
Speaker 1: reports you needed and make your decisions there. You didn't
Speaker 1: have to worry about waiting on somebody else to send
Speaker 1: you the information you needed. At least that was the
Speaker 1: again sales pitch. As the suite of features grew, so
Speaker 1: did the fee to access them, which led some other
Speaker 1: analysts to echo what c net had said in two
Speaker 1: thousand one, and namely that the company was pricing themselves
Speaker 1: out of their target customer base of those small to
Speaker 1: mid sized companies. By the mid two thousand's, cloud computing
Speaker 1: was starting to come into its own in the business world.
Speaker 1: Net Suite continued to grow, though not as quickly as
Speaker 1: its rivals salesforce dot com. The company eventually began to
Speaker 1: add more services and features. Uh, they fall into some
Speaker 1: really big categories. So I'm gonna talk about those categories now,
Speaker 1: and I'm gonna give a little more detail about some
Speaker 1: stuff I've already mentioned. So first, let's start with customer
Speaker 1: relationship management, because that was the one Evan Goldberg had
Speaker 1: in mind originally when he pitched his idea to Larry
Speaker 1: Ellison back in It was the idea that Salesforce dot
Speaker 1: Com went with in and we frequently initialize this category
Speaker 1: to c r M. It's all about how a company
Speaker 1: interacts with its customers, so the name is pretty self
Speaker 1: explanatory Customer relationship management. So those customers might be other businesses,
Speaker 1: or you know, they might be real life human being
Speaker 1: type people like me and you or you and me,
Speaker 1: or you and I or or all of us Google
Speaker 1: che we are the Walrus CRM is about learning what
Speaker 1: your customers like and don't like about your products and services.
Speaker 1: It's about improving customer satisfaction and therefore customer retention, and
Speaker 1: ultimately it's about driving more sales to customers. Not keep
Speaker 1: in mind we are talking about businesses here, so at
Speaker 1: the end of the day, the purpose of a business
Speaker 1: is to make money doing whatever it is that the
Speaker 1: business does. So while customer satisfaction is very important, it's
Speaker 1: typically done with the view of how can I sell
Speaker 1: more to this person? Just so that you don't get
Speaker 1: too any warm, fuzzy feelings about customer service. Uh, but
Speaker 1: it is important and obviously companies that have great customer
Speaker 1: service are more likely to retain a customer and to
Speaker 1: encourage that customer to purchase more and more than a
Speaker 1: company that has really crappy customer service. I'm sure you've
Speaker 1: all had good and bad experiences with customer service with
Speaker 1: various companies, and I'm sure in many cases that has
Speaker 1: led to changes in your behavior, whether it meant stepping
Speaker 1: away from a company because you didn't like the way
Speaker 1: you were treated, or sticking with a company becoming a
Speaker 1: loyal customer because the way that they did treat you.
Speaker 1: That sweets product has lots of features to track customer
Speaker 1: behaviors to give analyst the chance to figure out what's
Speaker 1: going on nearly in real time. So ideally this would
Speaker 1: give a company the chance to address any problems quickly
Speaker 1: or capitalize on working strategies to maximize their impact. Now,
Speaker 1: this is more complicated than it sounds because there's so
Speaker 1: many potential points of contact between a company and its customers.
Speaker 1: So they're the obvious points, like a company's website. So
Speaker 1: if there are feedback forms on the website, that's a
Speaker 1: clear case where you're getting communications from your customers. But
Speaker 1: there could also be phone lines, which means you have
Speaker 1: representatives and you have to incorporate their reports into your information.
Speaker 1: There could be an email contact, there could be social
Speaker 1: media accounts, so it all starts to add up with
Speaker 1: a really good CRM solution. Ideally, you would be able
Speaker 1: to get a pretty big, high level view of what
Speaker 1: the overall customer perception is of your company's business, like
Speaker 1: what does the average person think about what you do?
