Evan Goldberg, founder and chief executive officer of NetSuite, discerns a post-pandemic future of business growth through the prism of his company’s customer base, which tends towards high-growth, often internet-based, entities.
In an interview with Computer Weekly, he reflects on what has made 2021 different from 2020.
The business software-as-a-service (SaaS) supplier was acquired by Oracle in 2016, but was always a close cousin of Big Red. Oracle founder Larry Ellison was a major shareholder, and a mentor to Goldberg, who originally joined Oracle straight from Harvard in 1987 when it had about 900 employees.
Goldberg is a keen squash player but confirms Ellison does not join him on court. “Larry’s a tennis guy,” he revealed in an interview with Computer Weekly.
NetSuite, which he founded in 1998, was originally a cloud applications firm called NetLedger. In a previous interview with CW, Goldberg recalled: “We started a few months before Salesforce.com. We had a focus on a complete business management suite for small and growing, and mid-market companies. We moved up the ladder as we grew out the product, but we kept our eyes on that prize during the 18 years we were an independent company, getting close to $1bn in annual revenue.”
What follows here is an edited version of his most recent interview with Computer Weekly.
I thought the starting point here could be how you feel and how you think things are different economically in the final quarter of 2021 compared with the same quarter in 2020, from a general business point of view?
I think a lot of a lot of businesses have adjusted. At least here in the US, restaurants are open and sports leagues are playing their games. I think there’s a much larger sense of normalcy now.
There is definitely more certainty now than there was in 2020, though there is still a lot of uncertainty. But I think there have been a lot of adjustments and the pandemic caused a lot of dislocation.
Software companies are getting funded at an amazing clip, entering the capital markets. NetSuite is fortunate to have played a big role there – 65% of US tech IPOs are based on NetSuite. So we’re pleased we are helping these companies move to the next stage, whatever that is for them.
But there are labour market challenges – the great resignation. People are moving on, changing their careers. There was a pent-up demand to do something new, because people have been hunkering down for so long. Even with your existing employees, if they stay, they’re still looking at a different normal, they want to be able to be more flexible about where they work.
Also, some of the things that happened during the time of the pandemic, like, in the US, the George Floyd case, has caused employees to question the role of their company and what things their company is doing beyond just making money.
And then there have been the supply chain challenges, delays, things being more expensive – they’ve all led companies to have to adjust to a different way of doing business. And so we’ve seen some interesting changes that companies have made, like B2B companies starting to go direct to the consumer.
Some of those things are going to be permanent because they’re like “wow, that worked”. The companies that are nimble, that are taking advantage of the new normal, in terms of back-office operations, and being more nimble about supply chains, will prosper. We saw a lot of companies during the pandemic change their inventory strategies; some had been “just in time” for so many years, as lean as you possibly get. That makes you vulnerable.
So now there is a shift to a hybrid model: “these products are my absolute wheelhouse, the ones that produce my biggest profit, so I’m going to make sure I don’t run out of those”. That’s a more like a “just in case” inventory strategy.
“Software companies are getting funded at an amazing clip, entering the capital markets. NetSuite is fortunate to have played a big role there”
Evan Goldberg, NetSuite
And the labour shortage problem, that’s emerging in the UK as well as the US?
Well, for our customers, what we look at them taking advantage of is, in terms of labour shortages, is increased automation, so that you can get more out of the people that you do have and into trends across your portfolio of products and people. And then agility is the name of the game. Fast-growing companies, like our customers, are smaller and more nimble. I think we’re seeing a lot of interesting pivots that companies are making in their product lines, in their business models – that’s the landscape that I’d describe.
We’re also taking our learnings and packaging those up into “playbooks”, which allows us to deliver the institutional knowledge that we have more effectively to our customers. We’ve had 65% of the tech IPOs in the US, and we have tons of experience in bringing companies public.
So that’s the big picture of how we portray the world, as NetSuite, at least in terms of what we’re seeing from our customers, and then how we’re trying to react to that with new products and services within our portfolio.
I was really struck by something that you said last year about NetSuite customers getting more time to get value out of the software during the pandemic. And that was enabling what you called a “ton of business transformation” coming up in 2021 and 2022. I just wondered if you can reflect on that a little bit more?
I think there was that opportunity, and I think companies that took advantage of will face the sort of onslaught of [upcoming] demand in a better position. And these challenges – both the increased demand and the challenges with labour and supply chains – require investment in systems like NetSuite, for the first time, or re-examining how it works within the organisation and how to get more out of it.
That’s why we instituted “advanced customer support” in the first place, with releases every six months. Typical companies are focused on their business; they don’t have a lot of time to peruse all of the release notes and see which new advances are useful for them. So having somebody that knows your company and can say “you should examine A, B and C, and all this other stuff is not relevant for you” is critical.
How so you think it is best to think about the division of labour between NetSuite and Oracle Fusion?
When we came together as a company, we met with the Fusion team, and we did a dog and pony show between two groups. And Steve Miranda, who runs the Oracle Fusion team, and I came away both with a really clear understanding of our difference. And the reason that works out well is because there is no way to have an all- encompassing product that’s going to satisfy the business management needs of every size of business.
Fusion was designed for large companies that have relatively independent divisions. We built one application for a company that’s more tight knit, where there’s less of a division of labour, people wear a lot of hats, and they want to use one system for all those hats. We find that companies self-select pretty easily into which model is appropriate for them.
So, NetSuite, as a single application, works well for certain large companies, you would say? It’s not only an SME or mid-market play?
Well, for those whose business model hasn’t changed very much – if they scaled on the internet. A company that’s built on the internet, they do one thing or a few things really well. And they’ve just grown their business by getting it all over the world. The capability of internet-based businesses to scale internationally is unprecedented.
And how about synergies between NetSuite and Oracle, as opposed to this division of labour?
There are some obvious things we’re doing, like bill capture OCR and expense capture for employees. The best expense report is no expense report. Those kinds of things are very similar across Fusion and NetSuite. We are absolutely collaborating on that.
Something I never would have predicted when I came back is that Oracle is investing extremely heavily into the business user experience. And the next generation of user experience for Oracle’s applications is going to leapfrog anything they’ve had before. That’s not something that Oracle has put a lot of attention into. And I know Larry has completely flipped in terms of how important he thinks that is, relative to everything else.
It has been an enormous investment, the Redwood design system, and NetSuite is taking advantage of it. That is really a collaboration because we’ve always had user experience top of mind, so we’re a great laboratory for that and we have a lot of expertise. So, we’ve been collaborating with the team at Oracle, and the results of that are going to be coming out over the next couple of years. And I’m super excited about them.
So, while we remain independent within Oracle to be able to attack our market, which is a little bit different than Oracle’s traditional market, we also have a lot of avenues of collaboration.
