Tuesday, October 17, 2017
Interview with Jon Ferrara on Nimble, The Microsoft Accelerator, And The Cloud
Story by Benjamin F. Kuo
Jon Ferrara was co-founder of Goldmine software, a huge customer relationship management (CRM) provider which he built into a $100M business in the PC age, and is now working on doing the same thing in the age of the cloud, with another CRM startup, Nimble (www.nimble.com). Most recently, Nimble was accepted into Microsoft's Accelerator, aimed at taking companies and scaling them through Microsoft relationships. We caught up with Jon about the company's entry into Microsoft's Accelerator, and also got his thoughts on how the world is different this time around for his latest CRM startup. Nimble's software connects to your email, social accounts, and more, and helps you track your customers, sales prospects, sales pipeline, and much much more.
Congrats on being accepted to Microsoft's Accelerator. Tell us a bit about what you're hoping to do there?
Jon Ferrara: The thing the Microsoft Accelerator does, is it tries to identify startups that are really enterprise ready, and ready to scale. They typically don't invest in companies that are in the startup phase. Instead, they really focus on companies that have between $2M to $10M in revenues, and have already raised between $8 and $15M. They're really looking for enterprise-ready companies, who are innovative, and ready to scale, and who are really aligned with what Microsoft is trying to achieve with their customers and products. It's really an exciting alignment between what we're doing, and what Microsoft is with Office 365 and Azure.
How did you get involved with Microsoft?
Jon Ferrara: I'd like to tell you a little story on how I scaled Goldmine in Canoga Park, bootstrapped with $5,000 without a dime of venture capital. Imagine, if you will, the marketplace before there were things like Outlook and Salesforce. There were barely network applications at the time. Businesses were hooking up their PCs with things like Novell. That was the operating system of business at the time, Novell. We built the first, networkable contact management product, Goldmine, to run on top of Novell. In order to bring our product to market, rather than to try go into direct selling ourselves, or trying to create a market by advertising--which we didn't have the money to do--we started cold calling Novell resellers. We were able to bootstrap Goldmine through Novell.
That brings us to Microsoft. Microsoft doesn't innovate, it goes out and iterates, and comes into markets when they are big enough and they're able to leverage their big base of users, and thousands of resellers and distributors to dominate a market. They did that with NT Server. Microsoft didn't have a network OS, until Novell built a market for it, and ate Novell with NT Server. What we did is we shifted to Microsoft resellers, because our customers were telling us that although Goldmine was built on a database that was affordable and easy, it didn't scale to millions of records or hundreds of users. They told us it wasn't enterprise ready. They asked us to integrate it with NT Server, SQL Server, and Exchange Server, so that it would be an enterprise product. That allowed us to deliver a scalable solution for our customers. In addition to adding $10 in sales for every reseller, what was most important was we became the number one ISV in NT Server, SQL Server, and Exchange. We soon had Steve Ballmer doing his monkey dance at our conferences every year.
Anyway, the reason I am telling you this story, is we're seeing history repeat itself.
Jon Ferrara: When Nimble started, there was no Office 365. Businesses in 2009, 2010, and 2011, when they wanted to start a business, they didn't buy a Novell or use Exchange. Instead, they got WiFi and connected their computers to the cloud. They used Gmail and Gsuite for email and calendar. They didn't have to buy a server or anything. As I said before, Microsoft doesn't innovate, it iterates, and waits until the market is big enough to leverage billions of users, and 100's of thousands of resellers. That's why they then created Office 365. They now dominate the market. A few years ago, 90 percent of our users on Nimble were on Gmail and GSuite. Now, more than half are on Office 365. If you look at the numbers, there are 160 million plus Office 365 users, billions of users, and 100 of thousands of resellers. Microsoft has really come to dominate this area. We're in the adoption phase. Some businesses are using cloud, but most are not. As business onboard to the cloud for email, they'll eventually move there for servers. When they do, they will end up in the Microsoft bucket. Back in the day, no one could fail if they bought IBM for computers, and Microsoft for software. There's lots of those companies who still drink the Microsoft Kool Aid. We're hoping to do with Nimble what we with Goldmine. If you are in business today, before you get a website, before you get email, you get Gmail, Gsuite, or Office 365. That's why Microsoft picked us for this platform. In the same way Goldmine drove adoption for NT Serve, SQL Server, and Exchange, Nimble will drive demand for Office 365, PowerApps, Microsoft Flow, Power BI, and soon even Dynamics and Sales Navigator. It's quickly becoming the gateway drug, the third-party product that drives first party adoption for what I think is the crown jewel of Microsoft, Azure. If you think about it, Exchange Server is Office 365, NT Server is also Office 365, and SQL Server is essentially Azure.