Speaker 1: And if it's great, then you know you're doing well
Speaker 1: and that you should really concentrate on those strategies. And
Speaker 1: if it's not, so, you know that you have an
Speaker 1: image problem and you need to fix it. And that
Speaker 1: image problem might be on the surface or it might
Speaker 1: be indicative of a very serious brutial problem at the
Speaker 1: core of your business. Either way, this is one of
Speaker 1: those methods where you can actually get that indication and
Speaker 1: then respond to it so you can blame your strategies
Speaker 1: accordingly based upon what your customers think about you. Then
Speaker 1: there's the e commerce side of net suite. These are
Speaker 1: tools that are meant to help integrate online sales with
Speaker 1: traditional point of sale tools to help a business keep
Speaker 1: an accurate tally of all sales across all platforms. So
Speaker 1: let's say that you own a business that sells I
Speaker 1: don't know, fidget spinners that that trend is almost over,
Speaker 1: so let's go ahead and talk about that. You've got
Speaker 1: in on the tail end of the fidget spinner craze,
Speaker 1: but you're you're really hoping that it comes back, kind
Speaker 1: of like Yo Yo's do every few years. So you
Speaker 1: have a big storefront in um Times Square, New York,
Speaker 1: and you also have your online store, and you want
Speaker 1: to be able to see how sales are doing both
Speaker 1: at the physical retail spot and online. So if you
Speaker 1: have a software kit that can integrate all that information,
Speaker 1: you can actually see the total sales both online and
Speaker 1: in your physical storefront. You could break it out by
Speaker 1: looking at online only storefront only. You could possibly even
Speaker 1: break it out further like online only by region. So
Speaker 1: depending upon the software that you're using for e commerce,
Speaker 1: you could be able to get really granular and you
Speaker 1: might see, oh, well, there's this one particular place that's
Speaker 1: doing really really well, and there's this other place where
Speaker 1: sales are are dragging behind. I should look into seeing
Speaker 1: why that is. And there could be lots of different
Speaker 1: reasons for that, right. It could just be that there's
Speaker 1: no market for fidget spinners in that other region, or
Speaker 1: it could be that you don't have enough sales people
Speaker 1: in that region, and that's why your sales figures are low.
Speaker 1: It could be that there was some sort of back
Speaker 1: end error where maybe there was a manufacturing problem or
Speaker 1: a shipping problem. So there's lots of different things that
Speaker 1: could indicate why those sales are low. This is also
Speaker 1: another reason why that integrated approach is one of the
Speaker 1: big selling points that net suite hits over and over
Speaker 1: again when they're marketing to customers. They say, you know,
Speaker 1: any piece of information is valuable, but it's way more
Speaker 1: valuable when you pair it with all the other information
Speaker 1: and when you can actually see what is the cause
Speaker 1: of that, because if you only have these individually, if
Speaker 1: you have these, you know, separated out and there's no context,
Speaker 1: you can't necessarily be sure why the information has turned
Speaker 1: out the way it is. So that's one of their
Speaker 1: big selling points that they have for their customers. There's
Speaker 1: also human capital management or HCM. I personally find the
Speaker 1: phrase human capital to be really icky. I don't think
Speaker 1: I don't. I don't like thinking of people in terms
Speaker 1: of being assets to a company because it seems dehumanizing
Speaker 1: to me. But hey, that's me being all hippie dippy.
Speaker 1: The important thing about these features is that they centralize
Speaker 1: human resource operations and payroll, so as companies grow, it
Speaker 1: becomes more difficult to track all of that stuff. And
Speaker 1: the promised net Suite makes to its customers is that
Speaker 1: their product will keep things simple even as the company
Speaker 1: gets more complicated, and the software generates reports on demand
Speaker 1: and gives managers a chance to look for outliers that
Speaker 1: might be the result of a mistake, or they might
Speaker 1: indicate an under or overperforming employee and thus allow you
Speaker 1: to address that further. Um then there's professional services automation
Speaker 1: or p s A that's all about project management and
Speaker 1: resource allocation. There are a lot of businesses out there
Speaker 1: that operate on the principle of billable hours. I used
Speaker 1: to work in consulting, and in those days, you were
Speaker 1: supposed to build all of your hours to whichever projects
Speaker 1: you were working on. So if you were working on
Speaker 1: project day for four hours in the day, he would
Speaker 1: write that down, and then maybe you spent two hours
Speaker 1: on project B, so you would write that down. You're
Speaker 1: supposed to keep track of all of that information because
Speaker 1: all of that would be build to the client, or
Speaker 1: sometimes it's all internal billing where it it doesn't ever
Speaker 1: go necessarily to an outward client, but it's a way
Speaker 1: for a company to keep track of what employees are doing,
Speaker 1: what projects are working on, which projects are taking up
Speaker 1: the most in assets. Again, there's that word to refer
Speaker 1: to human beings as assets um and it's a way
Speaker 1: of just tracking what's going on. So uh, that was
Speaker 1: part of what p s A covers. And finally there's
Speaker 1: the enterprise resource planning or e r P section. I
Speaker 1: talked about this just briefly earlier. These are all the
Speaker 1: back end operations of business needs to handle, like inventory, shipping, billing,
Speaker 1: and more. And obviously that that applies mainly to businesses
Speaker 1: that are dealing with actual physical products, but services based
Speaker 1: businesses they also have to work with inner enterprise resource planning.
Speaker 1: So as business businesses grow, this gets way more complicated.
Speaker 1: You could be dealing with multiple warehouses, manufacturing plants, retail locations,
Speaker 1: so you have to figure out how to manage all
Speaker 1: those moving pieces to make the stuff you make and
Speaker 1: get it to the people who want it. And it
Speaker 1: can also include functions like quality control. So if it
Speaker 1: turns out your brand new fidget spinner has a tendency
Speaker 1: to burst into flames. When you spin it counterclockwise, you'll
Speaker 1: know and then you can address it before it becomes
Speaker 1: a huge problem. You can put a hold on them
Speaker 1: and find out what the underlying issue is and fix it.
Speaker 1: Features might include things like sending reports to various managers
Speaker 1: to clear out bottlenecks or put a hold on shipments
Speaker 1: while you work to resolve problems and think it's even
Speaker 1: more complicated when you start operating in other countries. And
Speaker 1: one of the other things the company has worked to
Speaker 1: keep up with is the changing nature of business. Now,
Speaker 1: I mentioned going international just a second ago, but a
Speaker 1: few years ago that was something only really big companies
Speaker 1: could do. Is when you reached a certain level of growth,
Speaker 1: then you could start looking into expanding operations into other countries.
Speaker 1: But with the Internet, it's way easier to extend to
Speaker 1: presence into new markets in different countries. At least it's
Speaker 1: easier in that the Internet gives people a potential point
Speaker 1: of contact. Actually doing business in other countries gets a
Speaker 1: lot more complicated because of multiple factors that you have
Speaker 1: to consider. So again, let's talk about you and your
Speaker 1: fidget spinners. Like your fidget spinners are doing really well
Speaker 1: for some reason, the trend has come back into vogue,
Speaker 1: and you start having to ask yourself a lot of questions, like,
Speaker 1: you wanna explore the possibility of of opening up operations
Speaker 1: in other countries. So does it make sense to continue
Speaker 1: making your fidget spinners in your main manufacturing facility. So
Speaker 1: in our hypothetical example, let's say that you've got your
Speaker 1: manufacturing facility and um, Hey Hira, Georgia, Ray Stevens call
Speaker 1: out fidget spinner capital of the hypothetical situation, Hey Hira, Georgia.