Nowadays, you can't go one day without hearing about companies getting hacked. Equifax, Deloitte, Bitly. I think most companies wanting to put their servers somewhere more safe and secure are going to end up in Azure. Although many companies like us have used AWS, Azure is much more than the server and the cloud. It's development tools that Microsoft people know how to use, and the cloud is much more safe and secure behind their own firewalls and servers.
Where do you think cloud adoption is today?
Jon Ferrara: I think there are still a large amount of people who are adopting cloud in a more serious way. I'll give you an example. You might consider me technical, but you won't believe me when I tell you that I had an Earthlink account, ferrara.net, for 20 years, and only just moved to Office 365 a month or so ago. There are a lot of companies like that out in the marketplace. They might have a Gmail or iCloud account, but that doesn't mean their business servers or emails are in the cloud today. I think that, eventually, everyone is going to have to be in the cloud. Not just emails, contacts, productivity and calendar suites, but in the future, their servers, as well. There are still lots of businesses who have servers behind firewalls, and are doing their own backups, and have IT departments maintaining them, and I'd argue that's still a big chunk of the market. Where the money is made, is not in selling Office 365 or Gsuite. It's setting up and serving applications in the cloud, and transitioning everything to the cloud. On that front, there's nobody that can compete with Microsoft's channel. They have literally, millions of resellers with trusted relationships. If businesses need to do something, those are the people who are going to help them. There are none of those resellers for Amazon Web Services or Google. What most people do not know, is that AWS is hard. It took up 20 engineers to use AWS, and we had to build all these tools to spin up and spin down our servers, and manage them. That's all built into Azure. It's built for running applications and all the tools we know. Building an application in Azure is like building formulas in Excel—it's that easy. I truly believe we haven't seen full adoption of the cloud yet, and it's going to happen when people realize that's where they should be putting their servers. Here's a simple example to help you visualize this. Say, I have 100 bars of gold bullion. They weigh a lot. I think each weighs like 20 pounds, and I think the cost of $1600 an ounce. Would you store that in your garage? Would you keep that in your building? No, you'd put that in a bank. Now, if you had servers at your company containing social security numbers, drivers licenses, or birthdays, would you keep that in your building? You'd put that someplace safe. And I think, what Azure represents, and literally millions of resellers are pushing this, is it's safe to bet on cloud services like Google or Microsoft for Nimble. We believe that the operating system of business is going to be Google or Microsoft, so we're working with them both. Now, Microsoft has been growing faster, because of who they are, how big their customer base is, and their reseller channel--which is why we've built onto their platform, similar to how we've built on top of Google.
You've been in CRM for a long time, what's different this time around in that area versus Goldmine?
Jon Ferrara: The biggest difference is how easy it is to access customers globally. In the old days at Goldmine, I had to build a network of boots on the ground, by finding resellers, sending them disks and CDs by mail, and even had to build boxes to ship to distribution. Today, we don't have to do any of that with the cloud. We can use the cloud to build our influence with prospects, customers, and resellers, and we just use the cloud to distribute that. But, ultimately, even if you get something into a customer's hands, it takes boots on the ground to make it happen. I think that most software-as-a-service people don't really know what a channel is. They think they can just distribute their software via the cloud, like Google. Or, if you are going to have resellers, they think all they have to do is connect them with Salesforce and sales and marketing tools. However, you need the channel to help your company scale, and there are literally millions of resellers, looking for solutions to sell to the customers they already have relationship with. Even though some things change, many things haven't. As easy as Nimble is to use, I think by having trusted partners out there recommending and pushing your product, there is no comparison. You can't build an inside team to do that.
What is the biggest lesson you've learned from the experience so far at Nimble?
Jon Ferrara: I think the power of the cloud enables you to iterate with your customers in a much faster motion. I think it's really important to listen to your customers, and to adjust your product and your messaging for prospects, in order to make sure your scaling of your platform is efficient and sticky. You couldn't do that in the Goldmine days, where customers had installed software on their servers, and you had no idea what they were doing with it. I really love the cloud, I love the ability to build a brand with social, and I'm excited to be where we are now at this stage with Nimble. I think we're on our way to where we were with Goldmine, when we hit $100M in revenue by riding our relationship with Microsoft. I expect we'll do the same with Google and Microsoft, especially with Office 365 and Azure.
Thanks, and good luck!