Speaker 1: If you do keep your manufacturing centralized in Hey Hira, Georgia,
Speaker 1: it means that you'll be shipping all those fidget spinners
Speaker 1: overseas to your international markets. Now, that obviously is going
Speaker 1: to increase the cost per spinner that you are incurring
Speaker 1: and that will eat into your profits. Or does it
Speaker 1: make more sense for you to either build or partner
Speaker 1: with a manufacturing facility in the country or countries you
Speaker 1: want to do business with. And if so, that requires
Speaker 1: more management, but it might cut down on other costs,
Speaker 1: including shipping costs, because if you're closer to your destination,
Speaker 1: you don't have to ship things as far, so there
Speaker 1: are lots of other matters to consider, like foreign currencies,
Speaker 1: what's the exchange rate? How are you how is that
Speaker 1: going to affect your business? Also, taxes, different countries and
Speaker 1: even different regions within some countries have different tax laws,
Speaker 1: so you have to know all of these in order
Speaker 1: to price your fidget spinners properly and make sure you're
Speaker 1: still making a profit. And then there are localization issues
Speaker 1: to consider. So let's say the country you've got your
Speaker 1: sights on is um Germany. They seem like they'd be
Speaker 1: really big into fidget spinners. That's a fun loving country.
Speaker 1: So to make things go more smoothly, it would be
Speaker 1: good to have your business localized so that German customers
Speaker 1: can operate easily with your storefront, which means having a
Speaker 1: German language website, and it means having some Germans speaking
Speaker 1: people to communicate uh, so that you're when people talk
Speaker 1: to your company, you can talk back with them, so
Speaker 1: you want to have some sort of localized support there.
Speaker 1: It may also mean developing tailored customer relationship strategies for
Speaker 1: German customers because you may find out that people in
Speaker 1: different parts of the world behave differently that you can't
Speaker 1: just use the exact same customer relationship approach across the world.
Speaker 1: It might work in one part and not in another. Now,
Speaker 1: take this imaginary scenario and then expand it to an
Speaker 1: operation that's trying to go worldwide. So how do you
Speaker 1: make sure you're serving everyone? Well, that's why companies like
Speaker 1: net sweet try to come up with strategies that that
Speaker 1: incorporate these ideas and are supposed to help you be
Speaker 1: able to implement them. Uh. And of course net suite
Speaker 1: is not the only one that does this, but I mean,
Speaker 1: this is the story of net sweet, which is why
Speaker 1: I'm talking about it. But it does show you how
Speaker 1: complicated things can get very quickly as businesses grow, particularly
Speaker 1: in the Internet age, where we have an unprecedented access
Speaker 1: to the whole world, so things happen really fast now.
Speaker 1: And that again is why companies like net suite can
Speaker 1: offer up services that can look really attractive if you're
Speaker 1: a business owner who doesn't have experience in these realms.
Speaker 1: I've got a little bit more to say about that Suite,
Speaker 1: but first let's take another quick break to thank our sponsor.
Speaker 1: In two thousand seven, that's Sweet held its initial public offering,
Speaker 1: meaning it transformed from a private company to a publicly
Speaker 1: traded one, and when preparing to set the opening price
Speaker 1: for shares, net Suite actually doubled its initial estimate of
Speaker 1: thirteen dollars. The new price of twenty six dollars per
Speaker 1: share would put the value of the company and more
Speaker 1: than one and a half billion dollars a Princely some
Speaker 1: net Suite did not do this increase randomly. The company
Speaker 1: actually held what is known as a Dutch auction for
Speaker 1: the I p O. And actually there are two different
Speaker 1: types of Dutch auctions, and they contradict each other, So
Speaker 1: I'll explain what the other one is at the end
Speaker 1: of this. But when we talk about I p O s,
Speaker 1: the Dutch auction is a process that a company essentially
Speaker 1: puts out a question to investors, which is how much
Speaker 1: stock are you willing to buy? And at what price
Speaker 1: are you willing to buy it. Then the company takes
Speaker 1: all that response and they look at it and they
Speaker 1: figure out what the best opening price of its I
Speaker 1: p O stock is based off those results. And this
Speaker 1: is in an attempt to get the most money on
Speaker 1: that opening So if say, oh, well, here's the highest
Speaker 1: amount that someone said they were willing to pay for
Speaker 1: our stock. So that's that's our upper limit. Here's the
Speaker 1: lowest one. That sets our low limit. Where do most
Speaker 1: of them fall in? All right, So it turns out
Speaker 1: that people are value are stock more than thirteen dollars
Speaker 1: per share, so let's go ahead and increase it. And
Speaker 1: that's how they got to the figure of twenty six
Speaker 1: dollars per share UH and its first day of trading,
Speaker 1: the shares ended up trading at twenty seven dollars and
Speaker 1: cents at the end of the day. That bummed out
Speaker 1: some shareholders who are really hoping for a first day
Speaker 1: surge and value. That frequently happens with I p o s.
Speaker 1: But then you could argue that that happens with I
Speaker 1: p o s that undervalued their stock going into trading,
Speaker 1: and in this case, you could argue that net Sweet
Speaker 1: pretty much nailed the value of its stock. But for
Speaker 1: investors that doesn't necessarily come back as a happy news
Speaker 1: because you may want to have that feeling of a
Speaker 1: day one pay day where you buy a thousand shares
Speaker 1: of stock at thirteen dollars and it closes at twenty
Speaker 1: six and you've just doubled your money. Uh, that didn't happen. Oh,
Speaker 1: and I mentioned that Dutch auctions have two meanings, So
Speaker 1: here's the other one. The other is an auction where
Speaker 1: you start off with a high price and you gradually
Speaker 1: bring the price down for an item until someone bids
Speaker 1: on the item at the that current price. So you
Speaker 1: might say, let's auction this painting, starting off at two dollars,
Speaker 1: and then you might go down by five per a
Speaker 1: bid and as soon as someone bids on it, once
Speaker 1: it starts hitting a certain price um, then the auction
Speaker 1: for that item is over and that person buys it.
Speaker 1: So instead of starting from a low point and bidding higher,
Speaker 1: you started a high point and wait until some bidder
Speaker 1: decides that that's the price they're willing to pay for
Speaker 1: whatever the item is. And typically you keep going down
Speaker 1: until you hit the reserve price of the auction item,
Speaker 1: and at that point you stop because you wouldn't want
Speaker 1: to sell for less than what the is actually worth
Speaker 1: or has been set as a reserve price anyway. Worth
Speaker 1: is a difficult concept when it comes to auctions. So
Speaker 1: one thing else I wanted to talk about is that
Speaker 1: net sweet has acquired a few companies since it launched.
Speaker 1: UH since it's IPO in two thousand seven. In two
Speaker 1: thousand and eight, they bought a company called open Air
Speaker 1: that specialized in web based expense reports and timesheets. In
Speaker 1: two thousand nine, net Suite acquired quick Arrow, which created
Speaker 1: professional services automation products. And other acquisitions include e company
Speaker 1: Retail Anywhere UH in two thousands thirteen and email service
Speaker 1: provider Bronte Software in two thousand fifteen, and there were
Speaker 1: a lot of others as well. But now net Suite
Speaker 1: itself is an acquisition or it has been acquired. Back
Speaker 1: in two thousand sixteen, Oracle announced its intention to purchase
Speaker 1: net Suite for a cool nine point three billion dollars. Technically,
Speaker 1: this involved talking with investors and making an agreement to
Speaker 1: buy back fifty percent of the stocks that were out
Speaker 1: in circulation, so that Ellison larray Elson would essentially get
Speaker 1: more control over it because he and his family had
Speaker 1: nearly fifty percent of the company. Not quite around and UH,
Speaker 1: the the deal meant that the UH selling price for
Speaker 1: that other stock that other people were holding was actually
Speaker 1: higher than what the trading price was. This is how
Speaker 1: they were able to buy out the some of the
Speaker 1: other investors and so it was a deal that was
Speaker 1: valued at about nine point three billion dollars. Now, Oracle
Speaker 1: also deals in cloud based solutions for customers, and like
Speaker 1: I've mentioned, it's had a pretty tight relationship with net
Speaker 1: Suite throughout its history. Some analysts pointed out that the
Speaker 1: acquisition solved a problem that Oracle was running into. Net
Speaker 1: Sweet had more of a presence with midsized companies, a
Speaker 1: market that Oracle wanted to really get into, and Oracle
Speaker 1: and net Suite had been competing a bit in that market,
Speaker 1: which was weird because Oracle also had the close relationship
Speaker 1: with net Suite, and according to net Suite executives, the
Speaker 1: former company continues to operate as it did before. It's
Speaker 1: just now a department in the larger Oracle corporation and
Speaker 1: can take advantage of Oracles technologies and database and huge
Speaker 1: amounts of information. The acquisition was approved and completed in
Speaker 1: late twenties sixteen, so net Suite now operates as part
Speaker 1: of Oracle and has integrated several of its approaches with
Speaker 1: Oracle products. And At Sweet World eighteen where I am now,
Speaker 1: executives talked about new features being added in the one
Speaker 1: I thought was the most interesting was artificial intelligence meant
Speaker 1: to help alert managers to extraordinary cases, things that could
Speaker 1: indicate either someone has committed an error that needs to
Speaker 1: be addressed or potential strategic moves that could save a
Speaker 1: company money. So, for example, you could set up a
Speaker 1: project that involves manufacturing your fidget spinners in Hamburg, Germany
Speaker 1: and shipping them to Berlin. But then you see that
Speaker 1: the net swite product is telling you that this plan
Speaker 1: has a low probability of being profitable, and getting that
Speaker 1: information before you actually commit your sources could help you
Speaker 1: save tons of money and make you more nimble in
Speaker 1: the process to actually figure out a working strategy that
Speaker 1: will make you money, as assuming that the product works
Speaker 1: as advertised. Of course, I can't speak to that last
Speaker 1: bit because I've never used net suite. Now, I can
Speaker 1: say that they throw a really wild event. The presentations
Speaker 1: had a DJ mixing up music tracks live before the
Speaker 1: events even started. There were enormous screens with projections of
Speaker 1: presentations and live video of presenters. There were lights and
Speaker 1: smoke effects and acrobats. It's all pretty over the top
Speaker 1: for an event that was designed to market new features
Speaker 1: to net sweet customers. Um, I'm not really sure how
Speaker 1: I feel about these trade shows guys, because it's so weird.
Speaker 1: I mean, I'm not the target audience. I'm not a
Speaker 1: net sweet customer, So I'm looking at this from a
Speaker 1: very objective point of view, and it is it's a
Speaker 1: weird spectacle. It's it's not necessarily bad, it's just weird. Uh.
Speaker 1: There was a lot of humor in the presentations, which
Speaker 1: I appreciated, including a video about how Evan Goldberg talking, uh,
Speaker 1: you know, speaking with people over at Oracle and saying, Hey,
Speaker 1: I've got this great idea. We're going to announce all
Speaker 1: of our our new ideas with a viral video, and
Speaker 1: then the guy at Oracles like, no, please don't do that,
Speaker 1: and having over it's like, you're right, we should do it.
Speaker 1: And then it goes out and does this crazy mash
Speaker 1: up viral video approach, which was extremely dorky, and I
Speaker 1: appreciated that because I'm also extremely dorky. So it was
Speaker 1: an interesting experience attending this conference um and learning more
Speaker 1: about net Suite, a company I had heard about multiple
Speaker 1: times but never really looked into. So our next episodes
Speaker 1: will be about Oracle. We'll talk more about how that
Speaker 1: company came into being and what it has done over
Speaker 1: its years. More about Larry Ellison and some of the
Speaker 1: trials and tribulations that Oracle has been through. But if
Speaker 1: you guys have suggestions for future episodes of tech Stuff,
Speaker 1: I highly recommend you get in touch with me. Send
Speaker 1: me an email. The address for the podcast is tech
Speaker 1: stuff at how stuff works dot com, or drop me
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Speaker 1: before they come out, and you get to see me
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Speaker 1: tech Stuff. I hope to see you guys there and
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